STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.,
DEPOSITOR,
JPMORGAN CHASE BANK,
TRUSTEE,
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
MASTER SERVICER,
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
SECURITIES ADMINISTRATOR,
and
EMC MORTGAGE CORPORATION
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 2004
Structured Asset Mortgage Investments II Trust 2004-AR5
Mortgage Pass-Through Certificates
Series 2004-AR5
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
Section 1.01. Definitions....................................................1
Section 1.02. Calculation of LIBOR..........................................44
ARTICLE II
Conveyance of Mortgage Loans; Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans to Trustee.......................45
Section 2.02. Acceptance of Trust Fund by Trustee...........................46
Section 2.03. Assignment of Interest in the Mortgage Loan
Purchase Agreement............................................49
Section 2.04. Substitution of Mortgage Loans................................50
Section 2.05. Issuance of Certificates......................................51
Section 2.06. Representations and Warranties Concerning the Depositor.......51
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. Master Servicer...............................................53
Section 3.02. REMIC-Related Covenants.......................................54
Section 3.03. Monitoring of Servicers.......................................54
Section 3.04. Fidelity Bond.................................................56
Section 3.05. Power to Act; Procedures......................................56
Section 3.06. Due-on-Sale Clauses; Assumption Agreements....................57
Section 3.07. Release of Mortgage Files.....................................57
Section 3.08. Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee...............................58
Section 3.09. Standard Hazard Insurance and Flood Insurance Policies........59
Section 3.10. Presentment of Claims and Collection of Proceeds..............59
Section 3.11. Maintenance of the Primary Mortgage Insurance Policies........60
Section 3.12. Trustee to Retain Possession of Certain Insurance
Policies and Documents........................................60
Section 3.13. Realization Upon Defaulted Mortgage Loans.....................60
Section 3.14. Compensation for the Master Servicer..........................61
Section 3.15. REO Property..................................................61
Section 3.16. Annual Officer's Certificate as to Compliance.................62
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Section 3.17. Annual Independent Accountant's Servicing Report..............62
Section 3.18. Reports Filed with Securities and Exchange Commission.........63
Section 3.19. EMC...........................................................64
Section 3.20. UCC...........................................................64
Section 3.21. Optional Purchase of Defaulted Mortgage Loans.................64
ARTICLE IV
Accounts
Section 4.01. Protected Accounts............................................65
Section 4.02. Distribution Account..........................................66
Section 4.03. Permitted Withdrawals and Transfers from the
Distribution Account..........................................67
Section 4.04. Distribution of Carryover Shortfall Amount; Carryover
Shortfall Reserve Fund........................................69
ARTICLE V
Certificates
Section 5.01. Certificates..................................................71
Section 5.02. Registration of Transfer and Exchange of Certificates.........82
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.............86
Section 5.04. Persons Deemed Owners.........................................86
Section 5.05. Transfer Restrictions on Residual Certificates................86
Section 5.06. Restrictions on Transferability of Certificates...............87
Section 5.07. ERISA Restrictions............................................88
Section 5.08. Rule 144A Information.........................................89
Section 5.09. Appointment of Paying Agent and Certificate Registrar.........90
ARTICLE VI
Payments to Certificateholders
Section 6.01. Distributions on the Certificates.............................91
Section 6.02. Allocation of Losses......................................... 98
Section 6.03. Payments.....................................................101
Section 6.04. Statements to Certificateholders.............................101
Section 6.05. Monthly Advances.............................................104
Section 6.06. Compensating Interest Payments...............................105
ARTICLE VII
The Master Servicer
Section 7.01. Liabilities of the Master Servicer...........................106
Section 7.02. Merger or Consolidation of the Master Servicer...............106
Section 7.03. Indemnification of the Trustee, the Custodian and
the Securities Administrator......... .......................106
Section 7.04. Limitations on Liability of the Master Servicer
and Others...................................................107
Section 7.05. Master Servicer Not to Resign................................108
Section 7.06. Successor Master Servicer....................................108
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Section 7.07. Sale and Assignment of Master Servicing......................108
ARTICLE VIII
Default
Section 8.01. "Event of Default"...........................................110
Section 8.02. Trustee to Act; Appointment of Successor.....................112
Section 8.03. Notification to Certificateholders...........................112
Section 8.04. Waiver of Defaults...........................................113
Section 8.05. List of Certificateholders...................................113
ARTICLE IX
Concerning the Trustee and the Securities Administrator
Section 9.01. Duties of Trustee............................................114
Section 9.02. Certain Matters Affecting the Trustee and the
Securities Administrator.....................................116
Section 9.03. Trustee and Securities Administrator Not Liable for
Certificates or Mortgage Loans...............................117
Section 9.04. Trustee and Securities Administrator May Own
Certificates.................................................118
Section 9.05. Trustee's and Securities Administrator's Fees and
Expenses.....................................................118
Section 9.06. Eligibility Requirements for Trustee, Paying Agent and
Securities Administrator......... ...........................119
Section 9.07. Insurance....................................................119
Section 9.08. Resignation and Removal of the Trustee and Securities
Administrator................................................119
Section 9.09. Successor Trustee and Successor Securities
Administrator................................................................120
Section 9.10. Merger or Consolidation of Trustee or Securities
Administrator................................................121
Section 9.11. Appointment of Co-Trustee or Separate Trustee................121
Section 9.12. Federal Information Returns and Reports to
Certificateholders; REMIC
Administration...............................................122
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ARTICLE X
Termination
Xxxxxxx 00.00. Xxxxxxxxxxx Xxxx Xxxxxxxxxx by the Depositor or its
Designee or Liquidation of the Mortgage Loans................126
Section 10.02. Additional Termination Requirements..........................128
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Intent of Parties............................................130
Section 11.02. Amendment....................................................130
Section 11.03. Recordation of Agreement.....................................131
Section 11.04. Limitation on Rights of Certificateholders...................131
Section 11.05. Acts of Certificateholders...................................132
Section 11.06. GOVERNING LAW................................................133
Section 11.07. Notices......................................................133
Section 11.08. Severability of Provisions...................................134
Section 11.09. Successors and Assigns.......................................134
Section 11.10. Article and Section Headings.................................134
Section 11.11. Counterparts.................................................134
Section 11.12. Notice to Rating Agencies....................................134
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EXHIBITS
Exhibit A-1 - Form of Class A and Class I-X Certificates
Exhibit A-2 - Form of Class I-M Certificates
Exhibit A-3 - Form of Class B Certificates
Exhibit A-4 - Form of Class R Certificates
Exhibit B - Mortgage Loan Schedule
Exhibit C - [Reserved]
Exhibit D - Request for Release of Documents
Exhibit E - Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1 - Form of Investment Letter
Exhibit F-2 - Form of Rule 144A and Related Matters Certificate
Exhibit G - Form of Custodial Agreement
Exhibit H-1 - EverHome Subservicing Agreement
Exhibit H-2 - SouthTrust Servicing Agreement
Exhibit X-0 - XxxxXxxx Xxxxxxxxx Xxxxxxxxx
Xxxxxxx X-0 - Xxxxxxxxxx Servicing Agreement
Exhibit H-5 - Countrywide Servicing Agreement
Exhibit H-6 - First Tennessee Servicing Agreement
Exhibit H-7 - EverHome Servicing Agreement
Exhibit H-8 - Bank of America Servicing Agreement
Exhibit H-9 - EMC Servicing Agreement
Exhibit I - Assignment Agreements
Exhibit J - Mortgage Loan Purchase Agreement
Exhibit K - Form of Trustee Limited Power of Attorney
v
POOLING AND SERVICING AGREEMENT
Pooling and Servicing Agreement, dated as of August 1, 2004, among
Structured Asset Mortgage Investments II Inc., a Delaware corporation, as
depositor (the "Depositor"), JPMorgan Chase Bank, a New York banking
corporation, not in its individual capacity but solely as trustee (the
"Trustee"), Xxxxx Fargo Bank, National Association, as master servicer (in such
capacity, the "Master Servicer") and as securities administrator (in such
capacity, the "Securities Administrator"), and EMC Mortgage Corporation ("EMC").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Depositor has acquired the
Mortgage Loans from EMC. On the Closing Date, the Depositor will sell the
Mortgage Loans and certain other property to the Trust Fund and receive in
consideration therefor Certificates evidencing the entire beneficial ownership
interest in the Trust Fund.
The Trustee on behalf of the Trust shall make an election for the
assets constituting REMIC I to be treated for federal income tax purposes as a
REMIC. On the Startup Day, the REMIC I Regular Interests will be designated
"regular interests" in such REMIC and the Class R-I Certificate will be
designated the "residual interests" in such REMIC.
The Trustee on behalf of the Trust shall make an election for the
assets constituting REMIC II to be treated for federal income tax purposes as a
REMIC. On the Startup Day, the REMIC II Regular Certificates will be designated
"regular interests" in such REMIC and the Class R-II Certificate will be
designated the "residual interests" in such REMIC.
The Trustee on behalf of the Trust shall make an election for the
assets constituting REMIC III to be treated for federal income tax purposes as a
REMIC. On the Startup Day, the REMIC III Regular Certificates will be designated
"regular interests" in such REMIC and the Class R-III Certificate will be
designated the "residual interests" in such REMIC.
The Group I Mortgage Loans will have an Outstanding Principal Balance
as of the Cut-off Date, after deducting all related Scheduled Principal due on
or before the Cut-off Date, of $973,234,541.
The Group II Mortgage Loans will have an Outstanding Principal Balance
as of the Cut-off Date, after deducting all related Scheduled Principal due on
or before the Cut-off Date, of $279,350,336.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Securities Administrator, EMC and the
Trustee agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless otherwise expressly provided or unless the
context otherwise requires, shall have the meanings specified in this Article.
60 Days Delinquent -- A Mortgage Loan shall be deemed to be "60 Days
Delinquent" if it is 60 days or greater delinquent in payment of a scheduled
Monthly Payment (including Mortgage Loans that are subject to bankruptcy or
currently in foreclosure, and any REO Properties) as of a date of determination.
Accepted Master Servicing Practices: With respect to any Mortgage Loan,
as applicable, those customary mortgage master servicing practices of prudent
institutions that master service mortgage loans of the same type and quality as
such Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located, to the extent applicable to the Trustee or the Master Servicer (except
in its capacity as successor to a Servicer).
Account: The Distribution Account and the related Protected Account, as
the context may require.
Accrued Certificate Interest: For any Certificate (other than a
Residual Certificate) or for any Component of the Class I-X Certificates on any
Distribution Date, is equal to the amount of interest accrued during the related
Interest Accrual Period at the applicable Pass-Through Rate on the Current
Principal Amount of such Certificate or Notional Amount of such Component
immediately prior to such Distribution Date, less (i) in the case of a Senior
Certificate or a Component of the Class I-X Certificates, such Certificate's or
Component's share of any Net Interest Shortfall from the Mortgage Loans in the
related Loan Group or Loan Subgroup, as the case may be, and, after the
Cross-Over Date relating to such Certificates, the interest portion of any
Realized Losses on the Mortgage Loans in the related Loan Group or Loan
Subgroup, as the case may be, to the extent allocated thereto in accordance with
Section 6.02(g), (ii) in the case of a Group I Senior Mezzanine Certificate,
such Certificate's share of any Net Interest Shortfall and the interest portion
of any Realized Losses on the Group I Mortgage Loans, to the extent allocated
thereto in accordance with Section 6.02(g), (iii) in the case of a Subordinate
Certificate, such Certificate's share of any Net Interest Shortfall and the
interest portion of any Realized Losses on the Mortgage Loans in the related
Loan Group, to the extent allocated thereto in accordance with Section 6.02(g),
(iv) in the case of the Class II-A-1, Class II-A-2 and Class II-A-3
Certificates, respectively, the amount of any Deferred Interest on the related
Loan Subgroup II-1, II-2 and II-3 Mortgage Loans, as the case may be, which was
added to the Current Principal Amount of such respective Certificates and (v) in
the case of the Group II Subordinate Certificates, the amount of any Deferred
Interest on the Loan Subgroup II-1, II-2 and II-3 Mortgage Loans which was added
to the Current Principal Amount of such Group II Subordinate Certificates. Such
Net Interest Shortfalls will be allocated among the Certificates (other than the
Residual Certificates) in proportion to the amount of Accrued Certificate
Interest that would have been allocated thereto in the absence of such
shortfalls. The interest portion of Realized Losses for the Group I Mortgage
Loans will be allocated sequentially, in the following order, to the Class
I-B-6, Class I-B-5, Class I-B-4, Class I-B-3, Class I-B-2, Class I-B-1 and Class
I-M Certificates, and, following the Cross-Over Date relating to the Group I
Certificates, the interest portion of Realized Losses on the Loan Subgroup I-1
Mortgage Loans will be allocated on a pro rata basis to the Class I-A-1
Certificates, to Component 1X of the Class I-X Certificates and to
2
Component 2X of the Class I-X Certificates to the extent of the Subgroup I-1
Allocation Fraction thereof and the interest portion of Realized Losses on the
Loan Subgroup I-2 Mortgage Loans will be allocated on a pro rata basis to the
Class I-A-2 Certificates and to Component 2X of the Class I-X Certificates to
the extent of the Subgroup I-2 Allocation Fraction thereof. The interest portion
of Realized Losses for the Group II Mortgage Loans will be allocated
sequentially, in the following order, to the Class II-B-6, Class II-B-5, Class
II-B-4, Class II-B-3, Class II-B-2 and Class II-B-1 Certificates, and, following
the Cross-Over Date relating to the Group II Certificates, the interest portion
of Realized Losses on the Loan Subgroup II-1, II-2 and II-3 Mortgage Loans, as
the case may be, will be allocated to the Class II-A-1, Class II-A-2 and Class
II-A-3 Certificates, respectively. Accrued Certificate Interest on the
Certificates and the Components of the Class I-X Certificates shall be
calculated on the basis of a 360-day year consisting of twelve 30-day months;
provided, that the initial Interest Accrual Period for the Adjustable Rate
Certificates is only 19 days. An additional 11 days of interest will be paid to
the Class I-X Certificates as an additional distribution on the first
Distribution Date. No Accrued Certificate Interest will be payable with respect
to any Class or Classes of Certificates after the Distribution Date on which the
outstanding Current Principal Amount of such Certificate or Certificates or
Notional Amount of a Component of such Certificate or Certificates has been
reduced to zero.
Adjustable Rate Certificates: The Class I-A-1 Certificates, Class I-M
Certificates, Class I-B-1 Certificates, Class I-B-2 Certificates and Class I-B-3
Certificates.
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 all amendments
hereof and supplements hereto.
Allocable Share: With respect to the Group I Senior Mezzanine
Certificates and each Class of Group I Subordinate Certificates:
(a) as to any Distribution Date and amounts distributable pursuant to
clauses (1) and (4) of the definition of Group I Senior Mezzanine and Group I
Subordinate Optimal Principal Amount, the fraction, expressed as a percentage,
the numerator of which is the Current Principal Amount of such Class and the
denominator of which is the aggregate Current Principal Amount of all Classes of
the Group I Senior Mezzanine Certificates and Group I Subordinate Certificates;
and
(b) as to any Distribution Date and amounts distributable pursuant to
clauses (2), (3), (5) and (6) of the definition of Group I Senior Mezzanine and
Group I Subordinate Optimal Principal Amount,
3
(1) for any Distribution Date on which the Group I
Senior Mezzanine Loss and Delinquency Test has been satisfied,
as to the Group I Senior Mezzanine Certificates and each Class
of Group I Subordinate Certificates (or, if the Current
Principal Amount of the Group I Senior Mezzanine Certificates
has been reduced to zero, the Class of Group I Subordinate
Certificates having the lowest numerical designation as to
which the Group I Class Prepayment Distribution Trigger shall
not be applicable) for which (x) the Group I Class Prepayment
Distribution Trigger has been satisfied on such Distribution
Date, the fraction, expressed as a percentage, the numerator
of which is the Current Principal Amount of such Class and the
denominator of which is the aggregate Current Principal Amount
of all such Classes of Group I Senior Mezzanine Certificates
and Group I Subordinate Certificates for which the Group I
Class Prepayment Distribution Trigger has been satisfied and
(y) the Group I Class Prepayment Distribution Trigger has not
been satisfied on such Distribution Date, 0%; provided that if
on a Distribution Date, the Current Principal Amount of the
Group I Senior Mezzanine Certificates or any Class of Group I
Subordinate Certificates for which the Group I Class
Prepayment Distribution Trigger was satisfied on such
Distribution Date is reduced to zero, any amounts distributed
pursuant to this clause (b)(1), to the extent of such Class's
remaining Allocable Share, shall be distributed to the Class
of Group I Subordinate Certificates having the lowest
numerical designation and to the Group I Subordinate
Certificates which satisfy the Group I Class Prepayment
Distribution Trigger in reduction of their respective Current
Principal Amounts, in the order of their numerical Class
designations; and
(2) for any Distribution Date on which the Group I
Senior Mezzanine Loss and Delinquency Test has not been
satisfied, as to the Group I Senior Mezzanine Certificates,
100%, and as to the Group I Subordinate Certificates, 0%;
provided that if on a Distribution Date, the Current Principal
Amount of the Group I Senior Mezzanine Certificates is reduced
to zero, any remaining amounts distributed pursuant to this
clause (b)(2) shall be distributed to the Classes of Group I
Subordinate Certificates which satisfy the Group I Class
Prepayment Distribution Trigger and to the Class of Group I
Subordinate Certificates having the lowest numerical
designation in reduction of their respective Current Principal
Amounts in the order of their numerical Class designations.
With respect to each Class of Group II Subordinate Certificates:
(c) as to any Distribution Date and amounts distributable pursuant to
clauses (1) and (4) of the definition of Group II Subordinate Optimal Principal
Amount, the fraction, expressed as a percentage, the numerator of which is the
Current Principal Amount of such Class and the denominator of which is the
aggregate Current Principal Amount of all Classes of the Group II Subordinate
Certificates; and
(d) as to any Distribution Date and amounts distributable pursuant to
clauses (2), (3), (5) and (6) of the definition of Group II Subordinate Optimal
Principal Amount,
4
(1) for any Distribution Date on which the Group II
Subordinate Loss and Delinquency Test has been satisfied, as
to each Class of the Group II Subordinate Certificates for
which (x) the Group II Class Prepayment Distribution Trigger
has been satisfied on such Distribution Date, the fraction,
expressed as a percentage, the numerator of which is the
Current Principal Amount of such Class and the denominator of
which is the aggregate Current Principal Amount of all such
Classes of Group II Subordinate Certificates for which the
Group II Class Prepayment Distribution Trigger has been
satisfied and (y) the Group II Class Prepayment Distribution
Trigger has not been satisfied on such Distribution Date, 0%;
provided that if on a Distribution Date, the Current Principal
Amount of any Class of Group II Subordinate Certificates for
which the Group II Class Prepayment Distribution Trigger was
satisfied on such Distribution Date is reduced to zero, any
amounts distributed pursuant to this clause (d)(1), to the
extent of such Class's remaining Allocable Share, shall be
distributed to the Class of Group II Subordinate Certificates
having the lowest numerical designation and to the Group II
Subordinate Certificates which satisfy the Group II Class
Prepayment Distribution Trigger in reduction of their
respective Current Principal Amounts, in the order of their
numerical Class designations; and
(2) for any Distribution Date on which the Group II
Subordinate Loss and Delinquency Test has not been satisfied,
any remaining amounts distributed pursuant to this clause
(d)(2) shall be distributed to the Classes of Group II
Subordinate Certificates which satisfy the Group II Class
Prepayment Distribution Trigger and to the Class of Group II
Subordinate Certificates having the lowest numerical
designation in reduction of their respective Current Principal
Amounts in the order of their numerical Class designations.
Applicable Credit Rating: For any long-term deposit or security, a
credit rating of AAA in the case of S&P and Aaa in the case of Xxxxx'x. For any
short-term deposit or security, a rating of A-l+ in the case of S&P and P-1 in
the case of Xxxxx'x.
Applicable State Law: For purposes of Section 9.12(d), the Applicable
State Law shall be (a) the law of the State of New York and (b) such other state
law whose applicability shall have been brought to the attention of the
Securities Administrator and the Trustee by either (i) an Opinion of Counsel
reasonably acceptable to the Securities Administrator and the Trustee delivered
to it by the Master Servicer or the Depositor, or (ii) written notice from the
appropriate taxing authority as to the applicability of such state law.
Appraised Value: For any Mortgaged Property related to a Mortgage Loan,
the amount set forth as the appraised value of such Mortgaged Property in an
appraisal made for the mortgage originator in connection with its origination of
the related Mortgage Loan.
Assignment Agreements: The agreements attached hereto as Exhibit I,
whereby the Assigned Loans (as defined therein) and the related Servicing
Agreements were assigned to the Trustee for the benefit of the
Certificateholders.
5
Assumed Final Distribution Date: October 19, 2034, or if such day is
not a Business Day, the next succeeding Business Day.
Available Funds: With respect to any Distribution Date, the sum of the
Group I Available Funds and the Group II Available Funds for such Distribution
Date.
Average Loss Severity Percentage: With respect to any Distribution Date
and each Loan Subgroup, the percentage equivalent of a fraction, the numerator
of which is the sum of the Loss Severity Percentages for each Mortgage Loan in
such Loan Subgroup which had a Realized Loss and the denominator of which is the
number of Mortgage Loans in the related Loan Subgroup which had Realized Losses.
Bank of America: Bank of America, N.A., or its successor in interest.
Bank of America AAR: That certain Assignment, Assumption and
Recognition Agreement, made and entered into as of August 31, 2004, among EMC,
the Trustee and Bank of America.
Bank of America Servicing Agreement: That certain Flow Mortgage Loan
Sale and Servicing Agreement, dated as of March 1, 2003, by and between EMC and
Bank of America, as attached hereto as Exhibit H-8, as modified pursuant to the
Bank of America AAR.
Bankruptcy Code: The United States Bankruptcy Code, as amended, as
codified in 11 U.S.C. ss.ss.101-1330.
Bankruptcy Loss: With respect to any Mortgage Loan, any Deficient
Valuation or Debt Service Reduction related to such Mortgage Loan as reported by
the applicable Servicer to the Master Servicer.
Book-Entry Certificates: Initially, all Classes of Certificates other
than the Private Certificates and the Residual Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which the New York Stock Exchange or the Federal Reserve is closed or on
which banking institutions in New York City or in any of the jurisdictions in
which the Trustee, the Master Servicer, any Servicer or the Securities
Administrator is located are authorized or obligated by law or executive order
to be closed.
Calendar Quarter: January 1 through March 31, April 1 through June 30,
July 1 through September 30, or October 1 through December 31, as applicable.
Carryover Shortfall: With respect to the Class I-A-1, Class I-M, Class
I-B-1, Class I-B-2 and Class I-B-3 Certificates and any Distribution Date for
which the Pass-Through Rate for such Certificates is equal to the weighted
average of the Net Rates on the related Group I Mortgage Loans, the excess, if
any, of (x) Accrued Certificate Interest on the Class I-A-1, Class I-M, Class
I-B-1, Class I-B-2 or Class I-B-3 Certificates, as applicable, for such
Distribution Date, using the lesser of (a) LIBOR plus the related Margin, as
calculated for such Distribution Date, and (b) 11.00% per annum, over (y)
Accrued Certificate Interest on the Class I-A-1, Class I-M, Class I-
6
B-1, Class I-B-2 or Class I-B-3 Certificates, as applicable, for such
Distribution Date at the weighted average of the Net Rates on the related Group
I Mortgage Loans.
Carryover Shortfall Amount: With respect to the Class I-A-1, Class I-M,
Class I-B-1, Class I-B-2 and Class I-B-3 Certificates and each Distribution
Date, the sum of (a) the aggregate amount of Carryover Shortfall for such Class
on such Distribution Date which is not covered on such Distribution Date by
interest distributions otherwise payable to the Class I-X Certificates, plus (b)
any Carryover Shortfall Amount for such Class remaining unpaid from the
preceding Distribution Date, plus (c) one month's interest on the amount in
clause (b) (based on the number of days in the preceding Interest Accrual
Period) at a rate equal to the lesser of (i) LIBOR plus the related Margin for
such Distribution Date and (ii) 11.00% per annum.
Carryover Shortfall Reserve Fund: An "outside reserve fund" within the
meaning of Treasury regulation Section 1.860G-2(h), which is not an asset of any
REMIC, ownership of which is evidenced by the Class I-X Certificates, and which
is established and maintained pursuant to Section 4.04.
Certificate: Any mortgage pass-through certificate evidencing a
beneficial ownership interest in the Trust Fund signed by the Trustee and
countersigned by the Certificate Registrar in substantially the forms annexed
hereto as Exhibits X-0, X-0, X-0, and A-4 with the blanks therein appropriately
completed.
Certificate Group: With respect to Loan Group I, the Group I Senior
Certificates, the Class I-X Certificates, the Group I Senior Mezzanine
Certificates and the Group I Subordinate Certificates. With regard to Loan Group
II, the Group II Senior Certificates and the Group II Subordinate Certificates.
Certificate Owner: Any Person who is the beneficial owner of a
Certificate registered in the name of the Depository or its nominee.
Certificate Register: The register maintained pursuant to Section 5.02.
Certificate Registrar: The Securities Administrator or any successor
certificate registrar appointed hereunder.
Certificate Registrar Office: The office of the Certificate Registrar
located at Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000,
Attention: XXXX XX Series 2004-AR5.
Certificate Subgroup: The Class I-A-1 Certificates, the Class I-A-2
Certificates, the Class II-A-1 Certificates, the Class II-A-2 Certificates and
the Class II-A-3 Certificates, as applicable.
Certificateholder: A Holder of a Certificate.
Class: With respect to the Certificates, X-X-0, X-X-0, XX-X-0, XX-X-0,
XX-X-0, I-X, R-I, R-II, R-III, I-M, I-B-1, I-B-2, I-B-3, I-B-4, X-X-0, X-X-0,
XX-X-0, XX-X-0, XX-X-0, XX-X-0, XX-X-0 and II-B-6.
7
Class R Certificates: The Class R-I, Class R-II and Class R-III
Certificates.
Class R-I Certificate: Any one of the Class R-I Certificates executed
by the Trustee and authenticated by the Certificate Registrar substantially in
the form annexed hereto as Exhibit A-4 and evidencing an interest designated as
a "residual interest" in REMIC I for purposes of the REMIC Provisions.
Class R-II Certificate: Any one of the Class R-II Certificates executed
by the Trustee and authenticated by the Certificate Registrar substantially in
the form annexed hereto as Exhibit A-4 and evidencing an interest designated as
a "residual interest" in REMIC II for purposes of the REMIC Provisions.
Class R-III Certificate: Any one of the Class R-III Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit A-4 and evidencing an
interest designated as a "residual interest" in REMIC III for purposes of the
REMIC Provisions.
Closing Date: August 31, 2004.
Code: The Internal Revenue Code of 1986, as amended.
Combined Loan-to-Value Ratio: The fraction, expressed as a percentage,
the numerator of which is the sum of the original principal balance of the
related Mortgage Loan at the date of origination and the principal balance of
the related secondary financing and the denominator of which is the lesser of
the selling price of the Mortgaged Property and its Appraised Value.
Commission: The United States Securities and Exchange Commission.
Compensating Interest Payment: As defined in Section 6.06.
Component: With respect to the Class I-X Certificates, Component 1X and
Component 2X, as applicable.
Component 1X: Component 1X of the Class I-X Certificates.
Component 1X Distribution Percentage The percentage equal to (i) the
Notional Amount of Component 1X immediately prior to the first Distribution Date
divided by (ii) the sum of the Notional Amount of Component 1X and the Notional
Amount of Component 2X immediately prior to that Distribution Date.
Component 2X: Component 2X of the Class I-X Certificates.
Component 2X Distribution Percentage: The percentage equal to (i) the
Notional Amount of Component 2X immediately prior to the first Distribution Date
divided by (ii) the sum of the Notional Amount of Component 1X and the Notional
Amount of Component 2X immediately prior to that Distribution Date.
8
Corporate Trust Office: The office of the Trustee at which at any
particular time its corporate trust business is administered, which office, at
the date of the execution of this Agreement, is located at 0 Xxx Xxxx Xxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Institutional Trust Services/
Global Debt, SAMI Series II 2004-AR5.
Corresponding Certificate: With respect to (i) REMIC II Regular
Interest I-A-1, (ii) REMIC II Regular Interest I-A-2, (iii) REMIC II Regular
Interest I-M, (iv) REMIC II Regular Interest I-B-1, (v) REMIC II Regular
Interest I-B-2, (vi) REMIC II Regular Interest I-B-3, (vii) REMIC II Regular
Interest I-B-4, (viii) REMIC II Regular Interest I-B-5, (ix) REMIC II Regular
Interest I-B-6, (x) REMIC II Regular Interest II-A-1, (xi) REMIC II Regular
Interest II-A-2, (xii) REMIC II Regular Interest II-A-3,(xiii) REMIC II Regular
Interest II-B-1, (xiv) REMIC II Regular Interest II-B-2, (xv) REMIC II Regular
Interest II-B-3, (xvi) REMIC II Regular Interest II-B-4,(xvii) REMIC II Regular
Interest II-B-5, (xviii) REMIC II Regular Interest II-B-6, and (xix) REMIC II
Regular Interest MT-R, (i) the Class I-A-1 Certificates, (ii) the Class I-A-2
Certificates, (iii) the Class I-M Certificates, (iv) the Class I-B-1
Certificates, (v) the Class I-B-2 Certificates, (vi) the Class I-B-3
Certificates, (vii) the Class I-B-4 Certificates, (viii) the Class I-B-5
Certificates, (ix) the Class I-B-6 Certificates, (x) the Class II-A-1
Certificates, (xi) the Class II-A-2 Certificates, (xii) the Class II-A-3
Certificates, (xiii) the Class II-B-1 Certificates, (xiv) the Class II-B-2
Certificates, (xv) the Class II-B-3 Certificates, (xvi) the Class II-B-4
Certificates, (xvii) the Class II-B-5 Certificates, (xviii) the Class II-B-6
Certificates, and (xix) the Class R-III Certificates, respectively. With respect
to (i) REMIC I Regular Interests I-1A, I-1B and I-ZZZ, (ii) REMIC I Regular
Interests I-2A, I-2B and I-ZZZ, (iii) REMIC I Regular Interest I-ZZZ, (iv) REMIC
I Regular Interests II-1A, II-1B and II-ZZZ, (v) REMIC I Regular Interests
II-2A, II-2B and II-ZZZ, (vi) REMIC I Regular Interests II-3A, II-3B and II-ZZZ,
and (vii) REMIC I Regular Interest II-ZZZ, (i) REMIC II Regular Interest I-A-1,
(ii) REMIC II Regular Interest I-A-2, (iii) REMIC II Regular Interests I-M,
X-X-0, X-X-0, X-X-0, X-X-0, X-X-0 and I-B-6, (iv) REMIC II Regular Interest
II-A-1, (v) REMIC II Regular Interest II-A-2, (vi) REMIC II Regular Interest
II-A-3, and (vii) REMIC II Regular Interests XX-X-0, XX-X-0, XX-X-0, XX-X-0,
XX-X-0 and II-B-6.
Countrywide: Countrywide Home Loans Servicing L.P.
Countrywide Servicing Agreement - That certain Seller's Warranties and
Servicing Agreement, dated as of September 1, 2002, by and between EMC, as
purchaser, and Countrywide Home Loans, Inc., as seller and servicer, as amended
pursuant to that certain Amendment Number One, dated as of January 1, 2003, by
and between EMC and Countrywide, collectively as attached hereto as Exhibit H-5,
as modified pursuant to that certain Assignment, Assumption and Recognition
Agreement, made and entered into as of August 31, 2004, among EMC, the Trustee,
Countrywide Home Loans, Inc. and Countrywide.
Cross-Over Date: With respect to the Group I Certificates, the first
Distribution Date on which the aggregate Current Principal Amount of the Group I
Senior Mezzanine Certificates and Group I Subordinate Certificates has been
reduced to zero (after giving effect to all distributions on such Distribution
Date). With respect to the Group II Certificates, the first Distribution Date on
which the aggregate Current Principal Amount of the Group II Subordinate
Certificates has been reduced to zero (after giving effect to all distributions
on such Distribution Date).
9
Current Principal Amount: With respect to any Certificate (other than
an Interest Only Certificate) as of any Distribution Date, an amount equal to
the initial principal amount of such Certificate on the Closing Date plus the
Deferred Interest, if any, allocated thereto for each Distribution Date prior to
or coinciding with such Distribution Date plus, in the case of a Group I Senior
Mezzanine Certificate or a Subordinate Certificate, any Subsequent Recoveries
added to the Current Principal Amount of such Certificate pursuant to Section
6.02(h) hereof, as reduced by (i) all amounts distributed on previous
Distribution Dates on such Certificate with respect to principal, (ii) the
principal portion of all Realized Losses allocated prior to such Distribution
Date to such Certificate, taking account of its applicable Loss Allocation
Limitation, (iii) in the case of a Group I Senior Mezzanine Certificate, such
Certificate's pro rata share, if any, of the applicable Group I Senior Mezzanine
Certificate Writedown Amount for previous Distribution Dates and (iv) in the
case of a Subordinate Certificate, such Certificate's pro rata share, if any, of
the applicable Group I or Group II Subordinate Certificate Writedown Amount for
previous Distribution Dates. With respect to any Class of Certificates (other
than the Interest Only Certificates), the Current Principal Amount thereof will
equal the sum of the Current Principal Amounts of all Certificates in such
Class. Notwithstanding the foregoing, solely for purposes of giving consents,
directions, waivers, approvals, requests and notices, the Class R-I, Class R-II
and Class R-III Certificates after the Distribution Date on which they each
receive the distribution of the last dollar of their respective original
principal amount shall be deemed to have Current Principal Amounts equal to
their respective Current Principal Amounts on the day immediately preceding such
Distribution Date.
Custodial Agreement: An agreement, dated as of the Closing Date, among
the Depositor, the Master Servicer, the Trustee and the Custodian, in
substantially the form of Exhibit G hereto.
Custodian: Xxxxx Fargo Bank, National Association, or any successor
custodian appointed pursuant to the provisions hereof and of the Custodial
Agreement. Cut-off Date: August 1, 2004.
Cut-off Date Balance: $1,252,584,877.
Debt Service Reduction: Any reduction of the Scheduled Payments which a
Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of any
proceeding under the Bankruptcy Code or any other similar state law or other
proceeding.
Deferred Interest: With respect to a Group II Mortgage Loan and any
date of determination means the amount, if any, by which the Mortgage Loan
Accrued Interest for such Due Date exceeds the Monthly Payment for such Due Date
and which amount, pursuant to the terms of the related Mortgage Note, is added
to the principal balance of the related Group II Mortgage Loan.
Deficient Valuation: With respect to any Mortgage Loan, a valuation of
the Mortgaged Property by a court of competent jurisdiction in an amount less
than the then-outstanding indebtedness under such Mortgage Loan secured by such
Mortgage Property, which valuation results from a proceeding initiated under the
Bankruptcy Code or any other similar state law or other proceeding.
10
Deposit Amount: The amount of $150.00 deposited by the Depositor on the
Closing Date into the Distribution Account.
Depositor: Structured Asset Mortgage Investments II Inc., a Delaware
corporation, or its successors in interest.
Depository: The Depository Trust Company, the nominee of which is Cede
& Co., or any successor thereto.
Depository Agreement: The meaning specified in Subsection 5.01(a)
hereof.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Designated Depository Institution: A depository institution (commercial
bank, federal savings bank, mutual savings bank or savings and loan association)
or trust company (which may include the Trustee), the deposits of which are
fully insured by the FDIC to the extent provided by law.
Determination Date: With respect to any Distribution Date and each
Mortgage Loan, the Determination Date as defined in the related Servicing
Agreement.
Disqualified Organization: Any of the following: (i) the United States,
any State or political subdivision thereof, any possession of the United States,
or any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for Xxxxxxx Mac or any successor thereto, a majority of its
board of directors is not selected by such governmental unit), (ii) any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the Code, (v) any
Person with respect to which income on any Residual Certificate is attributable
to a foreign permanent establishment or fixed base, within the meaning of an
applicable income tax treaty, of such Person or any other Person, (vi) any
Person that does not satisfy the requirements of United States Treasury
Department Regulation Section 1.860E-1(c) with respect to a transfer of a
noneconomic residual interest, as defined therein, or (vii) any other Person so
designated by the Trustee and the Certificate Registrar based upon an Opinion of
Counsel that the holding of an ownership interest in a Residual Certificate by
such Person may cause any REMIC contained in the Trust or any Person having an
ownership interest in the Residual Certificate (other than such Person) to incur
a liability for any federal tax imposed under the Code that would not otherwise
be imposed but for the transfer of an ownership interest in a Residual
Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
11
Distribution Account: The trust account or accounts created and
maintained pursuant to Section 4.02, which shall be denominated "Xxxxx Fargo
Bank, National Association, as Paying Agent, for the benefit of the registered
holders of Structured Asset Mortgage Investments II Trust 2004-AR5, Mortgage
Pass-Through Certificates, Series 2004-AR5 - Distribution Account," and which
shall be an Eligible Account.
Distribution Account Deposit Date: The Business Day prior to each
Distribution Date.
Distribution Date: The 19th day of any month, beginning in the month
immediately following the month of the Closing Date, or, if such 19th day is not
a Business Day, the Business Day immediately following.
DTC Custodian: The Securities Administrator, or its successors in
interest as custodian for the Depository.
Due Date: With respect to each Mortgage Loan, the date in each month on
which its Scheduled Payment is due, if such due date is the first day of a
month, and otherwise is deemed to be the first day of the following month or
such other date specified in the related Servicing Agreement.
Due Period: With respect to any Distribution Date and each Mortgage
Loan, the period commencing on the second day of the month immediately preceding
the month in which such Distribution Date occurs and ending at the close of
business on the first day of the month in which such Distribution Date occurs.
Eligible Account: Any of (i) a segregated account maintained with a
federal or state chartered depository institution (A) the short-term obligations
of which are rated A-1+ or better by S&P and P-1 by Xxxxx'x at the time of any
deposit therein or (B) insured by the FDIC (to the limits established by such
Corporation), the uninsured deposits in which account are otherwise secured such
that, as evidenced by an Opinion of Counsel (obtained by the Person requesting
that the account be held pursuant to this clause (i)(B)) delivered to the
Trustee prior to the establishment of such account, the Certificateholders will
have a claim with respect to the funds in such account and a perfected first
priority security interest against any collateral (which shall be limited to
Permitted Investments, each of which shall mature not later than the Business
Day immediately preceding the Distribution Date next following the date of
investment in such collateral, or the Distribution Date (if such Permitted
Investment is an obligation of the institution that maintains the Distribution
Account)) securing such funds that is superior to claims of any other depositors
or general creditors of the depository institution with which such account is
maintained, (ii) a segregated trust account or accounts maintained with a
federal or state chartered depository institution or trust company with trust
powers acting in its fiduciary capacity or (iii) a segregated account or
accounts of a depository institution acceptable to the Rating Agencies (as
evidenced in writing by the Rating Agencies that use of any such account as the
Distribution Account will not have an adverse effect on the then-current ratings
assigned to the Classes of the Certificates then rated by the respective Rating
Agencies). Eligible Accounts may bear interest.
EMC: EMC Mortgage Corporation, or its successor in interest.
12
EMC AAR: That certain Assignment, Assumption and Recognition Agreement,
made and entered into as of August 31, 2004, among the Depositor, the Trustee
and EMC.
EMC Servicing Agreement: That certain Servicing Agreement, dated as of
August 31, 2004, by and between the Depositor and EMC, as attached hereto as
Exhibit H-9.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Event of Default: An event of default described in Section 8.01.
EverHome: EverHome Mortgage Company (formerly known as Alliance
Mortgage Company), or its successor in interest.
EverHome AAR: That certain Assignment, Assumption and Recognition
Agreement, made and entered into as of August 31, 2004, among EMC, the Trustee
and EverHome.
EverHome Delinquency Percentage: The fraction (expressed as a
percentage, and calculated on a rolling prior-three-month average), the
numerator of which is the aggregate Scheduled Principal Balances of Mortgage
Loans serviced by EverHome that are 60 Days Delinquent as of such date of
determination, and the denominator of which is the aggregate Scheduled Principal
Balances of all Mortgage Loans serviced by EverHome as of the Closing Date.
EverHome Servicing Agreement: That certain Servicing Agreement, dated
as of March 31, 2003, by and between EMC and EverHome, as attached hereto as
Exhibit H-7, as modified pursuant to the EverHome AAR.
EverHome Subservicing Agreement: That certain Subservicing Agreement,
dated as of August 1, 2002, and attached hereto as Exhibit H-1, between EverHome
as servicer and EMC as owner, as modified pursuant to the Metrocities AAR, the
Xxxx Financial AAR, the Quicken AAR and the SouthStar AAR, respectively.
Excess Liquidation Proceeds: To the extent that such amount is not
required by law to be paid to the related Mortgagor, the amount, if any, by
which the sum of any Liquidation Proceeds with respect to a Liquidated Mortgage
Loan received in the calendar month in which such Mortgage Loan became a
Liquidated Mortgage Loan exceeds the sum of (i) the Scheduled Principal Balance
of such Liquidated Mortgage Loan plus (ii) accrued interest at the Mortgage
Interest Rate from the Due Date as to which interest was last paid or advanced
(and not reimbursed) to the related Certificateholders up to the Due Date
applicable to the Distribution Date immediately following the calendar month
during which such liquidation occurred plus (iii) related Liquidation Expenses.
Exchange Act: As defined in Section 3.18.
Xxxxxx Mae: Xxxxxx Xxx (also known as Federal National Mortgage
Association) or any successor thereto.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
13
Final Certification: The certification substantially in the form of
Exhibit Three to the Custodial Agreement.
First Distribution Date Distribution Amount: An amount equal to the
interest that would have accrued on the Adjustable Rate Certificates for the
period beginning on August 19, 2004 and ending on (but not including) the
Closing Date had interest accrued on such Certificates during such period. Such
amount shall be distributed from Group I Available Funds to the Class I-X
Certificates on the first Distribution Date.
First Horizon: First Horizon Home Loan Corporation or its successor in
interest.
First Tennessee: First Tennessee Mortgage Services, Inc.
First Tennessee AAR: That certain Assignment, Assumption and
Recognition Agreement, made and entered into as of August 31, 2004, among EMC,
the Trustee, First Tennessee as servicer, and First Horizon.
First Tennessee Servicing Agreement: That certain Purchase, Warranties
and Servicing Agreement, dated as of September 1, 2003, by and among EMC, as
purchaser, First Tennessee, as servicer, and First Horizon, as seller, as
amended pursuant to Amendment No. 1 thereto, dated as of May 14, 2004, by and
among EMC, First Tennessee and First Horizon, collectively as attached hereto as
Exhibit H-6, as modified pursuant to the First Tennessee AAR.
Fractional Undivided Interest: With respect to any Class of
Certificates, the fractional undivided interest evidenced by any Certificate of
such Class the numerator of which is the Current Principal Amount, or Notional
Amount in the case of the Interest Only Certificates, of such Certificate and
the denominator of which is the Current Principal Amount, or Notional Amount in
the case of the Interest Only Certificates, of such Class. With respect to the
Certificates in the aggregate, the fractional undivided interest evidenced by
(i) each class of Residual Certificates will be deemed to equal 0.25%, (ii) each
class of Interest Only Certificates will be deemed to equal 1.0% multiplied by a
fraction, the numerator of which is the Notional Amount of such Certificate and
the denominator of which is the aggregate Notional Amount of such respective
Class and (iii) a Certificate of any other Class will be deemed to equal 98.25%
multiplied by a fraction, the numerator of which is the Current Principal Amount
of such Certificate and the denominator of which is the aggregate Current
Principal Amount of all the Certificates; provided, however, the percentage in
clause (iii) above shall be increased by 1% upon the retirement of each Class of
Interest Only Certificates.
Xxxxxxx Mac: Xxxxxxx Mac (also known as Federal Home Loan Mortgage
Corporation), or any successor thereto.
Global Certificate: Any Private Certificate registered in the name of
the Depository or its nominee, beneficial interests in which are reflected on
the books of the Depository or on the books of a Person maintaining an account
with such Depository (directly or as an indirect participant in accordance with
the rules of such depository).
14
Greenpoint: Greenpoint Mortgage Funding, Inc.
Greenpoint Servicing Agreement: That certain Purchase, Warranties and
Servicing Agreement, dated as of September 1, 2003, between EMC and Greenpoint,
as attached hereto as Exhibit H-4, as modified pursuant to that certain
Assignment, Assumption and Recognition Agreement, made and entered into as of
August 31, 2004, among EMC, the Trustee and Greenpoint.
Gross Margin: As to each Mortgage Loan, 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 Minimum Lifetime Mortgage Rate, the Maximum
Lifetime Mortgage Rate and the Periodic Rate Cap) the Mortgage Interest Rate
from such Interest Adjustment Date until the next Interest Adjustment Date.
Group I Available Funds or Group II Available Funds: With respect to
any Distribution Date and each Loan Group or Subgroup, as the case may be, an
amount equal to the aggregate of the following amounts with respect to the
Mortgage Loans in the related Loan Group or Subgroup, as the case may be: (a)
all previously undistributed payments on account of principal (including the
principal portion of Scheduled Payments, Principal Prepayments and the principal
amount of Net Liquidation Proceeds and Subsequent Recoveries) and all previously
undistributed payments on account of interest received after the Cut-off Date
and on or prior to the related Determination Date, (b) any Monthly Advances and
Compensating Interest Payments by a Servicer or the Master Servicer (or by the
Trustee, as successor master servicer) with respect to such Distribution Date,
(c) any other miscellaneous amounts remitted by the Master Servicer or a
Servicer pursuant to the related Servicing Agreement, and (d) any amount
reimbursed by the Master Servicer for such Distribution Date in connection with
losses on investments of deposits in an account, except:
(i) all payments that were due on or before the Cut-off Date;
(ii) all Principal Prepayments and Liquidation Proceeds
received after the applicable Prepayment Period;
(iii) all payments, other than Principal Prepayments, that
represent early receipt of Scheduled Payments due on a date or dates
subsequent to the related Due Date;
(iv) amounts received on particular Mortgage Loans as late
payments of principal or interest and respecting which, and to the
extent that, there are any unreimbursed Monthly Advances;
(v) amounts representing Monthly Advances determined to be
Nonrecoverable Advances; and
(vi) any investment earnings on amounts on deposit in the
Distribution Account and amounts permitted to be withdrawn from the
Distribution Account pursuant to this Agreement, and amounts to pay the
Master Servicing Fee and the Servicing Fees or to reimburse any
Servicer, the Securities Administrator, the Trustee, the Custodian or
the
15
Master Servicer for fees and the related Loan Group's or Loan
Subgroup's (as the case may be) pro rata share of reimbursable expenses
as are due under the applicable Servicing Agreement, this Agreement or
the Custodial Agreement and have not been retained by or paid to such
Servicer, the Trustee, the Custodian or the Master Servicer.
The Group I Available Funds with respect to Loan Group I and each of
Loan Subgroups I-1 and I-2 and any Distribution Date will equal the portion of
Group I Available Funds allocable to such Loan Group and such Loan Subgroup,
respectively.
The Group II Available Funds with respect to Loan Group II and each of
Loan Subgroups II-1, II-2 and II-3 and any Distribution Date will equal the
portion of Group II Available Funds allocable to such Loan Group and such Loan
Subgroup, respectively.
Group I Certificates: The Group I Senior Certificates, the Interest
Only Certificates, the Group I Senior Mezzanine Certificates and the Group I
Subordinate Certificates.
Group I Class Prepayment Distribution Trigger: For the Group I Senior
Mezzanine Certificates or a Class of Group I Subordinate Certificates for any
Distribution Date, the Group I Class Prepayment Distribution Trigger is
satisfied if the fraction (expressed as a percentage), the numerator of which is
the aggregate Current Principal Amount of such Class and each Class of Group I
Certificates subordinate thereto, if any, and the denominator of which is the
Scheduled Principal Balance of all of the Group I Mortgage Loans as of the
related Due Date, equals or exceeds such percentage calculated as of the Closing
Date. If on any Distribution Date the Current Principal Amount of any Class of
Group I Senior Mezzanine Certificates and Group I Subordinate Certificates for
which the Group I Class Prepayment Distribution Trigger was satisfied on such
Distribution Date is reduced to zero, any amounts distributable to such Class
pursuant to clauses (2), (3), (5) and (6) of the definition of "Group I Senior
Mezzanine and Group I Subordinate Optimal Principal Amount," to the extent of
such Class' remaining Allocable Share, shall be distributed to the remaining
Class or Classes of Group I Senior Mezzanine Certificates and Group I
Subordinate Certificates in reduction of their respective Current Principal
Amounts, sequentially, in the order of their numerical class designations.
Group I Mortgage Loans: The Mortgage Loans identified as such on the
applicable Mortgage Loan Schedule.
Group I Senior Certificates: The Class I-A-1 Certificates and the Class
I-A-2 Certificates.
Group I Senior Mezzanine and Group I Subordinate Optimal Principal
Amount: With respect to the Group I Senior Mezzanine Certificates and the Group
I Subordinate Certificates and as to any Distribution Date, an amount equal to
the sum, without duplication, of the following from Loan Group I (but in no
event greater than the aggregate Current Principal Amount of the Group I Senior
Mezzanine Certificates and Group I Subordinate Certificates immediately prior to
such Distribution Date):
(1) the related Group I Senior Mezzanine and Group I
Subordinate Percentage of the principal portion of all Monthly
Payments due on each
16
Group I Mortgage Loan in the related Loan Subgroup on the
related Due Date, as specified in the amortization schedule at
the time applicable thereto (after adjustment for previous
Principal Prepayments but before any adjustment to such
amortization schedule by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace
period);
(2) the related Group I Senior Mezzanine and Group I
Subordinate Prepayment Percentage of the Scheduled Principal
Balance of each Group I Mortgage Loan in the related Loan
Subgroup that was the subject of a Principal Prepayment in
full during the related Prepayment Period;
(3) the related Group I Senior Mezzanine and Group I
Subordinate Prepayment Percentage of all partial prepayments
of principal received during the applicable Prepayment Period
for each Group I Mortgage Loan in the related Loan Subgroup;
(4) the excess, if any, of (A) all Net Liquidation
Proceeds with respect to the Group I Mortgage Loans allocable
to principal received during the related Prepayment Period
and all subsequent recoveries received during the related Due
Period in respect of each Liquidated Mortgage Loan in the
related Group I Loan Subgroup over (B) the sum of the amounts
distributable to the holders of the related Group I Senior
Certificates pursuant to clause (4) of the definition of
Group I Senior Optimal Principal Amount on such Distribution
Date;
(5) the related Group I Senior Mezzanine and Group I
Subordinate Prepayment Percentage of the sum of (a) the
Scheduled Principal Balance of each Group I Mortgage Loan or
related REO Property in the related Group I Loan Subgroup
which was repurchased by the Seller with respect to such
Distribution Date and (b) the difference, if any, between the
Scheduled Principal Balance of a Group I Mortgage Loan in the
related Loan Subgroup that has been replaced by the Seller
with a Substitute Mortgage Loan pursuant to Section 2.04 of
this Agreement or the Mortgage Loan Purchase Agreement with
respect to such Distribution Date over the Scheduled Principal
Balance of such Substitute Mortgage Loan; and
(6) on the Distribution Date on which the Current
Principal Amounts of the Group I Senior Certificates have all
been reduced to zero, 100% of any Group I Senior Optimal
Principal Amount.
After the aggregate Current Principal Amount of the Group I
Senior Mezzanine and Group I Subordinate Certificates has been reduced
to zero, the related Group I Senior Mezzanine and Group I Subordinate
Optimal Principal Amount shall be zero.
Group I Senior Mezzanine and Group I Subordinate Percentage: On any
Distribution Date and with respect to Loan Subgroup I-1 or I-2, as the case may
be, 100% minus the related Group I Senior Percentage for such Loan Subgroup.
17
Group I Senior Mezzanine and Group I Subordinate Prepayment Percentage:
For the Group I Senior Mezzanine Certificates and Group I Subordinate
Certificates and as of any Distribution Date and with respect to Loan Subgroup
I-1 or I-2, as the case may be, will equal 100% minus the related Group I Senior
Prepayment Percentage for such Loan Subgroup, except that on any Distribution
Date after the Current Principal Amount of a Class of the Group I Senior
Certificates has been reduced to zero, the related Group I Senior Mezzanine and
Group I Subordinate Prepayment Percentage for the Group I Senior Mezzanine
Certificates and Group I Subordinate Certificates with respect to such Loan
Subgroup will equal 100%.
Group I Senior Mezzanine Certificate Writedown Amount: As to any
Distribution Date on or after which the aggregate Current Principal Amount of
the Group I Subordinate Certificates has been reduced to zero, the amount by
which (a) the sum of the Current Principal Amounts of all of the Group I
Certificates other than the Interest Only Certificates (after giving effect to
the distribution of principal on the related Group I Mortgage Loans and the
allocation of applicable Realized Losses on the related Group I Mortgage Loans
in reduction on a pro rata basis of the Current Principal Amounts of such
Certificates on such Distribution Date) exceeds (b) the aggregate Scheduled
Principal Balance of the related Group I Mortgage Loans on the Due Date related
to such Distribution Date.
Group I Senior Mezzanine Certificates: The Class I-M Certificates.
Group I Senior Mezzanine Loss and Delinquency Test: On any Distribution
Date, the Group I Senior Mezzanine Loss and Delinquency Test is satisfied if, as
of the last day of the month preceding such Distribution Date, (A) the aggregate
Scheduled Principal Balance of the Group I Mortgage Loans delinquent 60 days or
more (including for this purpose any such Group I Mortgage Loans in foreclosure
and Group I Mortgage Loans with respect to which the related Mortgaged Property
has been acquired by the Trust), averaged over the last six months, as a
percentage of the aggregate Current Principal Amount of the Group I Senior
Mezzanine Certificates and Group I Subordinate Certificates does not exceed 50%;
and (B) cumulative Realized Losses on the Group I Mortgage Loans do not exceed
(a) 30% of the Original Group I Senior Mezzanine and Group I Subordinate
Principal Balance if such Distribution Date occurs between and including
September 2014 and August 2015, (b) 35% of the Original Group I Senior Mezzanine
and Group I Subordinate Principal Balance if such Distribution Date occurs
between and including September 2015 and August 2016, (c) 40% of the Original
Group I Senior Mezzanine and Group I Subordinate Principal Balance if such
Distribution Date occurs between and including September 2016 and August 2017,
(d) 45% of the Original Group I Senior Mezzanine and Group I Subordinate
Principal Balance if such Distribution Date occurs between and including
September 2017 and August 2018, and (e) 50% of the Original Group I Senior
Mezzanine and Group I Subordinate Principal Balance if such Distribution Date
occurs during or after September 19, 2018.
Group I Senior Optimal Principal Amount and Group II Senior Optimal
Principal Amount: With respect to each Distribution Date and each Class of the
Group I Senior Certificates and each Class of the Group II Senior Certificates,
respectively, an amount equal to the sum, without duplication, of the following
(but in no event greater than the aggregate Current
18
Principal Amounts of each Class of the Group I Senior Certificates or each Class
of the Group II Senior Certificates, as applicable, immediately prior to such
Distribution Date):
(1) the applicable Senior Percentage of of principal portion of
all monthly payments due on the Mortgage Loans in the related Loan
Subgroup on the related Due Date, as specified in the amortization
schedule at the time applicable thereto (after adjustments for
previous Principal Prepayments but before any adjustment to such
amortization schedule by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period);
(2) the applicable Senior Prepayment Percentage of the Scheduled
Principal Balance of each Mortgage Loan in the related Loan Subgroup
which was the subject of a Principal Prepayment in full received by
the Master Servicer during the related Prepayment Period;
(3) the applicable Senior Prepayment Percentage of all Principal
Prepayments in part received by the Master Servicer during the
related Prepayment Period with respect to each Mortgage Loan in the
related Loan Subgroup;
(4) the lesser of (a) the applicable Senior Prepayment
Percentage of the sum of (i) all Net Liquidation Proceeds allocable
to principal received in respect of each Mortgage Loan in the
related Loan Subgroup which became a Liquidated Mortgage Loan during
the related Prepayment Period (other than Mortgage Loans described
in the immediately following clause (ii)) and all Subsequent
Recoveries received in respect of each Liquidated Mortgage Loan in
the related Loan Subgroup during the related Due Period and (ii) the
Scheduled Principal Balance of each such Mortgage Loan in the
related Loan Subgroup purchased by an insurer from the Trustee
during the related Prepayment Period pursuant to the related Primary
Mortgage Insurance Policy, if any, or otherwise; and (b) the
applicable Senior Percentage of the sum of (i) the Scheduled
Principal Balance of each Mortgage Loan in the related Loan Subgroup
which became a Liquidated Mortgage Loan during the related
Prepayment Period (other than the Mortgage Loans described in the
immediately following clause (ii)) and all Subsequent Recoveries
received in respect of each Liquidated Mortgage Loan in the related
Loan Subgroup during the related Due Period and (ii) the Scheduled
Principal Balance of each such Mortgage Loan in the related Loan
Subgroup that was purchased by an insurer from the Trustee during
the related Prepayment Period pursuant to the related Primary
Mortgage Insurance Policy, if any or otherwise; and
(5) the applicable Senior Prepayment Percentage of the sum of (a)
the Scheduled Principal Balance of each Mortgage Loan in the related
Loan Subgroup which was repurchased by the Seller in connection with
such Distribution Date and (b) the excess, if any, of the Scheduled
Principal Balance of a Mortgage Loan
19
in the related Loan Subgroup that has been replaced by the Seller
with a Substitute Mortgage Loan pursuant to the Mortgage Loan
Purchase Agreement in connection with such Distribution Date over
the Scheduled Principal Balance of such Substitute Mortgage Loan.
Group I Senior Percentage: Initially, 92.00%. On any Distribution Date,
and with respect to each of Loan Subgroups I-1 and I-2, the lesser of (i) 100%
and (ii) the percentage (carried to six places rounded up) obtained by dividing
the aggregate Current Principal Amount of the Class I-A-1 or Class I-A-2
Certificates, as the case may be, relating to such Loan Subgroup immediately
preceding such Distribution Date by the aggregate Scheduled Principal Balance of
the Loan Subgroup I-1 or I-2 Mortgage Loans, respectively, as of the beginning
of the related Due Period.
Group I Senior Prepayment Percentage: On any Distribution Date
occurring during the periods set forth below and for a Class of the Group I
Senior Certificates, as follows:
Period (dates inclusive) Group I Senior Prepayment Percentage
--------------------------------------------------------------------------------
September 19, 2004 - August 19, 2014 100%
September 19, 2014 - August 19, 2015 Group I Senior Percentage for the
related Group I Senior Certificates
plus 70% of the Group I Senior
Mezzanine and Group I Subordinate
Percentage
September 19, 2015 - August 19, 2016 Group I Senior Percentage for the
related Group I Senior Certificates
plus 60% of the Group I Senior
Mezzanine and Group I Subordinate
Percentage
September 19, 2016 - August 19, 2017 Group I Senior Percentage for the
related Group I Senior Certificates
plus 40% of the Group I Senior
Mezzanine and Group I Subordinate
Percentage
September 19, 2017 - August 19, 2018 Group I Senior Percentage for the
related Group I Senior Certificates
plus 20% of the Group I Senior
Mezzanine and Group I Subordinate
Percentage
September 19, 2018 and thereafter Group I Senior Percentage for the
Group I Senior Certificates
In addition, no reduction of the Group I Senior Prepayment Percentage
for a Class of the Group I Senior Certificates shall occur on any Distribution
Date unless, as of the last day of the month preceding such Distribution Date,
(A) the aggregate Scheduled Principal Balance of the Group I Mortgage Loans
delinquent 60 days or more (including for this purpose any such Mortgage Loans
in foreclosure and Mortgage Loans with respect to which the related Mortgaged
Property has been acquired by the Trust), averaged over the last six months, as
a percentage of the sum of the aggregate Current Principal Amount of the Group I
Senior Mezzanine Certificates and the Group I Subordinate Certificates does not
exceed 50%; and (B) cumulative Realized
20
Losses on the Group I Mortgage Loans do not exceed (a) 30% of the Original Group
I Senior Mezzanine and Group I Subordinate Principal Balance if such
Distribution Date occurs between and including September 2014 and August 2015,
(b) 35% of the Original Group I Senior Mezzanine and Group I Subordinate
Principal Balance if such Distribution Date occurs between and including
September 2015 and August 2016, (c) 40% of the Original Group I Senior Mezzanine
and Group I Subordinate Principal Balance if such Distribution Date occurs
between and including September 2016 and August 2017, (d) 45% of the Original
Group I Senior Mezzanine and Group I Subordinate Principal Balance if such
Distribution Date occurs between and including September 2017 and August 2018,
and (e) 50% of the Original Group I Senior Mezzanine and Group I Subordinate
Principal Balance if such Distribution Date occurs during or after September
2018.
In addition, if on any Distribution Date the current weighted average
Group I Senior Mezzanine and Group I Subordinate Percentages is equal to or
greater than two times the initial weighted average Group I Senior Mezzanine and
Group I Subordinate Percentages and (a) the aggregate Scheduled Principal
Balance of the Group I Mortgage Loans delinquent 60 days or more (including for
this purpose any such Mortgage Loans in foreclosure and such Mortgage Loans with
respect to which the related Mortgaged Property has been acquired by the Trust),
averaged over the last six months, as a percentage of the sum of the aggregate
Current Principal Amount of the Group I Senior Mezzanine Certificates and Group
I Subordinate Certificates does not exceed 50% and (b)(i) on or prior to the
Distribution Date in August 2007 cumulative Realized Losses on the Group I
Mortgage Loans as of the end of the related Prepayment Period do not exceed 20%
of the Original Group I Senior Mezzanine and Group I Subordinate Principal
Balance and (ii) after the Distribution Date in August 2007 cumulative Realized
Losses on the Group I Mortgage Loans as of the end of the related Prepayment
Period do not exceed 30% of the Original Group I Senior Mezzanine and Group I
Subordinate Principal Balance, then, in each case, the Group I Senior Prepayment
Percentage for such Class of Group I Senior Certificates for such Distribution
Date will equal the Group I Senior Percentage for such Class of Group I Senior
Certificates for such Distribution Date; provided, however, if on such
Distribution Date the current weighted average Group I Senior Mezzanine and
Group I Subordinate Percentages is equal to or greater than two times the
initial weighted average Group I Senior Mezzanine and Group I Subordinate
Percentages on or prior to the Distribution Date in August 2007 and the above
delinquency and loss tests are met, then the Group I Senior Prepayment
Percentage for such Class of Group I Senior Certificates for such Distribution
Date will equal the Group I Senior Percentage for such Class of Group I Senior
Certificates plus 50% of the Group I Senior Mezzanine and Group I Subordinate
Percentages on such Distribution Date.
Notwithstanding the foregoing, if on any Distribution Date, the
percentage, the numerator of which is the aggregate Current Principal Amount of
a Class of Group I Senior Certificates immediately preceding such Distribution
Date, and the denominator of which is the Scheduled Principal Balance of the
Group I Mortgage Loans in the related Loan Subgroup as of the beginning of the
related Due Period, exceeds such percentage as of the Cut-off Date, then the
Group I Senior Prepayment Percentage with respect to such Class of the Group I
Senior Certificates for such Distribution Date will equal 100%.
21
Group I Subordinate Certificates: The Class I-B-1, Class I-B-2, Class
I-B-3, Class I-B-4, Class I-B-5 and Class I-B-6 Certificates.
Group I Subordinate Certificate Writedown Amount: See definition of
"Subordinate Certificate Writedown Amount" in this Article I. Group II
Certificates: The Group II Senior Certificates and the Group II Subordinate
Certificates.
Group II Available Funds: See the definition of "Group I Available
Funds" in this Article I.
Group II Class Prepayment Distribution Trigger: For a Class of Group II
Subordinate Certificates for any Distribution Date, the Group II Class
Prepayment Distribution Trigger is satisfied if the fraction (expressed as a
percentage), the numerator of which is the aggregate Current Principal Amount of
such Class and each Class of Group II Certificates subordinate thereto, if any,
and the denominator of which is the Scheduled Principal Balance of all of the
Group II Mortgage Loans as of the related Due Date, equals or exceeds such
percentage calculated as of the Closing Date. If on any Distribution Date the
Current Principal Amount of any Class or Classes of Group II Subordinate
Certificates for which the Group II Class Prepayment Distribution Trigger was
satisfied on such Distribution Date is reduced to zero, any amounts
distributable to such Class or Classes pursuant to clauses (2), (3), (5) and (6)
of the definition of "Group II Subordinate Optimal Principal Amount," to the
extent of such Class' or Classes' remaining Allocable Share, shall be
distributed to the remaining Class or Classes of Group II Subordinate
Certificates in reduction of their respective Current Principal Amounts,
sequentially, in the order of their numerical Class designations.
Group II Mortgage Loans: The Mortgage Loans identified as such on the
applicable Mortgage Loan Schedule.
Group II Senior Certificates: The Class II-A-1 Certificates, the Class
II-A-2 Certificates and the Class II-A-3 Certificates.
Group II Senior Optimal Principal Amount: See the definition of "Group
I Senior Optimal Principal Amount" in this Article I.
Group II Senior Percentage: Initially, 94.20%. On any Distribution
Date, and with respect to each of Loan Subgroups II-1, II-2 and II-3, the lesser
of (i) 100% and (ii) the percentage (carried to six places rounded up) obtained
by dividing the aggregate Current Principal Amount of the Class II-A-1, Class
II-A-2 or Class II-A-3 Certificates, as the case may be, relating to such
Subgroup immediately preceding such Distribution Date by the aggregate Scheduled
Principal Balance of the Loan Subgroup II-1, II-2 or II-3 Mortgage Loans,
respectively, as of the beginning of the related Due Period.
Group II Senior Prepayment Percentage: On any Distribution Date
occurring during the periods set forth below and for a Class of the Group II
Senior Certificates, as follows:
22
Period (dates inclusive) Group II Senior Prepayment Percentage
-------------------------------------------------------------------------------
September 19, 2004 - August 19, 2014 100%
September 19, 2014 - August 19, 2015 Group II Senior Percentage for the
related Group II Senior Certificates
plus 70% of the Group II Subordinate
Percentage
September 19, 2015 - August 19, 2016 Group II Senior Percentage for the
related Group II Senior Certificates
plus 60% of the Group II Subordinate
Percentage
September 19, 2016 - August 19, 2017 Group II Senior Percentage for the
related Group II Senior Certificates
plus 40% of the Group II Subordinate
Percentage
September 19, 2016 - August 19, 2018 Group II Senior Percentage for the
related Group II Senior Certificates
plus 20% of the Group II Subordinate
Percentage
September 19, 2018 and thereafter Group II Senior Percentage for the
related Group II Senior Certificates
In addition, no reduction of the Group II Senior Prepayment Percentage
for a Class of the Group II Senior Certificates shall occur on any Distribution
Date unless, as of the last day of the month preceding such Distribution Date,
(A) the aggregate Scheduled Principal Balance of the Group II Mortgage Loans
delinquent 60 days or more (including for this purpose any such Mortgage Loans
in foreclosure and Mortgage Loans with respect to which the related Mortgaged
Property has been acquired by the Trust), averaged over the last six months, as
a percentage of the sum of the aggregate Current Principal Amount of the Group
II Subordinate Certificates does not exceed 50%; and (B) cumulative Realized
Losses on the Group II Mortgage Loans do not exceed (a) 30% of the Original
Group II Subordinate Principal Balance if such Distribution Date occurs between
and including September 2014 and August 2015, (b) 35% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs between and
including September 2015 and August 2016, (c) 40% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs between and
including September 2016 and August 2017, (d) 45% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs between and
including September 2017 and August 2018, and (e) 50% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs during or after
September 2018.
In addition, if on any Distribution Date the current weighted average
Group II Subordinate Percentages is equal to or greater than two times the
initial weighted average Group II Subordinate Percentages, and (a) the aggregate
Scheduled Principal Balance of the Group II Mortgage Loans delinquent 60 days or
more (including for this purpose any such Mortgage Loans in foreclosure and such
Mortgage Loans with respect to which the related Mortgaged Property has been
acquired by the Trust), averaged over the last six months, as a percentage of
the sum of the aggregate Current Principal Amount of the Group II Subordinate
Certificates does not exceed 50% and (b)(i) on or prior to the Distribution Date
in August 2007 cumulative Realized Losses on the Group II Mortgage Loans as of
the end of the related Prepayment Period do not exceed 20% of the Original Group
II Subordinate Principal Balance and (ii) after the Distribution Date in August
2007 cumulative Realized Losses on the Group II Mortgage Loans as of the end of
the related Prepayment Period do not exceed 30% of the Original Group II
Subordinate Principal Balance, then, in each case, the Group II Senior
Prepayment Percentage for such Class of the Group II Senior Certificates for
such Distribution Date will equal the Group II Senior Percentage for such Class
of the Group II Senior Certificates for such Distribution Date; provided,
however, if on such Distribution Date the current weighted average Group II
Subordinate Percentages is equal to or greater than two times the initial
weighted average Group II Subordinate Percentages on or prior to the
Distribution Date in August 2007 and the above delinquency and loss tests are
met, then the Group II Senior Prepayment Percentage for such Class of the Group
II Senior Certificates for such Distribution Date will equal the Group II Senior
Percentage for such Class of the Group II Senior Certificates plus 50% of the
Group II Subordinate Percentages for such Distribution Date.
Notwithstanding the foregoing, if on any Distribution Date, the
percentage, the numerator of which is the aggregate Current Principal Amount of
a Class of the Group II Senior Certificates immediately preceding such
Distribution Date, and the denominator of which is the Scheduled Principal
Balance of the Group II Mortgage Loans in the related Loan Subgroup as of the
beginning of the related Due Period, exceeds such percentage as of the Cut-off
Date, then the Group II Senior Prepayment Percentage with respect to such Class
of the Group II Senior Certificates for such Distribution Date will equal 100%.
23
Group II Subordinate Certificate Writedown Amount: See the definition
of "Subordinate Certificate Writedown Amount" in this Article I.
Group II Subordinate Certificates: The Class II-B-1, Class II-B-2,
Class II-B-3, Class II-B-4, Class II-B-5 and Class II-B-6 Certificates.
Group II Subordinate Loss and Delinquency Test: On any Distribution
Date, the Group II Subordinate Loss and Delinquency Test is satisfied if, as of
the last day of the month preceding such Distribution Date, (A) the aggregate
Scheduled Principal Balance of the Group II Mortgage Loans delinquent 60 days or
more (including for this purpose any such Group II Mortgage Loans in foreclosure
and Group II Mortgage Loans with respect to which the related Mortgaged Property
has been acquired by the Trust), averaged over the last six months, as a
percentage of the aggregate Current Principal Amount of the Group II Subordinate
Certificates does not exceed 50%; and (B) cumulative Realized Losses on the
Group II Mortgage Loans do not exceed (a) 30% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs between and
including September 2014 and August 2015, (b) 35% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs between and
including September 2015 and August 2016, (c) 40% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs between and
including September 2016 and August 2017, (d) 45% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs between and
including September 2017 and August 2018, and (e) 50% of the Original Group II
Subordinate Principal Balance if such Distribution Date occurs during or after
September 19, 2018.
Group II Subordinate Optimal Principal Amount: With respect to the
Group II Subordinate Certificates and each Distribution Date will be an amount
equal to the sum of the following from Loan Group II (but in no event greater
than the aggregate Current Principal Amounts of the Group II Subordinate
Certificates immediately prior to such Distribution Date):
(1) the related Group II Subordinate Percentage of the principal
portion of all Monthly Payments due on each Group II Mortgage Loan
in the related Loan Subgroup on the related Due Date, as specified
in the amortization schedule at the time applicable thereto (after
adjustment for previous Principal Prepayments but before any
adjustment to such amortization schedule by reason of any bankruptcy
or similar proceeding or any moratorium or similar waiver or grace
period);
(2) the related Group II Subordinate Prepayment Percentage of
the Scheduled Principal Balance of each Group II Mortgage Loan in
the related Loan Subgroup which was the subject of a prepayment in
full received by the Master Servicer during the applicable
Prepayment Period;
(3) the related Group II Subordinate Prepayment Percentage of
all partial prepayments of principal received during the applicable
Prepayment Period for each Group II Mortgage Loan in the related
Loan Subgroup;
(4) the excess, if any, of (a) the Net Liquidation Proceeds
allocable to principal received during the related Prepayment Period
and all Subsequent
24
Recoveries received in respect of each Liquidated Mortgage Loan
during the related Due Period in respect of each Liquidated Mortgage
Loan in the related Group II Loan Subgroup over (b) the sum of the
amounts distributable to the holders of the related Group II Senior
Certificates pursuant to clause (4) of the definition of "Group II
Senior Optimal Principal Amount" on such Distribution Date;
(5) the related Group II Subordinate Prepayment Percentage of
the sum of (a) the Scheduled Principal Balance of each Mortgage Loan
or related REO Property in the related Group II Loan Subgroup which
was repurchased by the Seller in connection with such Distribution
Date and (b) the difference, if any, between the Scheduled Principal
Balance of a Group II Mortgage Loan in the related Loan Subgroup
that has been replaced by the Seller with a Substitute Mortgage Loan
pursuant to this Agreement or the Mortgage Loan Purchase Agreement
in connection with such Distribution Date and the Scheduled
Principal Balance of such Substitute Mortgage Loan; and
(6) on the Distribution Date on which the Current Principal
Amounts of the Group II Senior Certificates have all been reduced to
zero, 100% of any Group II Senior Optimal Principal Amount.
After the aggregate Current Principal Amount of the Group II
Subordinate Certificates has been reduced to zero, the related Group II
Subordinate Optimal Principal Amount will be zero.
Group II Subordinate Percentage: On any Distribution Date and with
respect to Loan Subgroup II-1, II-2 or II-3, as the case may be, 100% minus the
related Group II Senior Percentage for such Loan Subgroup.
Group II Subordinate Prepayment Percentage: For the Group II
Subordinate Certificates and as of any Distribution Date and with respect to
Loan Subgroup II-1, II-2 or II-3, as the case may be, will equal 100% minus the
related Group II Senior Prepayment Percentage for the Group II Senior
Certificates, except that on any Distribution Date after the Current Principal
Amount of a Class of the Group II Senior Certificates has been reduced to zero,
the related Group II Subordinate Prepayment Percentage for the Group II
Subordinate Certificates with respect to such Loan Subgroup will equal 100%.
Holder: The Person in whose name a Certificate is registered in the
Certificate Register, except that, subject to Subsections 11.02(b) and 11.05(e),
solely for the purpose of giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Depositor, the Master Servicer or the
Trustee or any Affiliate thereof shall be deemed not to be outstanding and the
Fractional Undivided Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Fractional Undivided
Interests necessary to effect any such consent has been obtained.
HomeBanc: HomeBanc Mortgage Corporation, or its successor in interest.
25
HomeBanc AAR: That certain Assignment, Assumption and Recognition
Agreement, made and entered into as of August 31, 2004, among EMC, the Trustee
and HomeBanc.
HomeBanc Delinquency Percentage: The fraction (expressed as a
percentage, and calculated on a rolling prior-three-month average), the
numerator of which is the aggregate current Scheduled Principal Balances of
Mortgage Loans serviced by HomeBanc that are 60 Days Delinquent as of such date
of determination, and the denominator of which is the aggregate Scheduled
Principal Balances of all Mortgage Loans serviced by HomeBanc as of the Closing
Date.
HomeBanc Servicing Agreement: That certain Purchase, Warranties and
Servicing Agreement, dated as of January 1, 2004, by and between HomeBanc and
EMC, attached hereto as Exhibit H-3, as modified pursuant to the HomeBanc AAR.
Indemnified Persons: The Trustee, the Master Servicer, the Custodian
and the Securities Administrator and its officers, directors, agents and
employees and any separate co-trustee and its officers, directors, agents and
employees.
Independent: When used with respect to any specified Person, this term
means that such Person (a) is in fact independent of the Depositor or the Master
Servicer and of any Affiliate of the Depositor or the Master Servicer, (b) does
not have any direct financial interest or any material indirect financial
interest in the Depositor or the Master Servicer or any Affiliate of the
Depositor or the Master Servicer and (c) is not connected with the Depositor or
the Master Servicer or any Affiliate of the Depositor or the Master Servicer as
an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
Index: The index, if any, specified in a Mortgage Note by reference to
which the related Mortgage Interest Rate will be adjusted from time to time.
Individual Certificate: Any Private Certificate registered in the name
of the Holder other than the Depository or its nominee.
Initial Certification: The certification substantially in the form of
Exhibit One to the Custodial Agreement.
Institutional Accredited Investor: Any Person meeting the requirements
of Rule 501(a)(l), (2), (3) or (7) of Regulation D under the Securities Act or
any entity all of the equity holders in which come within such paragraphs.
Insurance Policy: With respect to any Mortgage Loan, any standard
hazard insurance policy, flood insurance policy or title insurance policy.
Insurance Proceeds: Amounts paid by the insurer under any Insurance
Policy covering any Mortgage Loan or Mortgaged Property, other than amounts
required to be paid over to the Mortgagor pursuant to law or the related
Mortgage Note or Security Instrument, and other than amounts used to repair or
restore the Mortgaged Property or to reimburse insured expenses.
26
Interest Accrual Period: With respect to each Distribution Date, for
each Class of Certificates (other than the Adjustable Rate Certificates), the
calendar month preceding the month in which such Distribution Date occurs. With
respect to each Distribution Date and the Adjustable Rate Certificates, the
period commencing on the 19th day of the preceding calendar month (or in the
case of the first Distribution Date, the Closing Date), to the 18th day of the
month of that Distribution Date. The Residual Certificates will not bear
interest.
Interest Adjustment Date: With respect to a Mortgage Loan, the date, if
any, specified in the related Mortgage Note on which the Mortgage Interest Rate
is subject to adjustment.
Interest Determination Date: With respect to each Distribution Date,
the second LIBOR Business Day immediately preceding the commencement of the
related Interest Accrual Period for the Adjustable Rate Certificates.
Interest Only Certificates: The Class I-X Certificates.
Interest Shortfall: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
Principal Prepayment or constitutes a Relief Act Mortgage Loan, an amount
determined as follows:
(a) Partial Principal Prepayments received during the relevant
Prepayment Period: The difference between (i) one month's interest at the
applicable Net Rate on the amount of such prepayment and (ii) the amount of
interest for the calendar month of such prepayment (adjusted to the applicable
Net Rate) received at the time of such prepayment;
(b) Principal Prepayments in full received during the relevant
Prepayment Period: The difference between (i) one month's interest at the
applicable Net Rate on the Scheduled Principal Balance of such Mortgage Loan
immediately prior to such prepayment and (ii) the amount of interest for the
calendar month of such prepayment (adjusted to the applicable Net Rate) received
at the time of such prepayment; and
(c) Relief Act Mortgage Loans: As to any Relief Act Mortgage Loan, the
excess of (i) 30 days' interest (or, in the case of a Principal Prepayment in
full, interest to the date of prepayment) on the Scheduled Principal Balance
thereof (or, in the case of a Principal Prepayment in part, on the amount so
prepaid) at the related Net Rate over (ii) 30 days' interest (or, in the case of
a Principal Prepayment in full, interest to the date of prepayment) on such
Scheduled Principal Balance (or, in the case of a Principal Prepayment in part,
on the amount so prepaid) at the Net Rate required to be paid by the Mortgagor
as limited by application of the Relief Act or similar state laws.
Interim Certification: The certification substantially in the form of
Exhibit Two to the Custodial Agreement.
Investment Letter: The letter to be furnished by each Institutional
Accredited Investor which purchases any of the Private Certificates in
connection with such purchase, substantially in the form set forth as Exhibit
F-1 hereto.
27
LIBOR: With respect to any Distribution Date, the arithmetic mean of
the London interbank offered rate quotations for one-month U.S. dollar deposits,
expressed on a per annum basis, determined in accordance with Section 1.02.
LIBOR Business Day: A day on which banks are open for dealing in
foreign currency and exchange in London, England and New York City.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
related Servicer has determined that all amounts it expects to recover from or
on account of such Mortgage Loan have been recovered.
Liquidation Date: With respect to any Liquidated Mortgage Loan, the
date on which the related Servicer has certified that such Mortgage Loan has
become a Liquidated Mortgage Loan.
Liquidation Expenses: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the related
Servicer or the Master Servicer in connection with the liquidation of such
Mortgage Loan and the related Mortgaged Property, such expenses including (a)
property protection expenses, (b) property sales expenses, (c) foreclosure and
sale costs, including court costs and reasonable attorneys' fees, and (d)
similar expenses reasonably paid or incurred in connection with the liquidation
of a Mortgage Loan.
Liquidation Proceeds: Amounts received by the related Servicer in
connection with the liquidation of a defaulted Mortgage Loan, whether through
trustee's sale, foreclosure sale, Insurance Proceeds, condemnation proceeds or
otherwise.
Loan Group: Loan Group I or Loan Group II, as applicable.
Loan Group I: The group of Mortgage Loans designated as belonging to
Loan Group I on the Mortgage Loan Schedule.
Loan Group II: The group of Mortgage Loans designated as belonging to
Loan Group II on the Mortgage Loan Schedule.
Loan Subgroup: Loan Subgroup I-1, I-2, II-1, II-2 or II-3. as
applicable.
Loan Subgroup I-1 Mortgage Loans: The Mortgage Loans identified as such
on the Mortgage Loan Schedule.
Loan Subgroup I-2 Mortgage Loans: The Mortgage Loans identified as such
on the Mortgage Loan Schedule.
Loan Subgroup II-1 Mortgage Loans: The Mortgage Loans identified as
such on the Mortgage Loan Schedule.
Loan Subgroup II-2 Mortgage Loans: The Mortgage Loans identified as
such on the Mortgage Loan Schedule.
28
Loan Subgroup II-3 Mortgage Loans: The Mortgage Loans identified as
such on the Mortgage Loan Schedule.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the principal balance of
the related Mortgage Loan at origination and the denominator of which is the
Original Value of the related Mortgaged Property.
Loss Allocation Limitation: The meaning specified in Section 6.02(c)
hereof.
Loss Severity Percentage: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the amount of
Realized Losses incurred on a Mortgage Loan and the denominator of which is the
Scheduled Principal Balance of such Mortgage Loan immediately prior to the
liquidation of such Mortgage Loan.
Lost Notes: The original Mortgage Notes that have been lost, as
indicated on the Mortgage Loan Schedule.
Margin: With respect to the Class I-A-1 Certificates, initially 0.330%
per annum, and starting on the first Distribution Date after the first possible
Optional Termination Date and on each Distribution Date thereafter, 0.660% per
annum. With respect to the Class I-M Certificates, initially 0.450% per annum,
and starting on the first Distribution Date after the first possible Optional
Termination Date and on each Distribution Date thereafter, 0.675% per annum.
With respect to the Class I-B-1 Certificates, initially 0.600% per annum, and
starting on the first Distribution Date after the first possible Optional
Termination Date and on each Distribution Date thereafter, 0.900% per annum.
With respect to the Class I-B-2 Certificates, initially 1.200% per annum, and
starting on the first Distribution Date after the first possible Optional
Termination Date and on each Distribution Date thereafter, 1.800% per annum.
With respect to the Class I-B-3 Certificates, initially 1.500% per annum, and
starting on the first Distribution Date after the first possible Optional
Termination Date and on each Distribution Date thereafter, 2.250% per annum.
Master Servicer: As of the Closing Date, Xxxxx Fargo Bank, National
Association and, thereafter, its respective successors in interest who meet the
qualifications of a successor Master Servicer as set forth in this Agreement.
Master Servicer Certification: A written certification covering
servicing of the Mortgage Loans by all Servicers and signed by an officer of the
Master Servicer that complies with (i) the Xxxxxxxx-Xxxxx Act of 2002, as
amended from time to time, and (ii) the February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time, provided that if after the Closing Date
(a) the Xxxxxxxx-Xxxxx Act of 2002 is amended, (b) the Statement referred to in
clause (ii) is modified or superceded by any subsequent statement, rule or
regulation of the Commission or any statement of a division thereof, or (c) any
future releases, rules and regulations are published by the 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
29
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 Servicing Compensation: The meaning specified in Section 3.14.
Master Servicing Fee: The meaning specified in Section 3.14.
Master Servicing Fee Rate: For each Mortgage Loan, 0.0015% per annum.
Maximum Lifetime Mortgage Rate: The maximum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.
Metrocities: Metrocities Mortgage LLC or its successor in interest.
Metrocities AAR: That certain Assignment, Assumption and Recognition
Agreement made and entered into as of August 31, 2004, by and among EMC, the
Trustee, EverHome and Metrocities.
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: The minimum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.
MOM Loan: With respect to any Mortgage Loan, MERS acting as the
mortgagee of such Mortgage Loan, solely as nominee for the originator of such
Mortgage Loan and its successors and assigns, at the origination thereof, or as
nominee for any subsequent assignee of the originator pursuant to an assignment
of mortgage to MERS.
Monthly Advance: An advance of principal or interest required to be
made by a Servicer pursuant to the related Servicing Agreement or the Master
Servicer pursuant to Section 6.05; provided, that Monthly Advance shall not
include any amount in respect of Deferred Interest.
Monthly Payment: With respect to any Mortgage Loan and any month, the
scheduled payment or payments of principal and interest due during such month on
such Mortgage Loan which either is payable by a Mortgagor in such month under
the related Mortgage Note, or in the case of an REO Property, would otherwise
have been payable under the related Mortgage Note.
Moody's: Xxxxx'x Investors Service, Inc. or its successor in interest.
30
Mortgage File: The mortgage documents listed in Section 2.01(b)
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement or the Mortgage Loan
Purchase Agreement.
Mortgage Interest Rate: The annual rate at which interest accrues from
time to time on any Mortgage Loan pursuant to the related Mortgage Note, which
rate is equal to the "Mortgage Interest Rate" set forth with respect thereto on
the Mortgage Loan Schedule.
Mortgage Loan: A mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.04 and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule, including a mortgage loan the
property securing which has become an REO Property.
Mortgage Loan Accrued Interest: With respect to each Mortgage Loan and
each Due Date, the aggregate amount of interest accrued at the Mortgage Interest
Rate in respect of such Mortgage Loan since the preceding Due Date (or in the
case of the initial Due Date, since the Cut-off Date) to but not including such
Due Date with respect to which the Mortgage Loan Accrued Interest is being
calculated in accordance with the terms of such Mortgage Loan, after giving
effect to any previous Principal Prepayments, Deficient Valuation or Debt
Service Reduction in respect of such Mortgage Loan.
Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase Agreement,
dated as of August 31, 2004, between EMC, as seller, and Structured Asset
Mortgage Investments II Inc., as purchaser, and all amendments thereof and
supplements thereto, attached hereto as Exhibit J.
Mortgage Loan Schedule: The schedule attached hereto as Exhibit B with
respect to the Mortgage Loans, as amended from time to time to reflect the
repurchase or substitution of Mortgage Loans pursuant to this Agreement or the
Mortgage Loan Purchase Agreement.
Mortgage Note: The originally executed note or other evidence of the
indebtedness of a Mortgagor under the related Mortgage Loan.
Mortgaged Property: Land and improvements securing the indebtedness of
a Mortgagor under the related Mortgage Loan or, in the case of REO Property,
such REO Property.
Mortgagor: The obligor on a Mortgage Note.
Net Interest Shortfall: With respect to any Distribution Date, the
Interest Shortfall, if any, for such Distribution Date net of Compensating
Interest Payments made with respect to such Distribution Date.
Net Liquidation Proceeds: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of (i) Liquidation Expenses which are payable therefrom
to the related Servicer in accordance with the related Servicing Agreement or
this Agreement, (ii) unreimbursed advances by the related Servicer and Monthly
Advances made with respect to such Mortgage Loan and the related Mortgaged
Property, and (iii) any other related servicing advances reimbursable to the
related Servicer under the related Servicing Agreement.
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Net Rate: With respect to each Mortgage Loan, the Mortgage Interest
Rate in effect from time to time less the related Servicing Fee Rate and the
Master Servicing Fee, in each case expressed as per annum rate.
Nonrecoverable Advance: Any advance or Monthly Advance (i) which was
previously made or is proposed to be made by the Master Servicer, the Trustee
(as successor Master Servicer) or the related Servicer and (ii) which, in the
good faith judgment of the Master Servicer, the Trustee or the related Servicer,
as the case may be, will not or, in the case of a proposed advance or Monthly
Advance, would not, be ultimately recoverable by the Master Servicer, the
Trustee (as successor Master Servicer) or the related Servicer from Liquidation
Proceeds, Insurance Proceeds or future payments on the Mortgage Loan for which
such advance or Monthly Advance was made or is proposed to be made.
Notional Amount: The Notional Amount of the Class I-X Certificates is
equal to the sum of the Notional Amounts of Component 1X and Component 2X. On
any Distribution Date, the Notional Amount of Component 1X of the Class I-X
Certificates is equal to the Current Principal Amount of the Class I-A-1
Certificates. On any Distribution Date, the Notional Amount of Component 2X of
the Class I-X Certificates is equal to the aggregate Current Principal Amounts
of the Class I-M Certificates, the Class I-B-1 Certificates, the Class I-B-2
Certificates and the Class I-B-3 Certificates.
Offered Certificates: The Senior Certificates, the Residual
Certificates, the Group I Senior Mezzanine Certificates and the Offered
Subordinate Certificates.
Offered Subordinate Certificates: The Class I-B-1, Class I-B-2, Class
I-B-3, Class II-B-2, Class II-B-2 and Class II-B-3 Certificates.
Officer's Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President or
Assistant Vice President or other authorized officer of the Master Servicer or
the Depositor, as applicable, and delivered to the Trustee, as required by this
Agreement.
One-Month LIBOR: A per annum rate equal to the average of interbank
offered rates for one-month U.S. dollar-denominated deposits in the London
market based on quotations of major banks as published in The Wall Street
Journal and most recently available as of the time specified in the related
Mortgage Note.
Opinion of Counsel: A written opinion of counsel who is or are
acceptable to the Trustee and who, unless required to be Independent (an
"Opinion of Independent Counsel"), may be internal counsel for EMC, the Master
Servicer or the Depositor.
Optional Termination Date: Any Distribution Date on or after which the
Scheduled Principal Balance (before giving effect to distributions to be made on
such Distribution Date) of the Mortgage Loans is less than or equal to 10% of
the Cut-off Date Balance.
Original Group I Senior Mezzanine and Group I Subordinate Principal
Balance: The aggregate Current Principal Amount of the Group I Senior Mezzanine
Certificates and Group I Subordinate Certificates as of the Closing Date.
32
Original Group II Subordinate Principal Balance: The aggregate Current
Principal Amount of the Group II Subordinate Certificates as of the Closing
Date.
Original Value: The lesser of (i) the Appraised Value or (ii) the sales
price of a Mortgaged Property at the time of origination of a Mortgage Loan,
except if either clause (i) or clause (ii) is unavailable, then the other may be
used to determine the Original Value, or if both clauses (i) and (ii) are
unavailable, then Original Value may be determined from other sources reasonably
acceptable to the Depositor.
Outstanding Mortgage Loan: With respect to any Due Date, a Mortgage
Loan which, prior to such Due Date, was not the subject of a Principal
Prepayment in full, did not become a Liquidated Mortgage Loan and was not
purchased or replaced.
Outstanding Principal Balance: As of the time of any determination, the
principal balance of a Mortgage Loan remaining to be paid by the Mortgagor
(including accrued and unpaid interest thereon to the extent such interest
constitutes Deferred Interest and has been added to the principal balance of
such Mortgage Loan), or, in the case of an REO Property, the principal balance
of the related Mortgage Loan remaining to be paid by the Mortgagor at the time
such property was acquired by the Trust Fund (including accrued and unpaid
interest thereon to the extent such interest constitutes Deferred Interest and
has been added to the principal balance of such Mortgage Loan) less any Net
Liquidation Proceeds with respect thereto to the extent applied to principal.
Pass-Through Rate: As to each Class of Certificates and the REMIC I
Regular Interests and the REMIC II Regular Interests, the rate of interest
determined as provided with respect thereto, in Section 5.01(c). Any monthly
calculation of interest at a stated rate shall be based upon annual interest at
such rate divided by twelve.
Xxxx Financial: Xxxx Financial LLC, or its successor in interest.
Xxxx Financial AAR: That certain Assignment, Assumption and Recognition
Agreement, made and entered into as of August 31, 2004, among EMC, the Trustee,
EverHome and Xxxx Financial.
Paying Agent: The Securities Administrator or any successor paying
agent appointed hereunder.
Periodic Rate Cap: With respect to each Mortgage Loan, the maximum
adjustment that can be made to the Mortgage Interest Rate on each Interest
Adjustment Date in accordance with its terms, regardless of changes in the
applicable Index.
Permitted Investments: Any one or more of the following obligations or
securities held in the name of the Trustee for the benefit of the
Certificateholders:
(i) direct obligations of, and obligations the timely payment of
which are fully guaranteed by the United States of America or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America;
33
(ii) demand or time deposits, federal funds or bankers' acceptances
(which shall each have a maturity of not more than 90 days and, in the case of
bankers' acceptances, shall in no event have an original maturity of more than
365 days or a remaining maturity of more than 30 days) issued by any depository
institution or trust company incorporated under the laws of the United States of
America or any state thereof (including the Trustee or the Master Servicer or
its Affiliates acting in its commercial banking capacity) and subject to
supervision and examination by federal and/or state banking authorities,
provided that the commercial paper and/or the short-term debt rating and/or the
long-term unsecured debt obligations of such depository institution or trust
company at the time of such investment or contractual commitment providing for
such investment have the Applicable Credit Rating or better from each Rating
Agency;
(iii) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or guaranteed by
an agency or instrumentality of the United States of America, the obligations of
which are backed by the full faith and credit of the United States of America,
in either case entered into with a depository institution or trust company
(acting as principal) described in clause (ii)(a) above where the Trustee holds
the security therefor; provided that such repurchase obligations shall have a
remaining maturity of not more than 365 days;
(iv) securities bearing interest or sold at a discount issued by any
corporation (including the Trustee or the Master Servicer or its Affiliates)
incorporated under the laws of the United States of America or any state thereof
that have the Applicable Credit Rating or better from each Rating Agency at the
time of such investment or contractual commitment providing for such investment;
provided, however, that securities issued by any particular corporation will not
be Permitted Investments to the extent that investments therein will cause the
then outstanding principal amount of securities issued by such corporation and
held as part of the Trust to exceed 10% of the aggregate Outstanding Principal
Balances of all the Mortgage Loans and Permitted Investments held as part of the
Trust;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) having the
Applicable Credit Rating or better from each Rating Agency at the time of such
investment; provided, that such commercial paper shall have a remaining maturity
of not more than 365 days;
(vi) a Reinvestment Agreement issued by any bank, insurance company
or other corporation or entity;
(vii) any other demand, money market or time deposit, obligation,
security or investment as may be acceptable to each Rating Agency as evidenced
in writing by each Rating Agency to the Trustee; and
(viii) any money market or common trust fund rated AAAm or AAAm-G by
S&P and rated at least Aaa by Moody's, including any such fund for which the
Trustee or Master Servicer or any affiliate of the Trustee or Master Servicer
acts as a manager or an advisor;
34
provided, however, that no instrument or security shall be a Permitted
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par or if such
instrument or security is purchased at a price greater than par; provided,
further, that, if rated, any such obligation or security shall not have an "r"
highlighter affixed to its rating.
Permitted Transferee: Any Person other than a Disqualified Organization
or an "electing large partnership" (as defined by Section 775 of the Code).
Person: Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Physical Certificates: The Residual Certificates and the Private
Certificates.
Prepayment Charge: With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof.
Prepayment Period: With respect to any Mortgage Loan and any
Distribution Date, the calendar month immediately preceding the month in which
such Distribution Date occurs.
Primary Mortgage Insurance Policy: Any primary mortgage guaranty
insurance policy issued in connection with a Mortgage Loan which provides
compensation to a Mortgage Note holder in the event of default by the obligor
under such Mortgage Note or the related Security Instrument, if any, or any
replacement policy therefor through the related Interest Accrual Period for such
Class relating to a Distribution Date.
Principal Prepayment: Any payment (whether partial or full) or other
recovery of principal on a Mortgage Loan which is received in advance of its
scheduled Due Date to the extent that it is not accompanied by an amount as to
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment, including Insurance Proceeds
and Repurchase Proceeds, but excluding the principal portion of Net Liquidation
Proceeds received at the time a Mortgage Loan becomes a Liquidated Mortgage
Loan.
Private Certificates: Any Class I-B-4, Class I-B-5, Class I-B-6, Class
II-B-4, Class II-B-5 and Class II-B-6 Certificate.
Prospectus: The Prospectus, dated May 14, 2004, relating to the
offering of the Offered Certificates.
Prospectus Supplement: The Prospectus Supplement, dated August 27,
2004, relating to the offering of the Offered Certificates.
35
Protected Account: An account or accounts established and maintained
for the benefit of Certificateholders by each Servicer with respect to the
related Mortgage Loans and with respect to REO Property pursuant to the related
Servicing Agreement.
QIB: A Qualified Institutional Buyer as defined in Rule 144A
promulgated under the Securities Act.
Qualified Insurer: Any insurance company duly qualified as such under
the laws of the state or states in which the related Mortgaged Property or
Mortgaged Properties is or are located, duly authorized and licensed in such
state or states to transact the type of insurance business in which it is
engaged and approved as an insurer by the Master Servicer, so long as its
claims-paying ability is acceptable to the Rating Agencies for pass-through
certificates having the same rating as the Certificates rated by the Rating
Agencies as of the Closing Date.
Quicken: Quicken Home Loans Inc., or its successor in interest.
Quicken AAR: That certain Assignment, Assumption and Recognition
Agreement, made and entered into as of August 31, 2004, among EMC, the Trustee,
EverHome and Quicken.
Rating Agencies: S&P and Xxxxx'x.
Realized Loss: With respect to (i) a Mortgage Loan, a Bankruptcy Loss,
and (ii) a Liquidated Mortgage Loan, (x) the Outstanding Principal Balance of
such Liquidated Mortgage Loan plus accrued and unpaid interest thereon (to the
extent such interest does not constitute Deferred Interest that has been added
to the principal balance of such Mortgage Loan) at the Mortgage Interest Rate
through the last day of the month of such liquidation, less (y) the Net
Liquidation Proceeds with respect to such Liquidated Mortgage Loan and the
related Mortgaged Property. In addition, to the extent the Paying Agent receives
from the related Servicer Subsequent Recoveries with respect to any Mortgage
Loan, the amount of the Realized Loss with respect to that Mortgage Loan will be
reduced to the extent such recoveries are applied to reduce the Current
Principal Amount of any Class or Classes of Certificates on any Distribution
Date. As to any Mortgage Loan which has become the subject of a Deficient
Valuation, if the principal amount due under the related Mortgage Note has been
reduced, then "Realized Loss" is the difference between the principal balance of
such Mortgage Loan outstanding immediately prior to such Deficient Valuation and
the principal balance of such Mortgage Loan as reduced by the Deficient
Valuation.
Record Date: With respect to each Distribution Date and each Class of
Certificates (other than the Adjustable Rate Certificates), the close of
business on the last Business Day of the month next preceding the month in which
the related Distribution Date occurs. With respect to each Distribution Date and
the Adjustable Rate Certificates, the 18th day of the month of such Distribution
Date.
Reinvestment Agreements: One or more reinvestment agreements,
acceptable to the Rating Agencies, from a bank, insurance company or other
corporation or entity (including the Trustee).
Relief Act: The Servicemembers' Civil Relief Act or similar state law.
36
Relief Act Mortgage Loan: Any Mortgage Loan as to which the Scheduled
Payment thereof has been reduced due to the application of the Relief Act or
similar state laws.
REMIC: A real estate mortgage investment conduit, as defined in the
Code.
REMIC I: That group of assets contained in the Trust Fund designated as
a REMIC consisting of (i) the Mortgage Loans, (ii) the Protected Accounts, (iii)
any REO Property relating to the Mortgage Loans, (iv) the rights with respect to
the Servicing Agreements, (v) the rights with respect to the Assignment
Agreements, (vi) such funds or assets as from time to time are deposited in the
Distribution Account and belonging to the Trust Fund (exclusive of the Carryover
Shortfall Reserve Fund) and (vii) any proceeds of the foregoing.
REMIC I Interests: The REMIC I Regular Interests and the Class R-I
Certificates.
REMIC I Regular Interests: The REMIC I Regular Interests, with such
terms as described in Section 5.01(c).
REMIC II: That group of assets contained in the Trust Fund designated
as a REMIC consisting of the REMIC I Regular Interests.
REMIC II Interests: The REMIC II Regular Interests and the Class R-II
Certificates.
REMIC II Regular Interests: The REMIC II Regular Interests, with such
terms as described in Section 5.01(c).
REMIC I Subordinated Balance Ratio: The ratio among the Uncertified
Principal Balances of each of the REMIC I Regular Interests ending with the
designation "A", equal to the ratio between, with respect to each such REMIC I
Regular Interest, the excess of (x) the aggregate Scheduled Principal Balance of
the Mortgage Loans in the related Loan Subgroup over (y) the Current principal
Amount of the Senior Certificate in the related Loan Subgroup.
REMIC III: That group of assets contained in the Trust Fund designated
as a REMIC consisting of the REMIC II Regular Interests.
REMIC III Interests: The REMIC III Regular Certificates and the Class
R-III Certificates.
REMIC III Regular Certificates: The REMIC III Regular Interests, with
such terms as described in Section 5.01(c).
REMIC Opinion: An Opinion of Independent Counsel, to the effect that
the proposed action described therein would not, under the REMIC Provisions, (i)
cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC while any
regular interest in such REMIC is outstanding, (ii) result in a tax on
prohibited transactions with respect to any REMIC or (iii) constitute a taxable
contribution to any REMIC after the Startup Day.
REMIC Provisions: The provisions of the federal income tax law relating
to REMICs, which appear at Sections 860A through 860G of the Code, and related
provisions and regulations promulgated thereunder, as the foregoing may be in
effect from time to time.
REO Property: A Mortgaged Property acquired in the name of the Trustee,
for the benefit of Certificateholders, by foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
37
Repurchase Price: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased by the Seller pursuant
to the Mortgage Loan Purchase Agreement or Article II or Section 3.21 of this
Agreement, an amount equal to the sum of (i) (A) 100% of the Outstanding
Principal Balance of such Mortgage Loan as of the date of repurchase (or if the
related Mortgaged Property was acquired with respect thereto, 100% of the
Outstanding Principal Balance of such Mortgage Loan as of the date of the
acquisition), plus (B) accrued but unpaid interest on the Outstanding Principal
Balance of such Mortgage Loan at the related Mortgage Interest Rate, through and
including the last day of the month of repurchase, and reduced by (C) any
portion of the Master Servicing Compensation, Servicing Fee and Monthly Advances
relating to such Mortgage Loan and advances payable to the purchaser of such
Mortgage Loan, and (ii) any costs and damages incurred by the Trust in
connection with any violation of such Mortgage Loan of any predatory lending
laws.
Repurchase Proceeds: The Repurchase Price in connection with any
repurchase of a Mortgage Loan by the Seller or any cash deposit in connection
with the substitution of a Mortgage Loan.
Request for Release: A request for release in the form attached hereto
as Exhibit D.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement with respect to such Mortgage Loan.
Residual Certificates: Any of the Class R Certificates.
Responsible Officer: Any officer assigned to the Corporate Trust Office
(or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement, and any other officer
of the Trustee to whom a matter arising hereunder may be referred.
Rule 144A: Rule 144A promulgated under the Securities Act.
Rule 144A Certificate: The certificate to be furnished by each
purchaser of a Private Certificate (which is also a Physical Certificate) which
is a Qualified Institutional Buyer as defined under Rule 144A promulgated under
the Securities Act, substantially in the form set forth as Exhibit F-2 hereto.
S&P: Standard & Poor's Rating Service, a division of The XxXxxx-Xxxx
Companies, Inc., and its successors in interest.
Scheduled Payment: With respect to any Mortgage Loan and any month, the
scheduled payment or payments of principal and interest due during such month on
such Mortgage Loan which either is payable by a Mortgagor in such month under
the related Mortgage Note or, in the case of REO Property, would otherwise have
been payable under the related Mortgage Note.
Scheduled Principal: The principal portion of any Scheduled Payment.
38
Scheduled Principal Balance: With respect to any Mortgage Loan on any
Distribution Date, the unpaid principal balance of such Mortgage Loan as of the
close of business on the related Due Date (i.e., taking account of the principal
payment to be made on such Due Date and irrespective of any delinquency in its
payment), as specified in the amortization schedule at the time relating thereto
(before any adjustment to such amortization schedule by reason of any bankruptcy
or similar proceeding occurring after the Cut-off Date (other than a Deficient
Valuation) or any moratorium or similar waiver or grace period), plus any
Deferred Interest added to the principal balance of such Mortgage Loan pursuant
to the terms of the related Mortgage Note, less any Principal Prepayments
(including the principal portion of Net Liquidation Proceeds) received during or
prior to the immediately preceding Prepayment Period; provided that the
Scheduled Principal Balance of a Liquidated Mortgage Loan is zero.
Securities Act: The Securities Act of 1933, as amended.
Securities Administrator: Xxxxx Fargo Bank, National Association, or
its successor in interest, or any successor securities administrator appointed
as herein provided.
Securities Legend: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3)
IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE
SECURITIES ACT OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE AND THE CERTIFICATE REGISTRAR OF A
LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B) THE RECEIPT
BY THE TRUSTEE AND THE CERTIFICATE REGISTRAR OF SUCH OTHER EVIDENCE ACCEPTABLE
TO THE TRUSTEE AND THE CERTIFICATE REGISTRAR THAT SUCH REOFFER, RESALE, PLEDGE
OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS
OR IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED
STATES AND ANY OTHER APPLICABLE JURISDICTION. THIS CERTIFICATE MAY NOT BE
ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS
39
AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED [in the case of a Residual Certificate or a Private Certificate] UNLESS
THE OPINION OF COUNSEL REQUIRED BY SECTION 5.07 OF THE POOLING AND SERVICING
AGREEMENT IS PROVIDED [in the case of the Class I-B-4, Class I-B-5, Class I-B-6,
Class II-B-4, Class II-B-5 and Class I-B-6 Certificates]:, UNLESS THE TRANSFEREE
CERTIFIES OR REPRESENTS THAT THE PROPOSED TRANSFER AND HOLDING OF A CERTIFICATE
AND THE SERVICING, MANAGEMENT AND OPERATION OF THE TRUST AND ITS ASSETS: (I)
WILL NOT RESULT IN ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN
INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED
TO, PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, XXX 00-00, XXX 00-0, XXX
95-60 OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY
DUTIES ON THE PART OF THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE MASTER
SERVICER, ANY SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN
OWNER OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE EVIDENCED
BY A REPRESENTATION OR AN OPINION OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF
AN INSTITUTIONAL ACCREDITED INVESTOR."
Security Instrument: A written instrument creating a valid first lien
on a Mortgaged Property securing a Mortgage Note, which may be any applicable
form of mortgage, deed of trust, deed to secure debt or security deed, including
any riders or addenda thereto.
Seller: EMC Mortgage Corporation, as seller under the Mortgage Loan
Purchase Agreement.
Senior Certificates: The Group I Senior Certificates, the Group II
Senior Certificates and the Class I-X Certificates.
Senior Optimal Principal Amount: Group I Senior Optimal Principal
Amount or Group II Senior Optimal Principal Amount.
Senior Percentage: The Group I Senior Percentage or the Group II Senior
Percentage.
Senior Prepayment Percentage: The Group I Senior Prepayment Percentage
or the Group II Senior Prepayment Percentage.
Servicer: With respect to each Mortgage Loan, any of EverHome, EMC
Mortgage Corporation, Bank of America, Greenpoint, Countrywide, First Tennessee,
HomeBanc and SouthTrust, as set forth in the Mortgage Loan Schedule.
Servicer Remittance Date: With respect to each Mortgage Loan, the 18th
day of each month, or if such day is not a Business Day, the preceding Business
Day.
Servicing Agreement (s): The EverHome Subservicing Agreement, the
EverHome Servicing Agreement, the EMC Servicing Agreement, the Bank of America
Servicing Agreement, the SouthTrust Servicing Agreement, the Greenpoint
Servicing Agreement, the First Tennessee Servicing Agreement, the Countrywide
Servicing Agreement and the HomeBanc Servicing Agreement, as applicable.
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Servicing Fee: As to any Mortgage Loan and Distribution Date, an amount
equal to the product of (i) the Scheduled Principal Balance of such Mortgage
Loan as of the Due Date in the month preceding the month in which such
Distribution Date occurs and (ii) the applicable Servicing Fee Rate.
Servicing Fee Rate: As to any Mortgage Loan, a per annum rate
(including, as applicable, any additional servicing fees) as set forth in the
Mortgage Loan Schedule.
Servicing Officer: As defined in the related Servicing Agreement.
SouthStar: SouthStar Funding LLC and/or HomeStar Mortgage Services, LLC
and/or their respective successors in interest, as the case may be.
SouthStar AAR: That certain Assignment, Assumption and Recognition
Agreement, made and entered into as of August 31, 2004, among EMC, the Trustee,
EverHome and SouthStar.
SouthTrust: SouthTrust Mortgage Corporation or its successor in
interest.
SouthTrust Servicing Agreement: That certain Purchase, Warranties and
Servicing Agreement, dated as of November 1, 2002, between SouthTrust and EMC,
as amended pursuant to that certain Amendment No. 1, dated as of December 30,
2002, between SouthTrust and EMC, collectively as attached hereto as Exhibit
H-2, as modified pursuant to SouthTrust AAR.
Startup Day: August 31, 2004.
Subgroup I-1 Allocation Fraction: With respect to any Distribution
Date, the fraction equal to (x) the excess of (a) the aggregate Scheduled
Principal Balance of the Loan Subgroup I-1 Mortgage Loans over (b) the Current
Principal Amount of the Class I-A-1 Certificates, over (y) the excess of (a) the
aggregate Scheduled Principal Balance of the Group I Mortgage Loans over (b) the
aggregate Current Principal Amount of the Group I Senior Certificates.
Subgroup I-2 Allocation Fraction: With respect to any Distribution
Date, the fraction equal to (x) the excess of (a) the aggregate Scheduled
Principal Balance of the Loan Subgroup I-2 Mortgage Loans over (b) the Current
Principal Amount of the Class I-A-2 Certificates over (y) the excess of (a) the
aggregate Scheduled Principal Balance of the Group I Mortgage Loans over (b) the
aggregate Current Principal Amount of the Group I Senior Certificates.
Subordinate Certificate Writedown Amount: With respect to the Group I
or Group Subordinate Certificates, as applicable, the amount by which (a) the
sum of the Current Principal Amounts of all of the Group I or Group II
Certificates, as applicable (after giving effect to the distribution of
principal collections on the related Group I Mortgage Loans or Group II Mortgage
Loans, as applicable, and the allocation of applicable Realized Losses on the
related Group I Mortgage Loans or Group II Mortgage Loans, as applicable, in
reduction on a pro rata basis of the Current Principal Amounts of such
Certificates on such Distribution Date) exceeds (b) the
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aggregate Scheduled Principal Balances of the related Group I Mortgage Loans or
related Group II Mortgage Loans, as applicable, on the Due Date related to such
Distribution Date.
Subsequent Recoveries: As of any Distribution Date, amounts received
during the related Due Period by the related Servicer specifically related to a
Liquidated Mortgage Loan or disposition of an REO property prior to the related
Prepayment Period that result in a Realized Loss, after liquidation or
disposition of such Mortgage Loan.
Substitute Mortgage Loan: A mortgage loan tendered to the Trustee
pursuant to the related Servicing Agreement, the Mortgage Loan Purchase
Agreement or Section 2.04 of this Agreement, as applicable, in each case, (i)
which has an Outstanding Principal Balance not greater nor materially less than
the Mortgage Loan for which it is to be substituted; (ii) which has a Mortgage
Interest Rate and Net Rate not less than, and not materially greater than, such
Mortgage Loan; (iii) which has a maturity date not materially earlier or later
than such Mortgage Loan and not later than the latest maturity date of any
Mortgage Loan; (iv) which is of the same property type and occupancy type as
such Mortgage Loan; (v) which has a Loan-to-Value Ratio not greater than the
Loan-to-Value Ratio of such Mortgage Loan; (vi) which (to the extent applicable)
has a Combined Loan-to-Value Ratio not greater than the Combined Loan-to-Value
Ratio of such Mortgage Loan; (vii) which is current in payment of principal and
interest as of the date of substitution; (viii) as to which the payment terms do
not vary in any material respect from the payment terms of the Mortgage Loan for
which it is to be substituted; (ix) which has a Gross Margin, Periodic Rate Cap
and Maximum Lifetime Mortgage Rate no less than those of such Mortgage Loan, has
the same Index and interval between Interest Adjustment Dates as such Mortgage
Loan, and has a Minimum Lifetime Mortgage Rate no lower than that of such
Mortgage Loan; and (x) which is not secured by Mortgaged Property located in (A)
the State of New Jersey, if such Mortgage Loan was originated on or after
November 27, 2003 or (B) the State of New Mexico, if such Mortgage Loan was
originated on or after January 1, 2004.
Tax Administration and Tax Matters Person: The Securities Administrator
or any successor thereto or assignee thereof shall serve as tax administrator
hereunder and as agent for the Tax Matters Person. The Holder of each Class of
Residual Certificates shall be the Tax Matters Person for the related REMIC, as
more particularly set forth in Section 9.12 hereof.
Trigger Event: A "Trigger Event" shall occur if, as of any date of
determination, the HomeBanc Delinquency Percentage is at least 10% greater than
the EverHome Delinquency Percentage.
Trust Fund or Trust: The corpus of the trust created by this Agreement,
consisting of the Mortgage Loans and the other assets described in Section
2.01(a).
Trustee: JPMorgan Chase Bank, or its successor in interest, or any
successor trustee appointed as herein provided.
Uncertificated Principal Balance: With respect to any REMIC I Regular
Interest or REMIC II Regular Interest as of any Distribution Date, the initial
principal amount of such Regular Interest, reduced by (i) all amounts
distributed on previous Distribution Dates on such Regular Interest with respect
to principal, (ii) the principal portion of all Realized Losses
42
allocated prior to such Distribution Date to such Regular Interest, taking
account of the Loss Allocation Limitation and (iii) in the case of a REMIC II
Regular Interest for which the Corresponding Certificate is a Group I Senior
Mezzanine Certificate or a Subordinate Certificate, such Regular Interest's pro
rata share, if any, of the Group I Senior Mezzanine Certificate Writedown Amount
or the applicable Subordinate Certificate Writedown Amount, as the case may be,
allocated to such Corresponding Certificate for previous Distribution Dates.
Underlying Seller: With respect to each Mortgage Loan, HomeBanc,
Countrywide, Greenpoint, Metrocities, SouthTrust, First Horizon, Bank of
America, American Gold Mortgage Corp., Primary Capital Advisors LC doing
business as Primary Capital Mortgage, Quicken, Xxxx Financial, EverHome or
SouthStar, as indicated on the Mortgage Loan Schedule.
Uninsured Cause: Any cause of damage to a Mortgaged Property or related
REO Property such that the complete restoration of such Mortgaged Property or
related REO Property is not fully reimbursable by the hazard insurance policies
or flood insurance policies required to be maintained pursuant to the related
Servicing Agreement, without regard to whether or not such policy is maintained.
United States Person: A citizen or individual resident of the United
States, a corporation or partnership (including an entity treated as a
corporation or partnership for federal income tax purposes) created or organized
in, or under the laws of, the United States or any state thereof or the District
of Columbia (except, in the case of a partnership, to the extent provided in
regulations), provided that, for purposes solely of the Class R Certificates, no
partnership or other entity treated as a partnership for United States federal
income tax purposes shall be treated as a United States Person unless all
persons that own an interest in such partnership, either directly or through any
entity that is not a corporation for United States federal income tax purposes,
are United States Persons, or an estate whose income is subject to United States
federal income tax regardless of its source, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
such trust and one or more such United States Persons have the authority to
control all substantial decisions of such trust or if the Trust was in existence
on August 20, 1996 and properly elected to continue to be treated as such a
United States Person.
Section 1.02. Calculation of LIBOR. LIBOR applicable to the calculation
of the Pass-Through Rate on the Adjustable Rate Certificates for any Interest
Accrual Period will be determined on each Interest Determination Date. On each
Interest Determination Date, LIBOR shall be established by the Securities
Administrator and, as to any Interest Accrual Period, will equal the rate for
one month United States dollar deposits that appears on the Telerate Screen Page
3750 as of 11:00 a.m., London time, on such Interest Determination Date.
"Telerate Screen Page 3750" means the display designated as page 3750 on the
Telerate Service (or such other page as may replace page 3750 on that service
for the purpose of displaying London interbank offered rates of major banks). If
such rate does not appear on such page (or such other page as may replace that
page on that service, or if such service is no longer offered, LIBOR shall be so
established by use of such other service for displaying LIBOR or comparable
rates as may be reasonably selected by the Securities Administrator), the rate
will be the Reference Bank Rate. The "Reference Bank Rate" will be determined on
the basis of the rates at which deposits in U.S. dollars are offered by the
reference banks (which shall be any three major banks that are engaged
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in transactions in the London interbank market, selected by the Securities
Administrator) as of 11:00 a.m., London time, on the Interest Determination Date
to prime banks in the London interbank market for a period of one month in
amounts approximately equal to the aggregate Current Principal Amount of the
Adjustable Rate Certificates then outstanding. The Securities Administrator will
request the principal London office of each of the reference banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
will be the arithmetic mean of the quotations rounded up to the nearest whole
multiple of 0.03125%. If on such date fewer than two quotations are provided as
requested, the rate will be the arithmetic mean of the rates quoted by one or
more major banks in New York City, selected by the Securities Administrator, as
of 11:00 a.m., New York City time, on such date for loans in U.S. dollars to
leading European banks for a period of one month in amounts approximately equal
to the aggregate Current Principal Amount of the Adjustable Rate Certificates
then outstanding. If no such quotations can be obtained, the rate will be LIBOR
for the prior Distribution Date; provided, however, if, under the priorities
described above, LIBOR for a Distribution Date would be based on LIBOR for the
previous Distribution Date for the third consecutive Distribution Date, the
Securities Administrator shall select an alternative comparable index (over
which the Securities Administrator has no control), used for determining
one-month Eurodollar lending rates that is calculated and published (or
otherwise made available) by an independent party. The establishment of LIBOR by
the Securities Administrator on any Interest Determination Date and the
Securities Administrator's subsequent calculation of the Pass-Through Rate
applicable to the Adjustable Rate Certificates for the relevant Interest Accrual
Period, in the absence of manifest error, will be final and binding. Promptly
following each Interest Determination Date, the Securities Administrator shall
supply the Master Servicer with the results of its determination of LIBOR on
such date.
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ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans to Trustee. (a) The
Depositor, concurrently with the execution and delivery of this Agreement,
sells, transfers and assigns to the Trust without recourse all its right, title
and interest in and to (i) the Mortgage Loans identified in the Mortgage Loan
Schedule, including all interest and principal due with respect to the Mortgage
Loans after the Cut-off Date but excluding any payments of principal and
interest due on or prior to the Cut-off Date, (ii) such assets as shall from
time to time be credited or are required by the terms of this Agreement to be
credited to the Distribution Account, (iii) such assets relating to the Mortgage
Loans as from time to time may be held by the related Servicer in Protected
Accounts and the Trustee in the Distribution Account for the benefit of the
Trustee on behalf of the Certificateholders, (iv) any REO Property, (v) the
Required Insurance Policies and any amounts paid or payable by the insurer under
any Insurance Policy (to the extent the mortgagee has a claim thereto), (vi) the
Mortgage Loan Purchase Agreement to the extent provided in Subsection 2.03(a),
(vii) the rights with respect to the Servicing Agreements as assigned to the
Trustee on behalf of the Certificateholders by the Assignment Agreements, and
(viii) any proceeds of the foregoing. Although it is the intent of the parties
to this Agreement that the conveyance of the Depositor's right, title and
interest in and to the Mortgage Loans and other assets in the Trust Fund
pursuant to this Agreement shall constitute a purchase and sale and not a loan,
in the event that such conveyance is deemed to be a loan, it is the intent of
the parties to this Agreement that the Depositor shall be deemed to have granted
to the Trustee a first priority perfected security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans and
other assets in the Trust Fund, and that this Agreement shall constitute a
security agreement under applicable law.
(b) In connection with the above sale, transfer and assignment, the
Depositor hereby deposits with the Trustee, or the Custodian, as its agent, as
described in the Mortgage Loan Purchase Agreement, with respect to each Mortgage
Loan, (i) the original Mortgage Note, endorsed without recourse to the order of
the Trustee and showing an unbroken chain of endorsements from the original
payee thereof to the Person endorsing it to the Trustee, or a lost note
affidavit with indemnity, (ii) the original Security Instrument (noting the
presence of the MIN of the Mortgage Loan and language indicating that the
Mortgage Loan is a MOM Loan if the 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, a certified copy of the assignment (which may
be in the form of a blanket assignment if permitted in the jurisdiction in which
the Mortgaged Property is located) to "JPMorgan Chase Bank, as Trustee," with
evidence of recording with respect to each Mortgage Loan in the name of the
Trustee thereon (or if clause (x) in the proviso below applies or for Mortgage
Loans with respect to which the related Mortgaged Property is located in a state
other than Maryland or an Opinion of Counsel has been provided as set forth in
this Section 2.01(b), shall be in recordable form), (iv) all intervening
assignments of the Security Instrument, if applicable and only to the extent
available to the Depositor with evidence of recording thereon, (v) the original
or a copy of the policy or certificate of primary mortgage guaranty insurance,
to the extent available, if any, (vi) the original policy of title insurance or
mortgagee's certificate of
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title insurance or commitment or binder for title insurance and (vii) originals
of all assumption and modification agreements, if applicable and available;
provided, however, that in lieu of the foregoing, the Depositor may deliver the
following documents, under the circumstances set forth below: (x) in lieu of the
original Security Instrument, assignments to the Trustee or intervening
assignments thereof which have been delivered, are being delivered or will, upon
receipt of recording information relating to the Security Instrument required to
be included thereon, be delivered to recording offices for recording and have
not been returned to the Depositor in time to permit their delivery as specified
above, the Depositor may deliver a true copy thereof with a certification by the
Depositor, on the face of such copy, substantially as follows: "Certified to be
a true and correct copy of the original, which has been transmitted for
recording"; (y) in lieu of the Security Instrument, assignment to the Trustee or
intervening assignments thereof, if the applicable jurisdiction retains the
originals of such documents (as evidenced by a certification from the Depositor,
to such effect) the Depositor may deliver photocopies of such documents
containing an original certification by the judicial or other governmental
authority of the jurisdiction where such documents were recorded; and (z) the
Depositor shall not be required to deliver intervening assignments or Mortgage
Note endorsements between the related Underlying Seller and EMC Mortgage
Corporation, between EMC Mortgage Corporation and the Depositor, and between the
Depositor and the Trustee; and provided, further, however, that, in the case of
Mortgage Loans which have been prepaid in full after the Cut-off Date and prior
to the Closing Date, the Depositor, in lieu of delivering the above documents,
may deliver to the Trustee or the Custodian, as its agent, a certification to
such effect and shall deposit all amounts paid in respect of such Mortgage Loans
in the Distribution Account on the Closing Date. The Depositor shall deliver
such original documents (including any original documents as to which certified
copies had previously been delivered) to the Trustee or the Custodian, as its
agent, promptly after they are received. The Depositor shall cause, at its
expense, the assignment of the related Security Instrument to the Trustee to be
recorded not later than 180 days after the Closing Date, unless (1) such
recordation is not required by the Rating Agencies, (2) an Opinion of Counsel
has been provided to the Trustee (with a copy to the Custodian) which states
that recordation of such Security Instrument is not required to protect the
interests of the Certificateholders in the related Mortgage Loans or (3) MERS is
identified on the related Security Instrument or on a properly recorded
assignment of such Security Instrument as mortgagee of record solely as nominee
for Depositor and its successors and assigns; provided, however, that each
assignment shall be submitted for recording by the Depositor in the manner
described above, at no expense to the Trust or the Trustee, or the Custodian, as
its agent, upon the earliest to occur of: (i) reasonable direction by the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 25% of the Trust, (ii) the occurrence of an Event of Default,
(iii) the occurrence of a bankruptcy, insolvency or foreclosure relating to the
Depositor, (iv) the rating of The Bear Xxxxxxx Companies Inc. falls below Baa3,
(v) the occurrence of a servicing transfer as described in Section 8.02 hereof,
or (vi) with respect to any one assignment of Mortgage, the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Mortgagor under the
related Mortgage. Notwithstanding the foregoing, if the Depositor fails to pay
the cost of recording the assignments, such expense will be paid by the Trustee
and the Trustee shall be reimbursed for such expenses by the Trust in accordance
with Section 9.05.
Section 2.02. Acceptance of Trust Fund by Trustee. (a) The Trustee
acknowledges the sale, transfer and assignment of the Trust Fund to it by the
Depositor and receipt of, subject to further review and the exceptions which may
be noted pursuant to the procedures described
46
below, and declares that it holds, the documents (or certified copies thereof)
delivered to it pursuant to Section 2.01, and declares that it will continue to
hold those documents and any amendments, replacements or supplements thereto and
all other assets of the Trust Fund delivered to it as Trustee in trust for the
use and benefit of all present and future Holders of the Certificates. On the
Closing Date, with respect to the Mortgage Loans, the Custodian shall
acknowledge, with respect to each Mortgage Loan by an Initial Certification
substantially in the form of Exhibit One to the Custodial Agreement, receipt of
the Mortgage File, but without review of such Mortgage File, except to the
extent necessary to confirm that such Mortgage File contains the related
Mortgage Note or lost note affidavit. No later than 90 days after the Closing
Date (or, with respect to any Substitute Mortgage Loan, within five Business
Days after the receipt by the Trustee or Custodian thereof), the Trustee agrees,
for the benefit of the Certificateholders, to review or cause to be reviewed by
the Custodian on its behalf (under the Custodial Agreement), each Mortgage File
delivered to it and to execute and deliver, or cause to be executed and
delivered, to the Depositor and the Trustee an Interim Certification
substantially in the form annexed as Exhibit Two to the Custodial Agreement. In
conducting such review, the Trustee or Custodian will ascertain whether all
required documents have been executed and received, and based on the Mortgage
Loan Schedule, whether those documents relate, determined on the basis of the
Mortgagor name, original principal balance and loan number, to the Mortgage
Loans it has received, as identified in the Mortgage Loan Schedule. In
performing any such review, the Trustee or the Custodian, as its agent, may
conclusively rely on the purported due execution and genuineness of any such
document and on the purported genuineness of any signature thereon. If the
Trustee or the Custodian, as its agent, finds any document constituting part of
the Mortgage File 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, then the Trustee or the Custodian, as its agent, shall promptly notify the
Seller. In accordance with the Mortgage Loan Purchase Agreement, the Seller
shall correct or cure any such defect within ninety (90) days from the date of
notice from the Trustee or the Custodian, as its agent, of the defect and, if
the Seller fails to correct or cure the defect within such period, and such
defect materially and adversely affects the interests of the Certificateholders
in the related Mortgage Loan, the Trustee or the Custodian, as its agent, shall
enforce the Seller's obligation pursuant to the Mortgage Loan Purchase Agreement
to, within 90 days from the Trustee's or the Custodian's notification, provide a
Substitute Mortgage Loan (if within two years of the Closing Date) or purchase
such Mortgage Loan at the Repurchase Price; provided that, if such defect would
cause the Mortgage Loan to be other than a "qualified mortgage" as defined in
Section 860G(a)(3) of the Code, any such cure or repurchase must occur within 90
days from the date such breach was discovered; provided, however, that if such
defect relates solely to the inability of the Seller to deliver the original
Security Instrument or intervening assignments thereof, or a certified copy
thereof, because the originals of such documents or a certified copy have not
been returned by the applicable jurisdiction, then the Seller shall not be
required to purchase such Mortgage Loan if the Seller delivers such original
documents or certified copy promptly upon receipt, but in no event later than
360 days after the Closing Date. The foregoing repurchase obligation shall not
apply in the event that the Seller cannot deliver such original or copy of any
document submitted for recording to the appropriate recording office in the
jurisdiction because such document has not been returned by such office;
provided that the Seller shall instead deliver a recording receipt of such
recording office or, if such receipt is not available, a certificate of the
Seller or a Servicing Officer confirming that such documents have been accepted
for recording, and
47
delivery to the Trustee or the Custodian, as its agent, shall be effected by the
Seller within thirty days of its receipt of the original recorded document.
(b) No later than 180 days after the Closing Date (or, with respect to
any Substitute Mortgage Loan, within five Business Days after the receipt by the
Trustee or the Custodian thereof), the Trustee or the Custodian, as its agent,
will review, for the benefit of the Certificateholders, the Mortgage Files
delivered to it and will execute and deliver or cause to be executed and
delivered to the Depositor and the Trustee a Final Certification substantially
in the form annexed as Exhibit Three to the Custodial Agreement. In conducting
such review, the Trustee or the Custodian, as its agent, will ascertain whether
an original of each document required to be recorded has been returned from the
recording office with evidence of recording thereon or a certified copy has been
obtained from the recording office. If the Trustee or the Custodian, as its
agent, finds any document constituting part of the Mortgage File has not been
received, or to be unrelated, determined on the basis of the Mortgagor name,
original principal balance and loan number, to the Mortgage Loans identified in
Exhibit B, or to appear defective on its face, the Trustee or the Custodian, as
its agent, shall promptly notify the Seller (provided, however, that with
respect to those documents described in subsection (b)(iv), (b)(v) and (b)(vii)
of Section 2.01, the Trustee's and the Custodian's obligations shall extend only
to the documents actually delivered pursuant to such subsections). In accordance
with the Mortgage Loan Purchase Agreement, the Seller shall correct or cure any
such defect or EMC shall deliver to the Trustee an Opinion of Counsel to the
effect that such defect does not materially or adversely affect the interests of
Certificateholders in such Mortgage Loan within 90 days from the date of notice
from the Trustee of the defect and if the Seller is unable to cure such defect
within such period, and if such defect materially and adversely affects the
interests of the Certificateholders in the related Mortgage Loan, then the
Trustee shall enforce the Seller's obligation under the Mortgage Loan Purchase
Agreement to, within 90 days from the Trustee's or Custodian's notification,
provide a Substitute Mortgage Loan (if within two years of the Closing Date) or
purchase such Mortgage Loan at the Repurchase Price; provided that, if such
defect would cause the Mortgage Loan to be other than a "qualified mortgage" as
defined in Section 860G(a)(3) of the Code, any such cure, repurchase or
substitution must occur within 90 days from the date such breach was discovered;
provided, further, however, that if such defect relates solely to the inability
of the Seller to deliver the original Security Instrument or intervening
assignments thereof, or a certified copy thereof, because the originals of such
documents or a certified copy have not been returned by the applicable
jurisdiction, then the Seller shall not be required to purchase such Mortgage
Loan if the Seller delivers such original documents or certified copy promptly
upon receipt, but in no event later than 360 days after the Closing Date.
(c) In the event that a Mortgage Loan is purchased by the Seller in
accordance with Subsections 2.02(a) or (b) above, the Seller shall remit to the
Paying Agent the Repurchase Price for deposit in the Distribution Account and
the Seller shall provide to the Master Servicer, the Paying Agent and the
Trustee written notification detailing the components of the Repurchase Price.
Upon deposit of the Repurchase Price in the Distribution Account, the Depositor
shall notify the Trustee and the Trustee or the Custodian, as its agent (upon
receipt of a Request for Release in the form of Exhibit D attached hereto with
respect to such Mortgage Loan), shall release to the Seller the related Mortgage
File and the Trustee shall execute and deliver all instruments of transfer or
assignment, without recourse, furnished to it by the Seller as are necessary to
vest in the Seller title to and rights under the Mortgage Loan. Such purchase
shall be
48
deemed to have occurred on the date on which the Repurchase Price in available
funds is received by the Paying Agent. The Trustee shall amend the Mortgage Loan
Schedule, which was previously delivered to it by the Depositor in a form agreed
to between the Depositor and the Trustee, to reflect such repurchase and shall
promptly notify the Rating Agencies and the Master Servicer of such amendment.
The obligation of the Seller to repurchase any Mortgage Loan as to which such a
defect in a constituent document exists shall be the sole remedy respecting such
defect available to the Certificateholders or to the Trustee on their behalf.
Section 2.03. Assignment of Interest in the Mortgage Loan Purchase
Agreement. (a) The Depositor hereby assigns to the Trustee, on behalf of the
Certificateholders, all of its right, title and interest in the Mortgage Loan
Purchase Agreement, including but not limited to the Depositor's rights and
obligations pursuant to the Servicing Agreements (noting that the Seller has
retained the right in the event of breach of the representations, warranties and
covenants, if any, with respect to the related Mortgage Loans of the related
Servicer under the related Servicing Agreement to enforce the provisions thereof
and to seek all or any available remedies). The obligations of the Seller to
substitute or repurchase, as applicable, a Mortgage Loan shall be the Trustee's
and the Certificateholders' sole remedy for any breach thereof. At the request
of the Trustee, the Depositor shall take such actions as may be necessary to
enforce the above right, title and interest on behalf of the Trustee and the
Certificateholders or shall execute such further documents as the Trustee may
reasonably require in order to enable the Trustee to carry out such enforcement.
(b) If the Depositor, the Securities Administrator or the Trustee
discovers a breach of any of the representations and warranties set forth in the
Mortgage Loan Purchase Agreement, which breach materially and adversely affects
the value of the interests of Certificateholders or the Trustee in the related
Mortgage Loan, the party discovering the breach shall give prompt written notice
of the breach to the other parties. The Seller, within 90 days of its discovery
or receipt of notice that such breach has occurred (whichever occurs earlier),
shall cure the breach in all material respects or, subject to the Mortgage Loan
Purchase Agreement or Section 2.04 of this Agreement, as applicable, shall
purchase the Mortgage Loan or any property acquired with respect thereto from
the Trustee; provided, however, that if there is a breach of any representation
set forth in the Mortgage Loan Purchase Agreement or Section 2.04 of this
Agreement, as applicable, and the Mortgage Loan or the related property acquired
with respect thereto has been sold, then the Seller shall pay, in lieu of the
Repurchase Price, any excess of the Repurchase Price over the Net Liquidation
Proceeds received upon such sale. (If the Net Liquidation Proceeds exceed the
Repurchase Price, any excess shall be paid to the Seller, to the extent not
required by law to be paid to the related borrower.) Any such purchase by the
Seller shall be made by providing an amount equal to the Repurchase Price to the
Paying Agent for deposit in the Distribution Account and written notification
detailing the components of such Repurchase Price to the Trustee, the Paying
Agent and the Master Servicer. The Depositor shall notify the Trustee and submit
to the Trustee or the Custodian, as its agent, a Request for Release in the form
of Exhibit D attached hereto, and the Trustee shall release, or the Trustee
shall cause the Custodian to release, to the Seller, the related Mortgage File
and the Trustee shall execute and deliver all instruments of transfer or
assignment furnished to it by the Seller, without recourse, as are necessary to
vest in the Seller title to and rights under the Mortgage Loan or any property
acquired with respect thereto. Such purchase shall be deemed to have occurred on
the date on which the Repurchase Price in available funds is received by the
Trustee. The Trustee
49
shall amend the Mortgage Loan Schedule to reflect such repurchase and shall
promptly notify the Master Servicer and the Rating Agencies of such amendment.
Enforcement of the obligation of the Seller to purchase (or substitute a
Substitute Mortgage Loan for) any Mortgage Loan or any property acquired with
respect thereto (or pay the Repurchase Price as set forth in the above proviso)
as to which a breach has occurred and is continuing shall constitute the sole
remedy respecting such breach available to the Certificateholders or the Trustee
on their behalf.
Section 2.04. Substitution of Mortgage Loans. Notwithstanding anything
to the contrary in this Agreement, in lieu of purchasing a Mortgage Loan
pursuant to the Mortgage Loan Purchase Agreement or Sections 2.02 or 2.03 of
this Agreement, the Seller may, no later than the date by which such purchase by
the Seller would otherwise be required, tender to the Trustee a Substitute
Mortgage Loan accompanied by a certificate of an authorized officer of the
Seller that such Substitute Mortgage Loan conforms to the requirements set forth
in the definition of "Substitute Mortgage Loan" in the Mortgage Loan Purchase
Agreement or this Agreement, as applicable; provided, however, that substitution
pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of this
Agreement, as applicable, in lieu of purchase shall not be permitted after the
termination of the two-year period beginning on the Startup Day; provided,
further, that if the breach of a Mortgage Loan representation or warranty would
cause such Mortgage Loan to be other than a "qualified mortgage" as defined in
Section 860G(a)(3) of the Code, then any such substitution must occur within 90
days from the date the breach was discovered. The Trustee or the Custodian, as
its agent, shall examine the Mortgage File for any Substitute Mortgage Loan in
the manner set forth in Section 2.02(a) and the Trustee or the Custodian, as its
agent, shall notify the Seller in writing, within five Business Days after
receipt, whether or not the documents relating to the Substitute Mortgage Loan
satisfy the requirements of the fourth sentence of Subsection 2.02(a). Within
two Business Days after such notification, the Seller shall provide to the
Paying Agent for deposit in the Distribution Account the amount, if any, by
which the Outstanding Principal Balance as of the next preceding Due Date of the
Mortgage Loan for which substitution is being made, after giving effect to
Scheduled Principal due on such date, exceeds the Outstanding Principal Balance
as of such date of the Substitute Mortgage Loan, after giving effect to
Scheduled Principal due on such date, which amount shall be treated for the
purposes of this Agreement as if it were the payment by the Seller of the
Repurchase Price for the purchase of a Mortgage Loan by the Seller. After such
notification to the Seller and, if any such excess exists, upon receipt of such
deposit, the Trustee shall accept such Substitute Mortgage Loan which shall
thereafter be deemed to be a Mortgage Loan hereunder. In the event of such a
substitution, accrued interest on the Substitute Mortgage Loan for the month in
which the substitution occurs and any Principal Prepayments made thereon during
such month shall be the property of the Trust Fund and accrued interest for such
month on the Mortgage Loan for which the substitution is made and any Principal
Prepayments made thereon during such month shall be the property of the Seller.
The Scheduled Principal on a Substitute Mortgage Loan due on the Due Date in the
month of substitution shall be the property of the Seller and the Scheduled
Principal on the Mortgage Loan for which the substitution is made due on such
Due Date shall be the property of the Trust Fund. Upon acceptance of the
Substitute Mortgage Loan (and delivery to the Trustee or Custodian of a Request
for Release for such Mortgage Loan), the Trustee (or the Custodian, as its
agent) shall release to the Seller the Mortgage File related to any Mortgage
Loan released pursuant to the Mortgage Loan Purchase Agreement or Section 2.04
of this Agreement, as applicable, and the Trustee shall execute and deliver all
instruments of transfer or assignment, without recourse, in form as provided to
it as
50
are necessary to vest in the Seller title to and rights under any Mortgage Loan
released pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of
this Agreement, as applicable. The Seller shall deliver the documents related to
the Substitute Mortgage Loan in accordance with the provisions of the Mortgage
Loan Purchase Agreement or Subsections 2.01(b) and 2.02(b) of this Agreement, as
applicable, with the date of acceptance of the Substitute Mortgage Loan deemed
to be the Closing Date for purposes of the time periods set forth in those
Subsections. The representations and warranties set forth in the Mortgage Loan
Purchase Agreement shall be deemed to have been made by the Seller with respect
to each Substitute Mortgage Loan as of the date of acceptance of such Mortgage
Loan by the Trustee. The Master Servicer shall amend the Mortgage Loan Schedule
to reflect such substitution and shall provide a copy of such amended Mortgage
Loan Schedule to the Trustee and the Rating Agencies.
Section 2.05. Issuance of Certificates. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the other assets comprising the Trust
Fund and, concurrently therewith, has signed, and the Certificate Registrar has
countersigned and delivered to the Depositor, in exchange therefor, Certificates
in such authorized denominations representing such Fractional Undivided
Interests as the Depositor has requested. The Trustee agrees that it will hold
the Mortgage Loans and such other assets as may from time to time be delivered
to it segregated on the books of the Trustee in trust for the benefit of the
Certificateholders.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests and the other assets of REMIC II for the
benefit of the holders of the REMIC II Interests. The Trustee acknowledges
receipt of the REMIC I Regular Interests (which are uncertificated) and the
other assets of REMIC II and declares that it holds and will hold the same in
trust for the exclusive use and benefit of the holders of the REMIC II
Certificates.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC II Regular Interests, and the other assets of REMIC III for the
benefit of the holders of the REMIC III Certificates. The Trustee acknowledges
receipt of the REMIC II Regular Interests (which are uncertificated) and the
other assets of REMIC III and declares that it holds and will hold the same in
trust for the exclusive use and benefit of the holders of the REMIC III
Certificates.
Section 2.06. Representations and Warranties Concerning the Depositor.
The Depositor hereby represents and warrants to the Trustee, the Master Servicer
and the Securities Administrator as follows:
(i) the Depositor (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and (b) is qualified and in good standing as a foreign corporation to
do business in each jurisdiction where such qualification is necessary,
except where the failure so to qualify would not reasonably be expected
to have a material adverse effect on the Depositor's business as
presently conducted or on the Depositor's ability to enter into this
Agreement and to consummate the transactions contemplated hereby;
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(ii) the Depositor has full corporate power to own its
property, to carry on its business as presently conducted and to enter
into and perform its obligations under this Agreement;
(iii) the execution and delivery by the Depositor of this
Agreement have been duly authorized by all necessary corporate action
on the part of the Depositor; and neither the execution and delivery of
this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict
with or result in a breach of, or constitute a default under, any of
the provisions of any law, governmental rule, regulation, judgment,
decree or order binding on the Depositor or its properties or the
articles of incorporation or by-laws of the Depositor, except those
conflicts, breaches or defaults which would not reasonably be expected
to have a material adverse effect on the Depositor's ability to enter
into this Agreement and to consummate the transactions contemplated
hereby;
(iv) the execution, delivery and performance by the Depositor
of this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in respect
of, any state, federal or other governmental authority or agency,
except those consents, approvals, notices, registrations or other
actions as have already been obtained, given or made;
(v) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery by
the other parties hereto, constitutes a valid and binding obligation of
the Depositor enforceable against it in accordance with its terms
(subject to applicable bankruptcy and insolvency laws and other similar
laws affecting the enforcement of the rights of creditors generally);
(vi) there are no actions, suits or proceedings pending or, to
the knowledge of the Depositor, threatened against the Depositor,
before or by any court, administrative agency, arbitrator or
governmental body (i) with respect to any of the transactions
contemplated by this Agreement or (ii) with respect to any other matter
which in the judgment of the Depositor will be determined adversely to
the Depositor and will, if determined adversely to the Depositor,
materially and adversely affect the Depositor's ability to enter into
this Agreement or perform its obligations under this Agreement; and the
Depositor is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to
materially and adversely affect the transactions contemplated by this
Agreement; and
(vii) immediately prior to the transfer and assignment thereof
to the Trustee, each Mortgage Note and each Mortgage was not subject to
an assignment or pledge, and the Depositor had good and marketable
title to and was the sole owner thereof and had full right to transfer
and sell the related Mortgage Loan to the Trustee free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. Master Servicer. The Master Servicer shall supervise,
monitor and oversee the obligation of the Servicers to service and administer
their respective Mortgage Loans in accordance with the terms of the related
Servicing Agreement and shall have full power and authority to do any and all
things which it may deem necessary or desirable in connection with such master
servicing and administration. In performing its obligations hereunder, the
Master Servicer shall act in a manner consistent with Accepted Master Servicing
Practices. Furthermore, the Master Servicer shall oversee and consult with each
Servicer as necessary from time-to-time to carry out the Master Servicer's
obligations hereunder, shall receive, review and evaluate all reports,
information and other data provided to the Master Servicer by each Servicer and
shall cause each Servicer to perform and observe the covenants, obligations and
conditions to be performed or observed by such Servicer under the related
Servicing Agreement. The Master Servicer shall independently and separately
monitor each Servicer's servicing activities with respect to each related
Mortgage Loan, reconcile the results of such monitoring with such information
provided in the previous sentence on a monthly basis and coordinate corrective
adjustments to the related Servicer's and Master Servicer's records, and based
on such reconciled and corrected information, the Master Servicer shall provide
such information to the Securities Administrator as shall be necessary in order
for it to prepare the statements specified in Section 6.04, and prepare any
other information and statements required to be forwarded by the Master Servicer
hereunder. The Master Servicer shall reconcile the results of its Mortgage Loan
monitoring with the actual remittances of the related Servicer pursuant to the
related Servicing Agreement.
The Trustee shall furnish each Servicer and the Master Servicer with
any powers of attorney, in substantially the form attached hereto as Exhibit K,
and other documents in form as provided to it necessary or appropriate to enable
such Servicer and the Master Servicer to service and administer the related
Mortgage Loans and REO Property.
The Trustee shall provide access to the records and documentation in
possession of the Trustee regarding the related Mortgage Loans and REO Property
and the servicing thereof to the Certificateholders, the FDIC, and the
supervisory agents and examiners of the FDIC, such access being afforded only
upon reasonable prior written request and during normal business hours at the
office of the Trustee; provided, however, that, unless otherwise required by
law, the Trustee shall not be required to provide access to such records and
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor. The Trustee shall allow representatives of the above entities
to photocopy any of the records and documentation and shall provide equipment
for that purpose at a charge that covers the Trustee's actual costs.
The Trustee shall execute and deliver to the related Servicer and the
Master Servicer any court pleadings, requests for trustee's sale or other
documents necessary or desirable to (i) the foreclosure or trustee's sale with
respect to a Mortgaged Property; (ii) any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Security Instrument;
(iii) obtain a deficiency judgment against the Mortgagor; or (iv) enforce any
other rights or remedies provided by the Mortgage Note or Security Instrument or
otherwise available at law or equity.
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Section 3.02. REMIC-Related Covenants. For as long as each REMIC shall
exist, the Trustee and the Securities Administrator shall act in accordance
herewith to assure continuing treatment of such REMIC as a REMIC, and the
Trustee and the Securities Administrator shall comply with any directions of the
Depositor, the Servicers or the Master Servicer to assure such continuing
treatment. In particular, the Trustee shall not (a) sell or permit the sale of
all or any portion of the Mortgage Loans or of any investment of deposits in an
Account unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion prepared
at the expense of the Trust Fund; and (b) other than with respect to a
substitution pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of
this Agreement, as applicable, accept any contribution to any REMIC after the
Startup Day without receipt of a REMIC Opinion. In addition, the Trustee shall
comply with all of the requirements of Treasury Regulation ss. 1.860F-2(a)(2),
including, without limitation, the requirement that each REMIC account for items
of income and ownership of assets in a manner that respects the separate
existence of each REMIC.
Section 3.03. Monitoring of Servicers. (a) The Master Servicer shall be
responsible for reporting to the Trustee and the Depositor the compliance by the
Servicers with their respective duties under the related Servicing Agreement. In
the review of each Servicer's activities, the Master Servicer may rely upon an
officer's certificate of such Servicer (or similar document signed by an officer
of the Servicer) with regard to such Servicer's compliance with the terms of the
related Servicing Agreement. In the event that the Master Servicer, in its
judgment, determines that such Servicer should be terminated in accordance with
the related Servicing Agreement, or that a notice should be sent pursuant to the
related Servicing Agreement with respect to the occurrence of an event that,
unless cured, would constitute grounds for such termination, the Master Servicer
shall notify the Depositor and the Trustee thereof and the Master Servicer shall
issue such notice or take such other action as it deems appropriate.
(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of each Servicer under the
related Servicing Agreement, and shall, in the event that a Servicer fails to
perform its obligations in accordance with the related Servicing Agreement,
subject to the preceding paragraph, terminate the rights and obligations of such
Servicer thereunder and act as servicer of the related Mortgage Loans or cause
the Trustee to enter into a new Servicing Agreement with a successor Servicer
selected by the Master Servicer; provided, however, it is understood and
acknowledged by the parties hereto that there will be a period of transition
(not to exceed 90 days) before the actual servicing functions can be fully
transferred to such successor Servicer. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of the related
Servicing Agreement and the pursuit of other appropriate remedies, shall be in
such form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, provided that the Master Servicer shall not be
required to prosecute or defend any legal action except to the extent that the
Master Servicer shall have received reasonable indemnity for its costs and
expenses in pursuing such action.
(c) To the extent that the costs and expenses of the Master Servicer
related to any termination of a Servicer, appointment of a successor Servicer or
the transfer and assumption of servicing by the Master Servicer with respect to
the related Servicing Agreement (including,
54
without limitation, (i) all legal costs and expenses and all due diligence costs
and expenses associated with an evaluation of the potential termination of a
Servicer as a result of an event of default by such Servicer and (ii) all costs
and expenses associated with the complete transfer of servicing, including all
servicing files and all servicing data and the completion, correction or
manipulation of such servicing data as may be required by the successor servicer
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the successor servicer to service the Mortgage Loans in accordance with
the related Servicing Agreement) are not fully and timely reimbursed by the
terminated Servicer, the Master Servicer shall be entitled to reimbursement of
such costs and expenses from the Distribution Account.
(d) The Master Servicer shall require each Servicer to comply with the
remittance requirements and other obligations set forth in the related Servicing
Agreement, including any related Assignment Agreement. The Master Servicer shall
enforce the obligation of each Servicer pursuant to the related Servicing
Agreement to provide it with the annual officer's certificate of compliance and
annual independent accountants' servicing reports, as well as back-up
certifications to each Master Servicer Certification pursuant to Section 3.18.
(e) If the Master Servicer acts as Servicer, it will not assume
liability for the representations and warranties of the Servicers, if any, that
it replaces.
(f) With respect to the HomeBanc Servicing Agreement only:
(i) The Master Servicer shall have the right to terminate
HomeBanc's rights and obligations as servicer under the HomeBanc
Servicing Agreement, upon written notice to HomeBanc, following the
occurrence of a Trigger Event. Such right of termination shall be in
addition to the right to terminate HomeBanc as servicer upon the
occurrence and during the continuance of an event of default as set
forth in Section 9.01 of the HomeBanc Servicing Agreement. Such right
of termination may be exercised by the Master Servicer in its sole and
absolute discretion, and the Master Servicer shall have no liability to
HomeBanc or any other Person, including without limitation, EMC, the
Trustee or any Certificateholder, as a consequence of the Master
Servicer's good faith determination, upon the occurrence of a Trigger
Event, either to terminate the rights of HomeBanc as servicer under the
HomeBanc Servicing Agreement or to allow HomeBanc to continue servicing
the Mortgage Loans serviced by it thereunder. In the event that the
right of HomeBanc to service the Mortgage Loans pursuant to the
HomeBanc Servicing Agreement is terminated in accordance with the
provisions of this Section 3.03(f), the provisions of Sections 9.01 and
11.01 of the HomeBanc Servicing Agreement shall apply.
(ii) The Master Servicer shall calculate the HomeBanc
Delinquency Percentage and the EverHome Delinquency Percentage based
solely on the information contained in the monthly reports provided to
it by HomeBanc and EverHome. The Master Servicer shall be entitled to
rely on such information and will not be obligated to verify,
recalculate or recompute any of such information.
(iii) The Master Servicer shall, as set forth in the HomeBanc
AAR, have the right to examine from time to time any and all of the
books, records, documentation or
55
other information of HomeBanc which relates to HomeBanc's performance
of, or HomeBanc's ability to perform, its obligations to service the
Mortgage Loans in accordance with the provisions of the HomeBanc
Servicing Agreement, and shall have the right to discuss HomeBanc's
servicing operations and capabilities with appropriate officers of
HomeBanc. Any such examination shall be made during normal business
hours and shall be at the expense of the Master Servicer; provided,
that in the event that any such examination is conducted following the
occurrence of a Trigger Event, HomeBanc shall, as set forth in the
HomeBanc AAR, be required to promptly reimburse the Master Servicer
its reasonable costs and expenses of conducting any such examination.
The Master Servicer shall be entitled to be reimbursed from funds then
on deposit in the Distribution Account for expenses it actually incurs
in connection with any such examination, to the extent it has not
received reimbursement from HomeBanc in this regard.
(iv) Notwithstanding anything set forth herein to the
contrary, HomeBanc shall be permitted to assign, sell or otherwise
transfer to any other Person any Servicing Fees paid to it pursuant to
the HomeBanc Servicing Agreement and with respect to a Mortgage Loan,
to the extent such Servicing Fees relating to such Mortgage Loan exceed
a per annum rate of 0.375% per annum.
Section 3.04. Fidelity Bond. The Master Servicer, at its expense, shall
maintain in effect a blanket fidelity bond and an errors and omissions insurance
policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Servicer's behalf, and covering errors
and omissions in the performance of the Master Servicer's obligations hereunder.
The amount of coverage to be maintained by the Master Servicer with respect to
the blanket fidelity bond policy shall be $50,000,000 per occurrence, and, with
respect to the errors and omissions insurance policy, shall be $20,000,000 per
occurrence.
Section 3.05. Power to Act; Procedures. The Master Servicer shall
master service the Mortgage Loans and shall have full power and authority,
subject to the REMIC Provisions and the provisions of Article X hereof, to do
any and all things that it may deem necessary or desirable in connection with
the master servicing and administration of the Mortgage Loans, including but not
limited to the power and authority (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages, (iii) to
collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Mortgage Loan, in each case, in accordance with the provisions of
this Agreement and the related Servicing Agreement, as applicable; provided,
however, that the Master Servicer shall not (and, consistent with its
responsibilities under Section 3.03, shall not permit a Servicer to) knowingly
or intentionally take any action, or fail to take (or fail to cause to be taken)
any action reasonably within its control and the scope of duties more
specifically set forth herein, that, under the REMIC Provisions, if taken or not
taken, as the case may be, would cause any REMIC hereunder to fail to qualify as
a REMIC or result in the imposition of a tax upon the Trust Fund (including but
not limited to the tax on prohibited transactions as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code) unless the Master Servicer has received an
56
Opinion of Counsel (but not at the expense of the Master Servicer) to the effect
that the contemplated action will not cause any REMIC hereunder to fail to
qualify as a REMIC or result in the imposition of a tax upon any REMIC
hereunder. The Trustee shall furnish the Master Servicer, upon written request
from a Servicing Officer, with any powers of attorney empowering the Master
Servicer or the related 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 appear in,
prosecute or defend any court action relating to the Mortgage Loans or the
Mortgaged Property, in accordance with the related Servicing Agreement and this
Agreement, and the Trustee shall execute and deliver such other documents as the
Master Servicer may request, to enable the Master Servicer to master service and
administer the Mortgage Loans and carry out its duties hereunder, in each case
in accordance with Accepted Master Servicing Practices (and the Trustee shall
have no liability for misuse of any such powers of attorney by the Master
Servicer or a Servicer). If the Master Servicer or the Trustee has been advised
that it is likely that the laws of the state in which action is to be taken
prohibit such action if taken in the name of the Trustee or that the Trustee
would be adversely affected under the "doing business" or tax laws of such state
if such action is taken in its name, then the Master Servicer shall join with
the Trustee in the appointment of a co-trustee pursuant to Section 9.11 hereof.
In the performance of its duties hereunder, the Master Servicer shall be an
independent contractor and shall not, except in those instances where it is
taking action in the name of the Trustee, be deemed to be the agent of the
Trustee.
Section 3.06. Due-on-Sale Clauses; Assumption Agreements. To the extent
provided in the related Servicing Agreement, to the extent Mortgage Loans
contain enforceable due-on-sale clauses, the Master Servicer shall cause the
related Servicer to enforce such clauses in accordance with the related
Servicing Agreement. If applicable law prohibits the enforcement of a
due-on-sale clause or such clause is otherwise not enforced in accordance with
the related Servicing Agreement, and, as a consequence, a Mortgage Loan is
assumed, the original Mortgagor may be released from liability in accordance
with the related Servicing Agreement.
Section 3.07. Release of Mortgage Files. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or the receipt by the related 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,
such Servicer will (and if such Servicer does not, then the Master Servicer
may), if required under the related Servicing Agreement, promptly furnish to the
Custodian, on behalf of the Trustee, two copies of a certification substantially
in the form of Exhibit D hereto signed by a Servicing Officer or in a mutually
agreeable electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer (which certification shall include a
statement to the effect that all amounts received in connection with such
payment that are required to be deposited in the related Protected Account
maintained by such Servicer pursuant to Section 4.01 or by such Servicer
pursuant to the related Servicing Agreement have been or will be so deposited)
and shall request that the Custodian, on behalf of the Trustee, deliver to such
Servicer the related Mortgage File. Upon receipt of such certification and
request, the Custodian, on behalf of the Trustee, shall promptly release the
related Mortgage File to the related Servicer, and the Trustee and Custodian
shall have no further responsibility with regard to such Mortgage File. Upon any
such payment in full, the related Servicer is authorized to give, as agent for
the Trustee, as the mortgagee under the Mortgage that secured the Mortgage Loan,
an instrument of satisfaction (or assignment of mortgage without recourse)
57
regarding the Mortgaged Property subject to the Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of such payment, it being
understood and agreed that no expenses incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the related Protected Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with the related Servicing
Agreement, the Trustee shall execute such documents as shall be prepared and
furnished to the Trustee by the related Servicer or the Master Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings. The Custodian, on behalf of the Trustee, shall, upon the
request of the related Servicer or the Master Servicer, and delivery to the
Custodian, on behalf of the Trustee, of two copies of a Request for Release
signed by a Servicing Officer substantially in the form of Exhibit D (or in a
mutually agreeable electronic format which will, in lieu of a signature on its
face, originate from a Servicing Officer), release the related Mortgage File
held in its possession or control to such Servicer or the Master Servicer, as
applicable. Such trust receipt shall obligate the related Servicer or the Master
Servicer to return the Mortgage File to the Custodian on behalf of the Trustee
when the need therefor by such Servicer or the Master Servicer no longer exists,
unless the Mortgage Loan shall be liquidated, in which case, upon receipt of a
certificate of a Servicing Officer similar to that hereinabove specified, the
Mortgage File shall be released by the Custodian, on behalf of the Trustee, to
the related Servicer or the Master Servicer.
(c) The Master Servicer hereby covenants that it shall not alter the
codes referenced in Section 4(c) of the Mortgage Loan Purchase Agreement 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.
Section 3.08. Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee.
(a) The Master Servicer shall transmit and the Servicers (to the extent
required by the related Servicing Agreement) shall transmit to the Trustee or
Custodian such documents and instruments coming into the possession of the
Master Servicer or the Servicers from time to time as are required by the terms
hereof, or in the case of the Servicers, the related Servicing Agreement, to be
delivered to the Trustee or Custodian. Any funds received by the Master Servicer
or by the related Servicer in respect of any Mortgage Loan or which otherwise
are collected by the Master Servicer or by such Servicer as Liquidation Proceeds
or Insurance Proceeds in respect of any Mortgage Loan shall be held for the
benefit of the Trustee and the Certificateholders subject to the Master
Servicer's right to retain the Master Servicing Compensation and other amounts
provided in this Agreement, and to the right of such Servicer to retain its
Servicing Fee and other amounts as provided in the related Servicing Agreement.
The Master Servicer shall, and (to the extent provided in the related Servicing
Agreement) shall cause the Servicers to, provide access to information and
documentation regarding the Mortgage Loans to the Trustee, its agents and
accountants at any time upon reasonable request and during normal business
hours, and to Certificateholders that are savings and loan associations, banks
or insurance companies, the Office of Thrift Supervision, the FDIC and the
supervisory agents and
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examiners of such Office and Corporation or examiners of any other federal or
state banking or insurance regulatory authority if so required by applicable
regulations of the Office of Thrift Supervision or other regulatory authority,
such access to be afforded without charge but only upon reasonable request in
writing and during normal business hours at the offices of the Master Servicer
designated by it. In fulfilling such a request the Master Servicer shall not be
responsible for determining the sufficiency of such information.
(b) All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer in respect of any Mortgage Loans, whether from
the collection of principal and interest payments or from Liquidation Proceeds
or Insurance Proceeds, shall be held by the Master Servicer for and on behalf of
the Trustee and the Certificateholders and shall be and remain the sole and
exclusive property of the Trustee; provided, however, that the Master Servicer
and the Servicers shall be entitled to setoff against, and deduct from, any such
funds any amounts that are properly due and payable to the Master Servicer or
such Servicer under this Agreement or the related Servicing Agreement.
Section 3.09. Standard Hazard Insurance and Flood Insurance Policies.
(a) For each Mortgage Loan, the Master Servicer shall enforce any
obligation of the Servicer under the related Servicing Agreement to maintain or
cause to be maintained standard fire and casualty insurance and, where
applicable, flood insurance, all in accordance with the provisions of the
related Servicing Agreement. It is understood and agreed that such insurance
shall be with insurers meeting the eligibility requirements set forth in the
related Servicing Agreement and that no earthquake or other additional insurance
is to be required of any Mortgagor or to be maintained on property acquired in
respect of a defaulted Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance.
(b) Pursuant to Section 4.01, any amounts collected by a Servicer or
the Master Servicer under any insurance policies (other than amounts to be
applied to the restoration or repair of the property subject to the related
Mortgage or released to the Mortgagor in accordance with the related Servicing
Agreement) shall be deposited into the Distribution Account, subject to
withdrawal pursuant to Section 4.03. Any cost incurred by the Master Servicer or
the related Servicer in maintaining any such insurance (if the Mortgagor
defaults in its obligation to do so) shall be added to the amount owing under
the Mortgage Loan where the terms of the Mortgage Loan so permit; provided,
however, that the addition of any such cost shall not be taken into account for
purposes of calculating the distributions to be made to Certificateholders and
shall be recoverable by the Master Servicer or such Servicer pursuant to
Sections 4.01 and 4.03.
Section 3.10. Presentment of Claims and Collection of Proceeds. The
Master Servicer shall (to the extent provided in the Servicing Agreements) cause
each Servicer to prepare and present on behalf of the Trustee and the
Certificateholders all claims under the Insurance Policies and take such actions
(including the negotiation, settlement, compromise or enforcement of the
insured's claim) as shall be necessary to realize recovery under such policies.
Any proceeds disbursed to the Master Servicer (or disbursed to a Servicer and
remitted to the Master Servicer) in respect of such policies, bonds or contracts
shall be promptly deposited in the Distribution Account upon receipt, except
that any amounts realized that are to be applied to the repair or
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restoration of the related Mortgaged Property as a condition precedent to the
presentation of claims on the related Mortgage Loan to the insurer under any
applicable Insurance Policy need not be so deposited (or remitted).
Section 3.11. Maintenance of the Primary Mortgage Insurance Policies.
(a) The Master Servicer shall not take, or permit a Servicer (to the
extent such action is prohibited under the related Servicing Agreement) to take,
any action that would result in noncoverage under any applicable Primary
Mortgage Insurance Policy of any loss which, but for the actions of such Master
Servicer or Servicer, would have been covered thereunder. The Master Servicer
shall use its best reasonable efforts to cause each Servicer (to the extent
required under the related Servicing Agreement) to keep in force and effect (to
the extent that the Mortgage Loan requires the Mortgagor to maintain such
insurance) primary mortgage insurance applicable to each Mortgage Loan in
accordance with the provisions of this Agreement and the related Servicing
Agreement, as applicable. The Master Servicer shall not, and shall not permit a
Servicer (to the extent required under the related Servicing Agreement) to,
cancel or refuse to renew any such Primary Mortgage Insurance Policy that is in
effect at the date of the initial issuance of the Mortgage Note and is required
to be kept in force hereunder except in accordance with the provisions of this
Agreement and the related Servicing Agreement, as applicable.
(b) The Master Servicer agrees to present, or to cause each Servicer
(to the extent required under the related Servicing Agreement) to present, on
behalf of the Trustee and the Certificateholders, claims to the insurer under
any Primary Mortgage Insurance Policies and, in this regard, to take such
reasonable action as shall be necessary to permit recovery under any Primary
Mortgage Insurance Policies respecting defaulted Mortgage Loans. Any amounts
collected by the Master Servicer or the related Servicer under any Primary
Mortgage Insurance Policies shall be deposited in the Distribution Account,
subject to withdrawal pursuant to Section 4.03.
Section 3.12. Trustee to Retain Possession of Certain Insurance
Policies and Documents.
The Trustee (or the Custodian, as directed by the Trustee), shall
retain possession and custody of the originals (to the extent available) of any
Primary Mortgage Insurance Policies, or certificate of insurance, if applicable,
and any certificates of renewal as to the foregoing as may be issued from time
to time as contemplated by this Agreement. Until all amounts distributable in
respect of the Certificates have been distributed in full and the Master
Servicer otherwise has fulfilled its obligations under this Agreement, the
Trustee (or its Custodian, if any, as directed by the Trustee) shall also retain
possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions of this Agreement. The Master Servicer shall promptly
deliver or cause to be delivered to the Trustee (or the Custodian, as directed
by the Trustee), upon the execution or receipt thereof the originals of any
Primary Mortgage Insurance Policies, any certificates of renewal, and such other
documents or instruments that constitute portions of the Mortgage File that come
into the possession of the Master Servicer from time to time.
Section 3.13. Realization Upon Defaulted Mortgage Loans. The Master
Servicer shall cause each Servicer (to the extent required under the related
Servicing Agreement) to foreclose
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upon, repossess or otherwise comparably convert the ownership of Mortgaged
Properties securing such of the Mortgage Loans as come into and continue in
default and as to which no satisfactory arrangements can be made for collection
of delinquent payments, all in accordance with the related Servicing Agreement.
Section 3.14. Compensation for the Master Servicer.
The Master Servicer will be entitled to the sum of (i) the Master
Servicing Fee Rate multiplied by the Scheduled Principal Balance of each related
Mortgage Loan as of the Due Date in the month preceding the month in which the
related Distribution Date occurs (the "Master Servicing Fee") and (ii) all
income and gain realized from any investment of funds in the Distribution
Account with respect to the related Distribution Date (clauses (i) and (ii)
collectively, the "Master Servicing Compensation"). Servicing compensation in
the form of assumption fees, if any, late payment charges, as collected, if any,
or otherwise (but not including any prepayment premium or penalty) shall be
retained by the related Servicer and shall not be deposited in the related
Protected Account. The Master Servicer will be entitled to retain, as additional
compensation, any interest remitted by the related Servicer in connection with a
Principal Prepayment in full or otherwise in excess of amounts required to be
remitted to the Distribution Account. The Master Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder and
shall not be entitled to reimbursement therefor except as provided in this
Agreement.
Section 3.15. REO Property.
(a) In the event the Trust Fund acquires ownership of any REO Property
in respect of any related Mortgage Loan, the deed or certificate of sale shall
be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall, to the extent provided in the
Servicing Agreements, cause the related Servicer to sell any REO Property as
expeditiously as possible and in accordance with the provisions of this
Agreement and the related Servicing Agreement, as applicable. Pursuant to its
efforts to sell such REO Property, the Master Servicer shall cause the related
Servicer to protect and conserve such REO Property in the manner and to the
extent required by the related Servicing Agreement, in accordance with the REMIC
Provisions and in a manner that does not result in a tax on "net income from
foreclosure property" or cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code.
(b) The Master Servicer shall, to the extent required by the Servicing
Agreements, cause the related Servicer to deposit all funds collected and
received in connection with the operation of any REO Property in the related
Protected Account.
(c) The Master Servicer and the related Servicer, upon the final
disposition of any REO Property, shall be entitled to reimbursement for any
related unreimbursed Monthly Advances and other unreimbursed advances as well as
any unpaid Master Servicing Fee or Servicing Fees from Liquidation Proceeds
received in connection with the final disposition of such REO Property;
provided, that any such unreimbursed Monthly Advances as well as any unpaid
Master Servicing Fee or Servicing Fees may be reimbursed or paid, as the case
may be,
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prior to final disposition, out of any net rental income or other net amounts
derived from such REO Property.
(d) To the extent provided in the Servicing Agreements, the Liquidation
Proceeds from the final disposition of the REO Property, net of any payment to
the Master Servicer and the related Servicer as provided above, shall be
deposited in the related Protected Account on or prior to the Determination Date
in the month following receipt thereof and be remitted by wire transfer in
immediately available funds to the Master Servicer for deposit into the
Distribution Account on the next succeeding Servicer Remittance Date.
Section 3.16. Annual Officer's Certificate as to Compliance.
(a) The Master Servicer shall deliver to the Trustee and the Rating
Agencies on or before March 1 of each year, commencing on March 1, 2005, an
Officer's Certificate, certifying that with respect to the year ending December
31 of the prior year: (i) such Servicing Officer has reviewed the activities of
such Master Servicer during the preceding calendar year or portion thereof and
its performance under this Agreement, (ii) to the best of such Servicing
Officer's knowledge, based on such review, such Master Servicer has performed
and fulfilled its duties, responsibilities and obligations under this Agreement
in all material respects throughout such year, or, if there has been a default
in the fulfillment of any such duties, responsibilities or obligations,
specifying each such default known to such Servicing Officer and the nature and
status thereof, and (iii) nothing has come to the attention of such Servicing
Officer to lead such Servicing Officer to believe that a Servicer has failed to
perform any of its duties, responsibilities and obligations under the related
Servicing Agreement in all material respects throughout such year, or, if there
has been a material default in the performance or fulfillment of any such
duties, responsibilities or obligations, specifying each such default known to
such Servicing Officer and the nature and status thereof.
(b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trustee at the
Master Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Trustee with
such statement or (ii) the Trustee shall be unaware of the Master Servicer's
failure to provide such statement).
Section 3.17. Annual Independent Accountant's Servicing Report. If the
Master Servicer has, during the course of any fiscal year, directly serviced any
of the Mortgage Loans, then the Master Servicer at its expense shall cause a
nationally recognized firm of independent certified public accountants to
furnish a statement to the Trustee, the Rating Agencies and the Depositor on or
before March 1 of each year, commencing on March 1, 2005, to the effect that,
with respect to the most recently ended fiscal year, such firm has examined
certain records and documents relating to the Master Servicer's performance of
its servicing obligations under this Agreement and pooling and servicing and
trust agreements in material respects similar to this Agreement and to each
other and that, on the basis of such examination conducted substantially in
compliance with the Audit Program for Mortgages Serviced for 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
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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
by the Master Servicer to any Certificateholder upon request, or by the Trustee
at the expense of the Master Servicer if the Master Servicer shall fail to
provide such copies. If such report discloses exceptions that are material, the
Master Servicer shall advise the Trustee whether such exceptions have been or
are susceptible of cure, and will take prompt action to do so.
Section 3.18. Reports Filed with Securities and Exchange Commission.
(a) Within 15 days after each Distribution Date, the Securities Administrator
shall, in accordance with industry standards, file with the Commission via the
Electronic Data Gathering and Retrieval System ("XXXXX"), a Form 8-K (or other
comparable form containing the same or comparable information, or other
information mutually agreed upon) with a copy of the statement to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30 in any year, the Securities Administrator shall, in accordance with
industry standards and only if instructed by the Depositor, file a Form 15
Suspension Notice with respect to the Trust Fund, if applicable. Prior to (i)
March 15, 2005 and (ii) unless and until a Form 15 Suspension Notice shall have
been filed, prior to March 15 of each year thereafter, the Master Servicer shall
provide the Securities Administrator with a Master Servicer Certification,
together with a copy of the annual independent accountant's servicing report and
annual statement of compliance of each Servicer, in each case, required to be
delivered pursuant to the related Servicing Agreement, and, if applicable, the
annual statement of compliance and the annual independent accountant's servicing
report to be delivered by the Master Servicer pursuant to Sections 3.16 and
3.17. Prior to (i) March 31, 2005, or such earlier filing date as may be
required by the Commission, and (ii) unless and until a Form 15 Suspension
Notice shall have been filed, March 31 of each year thereafter, or such earlier
filing date as may be required by the Commission, the Securities Administrator
shall prepare and file a Form 10-K, in substance conforming to industry
standards, with respect to the Trust. Such Form 10-K shall include the Master
Servicer Certification and other documentation provided by the Master Servicer
pursuant to the second preceding sentence. The Depositor hereby grants to the
Securities Administrator a limited power of attorney to execute and file each
such document on behalf of the Depositor. Such power of attorney shall continue
until either the earlier of (i) receipt by the Securities Administrator from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Depositor agrees to promptly furnish to the
Securities Administrator, from time to time upon request, such further
information, reports and financial statements within its control related to this
Agreement and the Mortgage Loans as the Securities Administrator reasonably
deems appropriate to prepare and file all necessary reports with the Commission.
The Securities Administrator shall have no responsibility to file any items
other than those specified in this Section 3.18; provided, however, the
Securities Administrator will cooperate with the Depositor in connection with
any additional filings with respect to the Trust Fund as the Depositor deems
necessary under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(b) The Master Servicer shall indemnify and hold harmless the
Depositor, the Trustee and their respective officers, directors and Affiliates
from and against any losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments and other costs and
expenses arising out of or based upon a breach of the Master Servicer's
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obligations under this Section 3.18 or the Master Servicer's negligence, bad
faith or willful misconduct in connection therewith. Fees and expenses incurred
by the Master Servicer in connection with this Section 3.18 shall not be
reimbursable from the Trust Fund.
Section 3.19. EMC. On the Closing Date, EMC will receive from the
Depositor a payment of $5,000.
Section 3.20. UCC. The Depositor shall inform the Trustee in writing of
any Uniform Commercial Code financing statements that were filed on the Closing
Date in connection with the Trust with stamped recorded copies of such financing
statements to be delivered to the Trustee promptly upon receipt by the
Depositor. The Trustee agrees to monitor and notify the Depositor if any
continuation statements for such Uniform Commercial Code financing statements
need to be filed. If directed by the Depositor in writing, the Trustee will file
any such continuation statements solely at the expense of the Depositor. The
Depositor shall file any financing statements or amendments thereto required by
any change in the Uniform Commercial Code.
Section 3.21. Optional Purchase of Defaulted Mortgage Loans.
With respect to any Mortgage Loan which as of the first day of a
Calendar Quarter is delinquent in payment by 90 days or more or is an REO
Property, EMC shall have the right to purchase such Mortgage Loan from the Trust
at a price equal to the Repurchase Price; provided, however, (i) that such
Mortgage Loan is still 90 days or more delinquent or is an REO Property as of
the date of such purchase and (ii) this purchase option, if not theretofore
exercised, shall terminate on the date prior to the last day of the related
Calendar Quarter. This purchase option, if not exercised, shall not be
thereafter reinstated unless the delinquency is cured and the Mortgage Loan
thereafter again becomes 90 days or more delinquent or becomes an REO Property,
in which case the option shall again become exercisable as of the first day of
the related Calendar Quarter.
In addition, EMC shall, at its option, purchase any Mortgage Loan from
the Trust if the first Due Date for such Mortgage Loan is subsequent to the
Cut-off Date and the initial Monthly Payment with respect to such Mortgage Loan
is not made within thirty (30) days of such Due Date. Such purchase shall be
made at a price equal to the Repurchase Price.
If at any time EMC remits to the Paying Agent a payment for deposit in
the Distribution Account covering the amount of the Repurchase Price for such a
Mortgage Loan, and EMC provides to the Trustee and the Master Servicer a
certification signed by a Servicing Officer stating that the amount of such
payment has been deposited in the Distribution Account, then the Trustee shall
execute the assignment of such Mortgage Loan at the request of EMC, without
recourse, to EMC which shall succeed to all the Trustee's right, title and
interest in and to such Mortgage Loan, and all security and documents relative
thereto. Such assignment shall be an assignment outright and not for security.
EMC will thereupon own such Mortgage Loan, and all such security and documents,
free of any further obligation to the Trustee or the Certificateholders with
respect thereto.
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ARTICLE IV
Accounts
Section 4.01. Protected Accounts. (a) The Master Servicer shall enforce
the obligation of each respective Servicer to establish and maintain a Protected
Account in accordance with the related Servicing Agreement, with records to be
kept with respect thereto on a Mortgage Loan by Mortgage Loan basis, into which
Protected Account shall be deposited, within 48 hours (or as of such other time
specified in the related Servicing Agreement) of receipt thereof, all
collections of principal and interest on any Mortgage Loan and with respect to
any REO Property received by the related Servicer, including Principal
Prepayments, Insurance Proceeds, Liquidation Proceeds, and advances made from
such Servicer's own funds (less servicing compensation as permitted by the
related Servicing Agreement) and all other amounts to be deposited in the
related Protected Account. Each Servicer is hereby authorized to make
withdrawals from and deposits to the related Protected Account for purposes
required or permitted by this Agreement. To the extent provided in the related
Servicing Agreement, the related Protected Account shall be held in a Designated
Depository Institution and segregated on the books of such institution in the
name of the Trustee for the benefit of Certificateholders.
(b) To the extent provided in a Servicing Agreement, amounts on deposit
in the related Protected Account may be invested in Permitted Investments in the
name of the Trustee for the benefit of Certificateholders and, except as
provided in the preceding paragraph, not commingled with any other funds, such
Permitted Investments to mature, or to be subject to redemption or withdrawal,
no later than the date on which such funds are required to be withdrawn for
deposit in the Distribution Account, and shall be held until required for such
deposit. The income earned from Permitted Investments made pursuant to this
Section 4.01 shall be paid to the related Servicers under the related Servicing
Agreement, and the risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the related Servicer. Each Servicer (to the extent provided in the
related Servicing Agreement) shall deposit the amount of any such loss in the
related Protected Account within two Business Days of receipt of notification of
such loss but not later than the second Business Day prior to the Distribution
Date on which the moneys so invested are required to be distributed to the
Certificateholders.
(c) To the extent provided in a Servicing Agreement and subject to this
Article IV, on or before each Servicer Remittance Date, the related Servicer
shall withdraw or shall cause to be withdrawn from the related Protected
Account, and shall immediately deposit or cause to be deposited in the
Distribution Account, amounts representing the following collections and
payments (other than with respect to principal of or interest on the Mortgage
Loans due on or before the Cut-off Date) with respect to each Loan Group and
Loan Subgroup, as applicable:
(i) Scheduled Payments on the Mortgage Loans received or any
related portion thereof advanced by the related Servicer pursuant to
the related Servicing Agreement which were due on or before the related
Due Date, net of the amount thereof comprising the related Servicing
Fee;
(ii) Full Principal Prepayments and any Liquidation Proceeds
received by the related Servicer with respect to such Mortgage Loans in
the related Prepayment Period,
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with interest to the date of prepayment or liquidation, net of the
amount thereof comprising the related Servicing Fee;
(iii) Partial Principal Prepayments received by the related
Servicer for such Mortgage Loans in the related Prepayment Period;
(iv) All funds collected and received in connection with the
operation of any REO Property, and Liquidation Proceeds received upon
the final disposition of any REO Property (net of any unreimbursed
Monthly Advances, other advances of the related Servicer or Master
Servicer with respect thereto, and unpaid Master Servicing Fee and
related Servicing Fees with respect thereto); and
(v) Any amount to be used as a Monthly Advance.
(d) Withdrawals may be made from a Protected Account only to make
remittances as provided in Section 4.01(c); to reimburse the Master Servicer or
the related Servicer for Monthly Advances which have been recovered by
subsequent collection from the related Mortgagor; to remove amounts deposited in
error; to remove fees, charges or other such amounts deposited on a temporary
basis; or to clear and terminate the account at the termination of this
Agreement in accordance with Section 10.01. As provided in Section 4.01(c),
certain amounts otherwise due to the related Servicers may be retained by them
and need not be deposited in the Distribution Account.
Section 4.02. Distribution Account. (a) The Paying Agent shall
establish and maintain in the name of the Paying Agent, for the benefit of the
Certificateholders, the Distribution Account as a segregated trust account or
accounts. On the Closing Date, the Depositor shall deposit the Deposit Amount
into the Distribution Account.
(b) All amounts deposited to the Distribution Account shall be held by
the Paying Agent in the name of the Paying Agent in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement.
(c) The Distribution Account shall constitute a trust account of the
Trust Fund segregated on the books of the Paying Agent. The Distribution Account
shall be an Eligible Account. The amount at any time credited to the
Distribution Account, shall, if invested, be invested in the name of the
Trustee, in such Permitted Investments selected 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 Date if the
obligor for such Permitted Investment is the Paying Agent or, if such obligor is
any other Person, the Business Day preceding such Distribution Date. All
investment earnings from Permitted Investments in the Distribution Account from
time to time shall be for the account of the Master Servicer. The Master
Servicer shall be permitted to withdraw or receive distribution of any and all
investment earnings from the Distribution Account on each Distribution Date. If
there is any loss on a Permitted Investment or demand deposit, the Master
Servicer shall promptly remit the amount of the loss to the Paying Agent, who
shall deposit such amount in the Distribution Account. With respect to the
Distribution Account and the funds deposited therein, the Paying Agent shall
take such action as may be necessary to ensure that the Certificateholders shall
be entitled to the
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priorities afforded to such a trust account (in addition to a claim against the
estate of the Paying Agent) 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 4.03. Permitted Withdrawals and Transfers from the Distribution
Account. (a) The Paying Agent will, from time to time on demand of the Master
Servicer or the Securities Administrator, make or cause to be made such
withdrawals or transfers from the Distribution Account as the Master Servicer
has designated for such transfer or withdrawal pursuant to the related Servicing
Agreement or this Agreement or as the Securities Administrator has instructed
hereunder for the following purposes:
(i) to reimburse the Master Servicer or the related Servicer
for any Monthly Advance of its own funds or any advance of such Master
Servicer's or Servicer's own funds, the right of the Master Servicer or
a Servicer to reimbursement pursuant to this subclause (i) being
limited to amounts received on a particular Mortgage Loan (including,
for this purpose, the Repurchase Price therefor, Insurance Proceeds and
Liquidation Proceeds) which represent late payments or recoveries of
the principal of or interest on such Mortgage Loan respecting which
such Monthly Advance or advance was made;
(ii) to reimburse the Master Servicer or the related Servicer
from Insurance Proceeds or Liquidation Proceeds relating to a
particular Mortgage Loan for amounts expended by the Master Servicer or
the related Servicer in good faith in connection with the restoration
of the related Mortgaged Property which was damaged by an Uninsured
Cause or in connection with the liquidation of such Mortgage Loan;
(iii) to reimburse the Master Servicer or the related Servicer
from Insurance Proceeds relating to a particular Mortgage Loan for
insured expenses incurred with respect to such Mortgage Loan and to
reimburse the Master Servicer or the related 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 4.03(a)
to the Master Servicer, and (ii) such Liquidation Expenses were not
included in the computation of such Excess Liquidation Proceeds;
(iv) to pay the Master Servicer or the related Servicer, as
appropriate, from Liquidation Proceeds or Insurance Proceeds received
in connection with the liquidation of any Mortgage Loan, the amount
which the Master Servicer or the related Servicer 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 or the related Servicer from
the Repurchase Price for any Mortgage Loan, the amount which the Master
Servicer or the related
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Servicer would have been entitled to receive under subclause (viii) of
this Subsection 4.03(a) as servicing compensation;
(vi) to reimburse the Master Servicer or the related Servicer
for advances of funds, and the right to reimbursement pursuant to this
subclause being limited to amounts received on the related Mortgage
Loan (including, for this purpose, the Repurchase Price therefor,
Insurance Proceeds and Liquidation Proceeds) which represent late
recoveries of the payments for which such advances were made;
(vii) to reimburse the Master Servicer or the related Servicer
for any Monthly Advance or advance, after a Realized Loss has been
allocated with respect to the related Mortgage Loan, if the Monthly
Advance or advance has not been reimbursed pursuant to clauses (i) and
(vi);
(viii) to pay the Master Servicer as set forth in Section
3.14;
(ix) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Sections
3.03, 7.04(c) and (d);
(x) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds to the extent not
retained by the related Servicer;
(xi) to reimburse or pay a Servicer any such amounts as are
due thereto under the related Servicing Agreement and have not been
retained by or paid to such Servicer, to the extent provided in the
related Servicing Agreement;
(xii) to reimburse or pay the Trustee, the Securities
Administrator or the Custodian for fees, expenses, costs and
liabilities incurred by and reimbursable or payable to it pursuant to
this Agreement and not otherwise reimbursable or payable to it;
(xiii) to remove amounts deposited in error;
(xiv) to clear and terminate the Distribution Account pursuant
to Section 10.01;
(xv) on the first Distribution Date, to withdraw an amount
equal to the Deposit Amount from the Distribution Account and
distribute such amount to the holders of the Class R-I, Class R-II and
Class R-III Certificates, pro rata, until their respective Current
Principal Amounts have been reduced to zero; and
(xvi) on the first Distribution Date, to withdraw an amount
equal to the First Distribution Date Distribution Amount from the
Distribution Account and distribute such amount to the holders of the
Class I-X Certificates.
(b) The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Distribution Account pursuant to subclauses (i) through
(vii), inclusive, and (x).
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(c) On each Distribution Date, the Paying Agent shall distribute the
Available Funds to the extent on deposit in the Distribution Account for each
Loan Group and Loan Subgroup, as the case may be, to the Holders of the related
Certificates in accordance with distribution instructions provided to it by the
Securities Administrator no later than two Business Days prior to such
Distribution Date and determined by the Securities Administrator in accordance
with Section 6.01.
Section 4.04. Distribution of Carryover Shortfall Amount; Carryover
Shortfall Reserve Fund.
(a) On the Closing Date, the Paying Agent shall establish and maintain
in its name, in trust for the benefit of Class I-A-1, Class I-M, Class I-B-1,
Class I-B-2 and Class I-B-3 Certificates, the Carryover Shortfall Reserve Fund.
The Paying Agent shall, promptly upon receipt, deposit in the Carryover
Shortfall Reserve Fund an amount equal to $5,000 to be remitted on the Closing
Date to the Paying Agent by the Seller. On each Distribution Date, the Paying
Agent shall transfer from the Distribution Account to the Carryover Shortfall
Reserve Fund the amounts specified pursuant to Section 6.01(a)(A) and (B). On
each Distribution Date, to the extent required, the Paying Agent shall make
withdrawals from the Carryover Shortfall Reserve Fund and use the amounts in the
Carryover Shortfall Reserve Fund to make distributions to the Class I-A-1, Class
I-M, Class I-B-1, Class I-B-2 and Class I-B-3 Certificates, in an amount equal
to the amount of any Carryover Shortfall Amount on such Certificate. Any such
amounts transferred shall be treated for federal tax purposes as amounts
distributed by REMIC III to the Class I-X Certificateholders as transferee
thereof. For federal tax return and information reporting purposes, the rights
of the Holders of the Class I-A-1, Class I-M, Class I-B-1, Class I-B-2 and Class
I-B-3 Certificates to receive such distributions shall be assigned a value
determined by the Depositor and reported by it to the Securities Administrator.
(b) The Carryover Shortfall Reserve Fund shall be an Eligible Account.
Amounts held in the Carryover Shortfall Reserve Fund from time to time shall
continue to constitute assets of the Trust Fund, but not of the REMICs, until
released from the Carryover Shortfall Reserve Fund pursuant to this Section
4.06. The Carryover Shortfall Reserve Fund 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 I-X Certificateholders shall be the owners of the
Carryover Shortfall Reserve Fund, and for all federal tax purposes, amounts
transferred by the REMICs to the Carryover Shortfall Reserve Fund shall be
treated as amounts distributed by the REMICs to the Class I-X
Certificateholders. The Paying Agent shall keep records that accurately reflect
the funds on deposit in the Carryover Shortfall Reserve Fund.
(c) The Paying Agent will invest funds deposited in the Carryover
Shortfall Reserve Fund as directed by the Class I-X 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 Paying Agent or an Affiliate of the Paying Agent 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 Paying
Agent or an Affiliate of the Paying Agent manages or advises such investment.
All income and gain realized from investment of funds deposited in the Carryover
Shortfall Reserve Fund shall be for the sole and exclusive benefit of
69
the Class I-X Certificateholders and shall be remitted by the Paying Agent to
the Class I-X Certificateholders no later than the first Business Day following
receipt of such income and gain by the Paying Agent. The Class I-X
Certificateholders shall deposit in the Carryover Shortfall Reserve Fund the
amount of any net loss incurred in respect of any such Permitted Investment
immediately upon realization of such loss without any right of reimbursement
therefor.
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ARTICLE V
Certificates
Section 5.01. Certificates (a) The Depository, the Depositor and the
Certificate Registrar have entered into a Depository Agreement dated as of the
Closing Date (the "Depository Agreement"). Except for the Residual Certificates,
the Private Certificates and the Individual Certificates and as provided in
Subsection 5.01(b), the Certificates shall at all times remain registered in the
name of the Depository or its nominee and at all times: (i) registration of such
Certificates may not be transferred by the Certificate Registrar except to a
successor to the Depository; (ii) ownership and transfers of registration of
such Certificates on the books of the Depository shall be governed by applicable
rules established by the Depository; (iii) the Depository may collect its usual
and customary fees, charges and expenses from its Depository Participants; (iv)
the Certificate Registrar shall deal with the Depository as representative of
such Certificate Owners of the respective Class of Certificates for purposes of
exercising the rights of Certificateholders under this Agreement, and requests
and directions for and votes of such representative shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(v) the Certificate Registrar may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its Depository
Participants.
The Residual Certificates and the Private Certificates are initially
Physical Certificates. If at any time the Holders of all of the Certificates of
one or more such Classes request that the Certificate Registrar cause such Class
to become Global Certificates, the Certificate Registrar and the Depositor will
take such action as may be reasonably required to cause the Depository to accept
such Class or Classes for trading if it may legally be so traded.
All transfers by Certificate Owners of such respective Classes of
Book-Entry Certificates and any Global Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owners. Each Depository Participant shall only
transfer Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures.
(b) If (i) (A) the Depositor advises the Certificate Registrar in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository and (B) the Certificate Registrar or the
Depositor is unable to locate a qualified successor within 30 days or (ii) the
Depositor at its option advises the Certificate Registrar in writing that it
elects to terminate the book-entry system through the Depository, the
Certificate Registrar shall request that the Depository notify all Certificate
Owners of the occurrence of any such event and of the availability of
definitive, fully registered Certificates to Certificate Owners requesting the
same. Upon surrender to the Certificate Registrar of the Certificates by the
Depository, accompanied by registration instructions from the Depository for
registration, the Certificate Registrar shall issue the definitive Certificates.
In addition, if an Event of Default has occurred and is continuing,
each Certificate Owner materially adversely affected thereby may at its option
request a definitive Certificate evidencing such Certificate Owner's interest in
the related Class of Certificates. In order to make such request, such
Certificate Owner shall, subject to the rules and procedures of the Depository,
71
provide the Depository or the related Depository Participant with directions for
the Certificate Registrar to exchange or cause the exchange of the Certificate
Owner's interest in such Class of Certificates for an equivalent interest in
fully registered definitive form. Upon receipt by the Certificate Registrar of
instructions from the Depository directing the Certificate Registrar to effect
such exchange (such instructions to contain information regarding the Class of
Certificates and the Current Principal Balance or Notional Balance, as
applicable, being exchanged, the registered holder of and delivery instructions
for the definitive Certificate, and any other information reasonably required by
the Certificate Registrar), (i) the Certificate Registrar shall execute and
deliver, in accordance with the registration and delivery instructions provided
by the Depository, a Definitive Certificate evidencing such Certificate Owner's
interest in such Class of Certificates and (ii) the Certificate Registrar shall
execute a new Book-Entry Certificate reflecting the reduction in the aggregate
Current Principal Balance or Notional Balance, as applicable, of such Class of
Certificates by the amount of the definitive Certificates.
Neither the Depositor nor the Certificate Registrar shall be liable for
any delay in the delivery of any instructions required pursuant to this Section
5.01(b) and may conclusively rely on, and shall be protected in relying on, such
instructions.
(c) (i) REMIC I will be evidenced by (x) the REMIC I Regular Interests
(designated below), which will be uncertificated and non-transferable and are
hereby designated as the "regular interests" in REMIC I and have the principal
balances and accrue interest at the Pass-Through Rates equal to those set forth
in this Section 5.01(c)(i) and (y) the Class R-I Certificates, which are hereby
designated as the single "residual interest" in REMIC I.
The REMIC I Regular Interests and the Class R-I Certificate will have
the following designations, initial balances and pass-through rates:
REMIC I Interest Initial Balance Pass-Through Related Subgroup
Rate
I-1A $6,974.50 (1) Subgroup I-1
I-1B $87,180.50 (2) Subgroup I-1
I-2A $811.44 (1) Subgroup I-2
I-2B $10,142.95 (3) Subgroup I-2
I-ZZZ $973,129,431.61 (1) N/A
II-1A $298.29 (4), (8) Subgroup II-1
II-1B $5,142.75 (5), (8) Subgroup II-1
II-2A $657.25 (4), (9) Subgroup II-2
II-2B $11,331.86 (6), (9) Subgroup II-2
II-3A $664.71 (4), (10) Subgroup II-3
II-3B $11,460.42 (7), (10) Subgroup II-3
II-ZZZ $279,320,780.72 (4), (11) N/A
Class R-I $50.00 N/A Loan Subgroup I-1
(1) The weighted average of the Net Rates of the Group I Mortgage
Loans, weighted on the basis of the respective Scheduled Principal Balance of
each such Mortgage Loan as of the beginning of the Due Period immediately
preceding the related Distribution Date.
(2) The weighted average of the Net Rates of the Loan Subgroup I-1
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balance of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date.
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(3) The weighted average of the Net Rates of the Loan Subgroup I-2
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balance of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date.
(4) The weighted average of the Net Rates of the Group II Mortgage
Loans, weighted on the basis of the respective Scheduled Principal Balance of
each such Mortgage Loan as of the beginning of the Due Period immediately
preceding the related Distribution Date.
(5) The weighted average of the Net Rates of the Loan Subgroup II-1
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balance of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date.
(6) The weighted average of the Net Rates of the Loan Subgroup II-2
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balance of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date.
(7) The weighted average of the Net Rates of the Loan Subgroup II-3
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balance of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date.
(8) The Current Principal Amount of REMIC I Regular Interests II-1A
and II-1B may be subject to increase if the interest due on any Loan Subgroup
II-1 Mortgage Loan exceeds the Monthly Payment due on that Mortgage Loan for a
given month and, as a result of the negative amortization feature of that
Mortgage Loan, that excess interest is added to its principal balance.
(9) The Current Principal Amount of REMIC I Regular Interests II-2A
and II-2B may be subject to increase if the interest due on any Loan Subgroup
II-2 Mortgage Loan exceeds the Monthly Payment due on that Mortgage Loan for a
given month and, as a result of the negative amortization feature of that
Mortgage Loan, that excess interest is added to its principal balance.
(10) The Current Principal Amount of REMIC I Regular Interests II-3A
and II-3B may be subject to increase if the interest due on any Loan Subgroup
II-3 Mortgage Loan exceeds the Monthly Payment due on that Mortgage Loan for a
given month and, as a result of the negative amortization feature of that
Mortgage Loan, that excess interest is added to its principal balance.
(11) The Current Principal Amount of REMIC I Regular Interest II-ZZZ
may be subject to increase if the interest due on any Loan Subgroup II-1
Mortgage Loan, Loan Subgroup II-2 Mortgage Loan or Loan Subgroup II-3 Mortgage
Loan exceeds the Monthly Payment due on that Mortgage Loan for a given month
and, as a result of the negative amortization feature of that Mortgage Loan,
that excess interest is added to its principal balance.
Distributions of principal shall be deemed to be made from amounts
received on the related Group I Mortgage Loans or Group II Mortgage Loans, as
the case maybe, to the applicable REMIC I Regular Interests, first, so as to
keep the Uncertificated Principal Balance of each REMIC I Regular Interest
ending with the designation "B" equal to 0.01% of the aggregate Scheduled
Principal Balance of the Group I Mortgage Loans or Group II Mortgage Loans in
the related Loan Subgroup; second, to each REMIC I Regular Interest ending with
the designation "A," so that the Uncertificated Principal Balance of each such
REMIC I Regular Interest is equal to 0.01% of the excess of (x) the aggregate
Scheduled Principal Balance of the Group I Mortgage Loans or Group II Mortgage
Loans in the related Loan Subgroup over (y) the Current Principal Amount of the
related Group I Senior Certificates or Group II Senior Certificates in the
related Loan Subgroup (except that if any such excess is a larger number than in
the preceding distribution period, the least amount of principal shall be
distributed to such REMIC I Regular Interests such that the REMIC I Subordinated
Balance Ratio is maintained); and third, any remaining principal to REMIC I
Regular Interest I-ZZZ or REMIC I
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Regular Interest II-ZZZ, as applicable. Realized Losses shall be applied after
all distributions have been made on each Distribution Date first, so as to keep
the Uncertificated Principal Balance of each REMIC I Regular Interest ending
with the designation "B" equal to 0.01% of the aggregate Scheduled Principal
Balance of the Group I Mortgage Loans or Group II Mortgage Loans in the related
Loan Subgroup; second, to each REMIC I Regular Interest ending with the
designation "A," so that the Uncertificated Principal Balance of each such REMIC
I Regular Interest is equal to 0.01% of the excess of (x) the aggregate
Scheduled Principal Balance of the Group I Mortgage Loans or Group II Mortgage
Loans in the related Loan Subgroup over (y) the Current Principal Amount of the
related Group I Senior Certificates or Group II Senior Certificates in the
related Loan Subgroup (except that if any such excess is a larger number than in
the preceding distribution period, the least amount of Realized Losses shall be
applied to such REMIC I Regular Interests such that the REMIC I Subordinated
Balance Ratio is maintained); and third, any remaining Realized Losses shall be
allocated to REMIC I Regular Interest I-ZZZ or II-ZZZ, as applicable.
(ii) REMIC II will be evidenced by (x) the REMIC II Regular Interests
(designated below), which will be uncertificated and non-transferable and are
hereby designated as the "regular interests" in REMIC II and have the principal
balances and accrue interest at the Pass-Through Rates equal to those set forth
in this Section 5.01(c)(ii) and (y) the Class R-II Certificate, which is hereby
designated as the single "residual interest" in REMIC II.
The REMIC II Regular Interests and the Class R-II Certificate will have
the following designations, initial balances and pass-through rates:
REMIC II Interest Initial Balance Pass-Through Rate Related Subgroup
I-A-1 $802,060,000 (1) Subgroup I-1
I-A-2 $93,315,100 (2) Subgroup I-2
MT-R $50.00 (1) Loan Subgroup I-1
I-M $30,657,400 (3) N/A
I-B-1 $15,571,800 (3) N/A
I-B-2 $11,192,200 (3) N/A
I-B-3 $7,785,900 (3) N/A
I-B-4 $3,892,900 (3) N/A
I-B-5 $2,433,100 (3) N/A
I-B-6 $6,326,141 (3) N/A
II-A-1 $48,444,600 (4), (8) Loan Subgroup II-1
II-A-2 $106,746,100 (5), (9) Loan Subgroup II-2
II-A-3 $107,957,100 (6), (10) Loan Subgroup II-3
II-B-1 $4,888,700 (7), (11) N/A
II-B-2 $3,771,300 (7), (11) N/A
II-B-3 $2,793,500 (7), (11) N/A
II-B-4 $2,793,400 (7), (11) N/A
II-B-5 $1,117,400 (7), (11) N/A
II-B-6 $838,236 (7), (11) N/A
Class R-II $50.00 N/A Loan Subgroup I-1
(1) The weighted average of the Net Rates of the Loan Subgroup I-1
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balance of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date.
(2) The weighted average of the Net Rates of the Loan Subgroup I-2
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balance of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date.
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(3) A variable Pass-Through Rate equal to the weighted average of the
Pass-Through Rates on REMIC I Regular Interests I-1A and I-2A, weighted on the
basis of the Uncertificated Principal Balance of each such REMIC I Regular
Interest immediately preceding the related Distribution Date, provided that for
purposes of that weighted average, the Pass-Through Rate of each such REMIC I
Regular Interest shall be subject to a cap and a floor equal to the Pass-Through
Rate of the REMIC I Regular Interest from the related Loan Subgroup ending with
the designation "B".
(4) The weighted average of the Net Rates of the Loan Subgroup II-1
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balance of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date.
(5) The weighted average of the Net Rates of the Loan Subgroup II-2
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balance of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date.
(6) The weighted average of the Net Rates of the Loan Subgroup II-3
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balance of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date.
(7) A variable Pass-Through Rate equal to the weighted average of the
Pass-Through Rates on REMIC I Regular Interests II-1A, II-2A and II-3A, weighted
on the basis of the Uncertificated Principal Balance of each such REMIC I
Regular Interest immediately preceding the related Distribution Date, provided
that for purposes of that weighted average, the Pass-Through Rate of each such
REMIC I Regular Interest shall be subject to a cap and a floor equal to the
Pass-Through Rate of the REMIC I Regular Interest from the related Loan Subgroup
ending with the designation "B".
(8) The Current Principal Amount of REMIC II Regular Interest II-A-1
may be subject to increase in the event that (i) the interest due with respect
to any Loan Subgroup II-1 Mortgage Loan exceeds the Monthly Payment due on that
Mortgage Loan for a given month and (ii) as a result of the negative
amortization feature of that Mortgage Loan, the Current Principal Amounts of
REMIC I Regular Interests II-1A and II-1B are increased.
(9) The Current Principal Amount of REMIC II Regular Interest II-A-2
may be subject to increase in the event that (i) the interest due with respect
to any Loan Subgroup II-2 Mortgage Loan exceeds the Monthly Payment due on that
Mortgage Loan for a given month and (ii) as a result of the negative
amortization feature of that Mortgage Loan, the Current Principal Amounts of
REMIC I Regular Interests II-2A and II-2B are increased.
(10) The Current Principal Amount of REMIC II Regular Interest II-A-3
may be subject to increase in the event that (i) the interest due with respect
to any Loan Subgroup II-3 Mortgage Loan exceeds the Monthly Payment due on that
Mortgage Loan for a given month and (ii) as a result of the negative
amortization feature of that Mortgage Loan, the Current Principal Amounts of
REMIC I Regular Interests II-3A and II-3B are increased.
(11) The current Principal Amounts of the REMIC II Regular Interests
XX-X-0, XX-X-0, XX-X-0, XX-X-0, XX-X-0 and II-B-6 may be subject to increase in
the event that (i) the interest due with respect to any Loan Subgroup II-1
Mortgage Loan, Loan Subgroup II-2 Mortgage Loan or Loan Subgroup II-3 Mortgage
Loan exceeds the Monthly Payment due on that Mortgage Loan for a given month and
(ii) as a result of the negative amortization feature of that Mortgage Loan,
that excess interest is added to the principal balance of that Mortgage Loan and
the Current Principal Amount of the corresponding REMIC I Regular Interest is
increased.
Principal shall be payable to, and shortfalls, losses and prepayments
are allocable to, the REMIC II Regular Interests as such amounts are payable and
allocable to the Corresponding Certificates.
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(iii) The Classes of the Certificates shall have the following
designations, initial principal amounts and Pass-Through Rates:
Designation Initial Principal/ Pass-Through Rate
Notional Amount
I-A-1 $802,060,000 (1)
I-A-2 $93,315,100 (2)
II-A-1 $48,444,600 (3), (14)
II-A-2 $106,746,100 (4), (15)
II-A-3 $107,957,100 (5), (16)
I-X $867,267,300 (6)
R-I $50.00 (7)
R-II $50.00 (7)
R-III $50.00 (7)
I-M $30,657,400 (8)
I-B-1 $15,571,800 (9)
I-B-2 $11,192,200 (10)
I-B-3 $7,785,900 (11)
I-B-4 $3,892,900 (12)
I-B-5 $2,433,100 (12)
I-B-6 $6,326,141 (12)
II-B-1 $4,888,700 (13), (17)
II-B-2 $3,771,300 (13), (17)
II-B-3 $2,793,500 (13), (17)
II-B-4 $2,793,400 (13), (17)
II-B-5 $1,117,400 (13), (17)
II-B-6 $838,236 (13), (17)
(1) The Class I-A-1 Certificates will bear interest at a variable rate
equal to the least of (i) One-Month LIBOR plus a margin initially equal to
0.330%, (ii) 11.00% per annum and (iii) the weighted average of the Net Rates of
the Loan Subgroup I-1 Mortgage Loans, weighted on the basis of the respective
Scheduled Principal Balances of each such Mortgage Loan as of the beginning of
the Due Period immediately preceding the related Distribution Date; provided
that, on such Distribution Dates, for federal income tax purposes such
Certificates will bear interest at a rate equivalent to the foregoing, with the
weighted average of the Net Rates of the Loan Subgroup I-1 Mortgage Loans
expressed as the weighted average of the Pass-Through Rate on REMIC II Regular
Interest I-A-1, weighted on the basis of the Uncertificated Principal balance of
such REMIC II Regular Interest immediately preceding the related Distribution
Date. The Pass-Through Rate with respect to the first Interest Accrual Period is
1.970% per annum.
(2) The Class I-A-2 Certificates will bear interest at a variable rate
equal to the weighted average of the Net Rates of the Loan Subgroup I-2 Mortgage
Loans, weighted on the basis of the respective Scheduled Principal Balances of
each such Mortgage Loan as of the beginning of the Due Period immediately
preceding the related Distribution Date; provided that, on such Distribution
Dates, for federal income tax purposes such Certificates will bear interest at a
rate equivalent to the foregoing, with the weighted average of the Net Rates of
the Loan Subgroup I-2 Mortgage Loans expressed as the weighted average of the
Pass-Through Rate on REMIC II Regular Interest I-A-2, weighted on the basis of
the Uncertificated Principal balance of such REMIC II Regular Interest
immediately preceding the related Distribution Date. The Pass-Through Rate with
respect to the first Interest Accrual Period is 4.014% per annum.
(3) The Class II-A-1 Certificates will bear interest at a variable rate
equal to the weighted average of the Net Rates of the Loan Subgroup II-1
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balances of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date; provided that, on such
Distribution Dates, for federal income tax purposes such Certificates will bear
interest at a rate equivalent to the foregoing, with the weighted average of the
Net Rates of the Loan Subgroup II-1 Mortgage Loans expressed as the weighted
average of the Pass-Through Rate on REMIC II Regular Interest II-A-1, weighted
on the basis of the Uncertificated Principal balance of such REMIC II Regular
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Interest immediately preceding the related Distribution Date. The Pass-Through
Rate with respect to the first Interest Accrual Period is 2.837% per annum.
(4) The Class II-A-2 Certificates will bear interest at a variable rate
equal to the weighted average of the Net Rates of the Loan Subgroup II-2
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balances of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date; provided that, on such
Distribution Dates, for federal income tax purposes the Class II-A-2
Certificates will bear interest at a rate equivalent to the foregoing, expressed
as the weighted average of the Pass-Through Rate on REMIC II Regular Interest
II-A-2, weighted on the basis of the Uncertificated Principal Balance of such
REMIC II Regular Interest immediately preceding the related Distribution Date.
The Pass-Through Rate with respect to the first Interest Accrual Period is
1.534% per annum.
(5) The Class II-A-3 Certificates will bear interest at a variable rate
equal to the weighted average of the Net Rates of the Loan Subgroup II-A-3
Mortgage Loans, weighted on the basis of the respective Scheduled Principal
Balances of each such Mortgage Loan as of the beginning of the Due Period
immediately preceding the related Distribution Date; provided that, on such
Distribution Dates, for federal income tax purposes the Class II-A-3
Certificates will bear interest at a rate equivalent to the foregoing, expressed
as the weighted average of the Pass-Through Rate on REMIC II Regular Interest
II-A-3, weighted on the basis of the Uncertificated Principal Balance of such
REMIC II Regular Interest immediately preceding the related Distribution Date.
The Pass-Through Rate with respect to the first Interest Accrual Period is
1.915% per annum.
(6) The Class I-X Certificates will consist of two non-separately
transferable components, Component 1X and Component 2X. Component 1X will bear
interest at a variable rate equal to the greater of (i) zero and (ii) the excess
of (x) the weighted average of the Net Rates of the Loan Subgroup I-1 Mortgage
Loans over (y) the weighted average Pass-Through Rate on the Class I-A-1
Certificates, based on a Notional Amount equal to the Current Principal Amount
of the Class I-A-1 Certificates. Component 2X will bear interest at a variable
rate equal to the greater of (i) zero and (ii) the excess of (x) the weighted
average of the Net Rates of Loan Subgroups I-1 and I-2, weighted in proportion
to the results of subtracting from the aggregate Scheduled Principal Balance of
each of Loan Subgroups I-1 and I-2 the Current Principal Amount of the related
Class of Group I Senior Certificates, as of the beginning of the Due Period
immediately prior to the related Distribution Date, over (y) the weighted
average of the Pass-Through Rates on the Class I-M, Class I-B-1, Class I-B-2 and
Class I-B-3 Certificates, based on a Notional Amount equal to the Current
Principal Amount of the Class I-M, Class I-B-1, Class I-B-2 and Class I-B-3
Certificates. The Pass-Through Rate for the Class I-X Certificates with respect
to the first Interest Accrual Period is 1.184% per annum, which excludes the
additional payment to be made to the Class I-X Certificates on the first
Distribution Date. The amount of interest payable to the Class I-X Certificates
will be reduced by any amounts necessary to fund the Carryover Shortfall Reserve
Fund to pay any Carryover Shortfall Amount to the Class I-A-1, Class I-M, Class
I-B-1, Class I-B-2 and Class I-B-3 Certificates on the related Distribution
Date. If on any Distribution Date the Group I Available Funds for the Group I
Senior Certificates in any Certificate Subgroup is less than the Accrued
Certificate Interest on the related Group I Senior Certificates for such
Distribution Date prior to reduction for Net Interest Shortfall and the interest
portion of Realized Losses on the related Group I Mortgage Loans, the shortfall
will be allocated among the holders of each Class of Group I Senior Certificates
in such Certificate Subgroup and the applicable Components of the Class I-X
Certificates in proportion to the respective amounts of Accrued Certificate
Interest that would have been allocated thereto in the absence of such Net
Interest Shortfall and/or Realized Losses for such Distribution Date.
(7) The Class R-I, Class R-II and Class R-III Certificates will not
bear interest.
(8) The Class I-M Certificates will bear interest at a variable rate
equal to the least of (i) One-Month LIBOR plus a margin initially equal to
0.450%, (ii) 11.00% per annum and (iii) the weighted average of the Net Rates of
Loan Subgroups I-1 and I-2, weighted in proportion to the results of subtracting
from the aggregate Scheduled Principal Balance of each such Loan Subgroup, the
Current Principal Amount of the related Class of Group I Senior Certificates
immediately prior to the related Distribution Date; provided that for federal
income tax purposes such Certificates will bear interest at a rate equivalent to
the foregoing, with the weighted average of the Net Rates of each such Loan
Subgroup expressed as the weighted average of the Pass-Through Rates on REMIC II
Regular Interests I-M, X-X-0, X-X-0, X-X-0, X-X-0, X-X-0 and I-B-6, weighted on
the basis of the Uncertificated
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Principal Balance of each such REMIC II Regular Interest immediately preceding
the related Distribution Date. The Pass-Through Rate with respect to the first
Interest Accrual Period is 2.090% per annum.
(9) The Class I-B-1 Certificates will bear interest at a variable rate
equal to the least of (i) One-Month LIBOR plus a margin initially equal to
0.600%, (ii) 11.00% per annum and (iii) the weighted average of the Net Rates of
Loan Subgroups I-1 and I-2, weighted in proportion to the results of subtracting
from the aggregate Scheduled Principal Balance of each such Loan Subgroup, the
Current Principal Amount of the related Class of Group I Senior Certificates
immediately prior to the related Distribution Date; provided that for federal
income tax purposes such Certificates will bear interest at a rate equivalent to
the foregoing, with the weighted average of the Net Rates of each such Loan
Subgroup expressed as the weighted average of the Pass-Through Rates on REMIC II
Regular Interests I-M, X-X-0, X-X-0, X-X-0, X-X-0, X-X-0 and I-B-6, weighted on
the basis of the Uncertificated Principal Balance of each such REMIC II Regular
Interest immediately preceding the related Distribution Date. The Pass-Through
Rate with respect to the first Interest Accrual Period is 2.240% per annum.
(10) The Class I-B-2 Certificates will bear interest at a variable rate
equal to the least of (i) One-Month LIBOR plus a margin initially equal to
1.200%, (ii) 11.00% per annum and (iii) the weighted average of the Net Rates of
Loan Subgroups I-1 and I-2, weighted in proportion to the results of subtracting
from the aggregate Scheduled Principal Balance of each such Loan Subgroup, the
Current Principal Amount of the related Class of Group I Senior Certificates
immediately prior to the related Distribution Date; provided that for federal
income tax purposes such Certificates will bear interest at a rate equivalent to
the foregoing, with the weighted average of the Net Rates of each such Loan
Subgroup expressed as the weighted average of the Pass-Through Rates on REMIC II
Regular Interests I-M, X-X-0, X-X-0, X-X-0, X-X-0, X-X-0 and I-B-6, weighted on
the basis of the Uncertificated Principal Balance of each such REMIC II Regular
Interest immediately preceding the related Distribution Date. The Pass-Through
Rate with respect to the first Interest Accrual Period is 2.840% per annum.
(11) The Class I-B-3 Certificates will bear interest at a variable rate
equal to the least of (i) One-Month LIBOR plus a margin initially equal to
1.500%, (ii) 11.00% per annum and (iii) the weighted average of the Net Rates of
Loan Subgroups I-1 and I-2, weighted in proportion to the results of subtracting
from the aggregate Scheduled Principal Balance of each such Loan Subgroup, the
Current Principal Amount of the related Class of Group I Senior Certificates
immediately prior to the related Distribution Date; provided that for federal
income tax purposes such Certificates will bear interest at a rate equivalent to
the foregoing, with the weighted average of the Net Rates of each such Loan
Subgroup expressed as the weighted average of the Pass-Through Rate on REMIC II
Regular Interests I-M, X-X-0, X-X-0, X-X-0, X-X-0, X-X-0 and I-B-6, weighted on
the basis of the Uncertificated Principal Balance of each such REMIC II Regular
Interest immediately preceding the related Distribution Date. The Pass-Through
Rate with respect to the first Interest Accrual Period is 3.140% per annum.
(12) The Class I-B-4, Class I-B-5 and Class I-B-6 Certificates will
bear interest at a variable rate equal to the weighted average of the Net Rates
of Loan Subgroups I-1 and I-2, weighted in proportion to the results of
subtracting from the aggregate Scheduled Principal Balance of each such Loan
Subgroup, the Current Principal Amount of the related Class of Group I Senior
Certificates immediately prior to the related Distribution Date; provided that
for federal income tax purposes such Certificates will bear interest at a rate
equivalent to the foregoing, expressed as the weighted average of the
Pass-Through Rates on REMIC II Regular Interests I-M, X-X-0, X-X-0, X-X-0,
X-X-0, X-X-0 and I-B-6, weighted on the basis of the Uncertificated Principal
Balance of each such REMIC II Regular Interest immediately preceding the related
Distribution Date. The Pass-Through Rate with respect to the first Interest
Accrual Period is 3.265% per annum.
(13) The Class II-B-1, Class II-B-2, Class II-B-3, Class II-B-4, Class
II-B-5 and Class II-B-6 Certificates will bear interest at a variable rate equal
to the weighted average of the Net Rates of Loan Subgroups II-1, II-2 and II-3,
weighted in proportion to the results of subtracting from the aggregate
Scheduled Principal Balance of each such Loan Subgroup, the Current Principal
Amount of the related Class of Group II Senior Certificates; provided that for
federal income tax purposes such Certificates will bear interest at a rate
equivalent to the foregoing, expressed as the weighted average of the
Pass-Through Rates on REMIC II Regular Interests XX-X-0, XX-X-0, XX-X-0, XX-X-0,
XX-X-0 and II-B-6, weighted on the basis of the Uncertificated Principal Balance
of each such REMIC II Regular Interest immediately preceding the related
Distribution Date. The Pass-Through Rate with respect to the first Interest
Accrual Period is 2.328% per annum.
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(14) The Current Principal Amount of the Class II-A-1 Certificates may
be subject to increase in the event that (i) the interest due with respect to
any Loan Subgroup II-1 Mortgage Loan exceeds the Monthly Payment due on such
Mortgage Loan for a given month, (ii) as a result of the negative amortization
feature of such Mortgage Loan, such excess interest is added to the principal
balance of such Loan Subgroup II-1 Mortgage Loan and the Current Principal
Amount of REMIC II Regular Interest II-A-1 is increased and (iii) Group II
Available Funds allocable to Loan Subgroup II-1 are insufficient to pay Accrued
Certificate Interest on the Class II-A-1 Certificates.
(15) The Current Principal Amount of the Class II-A-2 Certificates may
be subject to increase in the event that (i) the interest due with respect to
any Loan Subgroup II-2 Mortgage Loan exceeds the Monthly Payment due on such
Mortgage Loan for a given month, (ii) as a result of the negative amortization
feature of such Mortgage Loan, such excess interest is added to the principal
balance of such Loan Subgroup II-2 Mortgage Loan and the Current Principal
Amount of REMIC II Regular Interest II-A-2 is increased and (iii) Group II
Available Funds allocable to Loan Subgroup II-2 are insufficient to pay Accrued
Certificate Interest on the Class II-A-2 Certificates.
(16) The Current Principal Amount of the Class II-A-3 Certificates may
be subject to increase in the event that (i) the interest due with respect to
any Loan Subgroup II-3 Mortgage Loan exceeds the Monthly Payment due on such
Mortgage Loan for a given month, (ii) as a result of the negative amortization
feature of such Mortgage Loan, such excess interest is added to the principal
balance of such Loan Subgroup II-3 Mortgage Loan and the Current Principal
Amount of REMIC II Regular Interest II-A-3 is increased and (iii) Group II
Available Funds allocable to Loan Subgroup II-3 are insufficient to pay Accrued
Certificate Interest on the Class II-A-3 Certificates.
(17) The Current Principal Amount of the Class II-B-1 Certificates, the
Class II-B-2 Certificates, the Class II-B-3 Certificates, the Class II-B-4
Certificates, the Class II-B-5 Certificates and the Class II-B-6 Certificates
may be subject to increase in the event that (i) the interest due with respect
to any Loan Subgroup II-1 Mortgage Loan, Loan Subgroup II-2 Mortgage Loan or
Loan Subgroup II-3 Mortgage Loan exceeds the related Monthly Payment due on such
Mortgage Loan for a given month, and (ii) as a result of the negative
amortization feature of such Mortgage Loan, such excess interest is added to the
principal balance of such Loan Subgroup II-1 Mortgage Loan, Loan Subgroup II-2
Mortgage Loan or Loan Subgroup II-3 Mortgage Loan, as the case may be, and the
Current Principal Amount of REMIC II Regular Interest II-A-1, REMIC II Regular
Interest II-A-2 or REMIC II Regular Interest II-A-3 is increased.
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 Corresponding Certificates.
(d) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date for
the Mortgage Loan with the latest maturity date in the Trust Fund has been
designated as the "latest possible maturity date" for the REMIC I Regular
Interests, REMIC II Regular Interests and the Certificates.
(e) With respect to each Distribution Date, each Class of Certificates
shall accrue interest during the related Interest Accrual Period. With respect
to each Distribution Date and each such Class of Certificates, interest shall be
calculated, on the basis of a 360-day year comprised of twelve 30-day months,
based upon the respective Pass-Through Rate set forth, or determined as
provided, above and the Current Principal Amount (or Notional Amount, in the
case of the Interest Only Certificates) of such Class applicable to such
Distribution Date.
(f) The Certificates shall be substantially in the forms set forth in
Exhibits X-0, X-0, X-0 and A-4. On original issuance, the Trustee shall sign,
and the Certificate Registrar shall countersign and deliver the Certificates at
the direction of the Depositor. Pending the preparation of definitive
Certificates of any Class, the Trustee may sign and the Certificate Registrar
may countersign temporary Certificates that are printed, lithographed or
typewritten, in authorized
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denominations for Certificates of such Class, substantially of the tenor of the
definitive Certificates in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers or authorized signatories executing such Certificates may determine, as
evidenced by their execution of such Certificates. If temporary Certificates are
issued, the Depositor will cause definitive Certificates to be prepared without
unreasonable delay. After the preparation of definitive Certificates, the
temporary Certificates shall be exchangeable for definitive Certificates upon
surrender of the temporary Certificates at the Certificate Registrar Office,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Certificates, the Trustee shall sign and the Certificate Registrar
shall countersign and deliver in exchange therefor a like aggregate principal
amount, in authorized denominations for such Class, of definitive Certificates
of the same Class. Until so exchanged, such temporary Certificates shall in all
respects be entitled to the same benefits as definitive Certificates.
(g) Each Class of Book-Entry Certificates will be registered as a
single Certificate of such Class held by a nominee of the Depository or the DTC
Custodian, and beneficial interests will be held by investors through the
book-entry facilities of the Depository in minimum denominations of (i) in the
case of the Senior Certificates (other than the Residual Certificates) and the
Group I Senior Mezzanine Certificates, $1,000 and in each case increments of
$1.00 in excess thereof, and (ii) in the case of the Offered Subordinate
Certificates, $25,000 and increments of $1.00 in excess thereof, except that one
Certificate of each such Class may be issued in a different amount so that the
sum of the denominations of all outstanding Certificates of such Class shall
equal the Current Principal Amount of such Class on the Closing Date. On the
Closing Date, the Trustee shall execute and countersign Physical Certificates
all in an aggregate principal amount that shall equal the Current Principal
Amount of such Class on the Closing Date. The Private Certificates shall be
issued in certificated fully-registered form in minimum dollar denominations of
$25,000 and integral multiples of $1.00 in excess thereof, except that one
Private Certificate of each such Class may be issued in a different amount so
that the sum of the denominations of all outstanding Private Certificates of
such Class shall equal the Current Principal Amount of such Class on the Closing
Date. The Residual Certificates shall each be issued in certificated
fully-registered form in the denomination of $50, $50 and $50, respectively.
Each Class of Global Certificates, if any, shall be issued in fully registered
form in minimum dollar denominations of $50,000 and integral multiples of $1.00
in excess thereof, except that one Certificate of each Class may be in a
different denomination so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Current Principal Amount of such
Class on the Closing Date. On the Closing Date, the Trustee shall execute and
the Certificate Registrar shall countersign (i) in the case of each Class of
Offered Certificates, the Certificate in the entire Current Principal Amount of
the respective Class and (ii) in the case of each Class of Private Certificates,
Individual Certificates all in an aggregate principal amount that shall equal
the Current Principal Amount of each such respective Class on the Closing Date.
The Certificates referred to in clause (i) and, if at any time there are to be
Global Certificates, the Global Certificates, shall be delivered by the
Depositor to the Depository or, pursuant to the Depository's instructions, shall
be delivered by the Depositor on behalf of the Depository to and deposited with
the DTC Custodian. The Trustee shall sign the Certificates by facsimile or
manual signature and the Certificate Registrar shall countersign them by manual
signature on behalf of the Trustee by one or more authorized signatories, each
of whom shall be Responsible Officers of the Trustee or its agent and the
Certificate Registrar or its agent, as applicable. A
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Certificate bearing the manual and facsimile signatures of individuals who were
the authorized signatories of the Trustee or its agent or the Certificate
Registrar or its agent, as applicable, at the time of issuance shall bind the
Trustee and the Certificate Registrar, notwithstanding that such individuals or
any of them have ceased to hold such positions prior to the delivery of such
Certificate.
(h) No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
the manually executed countersignature of the Certificate Registrar or its
agent, and such countersignature upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly executed
and delivered hereunder. All Certificates issued on the Closing Date shall be
dated the Closing Date. All Certificates issued thereafter shall be dated the
date of their countersignature.
(i) The Closing Date is hereby designated as the "startup" day of each
REMIC within the meaning of Section 860G(a)(9) of the Code.
(j) For federal income tax purposes, each REMIC shall have a tax year
that is a calendar year and shall report income on an accrual basis.
(k) The Trustee on behalf of the Trust shall cause each REMIC to timely
elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of any
Trust established hereby shall be resolved in a manner that preserves the
validity of such elections.
(l) The following legend shall be placed on the Residual Certificates,
whether upon original issuance or upon issuance of any other Certificate of any
such Class in exchange therefor or upon transfer thereof:
THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFEREE PROVIDES THE TRUSTEE WITH AN OPINION OF COUNSEL
ADDRESSED TO THE TRUSTEE, THE CERTIFICATE REGISTRAR, THE MASTER SERVICER AND THE
SECURITIES ADMINISTRATOR AND ON WHICH THEY MAY RELY THAT IS SATISFACTORY TO THE
TRUSTEE THAT THE PURCHASE OF CERTIFICATES ON BEHALF OF SUCH PERSON WILL NOT
RESULT IN OR CONSTITUTE A NONEXEMPT PROHIBITED TRANSACTION, IS PERMISSIBLE UNDER
APPLICABLE LAW AND WILL NOT GIVE RISE TO ANY ADDITIONAL OBLIGATIONS ON THE PART
OF THE DEPOSITOR, THE CERTIFICATE REGISTRAR, THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR OR THE TRUSTEE.
The following legend shall be placed upon the Private Certificates,
whether upon original issuance or upon issuance of any other Certificate of any
such Class in exchange therefor or upon transfer thereof:
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THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFEREE CERTIFIES OR REPRESENTS THAT THE PROPOSED
TRANSFER AND HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND
OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED
TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED
TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION
EXEMPTION ("PTCE") 84-14, XXX 00-00, XXX 00-0, XXX 95-60 OR PTE 96-23 AND (II)
WILL NOT GIVE RISE TO ANY ADDITIONAL OBLIGATIONS ON THE PART OF THE DEPOSITOR,
THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE
DEEMED REPRESENTED BY AN OWNER OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL
CERTIFICATE OR UNLESS THE OPINION SPECIFIED IN SECTION 5.07 OF THE AGREEMENT IS
PROVIDED.
Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall maintain at its Certificate Registrar Office
a Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.
(b) Subject to Subsection 5.01(a) and, in the case of any Global
Certificate or Physical Certificate upon the satisfaction of the conditions set
forth below, upon surrender for registration of transfer of any Certificate at
any office or agency of the Certificate Registrar maintained for such purpose,
the Trustee shall sign, and the Certificate Registrar shall countersign and
deliver, in the name of the designated transferee or transferees, a new
Certificate of a like Class and aggregate Fractional Undivided Interest, but
bearing a different number.
(c) By acceptance of an Individual Certificate, whether upon original
issuance or subsequent transfer, each holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth in the Securities
Legend and agrees that it will transfer such a Certificate only as provided
herein. In addition to the provisions of Subsection 5.02(h), the following
restrictions shall apply with respect to the transfer and registration of
transfer of an Individual Certificate to a transferee that takes delivery in the
form of an Individual Certificate:
(i) The Certificate Registrar shall register the transfer of
an Individual Certificate if the requested transfer is being made to a
transferee who has provided the Certificate Registrar with a Rule 144A
Certificate or comparable evidence as to its QIB status.
(ii) The Certificate Registrar shall register the transfer of
any Individual Certificate if (x) the transferor has advised the
Certificate Registrar in writing that the Certificate is being
transferred to an Institutional Accredited Investor, and (y) prior to
the transfer the transferee furnishes to the Certificate Registrar an
Investment Letter (and the Certificate Registrar shall be fully
protected in so doing), provided that, if based upon an
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Opinion of Counsel to the effect that the delivery of (x) and (y)
above are not sufficient to confirm that the proposed transfer is
being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and
other applicable laws, the Certificate Registrar shall as a condition
of the registration of any such transfer require the transferor to
furnish such other certifications, legal opinions or other information
prior to registering the transfer of an Individual Certificate as
shall be set forth in such Opinion of Counsel.
(d) Subject to Subsection 5.02(h), so long as a Global Certificate of
such Class is outstanding and is held by or on behalf of the Depository,
transfers of beneficial interests in such Global Certificate, or transfers by
holders of Individual Certificates of such Class to transferees that take
delivery in the form of beneficial interests in the Global Certificate, may be
made only in accordance with this Subsection 5.02(d) and in accordance with the
rules of the Depository:
(i) In the case of a beneficial interest in the Global
Certificate being transferred to an Institutional Accredited Investor,
such transferee shall be required to take delivery in the form of an
Individual Certificate or Certificates and the Certificate Registrar
shall register such transfer only upon compliance with the provisions
of Subsection 5.02(c)(ii).
(ii) In the case of a beneficial interest in a Class of Global
Certificates being transferred to a transferee that takes delivery in
the form of an Individual Certificate or Certificates of such Class,
except as set forth in clause (i) above, the Certificate Registrar
shall register such transfer only upon compliance with the provisions
of Subsection 5.02(c)(i).
(iii) In the case of an Individual Certificate of a Class
being transferred to a transferee that takes delivery in the form of a
beneficial interest in a Global Certificate of such Class, the
Certificate Registrar shall register such transfer if the transferee
has provided the Trustee with a Rule 144A Certificate or comparable
evidence as to its QIB status.
(iv) No restrictions shall apply with respect to the transfer
or registration of transfer of a beneficial interest in the Global
Certificate of a Class to a transferee that takes delivery in the form
of a beneficial interest in the Global Certificate of such Class;
provided that each such transferee shall be deemed to have made such
representations and warranties contained in the Rule 144A Certificate
as are sufficient to establish that it is a QIB.
(e) Subject to Subsection 5.02(h), an exchange of a beneficial interest
in a Global Certificate of a Class for an Individual Certificate or Certificates
of such Class, an exchange of an Individual Certificate or Certificates of a
Class for a beneficial interest in the Global Certificate of such Class and an
exchange of an Individual Certificate or Certificates of a Class for another
Individual Certificate or Certificates of such Class (in each case, whether or
not such exchange is made in anticipation of subsequent transfer, and, in the
case of the Global Certificate of such Class, so long as such Certificate is
outstanding and is held by or on behalf of the
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Depository) may be made only in accordance with this Subsection 5.02(e) and in
accordance with the rules of the Depository:
(i) A holder of a beneficial interest in a Global Certificate
of a Class may at any time exchange such beneficial interest for an
Individual Certificate or Certificates of such Class.
(ii) A holder of an Individual Certificate or Certificates of
a Class may exchange such Certificate or Certificates for a beneficial
interest in the Global Certificate of such Class if such holder
furnishes to the Certificate Registrar a Rule 144A Certificate or
comparable evidence as to its QIB status.
(iii) A holder of an Individual Certificate of a Class may
exchange such Certificate for an equal aggregate principal amount of
Individual Certificates of such Class in different authorized
denominations without any certification.
(f) (i) Upon acceptance for exchange or transfer of an Individual
Certificate of a Class for a beneficial interest in a Global Certificate of such
Class as provided herein, the Certificate Registrar shall cancel such Individual
Certificate and shall (or shall request the Depository to) endorse on the
schedule affixed to the applicable Global Certificate (or on a continuation of
such schedule affixed to the Global Certificate and made a part thereof) or
otherwise make in its books and records an appropriate notation evidencing the
date of such exchange or transfer and an increase in the certificate balance of
the Global Certificate equal to the certificate balance of such Individual
Certificate exchanged or transferred therefor.
(ii) Upon acceptance for exchange or transfer of a beneficial
interest in a Global Certificate of a Class for an Individual
Certificate of such Class as provided herein, the Certificate Registrar
shall (or shall request the Depository to) endorse on the schedule
affixed to such Global Certificate (or on a continuation of such
schedule affixed to such Global Certificate and made a part thereof) or
otherwise make in its books and records an appropriate notation
evidencing the date of such exchange or transfer and a decrease in the
certificate balance of such Global Certificate equal to the certificate
balance of such Individual Certificate issued in exchange therefor or
upon transfer thereof.
(g) The Securities Legend shall be placed on any Individual Certificate
issued in exchange for or upon transfer of another Individual Certificate or of
a beneficial interest in a Global Certificate.
(h) Subject to the restrictions on transfer and exchange set forth in
this Section 5.02, the holder of any Individual Certificate may transfer or
exchange the same in whole or in part (in an initial certificate balance equal
to the minimum authorized denomination set forth in Section 5.01(g) above or any
integral multiple of $1.00 in excess thereof) by surrendering such Certificate
at the Certificate Registrar Office, or at the office of any transfer agent,
together with an executed instrument of assignment and transfer satisfactory in
form and substance to the Certificate Registrar in the case of transfer and a
written request for exchange in the case of exchange. The holder of a beneficial
interest in a Global Certificate may, subject to the rules and
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procedures of the Depository, cause the Depository (or its nominee) to notify
the Certificate Registrar in writing of a request for transfer or exchange of
such beneficial interest for an Individual Certificate or Certificates.
Following a proper request for transfer or exchange, the Certificate Registrar
shall, within five Business Days of such request made at such the Certificate
Registrar Office, sign, countersign and deliver at the Certificate Registrar
Office, to the transferee (in the case of transfer) or holder (in the case of
exchange) or send by first class mail at the risk of the transferee (in the case
of transfer) or holder (in the case of exchange) to such address as the
transferee or holder, as applicable, may request, an Individual Certificate or
Certificates, as the case may require, for a like aggregate Fractional Undivided
Interest and in such authorized denomination or denominations as may be
requested. The presentation for transfer or exchange of any Individual
Certificate shall not be valid unless made at the Certificate Registrar Office
by the registered holder in person, or by a duly authorized attorney-in-fact.
(i) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class and
aggregate Fractional Undivided Interest, upon surrender of the Certificates to
be exchanged at any such office or agency; provided, however, that no
Certificate may be exchanged for new Certificates unless the original Fractional
Undivided Interest represented by each such new Certificate (i) is at least
equal to the minimum authorized denomination or (ii) is acceptable to the
Depositor as indicated to the Trustee in writing. Whenever any Certificates are
so surrendered for exchange, the Trustee shall sign and the Certificate
Registrar shall countersign and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive.
(j) If the Certificate Registrar so requires, every Certificate
presented or surrendered for transfer or exchange shall be duly endorsed by, or
be accompanied by a written instrument of transfer, with a signature guarantee,
in form satisfactory to the Certificate Registrar, duly executed by the holder
thereof or his or her attorney duly authorized in writing.
(k) No service charge shall be made for any transfer or exchange of
Certificates, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(l) The Certificate Registrar shall cancel all Certificates surrendered
for transfer or exchange but shall retain such Certificates in accordance with
its standard retention policy or for such further time as is required by the
record retention requirements of the Exchange Act, and thereafter may destroy
such Certificates.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates. (a) If
(i) any mutilated Certificate is surrendered to the Certificate Registrar, or
the Certificate Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate, and (ii) there is delivered to
the Certificate Registrar such security or indemnity as it may require to save
it harmless, and (iii) the Certificate Registrar has not received notice that
such Certificate has been acquired by a third Person, the Trustee shall sign and
the Certificate Registrar shall countersign and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and Fractional Undivided Interest but in each case
bearing a
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different number. The mutilated, destroyed, lost or stolen Certificate shall
thereupon be canceled of record by the Certificate Registrar and shall be of no
further effect and evidence no rights.
(b) Upon the issuance of any new Certificate under this Section 5.03,
the Certificate Registrar 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 Certificate
Registrar) connected therewith. Any duplicate Certificate issued pursuant to
this Section 5.03 shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
Section 5.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Paying Agent, the
Certificate Registrar, the Trustee and any agent of the Depositor, the Paying
Agent, the Certificate Registrar, or 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 pursuant to Section 6.01 and for all other
purposes whatsoever. Neither the Depositor, the Paying Agent, the Certificate
Registrar the Trustee nor any agent of the Depositor, the Paying Agent, the
Certificate Registrar or the Trustee shall be affected by notice to the
contrary. No Certificate shall be deemed duly presented for a transfer effective
on any Record Date unless the Certificate to be transferred is presented no
later than the close of business on the third Business Day preceding such Record
Date.
Section 5.05. Transfer Restrictions on Residual Certificates. (a)
Residual Certificates, or interests therein, may not be transferred without the
prior express written consent of the Tax Matters Person and the Depositor. As a
prerequisite to such consent, the proposed transferee must provide the Tax
Matters Person, the Depositor, the Certificate Registrar and the Trustee with an
affidavit that the proposed transferee is a Permitted Transferee (and, unless
the Tax Matters Person and the Depositor consent to the transfer to a person who
is not a U.S. Person, an affidavit that it is a U.S. Person) as provided in
Subsection 5.05(b).
(b) No transfer, sale or other disposition of a Residual Certificate
(including a beneficial interest therein) may be made unless, prior to the
transfer, sale or other disposition of a Residual Certificate, the proposed
transferee (including the initial purchasers thereof) delivers to the Tax
Matters Person, the Certificate Registrar, the Trustee and the Depositor an
affidavit in the form attached hereto as Exhibit E stating, among other things,
that as of the date of such transfer (i) such transferee is a Permitted
Transferee and that (ii) such transferee is not acquiring such Residual
Certificate for the account of any person who is not a Permitted Transferee. The
Tax Matters Person shall not consent to a transfer of a Residual Certificate if
it has actual knowledge that any statement made in the affidavit issued pursuant
to the preceding sentence is not true. Notwithstanding any transfer, sale or
other disposition of a Residual Certificate to any Person who is not a Permitted
Transferee, such transfer, sale or other disposition shall be deemed to be of no
legal force or effect whatsoever and such Person shall not be deemed to be a
Holder of a Residual Certificate for any purpose hereunder, including, but not
limited to, the receipt of distributions thereon. If any purported transfer
shall be in violation of the provisions of this Subsection 5.05(b), then the
prior Holder thereof shall, upon discovery that the transfer of such Residual
Certificate was not in fact permitted by this Subsection 5.05(b), be restored to
all rights as a Holder thereof retroactive to the date of the purported
transfer. None of the Trustee, the
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Certificate Registrar, the Tax Matters Person or the Depositor shall be under
any liability to any Person for any registration or transfer of a Residual
Certificate that is not permitted by this Subsection 5.05(b) or for making
payments due on such Residual Certificate to the purported Holder thereof or
taking any other action with respect to such purported Holder under the
provisions of this Agreement so long as the written affidavit referred to above
was received with respect to such transfer, and the Tax Matters Person, the
Trustee and the Depositor, as applicable, had no knowledge that it was untrue.
The prior Holder shall be entitled to recover from any purported Holder of a
Residual Certificate that was in fact not a Permitted Transferee under this
Subsection 5.05(b) at the time it became a Holder all payments made on such
Residual Certificate. Each Holder of a Residual Certificate, by acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this Subsection 5.05(b) and to any amendment of this Agreement deemed necessary
(whether as a result of new legislation or otherwise) by counsel of the Tax
Matters Person or the Depositor to ensure that the Residual Certificates are not
transferred to any Person who is not a Permitted Transferee and that any
transfer of such Residual Certificates will not cause the imposition of a tax
upon the Trust or cause any REMIC to fail to qualify as a REMIC.
(c) Unless the Tax Matters Person and the Depositor shall have
consented in writing (which consent may be withheld in the Tax Matters Person's
or the Depositor's sole discretion), the Residual Certificates (including a
beneficial interest therein) may not be purchased by or transferred to any
person who is not a United States Person.
(d) By accepting a Residual Certificate, the purchaser thereof agrees
to be a Tax Matters Person, and appoints the Securities Administrator to act as
its agent with respect to all matters concerning the tax obligations of the
Trust.
Section 5.06. Restrictions on Transferability of Certificates. (a) No
offer, sale, transfer or other disposition (including pledge) of any Certificate
shall be made by any Holder thereof unless registered under the Securities Act,
or an exemption from the registration requirements of the Securities Act and any
applicable state securities or "Blue Sky" laws is available and the prospective
transferee (other than the Depositor) of such Certificate signs and delivers to
the Certificate Registrar an Investment Letter, if the transferee is an
Institutional Accredited Investor, in the form set forth as Exhibit F-l hereto,
or a Rule 144A Certificate, if the transferee is a QIB, in the form set forth as
Exhibit F-2 hereto. Notwithstanding the provisions of the immediately preceding
sentence, no restrictions shall apply with respect to the transfer or
registration of transfer of a beneficial interest in any Certificate that is a
Global Certificate of a Class to a transferee that takes delivery in the form of
a beneficial interest in the Global Certificate of such Class, provided that
each such transferee shall be deemed to have made such representations and
warranties contained in the Rule 144A Certificate as are sufficient to establish
that it is a QIB. In the case of a proposed transfer of any Certificate to a
transferee other than a QIB, the Certificate Registrar may require an Opinion of
Counsel that such transaction is exempt from the registration requirements of
the Securities Act. The cost of such opinion shall not be an expense of the
Trustee or the Trust Fund.
(b) The Private Certificates shall each bear a Securities Legend. The
Trustee and the Securities Administrator shall comply with the requirements of
Treasury Regulations (Section) 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to
the furnishing of information.
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Section 5.07. ERISA Restrictions. (a) Subject to the provisions of
Subsection 5.07(b), no Residual Certificates or Private Certificates may be
acquired directly or indirectly by, or on behalf of, an employee benefit plan or
other retirement arrangement which is subject to Title I of ERISA and/or Section
4975 of the Code, unless the proposed transferee provides either (i) the
Trustee, the Certificate Registrar, the Master Servicer and the Securities
Administrator with an Opinion of Counsel satisfactory to the Trustee, the
Certificate Registrar, the Master Servicer and the Securities Administrator,
which opinion will not be at the expense of the Trustee, the Master Servicer or
the Securities Administrator, that the purchase of such Certificates by or on
behalf of such Plan is permissible under applicable law, will not constitute or
result in the assets of the Trust being deemed to be "plan assets" subject to
the prohibited transaction provisions of ERISA or Section 4975 of the Code, will
not result in a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code and will not subject the Trustee, the Certificate
Registrar, the Master Servicer, the Depositor, any Servicer or the Securities
Administrator to any obligation in addition to those undertaken in the Agreement
or (ii) in the case of the Class I-B-4, Class I-B-5, Class I-B-6, Class II-B-4,
Class II-B-5 and Class II-B-6 Certificates, a representation or certification to
the Trustee and the Certificate Registrar (upon which each of the Trustee and
the Certificate Registrar is authorized to rely) to the effect that the proposed
transfer and/or holding of such a Certificate and the servicing, management and
operation of the Trust: (I) will not result in a prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code unless it is covered under an
individual or class prohibited transaction exemption, including but not limited
to Department of Labor Prohibited Transaction Class Exemption ("PTCE") 84-14
(Class Exemption for Plan Asset Transactions Determined by Independent Qualified
Professional Asset Managers); PTCE 91-38 (Class Exemption for Certain
Transactions Involving Bank Collective Investment Funds); PTCE 90-1 (Class
Exemption for Certain Transactions Involving Insurance Company Pooled Separate
Accounts), PTCE 95-60 (Class Exemption for Certain Transactions Involving
Insurance Company General Accounts), and PTCE 96-23 (Class Exemption for Plan
Asset Transactions Determined by In-House Asset Managers), or Section 401(c) of
ERISA and the regulations promulgated thereunder; (II) will not constitute or
result in the assets of the Trust being deemed to be "plan assets" subject to
the prohibited transaction provisions of ERISA or Section 4975 of the Code; and
(III) will not subject the Depositor, the Certificate Registrar, the Securities
Administrator, any Servicer, the Master Servicer or the Trustee to any
obligation in addition to those undertaken in the Agreement.
(b) Each beneficial owner of a Class I-M, Class I-B-1, Class I-B-2,
Class I-B-3, Class II-B-1, Class II-B-2 or Class II-B-3 Certificate or any
interest therein shall be deemed to have represented, by virtue of its
acquisition or holding of that certificate or interest therein, that either (i)
it is not a Plan or investing with "Plan Assets", (ii) it has acquired and is
holding such Certificate in reliance on Prohibited Transaction Exemption 97-34,
as amended (the "Exemption"), and that it understands that there are certain
conditions to the availability of the Exemption, including that the certificate
must be rated, at the time of purchase, not lower than "BBB-" (or its
equivalent) by S&P, Fitch or Xxxxx'x Investors Service, Inc., and the
certificate is so rated or (iii) (1) it is an insurance company, (2) the source
of funds used to acquire or hold the certificate or interest therein is an
"insurance company general account," as such term is defined in Prohibited
Transaction Class Exemption ("PTCE") 95-60, and (3) the applicable conditions of
PTCE 95-60 have been satisfied.
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(c) Any Person acquiring an interest in a Global Certificate which is a
Private Certificate, by acquisition of such Certificate, shall be deemed to have
represented to the Trustee that, in the case of the Class I-B-4, Class I-B-5,
Class I-B-6, Class II-B-4, Class II-B-5 and Class II-B-6 Certificates, either:
(i) it is not acquiring an interest in such Certificate directly or indirectly
by, or on behalf of, an employee benefit plan or other retirement arrangement
which is subject to Title I of ERISA and/or Section 4975 of the Code, or (ii)
the transfer and/or holding of an interest in such Certificate to that Person
and the subsequent servicing, management and/or operation of the Trust and its
assets: (I) will not result in any prohibited transaction unless it is covered
under an individual or class prohibited transaction exemption, including, but
not limited to, XXXX 00-00, XXXX 00-00, XXXX 00-0, XXXX 95-60 or PTCE 96-23, or
Section 401(c) of ERISA and the regulations promulgated thereunder; (II) will
not constitute or result in the assets of the Trust being deemed to be "plan
assets" subject to the prohibited transaction provisions of ERISA or Section
4975 of the Code; and (III) will not subject the Depositor, the Certificate
Registrar, the Securities Administrator, any Servicer, the Master Servicer or
the Trustee to any obligation in addition to those undertaken in the Agreement.
(d) Neither the Trustee, the Certificate Registrar, the Master Servicer
nor the Securities Administrator will be required to monitor, determine or
inquire as to compliance with the transfer restrictions with respect to the
Global Certificates. Any attempted or purported transfer of any Certificate in
violation of the provisions of Subsections (a) or (b) above shall be void ab
initio and such Certificate shall be considered to have been held continuously
by the prior permitted Certificateholder. Any transferor of any Certificate in
violation of such provisions, shall indemnify and hold harmless the Trustee, the
Certificate Registrar, the Securities Administrator and the Master Servicer from
and against any and all liabilities, claims, costs or expenses incurred by the
Trustee, the Certificate Registrar, the Securities Administrator or the Master
Servicer as a result of such attempted or purported transfer. Neither the
Trustee nor the Certificate Registrar shall have any liability for transfer of
any such Global Certificates in or through book-entry facilities of any
Depository or between or among Depository Participants or Certificate Owners
made in violation of the transfer restrictions set forth herein.
Section 5.08. Rule 144A Information. For so long as any Certificates
are outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) of the Securities Act: (1) the Depositor will provide or cause to be
provided to any holder of such Certificates and any prospective purchaser
thereof designated by such a holder, upon the request of such holder or
prospective purchaser, the information required to be provided to such holder or
prospective purchaser by Rule 144A(d)(4) under the Securities Act; and (2) the
Depositor shall update such information from time to time in order to prevent
such information from becoming false and misleading and will take such other
actions as are necessary to ensure that the safe harbor exemption from the
registration requirements of the Securities Act under Rule 144A is and will be
available for resales of such Certificates conducted in accordance with Rule
144A.
Section 5.09. Appointment of Paying Agent and Certificate Registrar.
Xxxxx Fargo Bank, National Association, as Securities Administrator, shall act
as the initial Paying Agent and Certificate Registrar for so long as it is also
the Master Servicer. Each of the Paying Agent and the Certificate Registrar may
resign upon thirty (30) days' prior written notice to the Trustee; provided
hereto that no such resignation shall be effective until the appointment of a
successor paying agent or certificate registrar. In the event the Paying Agent
and/or the Certificate
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Registrar resigns or is removed by the Trustee for cause, the Trustee may
appoint a successor paying agent or certificate registrar, as applicable. The
Trustee shall cause such successor paying agent, if other than the Trustee or
the Master Servicer or the Securities Administrator, to execute and deliver to
the Trustee an instrument in which such paying agent shall agree with the
Trustee that such paying agent will hold all sums held by it for the payment to
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums have been paid to the Certificateholders.
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ARTICLE VI
Payments to Certificateholders
Section 6.01. Distributions on the Certificates. (a) Interest and
principal on the Certificates will be distributed monthly on each Distribution
Date, commencing in August 2004, in an aggregate amount equal to the Available
Funds for such Distribution Date.
On the first Distribution Date, an amount equal to the Deposit Amount
will be distributed to the Class R-I, Class R-II and Class R-III Certificates,
pro rata, in reduction of their respective Current Principal Amounts, until
their respective Current Principal Amounts have been reduced to zero.
On the first Distribution Date, the Paying Agent will, prior to the
distribution of Group I Available Funds to any Group I Certificate, distribute
the First Distribution Date Distribution Amount to the Class I-X Certificates,
pro rata, as follows:
(i) from Group I Available Funds, an amount equal to the
product of (x) the First Distribution Date Distribution Amount and (y)
the Component 1X Distribution Percentage; and
(ii) from Group I Available Funds, an amount equal to the
product of (x) the First Distribution Date Distribution Amount and (y)
the Component 2X Distribution Percentage.
(A) On each Distribution Date, the Group I Available Funds (or on the
first Distribution Date, the Group I Available Funds remaining following the
distribution of the First Distribution Date Distribution Amount to the Class I-X
Certificates) will be distributed to the Group I Senior Certificates and the
Class I-X Certificates as follows:
first, concurrently, as follows:
(1) pro rata, to the extent of Group I Available
Funds allocable to Loan Subgroup I-1, to the Class I-A-1
Certificates and Component 1X of the Class I-X Certificates,
the Accrued Certificate Interest on each such Class or
Component for such Distribution Date, and to Component 2X of
the Class I-X Certificates, the Subgroup I-1 Allocation
Fraction of Accrued Certificate Interest on such Component for
such Distribution Date; and
(2) pro rata, to the extent of Group I Available
Funds allocable to Loan Subgroup I-2, to the Class I-A-2
Certificates, the Accrued Certificate Interest on such Class
for such Distribution Date, and to Component 2X of the Class
I-X Certificates, the Subgroup I-2 Allocation Fraction of
Accrued Certificate Interest on such Component for such
Distribution Date;
provided, however, that the amount of Accrued Certificate
Interest paid to the Class I-X Certificates in respect of
Component 1X will be reduced by the aggregate amount of any
Carryover Shortfall Amounts on the Class I-A-1 Certificates,
and that the amount of Accrued Certificate Interest paid to
the Class
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I-X Certificates pursuant to this clause in respect of
Component 2X will be reduced by the Subgroup I-1 Allocation
Fraction and the Subgroup I-2 Allocation Fraction of any
Carryover Shortfall Amounts on the Class I-M, Class I-B-1,
Class I-B-2 and Class I-B-3 Certificates, in each case for
that Distribution Date, which will be deposited into the
Carryover Shortfall Reserve Fund. In addition, Accrued
Certificate Interest on such Group I Senior Certificates and
each such Component of the Class I-X Certificates is subject
to reduction in the event of certain Net Interest Shortfalls
allocable thereto. Any Net Interest Shortfalls shall be
allocated among such Group I Senior Certificates and
Components of the Class I-X Certificates in accordance with
the provisions of Section 6.02(g);
second, to the extent of remaining Group I Available Funds
allocable to such Class or Component of such Certificates, to the Group
I Senior Certificates and Component 1X and Component 2X of the Class
I-X Certificates, the Accrued Certificate Interest thereon pursuant to
clause first remaining undistributed from previous Distribution Dates
(other than, with respect to Component 1X and Component 2X of the Class
I-X Certificates, any amounts pursuant to clause first deposited into
the Carryover Shortfall Reserve Fund); and
third, concurrently as follows:
(1) to the extent of remaining Group I Available
Funds allocable to Loan Subgroup I-1, to the Class I-A-1
Certificates, in reduction of the Current Principal Amount
thereof, the remaining related Group I Senior Optimal
Principal Amount for such Distribution Date, until the Current
Principal Amount of such Class has been reduced to zero; and
(2) to the extent of remaining Group I Available
Funds allocable to Loan Subgroup I-2, to the Class I-A-2
Certificates, in reduction of the Current Principal Amount
thereof, the remaining related Group I Senior Optimal
Principal Amount for such Distribution Date until the Current
Principal Amount of such Class has been reduced to zero.
(B) On each Distribution Date, the Group II Available Funds will be
distributed to the Group II Senior Certificates as follows:
first, concurrently, to the extent of Group II Available Funds
allocable to Loan Subgroups II-1, II-2 and II-3, as the case may be, to
the Class II-A-1 Certificates, the Class II-A-2 Certificates and the
Class II-A-3 Certificates, respectively, the Accrued Certificate
Interest on such Class for such Distribution Date. As described below,
Accrued Certificate Interest on the Class II-A-1 Certificates, the
Class II-A-2 Certificates and the Class II-A-3 Certificates, as the
case may be, is subject to reduction in the event of certain Net
Interest Shortfalls on the Mortgage Loans in Loan Subgroups II-1, II-2
and II-3, respectively, allocable thereto;
second, to the extent of remaining Group II Available Funds
allocable to Loan Subgroups II-1, II-2 and II-3, respectively, to the
Class II-A-1 Certificates, the Class II-
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A-2 Certificates and the Class II-A-3 Certificates, any Accrued
Certificate Interest thereon pursuant to clause first remaining
undistributed from previous Distribution Dates; and
third, to the extent of remaining Group II Available Funds
allocable to Loan Subgroups II-1, II-2 and II-3, respectively, to the
Class II-A-1 Certificates, the Class II-A-2 Certificates and the Class
II-A-3 Certificates, in reduction of the Current Principal Amount
thereof, the related Group II Senior Optimal Principal Amounts for such
Distribution Date, until the Current Principal Amount of each such
Class has been reduced to zero.
(C) Except as provided in paragraphs (E) and (F) below, on each
Distribution Date on or prior to the Cross-Over Date relating to the Group I
Certificates, an amount equal to the remaining Group I Available Funds after the
distributions in (A) above will be distributed to the Class I-M Certificates, up
to an amount equal to and in the following order: (a) the Accrued Certificate
Interest thereon for such Distribution Date, (b) any Accrued Certificate
Interest thereon remaining undistributed from previous Distribution Dates and
(c) such Class's Allocable Share for such Distribution Date, in each case, to
the extent of the remaining Group I Available Funds.
(D) Except as provided in paragraphs (E) and (F) below, on each
Distribution Date on or prior to the Cross-Over Date relating to the Group I
Certificates, an amount equal to the remaining Group I Available Funds after the
distributions in (A) and (C) above will be distributed sequentially, in the
following order, to the Class I-B-1, Class I-B-2, Class I-B-3, Class I-B-4,
Class I-B-5 and Class I-B-6 Certificates, in each case up to an amount equal to
and in the following order: (a) the Accrued Certificate Interest thereon for
such Distribution Date, (b) any Accrued Certificate Interest thereon remaining
undistributed from previous Distribution Dates and (c) such Class's Allocable
Share for such Distribution Date, in each case, to the extent of the remaining
Group I Available Funds.
(E) On each Distribution Date prior to the Cross-Over Date relating to
the Group I Certificates but after the reduction of the Current Principal Amount
of any Class of the Group I Senior Certificates to zero, the remaining Class of
Group I Senior Certificates will be entitled to receive in reduction of their
Current Principal Amounts, in addition to any Principal Prepayments related to
such remaining Group I Senior Certificates' respective Loan Subgroup allocated
to such Group I Senior Certificates, 100% of the Principal Prepayments on any
Mortgage Loan in the Loan Subgroup relating to the fully repaid Class of Group I
Senior Certificates; provided, however, that if (i) the weighted average of the
related Group I Senior Mezzanine and Group I Subordinate Percentage on such
Distribution Date equals or exceeds two times the initial weighted average of
the related Group I Senior Mezzanine and Group I Subordinate Percentage and (ii)
the aggregate Scheduled Principal Balance of the related Group I Mortgage Loans
delinquent 60 days or more (including for this purpose any such Mortgage Loans
in foreclosure and Mortgage Loans with respect to which the related Mortgaged
Property has been acquired by the Trust), averaged over the last six months, as
a percentage of the sum of the aggregate Current Principal Amount of the Group I
Senior Mezzanine Certificates and Group I Subordinate Certificates, does not
exceed 100%, then the additional allocation of Principal Prepayments to such
Class of Group I Senior Certificates in accordance with this clause (E) will not
be made and
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100% of the Principal Prepayments on any Mortgage Loan in the Loan Subgroup
relating to the fully prepaid Class of Group I Senior Certificates will be
allocated on a pro rata basis to the Group I Senior Mezzanine Certificates and
Group I Subordinate Certificates.
(F) If on any Distribution Date the aggregate Current Principal Amount
of any Class of the Group I Senior Certificates would be greater than the
aggregate Scheduled Principal Balance of the Group I Mortgage Loans in the
related Loan Subgroup and any Group I Senior Mezzanine Certificates and Group I
Subordinate Certificates are still outstanding, in each case after giving effect
to distributions to be made on such Distribution Date, then (i) 100% of amounts
otherwise allocable to the Group I Senior Mezzanine Certificates and Group I
Subordinate Certificates in respect of principal from the Group I Mortgage Loans
will be distributed to such Class of the Group I Senior Certificates in
reduction of the Current Principal Amounts thereof, until the aggregate Current
Principal Amount of such Class of Group I Senior Certificates is an amount equal
to the aggregate Scheduled Principal Balance of the Group I Mortgage Loans in
the related Loan Subgroup, and (ii) the Accrued Certificate Interest otherwise
allocable to the Group I Senior Mezzanine Certificates and Group I Subordinate
Certificates on such Distribution Date will be reduced, if necessary, and
distributed to such Class of Group I Senior Certificates in an amount equal to
the Accrued Certificate Interest for such Distribution Date on the excess of (x)
the aggregate Current Principal Amount of such Class of Group I Senior
Certificates over (y) the aggregate Scheduled Principal Balance of the Group I
Mortgage Loans in the related Loan Subgroup. Any such reduction in the Accrued
Certificate Interest on the Group I Senior Mezzanine Certificates and Group I
Subordinate Certificates will be allocated on a pro rata basis in reverse order
of the numerical designations of the Group I Subordinate Certificates,
commencing with the Class I-B-6 Certificates, and then will be allocated to the
Group I Senior Mezzanine Certificates.
(G) Except as provided in paragraphs (H) and (I) below, on each
Distribution Date on or prior to the Cross-Over Date relating to the Group II
Certificates, an amount equal to the remaining Group II Available Funds after
the distributions in (B) above will be distributed sequentially, in the
following order, to the Class II-B-1, Class II-B-2, Class II-B-3, Class II-B-4,
Class II-B-5 and Class II-B-6 Certificates, in each case up to an amount equal
to and in the following order: (a) the Accrued Certificate Interest thereon for
such Distribution Date, (b) any Accrued Certificate Interest thereon remaining
undistributed from previous Distribution Dates and (c) such Class's Allocable
Share for such Distribution Date, in each case, to the extent of the remaining
Group II Available Funds.
(H) On each Distribution Date prior to the Cross-Over Date relating to
the Group II Certificates but after the reduction of the Current Principal
Amount of any Class of the Group II Senior Certificates to zero, the remaining
Class or Classes of Group II Senior Certificates will be entitled to receive on
a pro rata basis in reduction of their Current Principal Amounts, in addition to
any Principal Prepayments related to such remaining Group II Senior
Certificates' respective Loan Subgroup allocated to such Group II Senior
Certificates, 100% of the Principal Prepayments on any Mortgage Loan in the Loan
Subgroup relating to the fully repaid Class or Classes of Group II Senior
Certificates; provided, however, that if (i) the weighted average of the related
Group II Subordinate Percentage on such Distribution Date equals or exceeds two
times the initial weighted average of the related Group II Subordinate
Percentage and (ii) the aggregate Scheduled Principal Balance of the related
Group II Mortgage Loans delinquent 60 days or more
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(including for this purpose any such Mortgage Loans in foreclosure and Mortgage
Loans with respect to which the related mortgaged property has been acquired by
the Trust), averaged over the last six months, as a percentage of the sum of the
aggregate Current Principal Amount of the Group II Subordinate Certificates,
does not exceed 100%, then the additional allocation of Principal Prepayments to
such Class of Group II Senior Certificates in accordance with this clause (H)
will not be made and 100% of the Principal Prepayments on any Mortgage Loan in
the Loan Subgroup relating to the fully prepaid Class or Classes of Group II
Senior Certificates will be allocated on a pro rata basis to the Group II
Subordinate Certificates.
(I) If on any Distribution Date the aggregate Current Principal Amount
of any Class of the Group II Senior Certificates would be greater than the
aggregate Scheduled Principal Balance of the Group II Mortgage Loans in the
related Loan Subgroup and any Group II Subordinate Certificates are still
outstanding, in each case after giving effect to distributions to be made on
such Distribution Date, then (i) 100% of amounts otherwise allocable to the
Group II Subordinate Certificates in respect of principal will be distributed to
such Class of Group II Senior Certificates in reduction of the Current Principal
Amounts thereof, until the aggregate Current Principal Amount of such Class of
Group II Senior Certificates is an amount equal to the aggregate Scheduled
Principal Balance of the Group II Mortgage Loans in the related Loan Subgroup,
and (ii) the Accrued Certificate Interest otherwise allocable to the Group II
Subordinate Certificates on such Distribution Date will be reduced, if
necessary, and distributed to such Class of the Group II Senior Certificates in
an amount equal to the Accrued Certificate Interest for such Distribution Date
on the excess of (x) the aggregate Current Principal Amount of such Class or
Classes of Group II Senior Certificates over (y) the aggregate Scheduled
Principal Balance of the Group II Mortgage Loans in the related Loan Subgroup.
Any such reduction in the Accrued Certificate Interest on the Group II
Subordinate Certificates will be allocated on a pro rata basis in reverse order
of the numerical designations of the Group II Subordinate Certificates,
commencing with the Class II-B-6 Certificates.
(J) To the extent that Deferred Interest causes a shortfall in interest
collections on the Group II Mortgage Loans and principal collections on such
Group II Mortgage Loans are used to pay Accrued Certificate Interest to the
holders of the Group II Certificates, the portion of principal so utilized shall
come first from Principal Prepayments on the related Group II Mortgage Loans,
then from other principal receipts on the related Group II Mortgage Loans
including, without limitation, Net Liquidation Proceeds and the excess, if any,
of the Scheduled Principal Balance of a Mortgage Loan in such respective Loan
Subgroup that has been replaced with a Substitute Mortgage Loan, and finally
from scheduled payments of principal on the related Group II Mortgage Loans.
(b)(i) If, after distributions have been made pursuant to priorities
first, second and third of clause (A) above on any Distribution Date, the
remaining Group I Available Funds allocable to the Class I-A-1 or Class I-A-2
Certificates, respectively, are less than the respective Group I Senior Optimal
Principal Amounts, then such respective amounts shall be reduced, and such
remaining funds allocable to such respective Certificates will be distributed to
the Class I-A-1 or Class I-A-2 Certificates, respectively, on the basis of such
reduced amounts.
(ii) If, after distributions have been made pursuant to
priorities first and second of clause (B) above on any Distribution
Date, the remaining Group II Available
95
Funds allocable to the Class II-A-1, Class II-A-2 or Class II-A-3
Certificates, respectively, are less than the respective Group II
Senior Optimal Principal Amounts, then such respective amounts shall be
reduced, and such remaining funds allocable to such respective
Certificates will be distributed to the Class II-A-1, Class II-A-2 and
Class II-A-3 Certificates, respectively, on the basis of such reduced
amounts.
(c) "Pro rata" principal distributions among Classes of Certificates
will be made in proportion to the then Current Principal Amount of such Classes.
"Pro rata" interest distributions among Classes of Certificates on any
Distribution Date will be made in proportion to the Accrued Certificate Interest
payable on such Distribution Date.
(d) On each Distribution Date, any Group I Available Funds or Group II
Available Funds remaining after payment of interest and principal to the Class
or Classes of Group I Certificates or Group II Certificates, as the case may be,
entitled thereto, as described above, will be distributed to the Class R-III
Certificates; provided that if on any Distribution Date there are any Group I
Available Funds or Group II Available Funds remaining after payment of interest
and principal to a Class or Classes of Group I Certificates or Group II
Certificates entitled thereto, such amounts will be distributed to the other
Class or Classes of Group I Senior Certificates or Group II Senior Certificates,
pro rata, based upon their Current Principal Amounts, until all amounts due to
all such Classes of Group I Senior Certificates or Group II Senior Certificates
have been paid in full, before any amounts are distributed to the Class R-III
Certificates.
(e) On each Distribution Date, any amounts in the Carryover Shortfall
Reserve Fund will be distributed, in the following order, first to the Class
I-A-1 Certificates, based on Accrued Certificate Interest on such Class, and
then sequentially to the Class I-M, Class I-B-1, Class I-B-2 and Class I-B-3
Certificates, in each case up to an amount equal to any Carryover Shortfall
Amounts with respect to such Classes of Certificates.
(f) No Accrued Certificate Interest will be payable with respect to any
Class or Classes of Certificates after the Distribution Date on which the
Current Principal Amount of such Certificate or Certificates or Notional Amount
of a Component of such Certificate or Certificates has been reduced to zero.
(g) (i) If on any Distribution Date the Group I Available Funds or the
Group II Available Funds for the Group I Senior Certificates or the Group II
Senior Certificates, respectively, in any Certificate Subgroup is less than the
Accrued Certificate Interest on the related Class of Senior Certificates for
such Distribution Date prior to reduction for Net Interest Shortfalls and the
interest portion of Realized Losses on the related Mortgage Loans, the shortfall
will be allocated among the holders of each Class of related Senior Certificates
in such Certificate Subgroup and the applicable Components of the Class I-X
Certificates in proportion to the respective amounts of Accrued Certificate
Interest for such Distribution Date that would have been allocated thereto in
the absence of such Net Interest Shortfall and/or Realized Losses for such
Distribution Date. In addition, the amount of any interest shortfalls with
respect to the Mortgage Loans in the related Loan Group or such Loan Subgroup,
as the case may be, that are covered by subordination will constitute unpaid
Accrued Certificate Interest and will be distributable to holders of the
Certificates of the related Classes entitled to such amounts on
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subsequent Distribution Dates, to the extent of the Available Funds allocable to
the related Loan Group or Loan Subgroup (as the case may be) after current
interest distributions as required herein. Any such amounts so carried forward
will not bear interest. Any interest shortfalls will not be offset by a
reduction in the servicing compensation of the Master Servicer, the Servicers or
otherwise, except to the extent of applicable Compensating Interest Payments.
(h) (A) To the extent that the Accrued Certificate Interest on the
Class II-A-1, Class II-B-1, Class II-B-2, Class II-B-3, Class II-B-4, Class
II-B-5 and Class II-B-6 Certificates for any Distribution Date exceeds the
portion of the Group II Available Funds allocable to the Loan Subgroup II-1
Mortgage Loans and distributable to the Class II-A-1, Class II-B-1, Class
II-B-2, Class II-B-3, Class II-B-4, Class II-B-5 and Class II-B-6 Certificates
for that Distribution Date, the lesser of such excess and the aggregate amount
of Deferred Interest, if any, that is added to the Scheduled Principal Balance
of the Loan Subgroup II-1 Mortgage Loans on the Due Date occurring in the month
in which that Distribution Date occurs will be (i) added to the Current
Principal Amount of the Class II-A-1, Class II-B-1, Class II-B-2, Class II-B-3,
Class II-B-4, Class II-B-5 and Class II-B-6 Certificates in accordance with the
amount of Accrued Certificate Interest that would have accrued on such
Certificates absent this reduction and (ii) subtracted from the amount of
Accrued Certificate Interest otherwise payable to the Class II-A-1, Class
II-B-1, Class II-B-2, Class II-B-3, Class II-B-4, Class II-B-5 and Class II-B-6
Certificates for that Distribution Date.
(B) To the extent that the Accrued Certificate Interest on the
Class II-A-2, Class II-B-1, Class II-B-2, Class II-B-3, Class II-B-4, Class
II-B-5 and Class II-B-6 Certificates for any Distribution Date exceeds the
portion of the Group II Available Funds allocable to the Loan Subgroup II-2
Mortgage Loans and distributable to the Class II-A-2, Class II-B-1, Class
II-B-2, Class II-B-3, Class II-B-4, Class II-B-5 and Class II-B-6 Certificates
for that Distribution Date, the lesser of such excess and the aggregate amount
of Deferred Interest, if any, that is added to the Scheduled Principal Balance
of the Loan Subgroup II-2 Mortgage Loans on the Due Date occurring in the month
in which that Distribution Date occurs will be (i) added to the Current
Principal Amount of the Class II-A-2, Class II-B-1, Class II-B-2, Class II-B-3,
Class II-B-4, Class II-B-5 and Class II-B-6 Certificates in accordance with the
amount of Accrued Certificate Interest that would have accrued on such
Certificates absent this reduction and (ii) subtracted from the amount of
Accrued Certificate Interest otherwise payable to the Class II-A-2, Class
II-B-1, Class II-B-2, Class II-B-3, Class II-B-4, Class II-B-5 and Class II-B-6
Certificates for that Distribution Date.
(C) To the extent that the Accrued Certificate Interest on the
Class II-A-3, Class II-B-1, Class II-B-2, Class II-B-3, Class II-B-4, Class
II-B-5 and Class II-B-6 Certificates for any Distribution Date exceeds the
portion of the Group II Available Funds allocable to the Loan Subgroup II-3
Mortgage Loans and distributable to the Class II-A-3, Class II-B-1, Class
II-B-2, Class II-B-3, Class II-B-4, Class II-B-5 and Class II-B-6 Certificates
for that Distribution Date, the lesser of such excess and the aggregate amount
of Deferred Interest, if any, that is added to the Scheduled Principal Balance
of the Loan Subgroup II-3 Mortgage Loans on the Due Date occurring in the month
in which that Distribution Date occurs will be (i) added to the Current
Principal Amount of the Class II-A-3, Class II-B-1, Class II-B-2, Class II-B-3,
Class II-B-4, Class II-B-5 and Class II-B-6 Certificates in accordance with the
amount of Accrued Certificate Interest that would have accrued on such
Certificates absent this reduction and (ii)
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subtracted from the amount of Accrued Certificate Interest otherwise payable to
the Class II-A-3, Class II-B-1, Class II-B-2, Class II-B-3, Class II-B-4, Class
II-B-5 and Class II-B-6 Certificates for that Distribution Date.
(i) The expenses and fees of the Trust shall be paid by each of the
REMICs, to the extent that such expenses relate to the assets of each of such
respective REMICs, and all other expenses and fees of the Trust shall be paid
pro rata by each of the REMICs.
Section 6.02. Allocation of Losses. (a) On or prior to each
Determination Date, the Master Servicer shall determine the amount of any
Realized Loss in respect of each Mortgage Loan that occurred during the
immediately preceding calendar month.
(b) (i) With respect to any Group I Certificates on any Distribution
Date, the principal portion of each Realized Loss on a Group I Mortgage
Loan shall be allocated as follows:
first, to the Class I-B-6 Certificates until the Current
Principal Amount thereof has been reduced to zero;
second, to the Class I-B-5 Certificates until the Current
Principal Amount thereof has been reduced to zero;
third, to the Class I-B-4 Certificates until the Current
Principal Amount thereof has been reduced to zero;
fourth, to the Class I-B-3 Certificates until the Current
Principal Amount thereof has been reduced to zero;
fifth, to the Class I-B-2 Certificates until the Current
Principal Amount thereof has been reduced to zero;
sixth, to the Class I-B-1 Certificates until the Current
Principal Amount thereof has been reduced to zero;
seventh, to the Class I-M Certificates until the Current
Principal Amount thereof has been reduced to zero; and
eighth, if such loss is on (x) a Loan Subgroup I-1 Mortgage
Loan, to the Class I-A-1 Certificates, and (y) a Loan Subgroup I-2
Mortgage Loan, to the Class I-A-1 Certificates, in each case until the
respective current Principal Amount thereof is reduced to zero.
(ii) With respect to any Group II Certificates on any
Distribution Date, the principal portion of each Realized Loss on a
Group II Mortgage Loan shall be allocated as follows:
first, to the Class II-B-6 Certificates until the Current
Principal Amount thereof has been reduced to zero;
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second, to the Class II-B-5 Certificates until the Current
Principal Amount thereof has been reduced to zero;
third, to the Class II-B-4 Certificates until the Current
Principal Amount thereof has been reduced to zero;
fourth, to the Class II-B-3 Certificates until the Current
Principal Amount thereof has been reduced to zero;
fifth, to the Class II-B-2 Certificates until the Current
Principal Amount thereof has been reduced to zero;
sixth, to the Class II-B-1 Certificates until the Current
Principal Amount thereof has been reduced to zero; and
seventh, if such loss is on (x) a Loan Subgroup II-1 Mortgage
Loan, to the Class II-A-1 Certificates, (y) a Loan Subgroup II-2
Mortgage Loan, to the Class II-A-2 Certificates, and (z) a Loan
Subgroup II-3 Mortgage Loan, to the Class II-A-3 Certificates, in each
case until the respective Current Principal Amount thereof has been
reduced to zero.
(c) Notwithstanding the foregoing clause (b), no such allocation of any
Realized Loss shall be made on a Distribution Date to any Class or Classes of
Certificates to the extent that such allocation would result in the reduction of
the aggregate Current Principal Amounts of all the Classes of such Certificate
Group or Certificate Subgroup, as the case may be, as of such Distribution Date,
after giving effect to all distributions and prior allocations of Realized
Losses allocable to such Certificate Group or Certificate Subgroup, as the case
may be, on such date, to an amount less than the aggregate Scheduled Principal
Balance of all of the Mortgage Loans in the related Loan Group or Loan Subgroup,
as the case may be, as of the related Due Date (such limitation, the "Loss
Allocation Limitation").
(d) Any Realized Losses allocated to a Class of Certificates shall be
allocated among the Certificates of such Class (other than the Interest Only
Certificates) in proportion to their respective Current Principal Amounts. Any
allocation of Realized Losses shall be accomplished by reducing the Current
Principal Amount of the related Certificates on the related Distribution Date.
(e) Realized Losses shall be allocated on the Distribution Date in the
month following the month in which such loss was incurred and, in the case of
the principal portion thereof, after giving effect to distributions made on such
Distribution Date.
(f) On each Distribution Date, the Securities Administrator shall
determine and notify the Paying Agent of the Group I Senior Mezzanine
Certificate Writedown Amount, the Group I Subordinate Certificate Writedown
Amount and the Group II Subordinate Certificate Writedown Amount. Any such
Subordinate Certificate Writedown Amount shall effect a corresponding reduction
in the Current Principal Amount of (i) with respect to the Group I Subordinate
Certificate Writedown Amount, if prior to the Cross-Over Date relating to the
related Group I Certificates, the Group I Subordinate Certificates, in the
reverse order of their
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numerical Class designations, (ii) with respect to the Group II Subordinate
Certificate Writedown Amount, if prior to the Cross-Over Date relating to the
Group II Certificates, the Group II Subordinate Certificates, in the reverse
order of their numerical Class designations, (iii) with respect to the Group I
Senior Mezzanine Certificate Writedown Amount, if prior to the Cross-Over Date
relating to the Group I Certificates, the Group I Senior Mezzanine Certificates,
(iv) from and after the Cross-Over Date relating to the Group I Certificates,
the related Class of Group I Senior Certificates, and (v) from and after the
Cross-Over Date relating to the Group II Certificates, the related Class of
Group II Senior Certificates, which reduction shall occur on such Distribution
Date after giving effect to distributions made on such Distribution Date.
(g) Any Net Interest Shortfalls will be allocated among the Classes of
Certificates in proportion to the respective amounts of Accrued Certificate
Interest that would have been allocated thereto in the absence of such Net
Interest Shortfalls for such Distribution Date. The interest portion of any
Realized Losses with respect to the Group I Mortgage Loans or the Group II
Mortgage Loans occurring on or prior to the Cross-Over Date with respect to the
related Certificate Group will not be allocated among any Certificates, but will
reduce the amount of Group I Available Funds or the Group II Available Funds, as
the case may be, on the related Distribution Date. As a result of the
subordination of the Group I Senior Mezzanine Certificates and Group I
Subordinate Certificates in right of distribution, such Realized Losses on the
Group I Mortgage Loans will be borne first by the Group I Subordinate
Certificates in inverse order of their numerical Class designations, and then by
the Group I Senior Mezzanine Certificates. Following the Cross-Over Date with
respect to the Group I Certificates, the interest portion of Realized Losses on
the Loan Subgroup I-1 Mortgage Loans will be allocated on a pro rata basis to
the Class I-A-1 Certificates, to Component 1X of the Class I-X Certificates and
to Component 2X of the Class I-X Certificates to the extent of the Subgroup I-1
Allocation Fraction thereof and the interest portion of Realized Losses on the
Loan Subgroup I-2 Mortgage Loans will be allocated on a pro rata basis to the
Class I-A-2 Certificates and to Component 2X of the Class I-X Certificates to
the extent of the Subgroup I-2 Allocation Fraction thereof. Following the
Cross-Over Date with respect to the Group II Certificates, the interest portion
of Realized Losses on the Loan Subgroup II-1, II-2 and II-3 Mortgage Loans, as
the case may be, will be allocated to the Class II-A-1, Class II-A-2 and Class
II-A-3 Certificates, respectively.
(h) In addition, in the event that the Paying Agent receives any
Subsequent Recoveries from a Servicer, the Paying Agent shall deposit such funds
into the Distribution Account pursuant to Section 4.01(c)(ii). If, after taking
into account such Subsequent Recoveries, the amount of a Realized Loss is
reduced, the amount of such Subsequent Recoveries will be applied to increase
the Current Principal Amount of the Class or Classes of related Subordinate
Certificates with the highest payment priority to which Realized Losses have
been allocated, but not by more than the amount of Realized Losses previously
allocated to that Class or Classes of Subordinate Certificates pursuant to
Section 6.02. The amount of any Subsequent Recoveries following the application
set forth in the immediately preceding sentence will be applied to sequentially
increase the Current Principal Amount of the related Subordinate Certificates,
beginning with the Class of related Subordinate Certificates with the next
highest payment priority, up to the amount of such Realized Losses previously
allocated to such Class or Classes of Certificates pursuant to this Section
6.02. Holders of such Certificates will not be entitled to any payments in
respect of Accrued Certificate Interest on the amount of such increases for any
Interest Accrual Period preceding the Distribution Date on which such increase
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occurs. Any such increases shall be applied to the Current Principal Amount of
each Subordinate Certificate of such Class in accordance with its respective
Fractional Undivided Interest.
Section 6.03. Payments (a) On each Distribution Date, other than the
final Distribution Date, the Paying Agent shall distribute, to the extent of
funds then on deposit in the Distribution Account, to each Certificateholder of
record on the directly preceding Record Date the Certificateholder's pro rata
share of its Class (based on the aggregate Fractional Undivided Interest
represented by such Holder's Certificates) of all amounts required to be
distributed on such Distribution Date to such Class, based on information
provided to the Securities Administrator by the Master Servicer. The Securities
Administrator shall calculate the amount to be distributed to each Class and,
based on such amounts, the Securities Administrator shall determine the amount
to be distributed to each Certificateholder. All of the Securities
Administrator's calculations of payments shall be based solely on information
provided to the Securities Administrator by the Master Servicer. The Securities
Administrator shall not be required to confirm, verify or recompute any such
information but shall be entitled to rely conclusively on such information.
(b) Payment of the above amounts to each Certificateholder shall be
made (i) by check mailed to each Certificateholder entitled thereto at the
address appearing in the Certificate Register or (ii) upon receipt by the Paying
Agent on or before the fifth Business Day preceding the Record Date of written
instructions from a Certificateholder by wire transfer to a United States dollar
account maintained by the payee at any United States depository institution with
appropriate facilities for receiving such a wire transfer; provided, however,
that the final payment in respect of each Class of Certificates will be made
only upon presentation and surrender of such respective Certificates at the
office or agency of the Paying Agent specified in the notice to
Certificateholders of such final payment.
Section 6.04. Statements to Certificateholders. (a) Concurrently with
each distribution to Certificateholders, the Securities Administrator shall make
available to the parties hereto and each Certificateholder via the Securities
Administrator's internet website as set forth below, the following information,
expressed with respect to clauses (i) through (vii) in the aggregate and as a
Fractional Undivided Interest representing an initial Current Principal Amount
of $1,000, in the case of the Interest Only Certificates, a Notional Amount of
$1,000, or in the case of the Residual Certificates, an initial Current
Principal Amount of $50:
(i) the Current Principal Amount or Notional Amount of each
Class of Certificates immediately prior to such Distribution Date;
(ii) the amount of the distribution allocable to principal on
each applicable Class of Certificates;
(iii) the aggregate amount of interest accrued at the related
Pass-Through Rate with respect to each Class during the related
Interest Accrual Period;
(iv) any Carryover Shortfall, any Carryover Shortfall Amounts,
the Net Interest Shortfall and any other adjustments to interest at the
related Pass-Through Rate
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necessary to account for any difference between interest accrued and
aggregate interest distributed with respect to each Class of
Certificates;
(v) the amount of the distribution allocable to interest on
each Class of Certificates;
(vi) the Pass-Through Rates for each Class of Certificates
with respect to such Distribution Date;
(vii) the Current Principal Amount or Notional Amount of each
Class of Certificates after such Distribution Date;
(viii) the amount of any Monthly Advances, Compensating
Interest Payments and outstanding unreimbursed advances by the Master
Servicer or the Trustee included in such distribution separately stated
for each Loan Group and Loan Subgroup;
(ix) the aggregate amount of any Realized Losses (listed
separately for each category of Realized Loss and for each Loan Group
and Loan Subgroup) and Subsequent Recoveries during the related
Prepayment Period and cumulatively since the Cut-off Date and the
amount and source (separately identified) of any distribution in
respect thereof included in such distribution;
(x) with respect to each Mortgage Loan which incurred a
Realized Loss during the related Prepayment Period, (i) the loan
number, (ii) the Scheduled Principal Balance of such Mortgage Loan as
of the Cut-off Date, (iii) the Scheduled Principal Balance of such
Mortgage Loan as of the beginning of the related Due Period, (iv) the
Net Liquidation Proceeds with respect to such Mortgage Loan and (v) the
amount of the Realized Loss with respect to such Mortgage Loan;
(xi) with respect to each Loan Group and Loan Subgroup, the
amount of Scheduled Principal and Principal Prepayments (including but
separately identifying the principal amount of principal prepayments,
Insurance Proceeds, the purchase price in connection with the purchase
of Mortgage Loans, cash deposits in connection with substitutions of
Mortgage Loans and Net Liquidation Proceeds) and the number and
principal balance of Mortgage Loans purchased or substituted for during
the relevant period and cumulatively since the Cut-off Date;
(xii) the number of Mortgage Loans (excluding REO Property) in
each Loan Group and Loan Subgroup remaining in the Trust Fund as of the
end of the related Prepayment Period;
(xiii) information for each Loan Group and Loan Subgroup
regarding any Mortgage Loan delinquencies as of the end of the related
Prepayment Period, including the aggregate number and aggregate
Outstanding Principal Balance of Mortgage Loans (a) delinquent 30 to 59
days on a contractual basis, (b) delinquent 60 to 89 days on a
contractual basis, and (c) delinquent 90 or more days on a contractual
basis, in each case as of the close of business on the last day of the
immediately preceding month;
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(xiv) for each Loan Group and Loan Subgroup, the number of
Mortgage Loans in the foreclosure process as of the end of the related
Due Period and the aggregate Outstanding Principal Balance of such
Mortgage Loans;
(xv) for each Loan Group and Loan Subgroup, the number and
aggregate Outstanding Principal Balance of all Mortgage Loans as to
which the Mortgaged Property was REO Property as of the end of the
related Due Period;
(xvi) the book value (the sum of (A) the Outstanding Principal
Balance of the related Mortgage Loan and (B) accrued interest through
the date of foreclosure, minus (C) foreclosure expenses) of any REO
Property in each Loan Group and Loan Subgroup; provided that, in the
event that such information is not available to the Securities
Administrator on the Distribution Date, such information shall be
furnished promptly after it becomes available;
(xvii) the amount of Realized Losses allocated to each Class
of Certificates since the prior Distribution Date and in the aggregate
for all prior Distribution Dates;
(xviii) the Average Loss Severity Percentage for each Loan
Group and Loan Subgroup;
(xix) for each related Loan Subgroup, the then applicable
Group I Senior Percentage and Group II Senior Percentage, Group I
Senior Prepayment Percentage and Group II Senior Prepayment Percentage,
Group I Senior Mezzanine and Group I Subordinate Percentage and Group
II Subordinate Percentage and Group I Senior Mezzanine and Group I
Subordinate Prepayment Percentage and Group II Subordinate Prepayment
Percentage;
(xx) the aggregate amount of Deferred Interest added to the
Scheduled Principal Balance of any Loan Subgroup II-1, II-2 or II-3
Mortgage Loan; and
(xxi) the amount of any Subsequent Recovery for such
Distribution Date, and the amount by which the Current Principal Amount
of each Class of related Subordinate Certificates was increased as a
result thereof.
The information set forth above shall be calculated or reported, as the
case may be, by the Securities Administrator, based solely on, and to the extent
of, information provided to the Securities Administrator by the Master Servicer.
The Securities Administrator may conclusively rely on such information and shall
not be required to confirm, verify or recalculate any such information.
The Securities Administrator may make available each month, to any
interested party, the monthly statement to Certificateholders via the Securities
Administrator's website initially located at "xxx.xxxxxxx.xxx." Assistance in
using the website can be obtained by calling the Securities Administrator's
customer service desk at (000) 000-0000. Parties that are unable to use the
above distribution option are entitled to have a paper copy mailed to them via
first class mail by calling the Securities Administrator's customer service desk
and indicating such. The Securities Administrator shall have the right to change
the way such reports are distributed in
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order to make such distribution more convenient and/or more accessible to the
parties, and the Securities Administrator shall provide timely and adequate
notification to all parties regarding any such change.
To the extent timely received from the Securities Administrator, the
Trustee will also make monthly statements available each month to
certificateholders via the Trustee's internet website. The Trustee's internet
website will initially be located at xxx.xxxxxxxx.xxx/xxx. Assistance in using
the Trustee's website service can be obtained by calling the Trustee's customer
service desk at (000) 000-0000.
(b) By March 31 of each year beginning in 2005, the Trustee will
furnish such report to each Holder of the Certificates of record at any time
during the prior calendar year as to the aggregate of amounts reported pursuant
to subclauses (a) (ii) and (a) (v) above with respect to the Certificates, plus
information with respect to the amount of servicing compensation and such other
customary information as the Securities Administrator may determine and advise
the Trustee to be necessary and/or to be required by the Internal Revenue
Service or by a federal or state law or rules or regulations to enable such
Holders to prepare their tax returns for such calendar year. Such obligations
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Securities Administrator
pursuant to the requirements of the Code.
Section 6.05. Monthly Advances. Pursuant to the related Servicing
Agreement, each Servicer will make Monthly Advances. Each such Monthly Advance
shall be remitted to the Distribution Account no later than 1:00 p.m. Eastern
time on the Distribution Account Deposit Date in immediately available funds.
Subject to the Master Servicer's recoverability determination, in the event that
the related Servicer fails to make a required Monthly Advance, the Master
Servicer shall be required to remit the amount of such Monthly Advance to the
Distribution Account. The Master Servicer shall be obligated to make any such
Monthly 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 Monthly Advance or a lesser
portion of such Monthly Advance would constitute a Nonrecoverable Advance, the
Master Servicer shall deliver (i) to the Paying Agent for the benefit of the
Certificateholders funds constituting the remaining portion of such Monthly
Advance, if applicable, and (ii) to the Trustee an Officer's Certificate setting
forth the basis for such determination.
The Master Servicer and each Servicer shall be entitled to be
reimbursed from the Distribution Account for all Monthly Advances of its own
funds made pursuant to this Section as provided in Section 4.03. The obligation
to make Monthly 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 6.05.
Subject to and in accordance with the provisions of Article VIII
hereof, in the event the Master Servicer fails to make such Monthly Advance,
then the Trustee, as the successor Master
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Servicer, shall be obligated to make such Monthly Advance, subject to the
provisions of this Section 6.05.
Section 6.06. Compensating Interest Payments. Upon timely notice by the
Paying Agent, the Master Servicer shall deposit in the Distribution Account not
later than each Distribution Account Deposit Date an amount equal to the lesser
of (i) the sum of the amounts required to be paid by each Servicer under the
related Servicing Agreement with respect to subclauses (a) and (b) of the
definition of Interest Shortfall with respect to the Mortgage Loans for the
related Distribution Date, and not so paid by such Servicers and (ii) the Master
Servicing Compensation for such Distribution Date (such amount, the
"Compensating Interest Payment"). The Master Servicer shall not be entitled to
any reimbursement of any Compensating Interest Payment.
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ARTICLE VII
The Master Servicer
Section 7.01. Liabilities of the Master Servicer. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it herein.
Section 7.02. Merger or Consolidation of the Master Servicer.
(a) The Master Servicer will keep in full force and effect its
existence, rights and franchises as a corporation under the laws of the state of
its incorporation, and will obtain and preserve its qualification to do business
as a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement,
the Certificates or any of the Mortgage Loans and to perform its duties under
this Agreement.
(b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 7.03. Indemnification of the Trustee, the Custodian and the
Securities Administrator. (a) The Master Servicer agrees to indemnify the
Indemnified Persons for, and to hold them harmless against, any loss, liability
or expense (including reasonable legal fees and disbursements of counsel)
incurred on their part that may be sustained in connection with, arising out of,
or relating to, any claim or legal action (including any pending or threatened
claim or legal action) relating to this Agreement or the Certificates (i)
related to the Master Servicer's failure to perform its duties in compliance
with this Agreement (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) or (ii) incurred by reason of
the Master Servicer's willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder, provided, in each case, that with respect to
any such claim or legal action (or pending or threatened claim or legal action),
the Indemnified Person shall have given the Master Servicer and the Depositor
written notice thereof promptly after the Indemnified Person shall have, with
respect to such claim or legal action, knowledge thereof. This indemnity shall
survive the resignation or removal of the Trustee, the Master Servicer, the
Custodian or the Securities Administrator and the termination of this Agreement.
(b) The Depositor will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise covered by the
Master Servicer's indemnification pursuant to Subsection (a) above.
(c) The Securities Administrator agrees to indemnify the Indemnified
Persons (other than the Securities Administrator) for, and to hold them harmless
against, any loss, liability or expense (including reasonable legal fees and
disbursements of counsel) incurred on their part (i) in connection with, arising
out of, or relating to the Securities Administrator's failure to prepare
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and file a Form 10-K in accordance with Section 3.18, (ii) by reason of the
Securities Administrator's willful misfeasance, bad faith or gross negligence in
the performance of its obligations pursuant to Section 3.18 or (iii) by reason
of the Securities Administrator's reckless disregard of its obligations pursuant
to Section 3.18 (including, without limitation, in respect of any powers of
attorney furnished to the Securities Administrator), 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 Securities
Administrator written notice thereof promptly after such Indemnified Person
shall have knowledge with respect to such claim or legal action. 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, the Master Servicer or the Securities Administrator
and the termination of this Agreement.
Section 7.04. Limitations on Liability of the Master Servicer and
Others. Subject to the obligation of the Master Servicer to indemnify the
Indemnified Persons pursuant to Section 7.03:
(a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Indemnified Persons, the Depositor, the Trust Fund or the Certificateholders for
taking any action or for refraining from taking any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such Person against
any breach of warranties or representations made herein or any liability which
would otherwise be imposed by reason of such Person's willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.
(b) The Master Servicer and any director, officer, employee or agent of
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder.
(c) The Master Servicer, the Custodian and any director, officer,
employee or agent of the Master Servicer or the Custodian shall be indemnified
by the Trust and held harmless thereby against any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or related to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to this Agreement, the Certificates or the Servicing Agreements
(except to the extent that the Master Servicer is indemnified by the related
Servicer thereunder), other than (i) any such loss, liability or expense related
to the Master Servicer's failure to perform its duties in compliance with this
Agreement (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement), or to the Custodian's failure to
perform its duties under the Custodial Agreement, respectively, or (ii) any such
loss, liability or expense incurred by reason of the Master Servicer's or the
Custodian's willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or under the Custodial Agreement, as applicable,
or by reason of reckless disregard of obligations and duties hereunder or under
the Custodial Agreement, as applicable.
(d) The Master Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties under
this Agreement and that in its
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opinion may involve it in any expense or liability; provided, however, the
Master Servicer may in its discretion, with the consent of the Trustee (which
consent shall not be unreasonably withheld), undertake any such action which it
may deem necessary or desirable with respect to this Agreement and the rights
and duties of the parties hereto and the interests of the Certificateholders
hereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust Fund, and the Master Servicer shall be entitled to be reimbursed therefor
out of the Distribution Account as provided by Section 4.03. Nothing in this
Subsection 7.04(d) shall affect the Master Servicer's obligation to supervise,
or to take such actions as are necessary to ensure, the servicing and
administration of the Mortgage Loans pursuant to Section 3.01.
(e) In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement, the
Master Servicer shall not be required to investigate or make recommendations
concerning potential liabilities which the Trust might incur as a result of such
course of action by reason of the condition of the Mortgaged Properties but
shall give notice to the Trustee if it has notice of such potential liabilities.
(f) The Master Servicer shall not be liable for any acts or omissions
of any Servicer, except as otherwise expressly provided herein.
Section 7.05. Master Servicer Not to Resign. Except as provided in
Section 7.07, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon a determination that any such duties
hereunder are no longer permissible under applicable law and such
impermissibility cannot be cured. Any such determination permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of
Independent Counsel to such effect delivered to the Trustee. No such resignation
by the Master Servicer shall become effective until EMC or the Trustee or a
successor to the Master Servicer reasonably satisfactory to the Trustee shall
have assumed the responsibilities and obligations of the Master Servicer in
accordance with Section 8.02 hereof. The Trustee shall notify the Rating
Agencies of the resignation of the Master Servicer.
Section 7.06. Successor Master Servicer. In connection with the
appointment of any successor Master Servicer or the assumption of the duties of
the Master Servicer, EMC or the Trustee may make such arrangements for the
compensation of such successor Master Servicer out of payments on the Mortgage
Loans as EMC or the Trustee and such successor Master Servicer shall agree. If
the successor Master Servicer does not agree that such market value is a fair
price, such successor Master Servicer shall obtain two quotations of market
value from third parties actively engaged in the servicing of single-family
mortgage loans. Notwithstanding the foregoing, the compensation payable to a
successor master servicer may not exceed the compensation which the Master
Servicer would have been entitled to retain if the Master Servicer had continued
to act as Master Servicer hereunder.
Section 7.07. Sale and Assignment of Master Servicing. The Master
Servicer may sell and assign its rights and delegate its duties and obligations
in its entirety as Master Servicer under this Agreement and EMC may terminate
the Master Servicer without cause and select a new Master Servicer; provided,
however, that: (i) the purchaser or transferee accepting such assignment and
delegation (a) shall be a Person or shall be an Affiliate of a Person which
shall be
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qualified to service mortgage loans for Xxxxxx Xxx or Xxxxxxx Mac; (b)
shall have a net worth of not less than $10,000,000 (unless otherwise approved
by each Rating Agency pursuant to clause (ii) below); (c) shall be reasonably
satisfactory to the Trustee (as evidenced in a writing signed by the Trustee);
and (d) shall execute and deliver to the Trustee an agreement, in form and
substance reasonably satisfactory to the Trustee, which contains an assumption
by such Person of the due and punctual performance and observance of each
covenant and condition to be performed or observed by it as Master Servicer
under this Agreement and any custodial agreement from and after the effective
date of such agreement; (ii) each Rating Agency shall be given prior written
notice of the identity of the proposed successor to the Master Servicer and each
Rating Agency's rating of the Certificates in effect immediately prior to such
assignment, sale and delegation will not be downgraded, qualified or withdrawn
as a result of such assignment, sale and delegation, as evidenced by a letter to
such effect delivered to the Master Servicer and the Trustee; (iii) the Master
Servicer assigning and delegating its rights and obligations hereunder shall
deliver to the Trustee an Officer's Certificate and an Opinion of Independent
Counsel, each stating that all conditions precedent to such action under this
Agreement have been completed and such action is permitted by and complies with
the terms of this Agreement; and (iv) in the event the Master Servicer is
terminated without cause by EMC, EMC shall pay the terminated Master Servicer a
termination fee equal to 0.25% of the aggregate Scheduled Principal Balance of
the Mortgage Loans at the time the master servicing of the Mortgage Loans is
transferred to the successor Master Servicer. No such assignment or delegation
shall affect any liability of the Master Servicer arising prior to the effective
date thereof.
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ARTICLE VIII
Default
Section 8.01. "Event of Default" wherever used herein, means any one of
the following events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body) and only with respect to
the defaulting Master Servicer:
(i) The Master Servicer fails to deposit in the Distribution
Account any amount so required by it to be deposited pursuant to this
Agreement (other than any Monthly Advance), and such failure continues
unremedied for a period of three Business Days after the date upon
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer; or
(ii) The Master Servicer fails to observe or perform in any
material respect any other material covenants and agreements set forth
in this Agreement to be performed by it, which covenants and agreements
materially affect the rights of Certificateholders, and such failure
continues unremedied for a period of 60 days (or, in the case of a
breach of its obligation to provide a Master Servicer Certification
pursuant to Section 3.18, for a period of five days) after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer by the Trustee
or to the Master Servicer and the Trustee by the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not
less than 25% of the Trust Fund; or
(iii) There is entered against the Master Servicer a decree or
order by a court or agency or supervisory authority having jurisdiction
in the premises for the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding up or
liquidation of its affairs, and the continuance of any such decree or
order is unstayed and in effect for a period of 60 consecutive days, or
an involuntary case is commenced against the Master Servicer under any
applicable insolvency or reorganization statute and the petition is not
dismissed within 60 days after the commencement of the case; or
(iv) The Master Servicer consents to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings of
or relating to the Master Servicer or substantially all of its
property; or the Master Servicer admits in writing its inability to pay
its debts generally as they become due, files a petition to take
advantage of any applicable insolvency or reorganization statute, makes
an assignment for the benefit of its creditors, or voluntarily suspends
payment of its obligations; or
(v) The Master Servicer assigns or delegates its duties or
rights under this Agreement in contravention of the provisions
permitting such assignment or delegation under Sections 7.05 or 7.07;
or
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(vi) The Master Servicer fails to deposit, or cause to be
deposited, on the Distribution Date in the Distribution Account any
Monthly Advance (other than a Nonrecoverable Advance) required to be
made with respect to such Distribution Date.
In each and every such case, so long as such Event of Default with respect to
the Master Servicer shall not have been remedied, either the Trustee or the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the principal of the Trust Fund, by notice in writing to
the Master Servicer (and to the Trustee, if given by such Certificateholders),
with a copy to the Rating Agencies, and with the consent of EMC, may terminate
all of the rights and obligations (but not the liabilities) of the Master
Servicer under this Agreement and in and to the Mortgage Loans and/or the REO
Property serviced by the Master Servicer and the proceeds thereof. Upon the
receipt by the Master Servicer of such written notice, all authority and power
of the Master Servicer under this Agreement, whether with respect to the
Certificates, the Mortgage Loans, REO Property or under any other related
agreements (but only to the extent that such other agreements relate to the
Mortgage Loans or related REO Property) shall, subject to Section 8.02 and to
bankruptcy, insolvency or similar laws, if applicable, automatically and without
further action pass to and be vested in the Trustee pursuant to this Section
8.01; and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Master Servicer as attorney-in-fact or
otherwise, any and all documents and other instruments and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise. The Master
Servicer agrees to cooperate with the Trustee in effecting the termination of
the Master Servicer's rights and obligations hereunder, including, without
limitation, the transfer to the Trustee of (i) the property and amounts which
are then or should be part of the Trust or which thereafter become part of the
Trust, and (ii) originals or copies of all documents of the Master Servicer
reasonably requested by the Trustee to enable it to assume the Master Servicer's
duties hereunder. In addition to any other amounts which are then, or,
notwithstanding the termination of its activities under this Agreement, may
become payable to the Master Servicer under this Agreement, the Master Servicer
shall be entitled to receive, out of any amount received on account of a
Mortgage Loan or related REO Property, that portion of such payments which it
would have received as reimbursement under this Agreement if notice of
termination had not been given. The termination of the rights and obligations of
the Master Servicer shall not affect any obligations incurred by the Master
Servicer prior to such termination.
Notwithstanding the foregoing, if an Event of Default described in clause (vi)
of this Section 8.01 shall occur, the Trustee shall, by notice in writing to the
Master Servicer, which may be delivered by telecopy, immediately terminate all
of the rights and obligations of the Master Servicer thereafter arising under
this Agreement, but without prejudice to any rights it may have as a
Certificateholder or to reimbursement of Monthly Advances and other advances of
its own funds, and the Trustee shall act as provided in Section 8.02 to carry
out the duties of the Master Servicer, including the obligation to make any
Monthly Advance the nonpayment of which was an Event of Default described in
clause (vi) of this Section 8.01. Any such action taken by the Trustee must be
taken prior to the distribution on the relevant Distribution Date.
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Section 8.02. Trustee to Act; Appointment of Successor. (a) Upon the
receipt by the Master Servicer of a notice of termination pursuant to Section
8.01 or an Opinion of Independent Counsel pursuant to Section 7.05 to the effect
that the Master Servicer is legally unable to act or to delegate its duties to a
Person which is legally able to act, the Trustee shall automatically become the
successor in all respects to the Master Servicer in its capacity under this
Agreement and the transactions set forth or provided for herein and shall
thereafter be subject to all the responsibilities, duties, liabilities and
limitations on liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof; provided, however, that EMC shall have the right to
either (a) immediately assume the duties of the Master Servicer or (b) select a
successor Master Servicer; provided, further, however, that the Trustee shall
have no obligation whatsoever with respect to any liability (other than advances
deemed recoverable and not previously made) incurred by the Master Servicer at
or prior to the time of termination. As compensation therefor, but subject to
Section 7.06, the Trustee shall be entitled to all funds relating to the
Mortgage Loans which the Master Servicer would have been entitled to retain if
the Master Servicer had continued to act hereunder, except for those amounts due
the Master Servicer as reimbursement permitted under this Agreement for advances
previously made or expenses previously incurred. Notwithstanding the above, the
Trustee may, if it shall be unwilling so to act, or shall, if it is legally
unable so to act, appoint or petition a court of competent jurisdiction to
appoint any established housing and home finance institution which is a Xxxxxx
Mae- or Xxxxxxx Mac-approved servicer, and with respect to a successor to the
Master Servicer only having a net worth of not less than $10,000,000, as the
successor to the Master Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Master Servicer hereunder;
provided, that the Trustee shall obtain a letter from each Rating Agency that
the ratings, if any, of such Rating Agency on each of the Certificates will not
be downgraded, qualified or withdrawn as a result of the selection of the
successor to the Master Servicer. Pending appointment of a successor to the
Master Servicer hereunder, the Trustee shall act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
the Mortgage Loans as it and such successor shall agree; provided, however, that
the provisions of Section 7.06 shall apply, no such compensation shall be in
excess of that permitted the Trustee under this Subsection 8.02(a), and that
such successor shall undertake and assume the obligations of the Trustee to pay
compensation to any third Person acting as an agent or independent contractor in
the performance of master servicing responsibilities hereunder. The Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession.
(b) If the Trustee shall succeed to any duties of the Master Servicer
respecting the Mortgage Loans as provided herein, it shall do so in a separate
capacity and not in its capacity as Trustee and, accordingly, the provisions of
Article IX shall be inapplicable to the Trustee in its duties as the successor
to the Master Servicer in the servicing of the Mortgage Loans (although such
provisions shall continue to apply to the Trustee in its capacity as Trustee);
the provisions of all other provisions of this Agreement and the respective
Servicing Agreements relating to the Master Servicer, including the provisions
of Article VII, however, shall apply to it in its capacity as successor Master
Servicer.
Section 8.03. Notification to Certificateholders. Upon any termination
or appointment of a successor to the Master Servicer, the Trustee shall give
prompt written notice thereof to
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Certificateholders at their respective addresses appearing in the Certificate
Register, and to the Rating Agencies.
Section 8.04. Waiver of Defaults. The Trustee shall transmit by mail to
all Certificateholders, within 60 days after the occurrence of any Event of
Default known to the Trustee, unless such Event of Default shall have been
cured, notice of each such Event of Default hereunder known to the Trustee. The
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the Trust Fund may, on behalf of all Certificateholders,
waive any default by the Master Servicer in the performance of its obligations
hereunder and the consequences thereof, except a default in the making of or the
causing to be made of any required distribution on the Certificates, which
default may only be waived by Holders of Certificates evidencing Fractional
Undivided Interests aggregating 100% of the Trust Fund. Upon any such waiver of
a past default, such default shall be deemed to cease to exist, and any Event of
Default arising therefrom shall be deemed to have been timely remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived. The Trustee shall give notice of any such waiver to the
Rating Agencies.
Section 8.05. List of Certificateholders. Upon written request of three
or more Certificateholders of record, for purposes of communicating with other
Certificateholders with respect to their rights under this Agreement, the
Trustee will afford such Certificateholders access during business hours to the
most recent list of Certificateholders held by the Trustee.
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ARTICLE IX
Concerning the Trustee and the Securities Administrator
Section 9.01. Duties of 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, and the Securities Administrator each
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement as duties of the Trustee and the Securities
Administrator, respectively. If an Event of Default has occurred and has not
been cured or waived, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and subject to Section 8.02(b) use the same
degree of care and skill in their exercise, as a prudent person would exercise
under the circumstances in the conduct of his own affairs.
(b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee and the Securities Administrator
pursuant to any provision of this Agreement, the Trustee and the Securities
Administrator, respectively, shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that neither the Trustee
nor the Securities Administrator shall be responsible for the accuracy or
content of any resolution, certificate, statement, opinion, report, document,
order or other instrument furnished by the Master Servicer; and provided,
further, that neither the Trustee nor the Securities Administrator shall be
responsible for the accuracy or verification of any calculation provided to it
pursuant to this Agreement.
(c) On each Distribution Date, the Paying Agent shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 6.01 and 10.01 herein based on
the report of the Securities Administrator.
(d) No provision of this Agreement shall be construed to relieve the
Trustee or the Securities Administrator from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after
the curing or waiver of all such Events of Default which may have
occurred, the duties and obligations of the Trustee and the Securities
Administrator shall be determined solely by the express provisions of
this Agreement, neither the Trustee nor the Securities Administrator
shall be liable except for the performance of their respective duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Trustee or the Securities Administrator and, in the absence
of bad faith on the part of the Trustee or the Securities
Administrator, respectively, the Trustee or the Securities
Administrator, respectively, may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee or the
Securities Administrator, respectively, and conforming to the
requirements of this Agreement;
(ii) Neither the Trustee nor the Securities Administrator
shall be liable in its individual capacity for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee or an officer of the Securities Administrator,
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respectively, unless it shall be proved that the Trustee or the
Securities Administrator, respectively, was negligent in ascertaining
the pertinent facts;
(iii) Neither the Trustee nor the Securities Administrator
shall be liable with respect to any action taken, suffered or omitted
to be taken by it in good faith in accordance with the directions of
the Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 25% of the Trust Fund, if such action or
non-action relates to the time, method and place of conducting any
proceeding for any remedy available to the Trustee or the Securities
Administrator, respectively, or exercising any trust or other power
conferred upon the Trustee or the Securities Administrator,
respectively, under this Agreement;
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default or Event of Default
unless a Responsible Officer of the Trustee's Corporate Trust Office
shall have actual knowledge thereof. In the absence of such notice, the
Trustee may conclusively assume there is no such default or Event of
Default;
(v) The Trustee shall not in any way be liable by reason of
any insufficiency in any Account held by or in the name of Trustee
unless it is determined by a court of competent jurisdiction that the
Trustee's gross negligence or willful misconduct was the primary cause
of such insufficiency (except to the extent that the Trustee is obligor
and has defaulted thereon);
(vi) Anything in this Agreement to the contrary
notwithstanding, in no event shall the Trustee or the Securities
Administrator be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost
profits), even if the Trustee or the Securities Administrator,
respectively, has been advised of the likelihood of such loss or damage
and regardless of the form of action; and
(vii) None of the Securities Administrator, EMC or the Trustee
shall be responsible for the acts or omissions of the other, the Master
Servicer or any Servicer, it being understood that this Agreement shall
not be construed to render them partners, joint venturers or agents of
one another.
Neither the Trustee nor the Securities Administrator shall be required
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it, and none of the provisions contained in this Agreement
shall in any event require the Trustee or the Securities Administrator to
perform, or be responsible for the manner of performance of, any of the
obligations of the Master Servicer under the Servicing Agreements, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.
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(e) All funds received by the Master Servicer and the Paying Agent and
required to be deposited in the Distribution Account pursuant to this Agreement
will be promptly so deposited by the Master Servicer and the Paying Agent.
(f) Except for those actions that the Trustee or the Securities
Administrator is required to take hereunder, neither the Trustee nor the
Securities Administrator shall have any obligation or liability to take any
action or to refrain from taking any action hereunder in the absence of written
direction as provided hereunder.
Section 9.02. Certain Matters Affecting the Trustee and the Securities
Administrator. Except as otherwise provided in Section 9.01:
(i) The Trustee and the Securities Administrator may rely and
shall be protected in acting or refraining from acting in reliance on
any resolution, certificate of a Depositor, Master Servicer or
Servicer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) The Trustee and the Securities Administrator may consult
with counsel, and any advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection with respect to
any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or Opinion of Counsel:
(iii) Neither the Trustee nor the Securities Administrator
shall be under any obligation to exercise any of the trusts or powers
vested in it by this Agreement, other than its obligation to give
notices pursuant to this Agreement, or to institute, conduct or defend
any litigation hereunder or in relation hereto at the request, order or
direction of any of the Certificateholders pursuant to the provisions
of this Agreement, unless such Certificateholders shall have offered to
the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
Nothing contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default of which a
Responsible Officer of the Trustee's Corporate Trust Office has actual
knowledge (which has not been cured or waived), subject to Section
8.02(b), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their
exercise, as a prudent person would exercise under the circumstances in
the conduct of his own affairs;
(iv) Prior to the occurrence of an Event of Default hereunder
and after the curing or waiver of all Events of Default which may have
occurred, neither the Trustee nor the Securities Administrator shall be
liable in its individual capacity for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Agreement;
(v) Neither the Trustee nor the Securities Administrator shall
be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or
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other paper or document, unless requested in writing to do so by
Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 25% of the Trust Fund, and provided that the
payment within a reasonable time to the Trustee or the Securities
Administrator, as applicable, of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee or the Securities Administrator, as
applicable, reasonably assured to the Trustee or the Securities
Administrator, as applicable, by the security afforded to it by the
terms of this Agreement. The Trustee or the Securities Administrator
may require reasonable indemnity against such expense or liability as a
condition to taking any such action. The reasonable expense of every
such examination shall be paid by the Certificateholders requesting the
investigation;
(vi) The Trustee and the Securities Administrator may execute
any of the trusts or powers hereunder or perform any duties hereunder
either directly or through Affiliates, agents or attorneys; provided,
however, that the Trustee may not appoint any agent to perform its
custodial functions with respect to the Mortgage Files or paying agent
functions under this Agreement without the express written consent of
the Master Servicer, which consent will not be unreasonably withheld.
Neither the Trustee nor the Securities Administrator shall be liable or
responsible for the misconduct or negligence of any of the Trustee's or
the Securities Administrator's agents or attorneys or a custodian or
paying agent appointed hereunder by the Trustee or the Securities
Administrator with due care and, when required, with the consent of the
Master Servicer;
(vii) Should the Trustee or the Securities Administrator deem
the nature of any action required on its part, other than a payment or
transfer under Subsection 4.01(b) or Section 4.02, to be unclear, the
Trustee or the Securities Administrator, respectively, may require
prior to such action that it be provided by the Depositor with
reasonable further instructions;
(viii) The right of the Trustee or the Securities
Administrator to perform any discretionary act enumerated in this
Agreement shall not be construed as a duty, and neither the Trustee nor
the Securities Administrator shall be accountable for other than its
negligence, negligent failure to act or willful misconduct in the
performance of any such act;
(ix) Neither the Trustee nor the Securities Administrator
shall be required to give any bond or surety with respect to the
execution of the trust created hereby or the powers granted hereunder,
except as provided in Subsection 9.07; and
(x) Neither the Trustee nor the Securities Administrator shall
have any duty to conduct any affirmative investigation as to the
occurrence of any condition requiring the repurchase of any Mortgage
Loan by the Seller pursuant to this Agreement or the Mortgage Loan
Purchase Agreement or the eligibility of any Mortgage Loan for purposes
of this Agreement.
Section 9.03. Trustee and Securities Administrator Not Liable for
Certificates or Mortgage Loans. The recitals contained herein and in the
Certificates (other than the signature
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of the Trustee, and the countersignature of the Certificate Registrar, on the
Certificates) shall be taken as the statements of the Depositor, and neither the
Trustee nor the Securities Administrator shall have any responsibility for their
correctness. Neither the Trustee nor the Securities Administrator makes any
representation as to the validity or sufficiency of the Certificates (other than
the signature of the Trustee on the Certificates) or of any Mortgage Loan except
as expressly provided in Sections 2.02 and 2.05 hereof; provided, however, that
the foregoing shall not relieve the Trustee of the obligation to review the
Mortgage Files pursuant to Sections 2.02 and 2.04. The Trustee's signature on
the Certificates shall be solely in its capacity as Trustee and shall not
constitute the Certificates an obligation of the Trustee in any other capacity.
Neither the Trustee or the Securities Administrator shall be accountable for the
use or application by the Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor with respect to the Mortgage Loans. Subject to the provisions
of Section 2.05, neither the Trustee nor the Securities Administrator shall be
responsible for the legality or validity of this Agreement or any document or
instrument relating to this Agreement, the validity of the execution of this
Agreement or of any supplement hereto or instrument of further assurance, or the
validity, priority, perfection or sufficiency of the security for the
Certificates issued hereunder or intended to be issued hereunder. Neither the
Trustee nor the Securities Administrator shall at any time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Fund or its ability to
generate the payments to be distributed to Certificateholders, under this
Agreement. Neither the Trustee nor the Securities Administrator shall have any
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to record this Agreement,
other than any continuation statements required to be filed by the Trustee
pursuant to Section 3.20.
Section 9.04. Trustee and Securities Administrator May Own
Certificates. The Trustee and the Securities Administrator, in its individual
capacity or in any capacity other than as Trustee hereunder, may become the
owner or pledgee of any Certificates with the same rights it would have if it
were not the Trustee or the Securities Administrator, as applicable, and may
otherwise deal with the parties hereto.
Section 9.05. Trustee's and Securities Administrator's Fees and
Expenses. The fees and expenses of the Trustee and the Securities Administrator
shall be paid in accordance with a side letter agreement. In addition, the
Trustee and the Securities Administrator will be entitled to recover from the
Distribution Account pursuant to Section 4.03 all reasonable out-of-pocket
expenses, disbursements and advances and the expenses of the Trustee and the
Securities Administrator, respectively, or any of their respective directors,
officers, employees or agents in connection with any Event of Default, any
breach of this Agreement or any claim or legal action (including any pending or
threatened claim or legal action) incurred or made by the Trustee or the
Securities Administrator, respectively, or any of their respective directors,
officers, employees or agents in the administration of the trusts hereunder
(including the reasonable compensation, expenses and disbursements of its
counsel) except any such expense, disbursement or advance as may arise from its
or their negligence, negligent failure to act or intentional misconduct or which
is the responsibility of the Certificateholders or the Trust Fund hereunder. If
funds in the Distribution Account are insufficient therefor, the Trustee and the
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Securities Administrator shall recover such expenses 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.
Section 9.06. Eligibility Requirements for Trustee, Paying Agent and
Securities Administrator. The Trustee and any successor Trustee, the Paying
Agent and any successor Paying Agent and the Securities Administrator and any
successor Securities Administrator shall during the entire duration of this
Agreement be a state bank or trust company or a national banking association
organized and doing business under the laws of such state or the United States
of America, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus and undivided profits of at least
$40,000,000 or, in the case of a successor Trustee, $50,000,000, subject to
supervision or examination by federal or state authority and, in the case of the
Trustee, rated "BBB" or higher by S&P with respect to their long-term rating and
rated "BBB" or higher by S&P and "Baa2" or higher by Xxxxx'x with respect to any
outstanding long-term unsecured unsubordinated debt, and, in the case of a
successor Trustee, successor Paying Agent or successor Securities Administrator
other than pursuant to Section 9.10, rated in one of the two highest long-term
debt categories of, or otherwise acceptable to, each of the Rating Agencies. If
the Trustee publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 9.06 the combined capital and surplus of such
corporation shall be deemed to be its total equity capital (combined capital and
surplus) as set forth in its most recent report of condition so published. In
case at any time the Trustee, the Paying Agent or the Securities Administrator
shall cease to be eligible in accordance with the provisions of this Section
9.06, the Trustee, the Paying Agent or the Securities Administrator shall resign
immediately in the manner and with the effect specified in Section 9.08.
Section 9.07. Insurance. The Trustee, the Paying Agent and the
Securities Administrator, at their own expense, shall at all times maintain and
keep in full force and effect: (i) fidelity insurance, (ii) theft of documents
insurance and (iii) forgery insurance (which may be collectively satisfied by a
"Financial Institution Bond" and/or a "Bankers' Blanket Bond"). All such
insurance shall be in amounts, with standard coverage and subject to
deductibles, as are customary for insurance typically maintained by banks or
their affiliates which act as custodians for investor-owned mortgage pools. A
certificate of an officer of the Trustee, the Paying Agent or the Securities
Administrator as to the Trustee's, the Paying Agent's or the Securities
Administrator's, respectively, compliance with this Section 9.07 shall be
furnished to any Certificateholder upon reasonable written request.
Section 9.08. Resignation and Removal of the Trustee and Securities
Administrator. (a) The Trustee and the Securities Administrator may at any time
resign and be discharged from the Trust hereby created by giving written notice
thereof to the Depositor and the Master Servicer, with a copy to the Rating
Agencies. Upon receiving such notice of resignation, the Depositor shall
promptly appoint a successor Trustee or successor Securities Administrator, as
applicable, by written instrument, in triplicate, one copy of which instrument
shall be delivered to each of the resigning Trustee or Securities Administrator,
as applicable, and the successor Trustee or Securities Administrator, as
applicable. If no successor Trustee or Securities Administrator shall have been
so appointed and have accepted appointment within 30 days after the giving of
such
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notice of resignation, the resigning Trustee or Securities Administrator may
petition any court of competent jurisdiction for the appointment of a successor
Trustee or Securities Administrator.
(b) If at any time the Trustee, the Paying Agent or the Securities
Administrator shall cease to be eligible in accordance with the provisions of
Section 9.06 and shall fail to resign after written request therefor by the
Depositor, or if at any time the Trustee, the Paying Agent or the Securities
Administrator shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee, the Paying Agent or the Securities
Administrator, as applicable, or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee, the Paying Agent or
the Securities Administrator, as applicable, or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the Depositor
shall promptly remove the Trustee, or shall be entitled to remove the Paying
Agent or the Securities Administrator, as applicable, and appoint a successor
Trustee, Paying Agent or Securities Administrator, as applicable, by written
instrument, in triplicate, one copy of which instrument shall be delivered to
each of the Trustee, the Paying Agent or Securities Administrator, as
applicable, so removed, and the successor Trustee, Paying Agent or Securities
Administrator, as applicable.
(c) The Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund may at any time remove
the Trustee, the Paying Agent or the Securities Administrator and appoint a
successor Trustee, Paying Agent or Securities Administrator by written
instrument or instruments, in sextuplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Depositor, the Paying Agent, the Master Servicer, the
Securities Administrator (if the Trustee is removed), the Trustee (if the
Securities Administrator or the Paying Agent is removed), and the Trustee,
Paying Agent or Securities Administrator so removed and the successor so
appointed. In the event that the Trustee, the Paying Agent or the Securities
Administrator is removed by the Holders of Certificates in accordance with this
Section 9.08(c), the Holders of such Certificates shall be responsible for
paying any compensation payable to a successor Trustee, successor Paying Agent
or successor Securities Administrator, in excess of the amount paid to the
predecessor Trustee, predecessor Paying Agent or predecessor Securities
Administrator, as applicable.
(d) No resignation or removal of the Trustee, the Paying Agent or the
Securities Administrator and appointment of a successor Trustee, Paying Agent or
Securities Administrator pursuant to any of the provisions of this Section 9.08
shall become effective except upon appointment of and acceptance of such
appointment by the successor Trustee, Paying Agent or Securities Administrator
as provided in Section 9.09.
Section 9.09. Successor Trustee and Successor Securities Administrator.
(a) Any successor Trustee, Paying Agent or Securities Administrator appointed as
provided in Section 9.08 shall execute, acknowledge and deliver to the Depositor
and to its predecessor Trustee, Paying Agent or Securities Administrator, as
applicable, an instrument accepting such appointment hereunder. The resignation
or removal of the predecessor Trustee, Paying Agent or Securities Administrator
shall then become effective and such successor Trustee, Paying Agent or
Securities Administrator, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like
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effect as if originally named as Trustee, Paying Agent or Securities
Administrator herein. The predecessor Trustee, Paying Agent or Securities
Administrator shall, after its receipt of payment of its outstanding fees and
expenses with respect hereunder, promptly deliver to the successor Trustee,
Paying Agent or Securities Administrator, as applicable, all assets and records
of the Trust held by it hereunder, and the Depositor and the predecessor
Trustee, Paying Agent or Securities Administrator, as applicable, shall execute
and deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
Trustee, Paying Agent or Securities Administrator, as applicable, all such
rights, powers, duties and obligations.
(b) No successor Trustee, Paying Agent or Securities Administrator
shall accept appointment as provided in this Section 9.09 unless at the time of
such acceptance such successor Trustee, Paying Agent or Securities Administrator
shall be eligible under the provisions of Section 9.06.
(c) Upon acceptance of appointment by a successor Trustee, Paying Agent
or Securities Administrator as provided in this Section 9.09, the successor
Trustee, Paying Agent or Securities Administrator shall mail notice of the
succession of such Trustee, Paying Agent or Securities Administrator hereunder
to all Certificateholders at their addresses as shown in the Certificate
Register and to the Rating Agencies. EMC shall pay the cost of any such mailing
by the successor Trustee, Paying Agent or Securities Administrator.
Section 9.10. Merger or Consolidation of Trustee or Securities
Administrator. Any state bank or trust company or national banking association
into which the Trustee, the Paying Agent or the Securities Administrator may be
merged or converted or with which it may be consolidated, or any state bank or
trust company or national banking association resulting from any merger,
conversion or consolidation to which the Trustee, the Paying Agent or the
Securities Administrator, respectively, shall be a party, or any state bank or
trust company or national banking association succeeding to all or substantially
all of the corporate trust business of the Trustee, the Paying Agent or the
Securities Administrator, respectively, shall be the successor of the Trustee,
the Paying Agent or the Securities Administrator, respectively, hereunder,
provided such state bank or trust company or national banking association shall
be eligible under the provisions of Section 9.06. Such succession shall be valid
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
Section 9.11. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust or property constituting the same may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the Depositor to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section 9.11, such powers, duties, obligations, rights and trusts as the
Depositor and the Trustee may consider necessary or desirable.
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(b) If the Depositor shall not have joined in such appointment within
15 days after the receipt by it of a written request so to do, the Trustee shall
have the power to make such appointment without the Depositor.
(c) No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 9.06
hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.08
hereof.
(d) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred on such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
(e) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(f) To the extent not prohibited by law, any separate trustee or
co-trustee may, at any time, request the Trustee, or its agent or
attorney-in-fact, with full power and authority, to do any lawful act under or
with respect to this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
(g) No trustee under this Agreement shall be personally liable by
reason of any act or omission of another trustee under this Agreement. The
Depositor and the Trustee acting jointly may at any time accept the resignation
of or remove any separate trustee or co-trustee.
Section 9.12. Federal Information Returns and Reports to
Certificateholders; REMIC Administration. (a) For federal income tax purposes,
the taxable year of each of REMIC I, REMIC II and REMIC III shall be a calendar
year and the Securities Administrator shall maintain or cause the maintenance of
the books of each such REMIC on the accrual method of accounting.
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(b) (i) The Securities Administrator shall prepare and file or cause to
be filed with the Internal Revenue Service, and the Trustee shall sign, Federal
tax information returns or elections required to be made hereunder with respect
to each REMIC, the Trust Fund, if applicable, and the Certificates, containing
such information and at the times and in the manner as may be required by the
Code or applicable Treasury regulations, and shall furnish to each Holder of
Certificates at any time during the calendar year for which such returns or
reports are made such statements or information at the times and in the manner
as may be required thereby, including, without limitation, reports relating to
interest, original issue discount and market discount or premium (using a
constant prepayment assumption of 20% CPR with respect to the Group I
Certificates and a constant prepayment assumption of 25% CPR with respect to the
Group II Certificates). The Securities Administrator shall apply for an Employee
Identification Number from the IRS under Form SS-4 or any other acceptable
method for all tax entities. In connection with the foregoing, the Securities
Administrator shall timely prepare and file, and the Trustee shall sign, IRS
Form 8811, and updated versions thereof, as required, which shall provide the
name and address of the person who can be contacted to obtain information
required to be reported to the holders of regular interests in each REMIC. The
Trustee shall make elections to treat each REMIC hereunder as a REMIC (which
elections shall apply to the taxable period ending December 31, 2003 and each
calendar year thereafter) in such manner as the Code or applicable Treasury
regulations may prescribe (and, if applicable, under applicable state and local
law), and as described by the Securities Administrator. The Trustee shall sign
all tax information returns filed pursuant to this Section 9.12 and any other
returns as may be required by the Code. The Holder of the largest percentage
interest of the Class R-I Certificate is hereby designated as the "Tax Matters
Person" (within the meaning of Treas. Reg.(Section)1.860F-4(d))for REMIC I, the
Holder of the largest percentage interest of the Class R-II Certificate is
hereby designated as the "Tax Matters Person" (within the meaning of Treas. Reg.
ss. 1.860F-4(d)) for REMIC II, and the Holder of the largest percentage interest
of the Class R-III Certificate is hereby designated as the "Tax Matters Person"
(within the meaning of Treas. Reg. ss. 1.860F-4(d)) for REMIC III. The
Securities Administrator is hereby designated and appointed as the agent of each
such Tax Matters Person. Any Holder of a Residual Certificate will by acceptance
thereof appoint the Securities Administrator as agent and attorney-in-fact for
the purpose of acting as Tax Matters Person for each REMIC during such time as
the Securities Administrator does not own any such Residual Certificate. In the
event that the Code or applicable Treasury regulations prohibit the Trustee from
signing tax or information returns or other statements, or the Securities
Administrator from acting as agent for the Tax Matters Person, each of the
Trustee and the Securities Administrator shall take whatever action that in its
sole good faith judgment is necessary for the proper filing of such information
returns or for the provision of a Tax Matters Person for each REMIC, including
designation of the Holder of a Residual Certificate to sign such returns or act
as Tax Matters Person for each REMIC. Each Holder of a Residual Certificate
shall be bound by this Section.
(ii) The Securities Administrator shall, to the extent that
they are under its control, conduct matters relating to the assets of any REMIC
hereunder at all times that any Certificates are outstanding so as to maintain
its status as a REMIC under the REMIC Provisions. The Securities Administrator
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 hereunder. The
Securities Administrator shall not permit the creation of any interests in REMIC
III other than the Certificates. The Securities Administrator shall not receive
any amount
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representing a fee or other compensation for services (except as otherwise
permitted by this Agreement). The Securities Administrator shall not receive any
income attributable to any asset which is neither a "qualified mortgage" nor a
"permitted investment" within the meaning of the REMIC Provisions. The
Securities Administrator shall not receive any contributions to any REMIC
hereunder after the Startup Day that would be subject to tax under Section
860G(d) of the Code. The Securities Administrator shall not dispose of any
assets of any REMIC hereunder at a gain if such disposition would be a
"prohibited transaction" within the meaning of Section 860F(a)(2) of the Code.
As agent of each Tax Matters Person, the Securities Administrator shall, as and
when necessary and appropriate, represent the related REMIC in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to
any taxable year of such REMIC, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of such REMIC, and otherwise act on behalf of such REMIC in relation to
any tax matter or controversy involving it.
(c) The Securities Administrator shall provide, upon request and
receipt of reasonable compensation, such information as required in Section
860D(a)(6)(B) of the Code to the Internal Revenue Service, to any Person
purporting to transfer a Residual Certificate to a Person other than a
transferee permitted by Section 5.05(b), and to any regulated investment
company, real estate investment trust, common trust fund, partnership, trust,
estate, organization described in Section 1381 of the Code, or nominee holding
an interest in a pass-through entity described in Section 860E(e)(6) of the
Code, or any record holder of which is not a transferee permitted by Section
5.05(b) (or which is deemed by statute to be an entity with a disqualified
member) and otherwise shall comply with all of the requirements of Section
860E(e) of the Code.
(d) The Securities Administrator shall prepare and file or cause to be
filed, and the Trustee shall sign, any state income tax returns required under
Applicable State Law with respect to each REMIC or the Trust Fund.
(e) Notwithstanding any other provision of this Agreement, the Trustee
and the Securities Administrator shall comply with all federal withholding
requirements respecting payments to Certificateholders of interest or original
issue discount on the Mortgage Loans, that the Trustee or the Securities
Administrator reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee or the Securities Administrator withholds any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trustee or the Securities
Administrator shall, together with its monthly report to such
Certificateholders, indicate such amount withheld.
(f) The Trustee and the Securities Administrator agree to indemnify the
Trust Fund and the Depositor for any taxes and costs, including, without
limitation, any reasonable attorneys fees, imposed on or incurred by the Trust
Fund, the Depositor or the Master Servicer as a result of a breach of the
Trustee's covenants or the Securities Administrator's covenants, respectively,
set forth in this Section 9.12; provided, however, such liability and obligation
to indemnify in this paragraph shall not be joint and several and neither the
Trustee nor the Securities Administrator shall be liable or be obligated to
indemnify the Trust Fund for the failure by the
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other to perform any duty under this Agreement or the breach by the other of any
covenant in this Agreement.
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ARTICLE X
Termination
Xxxxxxx 00.00. Xxxxxxxxxxx Xxxx Xxxxxxxxxx by the Depositor or its
Designee or Liquidation of the Mortgage Loans. (a) Subject to Section 10.02, the
respective obligations and responsibilities of the Depositor, the Trustee, the
Paying Agent, the Master Servicer, EMC and the Securities Administrator created
hereby, other than the obligation of the Paying Agent to make payments to
Certificateholders as hereinafter set forth, shall terminate upon:
(i) the repurchase by or at the direction of the Depositor or
its designee of all of the Mortgage Loans and all related REO Property
remaining in the Trust at a price (the "Termination Purchase Price")
equal to the sum of (a) 100% of the Outstanding Principal Balance of
each Mortgage Loan (other than a Mortgage Loan related to REO Property)
as of the date of repurchase, net of the principal portion of any
unreimbursed Monthly Advances made by the purchaser, together with
interest at the applicable Mortgage Interest Rate accrued but unpaid
to, but not including, the first day of the month of repurchase, (b)
the appraised value of any related REO Property, less the good faith
estimate of the Depositor of liquidation expenses to be incurred in
connection with its disposal thereof (but not more than the Outstanding
Principal Balance of the related Mortgage Loan, together with interest
at the applicable Mortgage Interest Rate accrued on that balance but
unpaid to, but not including, the first day of the month of
repurchase), such appraisal to be calculated by an appraiser mutually
agreed upon by the Depositor and the Trustee at the expense of the
Depositor, (c) unreimbursed out-of pocket costs of the Master Servicer,
including unreimbursed servicing advances and the principal portion of
any unreimbursed Monthly Advances, made on the Mortgage Loans prior to
the exercise of such repurchase right and (d) any unreimbursed costs
and expenses of the Trustee and the Securities Administrator payable
pursuant to Section 9.05; or
(ii) the later of (A) the making of the final payment or other
liquidation, or any advance with respect thereto, of the last Mortgage
Loan remaining in the Trust Fund and (B) the disposition of all
property acquired with respect to any Mortgage Loan; provided, however,
that in the event that an advance has been made, but not yet recovered,
at the time of such termination, the Person having made such advance
shall be entitled to receive, notwithstanding such termination, any
payments received subsequent thereto with respect to which such advance
was made; or
(iii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement.
(b) In no event, however, shall the Trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to
the Court of St. James's, living on the date of this Agreement.
(c) The right of the Depositor or its designee to repurchase all of the
assets of the Trust Fund pursuant to Subsection 10.01(a)(i) above shall be
exercisable only if (i) the aggregate Scheduled Principal Balance of the
Mortgage Loans at the time of any such repurchase is less
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than or equal to 10% of the Cut-off Date Balance, or (ii) the Depositor, based
upon an Opinion of Counsel addressed to the Depositor, the Trustee and the
Securities Administrator, has determined that the REMIC status of a REMIC
hereunder has been lost or that a substantial risk exists that such REMIC status
will be lost for the then-current taxable year. At any time thereafter, in the
case of (i) or (ii) above, the Depositor may elect to terminate REMIC I, REMIC
II or REMIC III at any time, and upon such election, the Depositor or its
designee shall repurchase all of the assets of the Trust Fund as described in
Subsection 10.01(a)(i) above.
(d) The Paying Agent shall give notice of any termination to the
Certificateholders, with a copy to the Master Servicer, the Securities
Administrator and the Rating Agencies, upon which the Certificateholders shall
surrender their Certificates to the Paying Agent for payment of the final
distribution and cancellation. Such notice shall be given by letter, mailed not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution, and shall specify (i) the
Distribution Date upon which final payment of the Certificates will be made upon
presentation and surrender of the Certificates at the office of the Paying Agent
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Certificates at
the office of the Paying Agent therein specified.
(e) If the option of the Depositor to repurchase or cause the
repurchase of all of the assets of the Trust Fund as described in Subsection
10.01 (a)(i) above is exercised,the Depositor and/or its designee shall deliver
to the Paying Agent for deposit in the Distribution Account, by the Business Day
prior to the applicable Distribution Date, an amount equal to the Termination
Purchase Price. Upon presentation and surrender of the Certificates by the
Certificateholders, the Paying Agent shall distribute to the Certificateholders,
as directed by the Securities Administrator in writing, an amount determined as
follows: with respect to each Certificate (other than the Class R Certificates
and the Interest Only Certificates), the outstanding Current Principal Amount,
plus with respect to each Certificate (other than the Class R Certificates), one
month's interest thereon at the applicable Pass-Through Rate; and with respect
to the Class R Certificates, the percentage interest evidenced thereby
multiplied by the difference, if any, between the above described repurchase
price and the aggregate amount to be distributed to the Holders of the
Certificates (other than the Class R Certificates). If the proceeds with respect
to the Loan Subgroup I-1 Mortgage Loans are not sufficient to pay all of the
Class I-A-1 Certificates in full, any such deficiency will be allocated first,
to the Group I Subordinate Certificates, in inverse order of their numerical
designation, then to the Group I Senior Mezzanine Certificates, and then to the
Class I-A-1 Certificates, in each case on a pro rata basis. If the proceeds with
respect to the Loan Subgroup I-2 Mortgage Loans are not sufficient to pay all of
the Class I-A-2 Certificates in full, any such deficiency will be allocated
first, to the Group I Subordinate Certificates, in inverse order of their
numerical designation, then to the Group I Senior Mezzanine Certificates, and
then to the Class I-A-2 Certificates, in each case on a pro rata basis. If the
proceeds with respect to the Loan Subgroup II-1 Mortgage Loans are not
sufficient to pay all of the Class II-A-1 Certificates in full, any such
deficiency will be allocated first, to the Group II Subordinate Certificates, in
inverse order of their numerical designation, and then to the Class II-A-1
Certificates, in each case on a pro rata basis. If the proceeds with respect to
the Loan Subgroup II-2 Mortgage Loans are not sufficient to pay all of the Class
II-A-2 Certificates in full, any such deficiency will be allocated first, to the
Group II Subordinate Certificates, in
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inverse order of their numerical designation, and then to the Class II-A-2
Certificates, in each case on a pro rata basis. If the proceeds with respect to
the Loan Subgroup II-3 Mortgage Loans are not sufficient to pay all of the Class
II-A-3 Certificates in full, any such deficiency will be allocated first, to the
Group II Subordinate Certificates, in inverse order of their numerical
designation, and then to the Class II-A-3 Certificates, in each case on a pro
rata basis. Upon deposit of the required repurchase price and following such
final Distribution Date relating thereto, the Trustee shall release promptly to
the Depositor and/or its designee the Mortgage Files for the remaining
applicable Mortgage Loans, and the Accounts with respect thereto shall
terminate, subject to the Paying Agent's obligation to hold any amounts payable
to Certificateholders in trust without interest pending final distributions
pursuant to Subsection 10.01(g). Any other amounts remaining in the Accounts
will belong to the Depositor.
(f) Upon the presentation and surrender of the Certificates, the Paying
Agent shall distribute to the remaining Certificateholders, pursuant to the
written direction of the Securities Administrator and in accordance with their
respective interests, all distributable amounts remaining in the Distribution
Account.
(g) If not all of the Certificateholders shall surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Paying Agent shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice not all the Certificates shall have been
surrendered for cancellation, the Paying Agent may take appropriate steps, or
appoint any agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain subject to
this Agreement.
Section 10.02. Additional Termination Requirements. (a) If the option
of the Depositor to repurchase all the Mortgage Loans under Subsection
10.01(a)(i) above is exercised, the Trust Fund and each of REMIC I, REMIC II and
REMIC III shall be terminated in accordance with the following additional
requirements, unless the Trustee has been furnished with an Opinion of Counsel
to the effect that the failure of the Trust to comply with the requirements of
this Section 10.02 will not (i) result in the imposition of taxes on "prohibited
transactions" as defined in Section 860F of the Code on REMIC I, REMIC II or
REMIC III or (ii) cause any REMIC to fail to qualify as a REMIC at any time that
any Certificates are outstanding:
(i) within 90 days prior to the final Distribution Date, at
the written direction of the Depositor, the Trustee, as agent for the
respective Tax Matters Persons, shall adopt a plan of complete
liquidation of REMIC I, REMIC II and REMIC III provided to it by the
Depositor meeting the requirements of a "qualified liquidation" under
Section 860F of the Code and any regulations thereunder;
(ii) the Depositor shall notify the Trustee at the
commencement of such 90-day liquidation period and, at or prior to the
time of making of the final payment on the Certificates, the Trustee
shall sell or otherwise dispose of all of the remaining assets of the
Trust Fund in accordance with the terms hereof; and
128
(iii) at or after the time of adoption of such a plan of
complete liquidation of any of REMIC I, REMIC II and REMIC III and at
or prior to the final Distribution Date relating thereto, the Trustee
shall sell for cash all of the assets of the Trust to or at the
direction of the Depositor, and REMIC I, REMIC II and REMIC III, as
applicable, shall terminate at such time.
(b) By their acceptance of the Residual Certificates, the Holders
thereof hereby (i) agree to adopt such a plan of complete liquidation of the
related REMIC upon the written request of the Depositor and to take such action
in connection therewith as may be reasonably requested by the Depositor and (ii)
appoint the Depositor as their attorney-in-fact, with full power of
substitution, for purposes of adopting such a plan of complete liquidation. The
Trustee shall adopt such plan of liquidation by filing the appropriate statement
on the final tax return of each REMIC. Upon complete liquidation or final
distribution of all of the assets of the Trust Fund, the Trust Fund and each of
REMIC I, REMIC II and REMIC III shall terminate.
129
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Intent of Parties. The parties intend that each of REMIC
I, REMIC II and REMIC III shall be treated as a REMIC for federal income tax
purposes and that the provisions of this Agreement should be construed in
furtherance of this intent.
Section 11.02. Amendment. (a) This Agreement may be amended from time
to time by EMC, the Depositor, the Master Servicer, the Securities Administrator
and the Trustee, and the Servicing Agreements may be amended from time to time
by EMC, the Master Servicer and the Trustee, without notice to or the consent of
any of the Certificateholders, to (i) cure any ambiguity, (ii) conform the terms
hereof to the disclosure in the Prospectus or the Prospectus Supplement, (iii)
correct or supplement any provisions herein that may be defective or
inconsistent with any other provisions herein, (iv) comply with any changes in
the Code or (v) make any other provisions with respect to matters or questions
arising under this Agreement or the Servicing Agreements which shall not be
inconsistent with the provisions of this Agreement; provided, however, that with
regard to clauses (iv) and (v) of this Section 11.02(a), such action shall not,
as evidenced by an Opinion of Independent Counsel, addressed to the Trustee,
adversely affect in any material respect the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by EMC, the
Master Servicer, the Depositor, the Securities Administrator and the Trustee,
and the Servicing Agreements may also be amended from time to time by the Master
Servicer and the Trustee, with the consent of the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Trust Fund or of the applicable Class or Classes, if such amendment affects only
such Class or Classes, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or the
Servicing Agreements or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) reduce the aforesaid
percentage of Certificates the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all Certificates then
outstanding, or (iii) cause REMIC I, REMIC II or REMIC III to fail to qualify as
a REMIC for federal income tax purposes, as evidenced by an Opinion of
Independent Counsel which shall be provided to the Trustee other than at the
Trustee's expense. Notwithstanding any other provision of this Agreement, for
purposes of the giving or withholding of consents pursuant to Section 11.02(b),
Certificates registered in the name of or held for the benefit of the Depositor,
the Securities Administrator, the Master Servicer, or the Trustee or any
Affiliate thereof shall be entitled to vote their Fractional Undivided Interests
with respect to matters affecting such Certificates.
(c) Promptly after the execution of any such amendment, the Trustee
shall furnish a copy of such amendment or written notification of the substance
of such amendment to each Certificateholder, with a copy to the Rating Agencies.
(d) In the case of an amendment under Subsection 11.02(b) above, it
shall not be necessary for the Certificateholders to approve the particular form
of such an amendment.
130
Rather, it shall be sufficient if the Certificateholders approve the substance
of the amendment. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee and the Securities Administrator may, but shall not be
obligated to, enter into any such amendment which affects the Trustee's or the
Securities Administrator's own respective rights, duties or immunities under
this Agreement.
Section 11.03. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. The Depositor
shall effect such recordation at the expense of the Trust upon the request in
writing of a Certificateholder, but only if such direction is accompanied by an
Opinion of Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.
Section 11.04. Limitation on Rights of Certificateholders. (a) The
death or incapacity of any Certificateholder shall not terminate this Agreement
or the Trust, nor entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) Except as expressly provided in this Agreement, no
Certificateholders shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to establish the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholders be under any liability to any third Person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon, under or with respect to this Agreement against the
Depositor, the Securities Administrator, the Master Servicer or any successor to
any such parties unless (i) such Certificateholder previously shall have given
to the Trustee a written notice of a continuing default, as herein provided,
(ii) the Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Trust Fund shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs and expenses and liabilities to be
incurred therein or thereby, and (iii) the Trustee, for 60 days after its
receipt of such notice,
131
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding.
(d) No one or more Certificateholders shall have any right by virtue of
any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or preference over
any other such Certificateholder, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.04, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.05. Acts of Certificateholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is expressly required, to the Depositor. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the
Depositor, if made in the manner provided in this Section 11.05.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Depositor, the Securities Administrator, the Master Servicer nor
any successor to any such parties shall be affected by any notice to the
contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action of the holder of any Certificate shall bind every future
holder of the same Certificate and the holder of every Certificate issued upon
the registration of transfer or exchange thereof, if applicable, or in lieu
thereof with respect to anything done, omitted or suffered to be done by the
Trustee, the Securities Administrator, the Depositor, the Master Servicer or any
successor to any such party in reliance thereon, whether or not notation of such
action is made upon such Certificates.
(e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Fractional Undivided Interests have given any request,
demand, authorization,
132
direction, notice, consent or waiver hereunder, Certificates owned by the
Trustee, the Securities Administrator, the Depositor, the Master Servicer or any
Affiliate thereof shall be disregarded, except as otherwise provided in Section
11.02(b) and except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Certificates which the Trustee knows to be so owned
shall be so disregarded. Certificates which have been pledged in good faith to
the Trustee, the Securities Administrator, the Depositor, the Master Servicer or
any Affiliate thereof may be regarded as outstanding if the pledgor establishes
to the satisfaction of the Trustee the pledgor's right to act with respect to
such Certificates and that the pledgor is not an Affiliate of the Trustee, the
Securities Administrator, the Depositor, or the Master Servicer, as the case may
be.
Section 11.06. GOVERNING LAW. THIS AGREEMENT AND THE CERTIFICATES SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES (OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW, WHICH THE PARTIES HERETO EXPRESSLY RELY UPON IN THE
CHOICE OF SUCH LAW AS THE GOVERNING LAW HEREUNDER) AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 11.07. Notices. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at (including delivery by
facsimile) or mailed by registered mail, return receipt requested, postage
prepaid, or by recognized overnight courier, to (i) in the case of the
Depositor, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Vice
President-Servicing, telecopier number: (000) 000-0000, or to such other address
as may hereafter be furnished to the other parties hereto in writing; (ii) in
the case of the Trustee, at its Corporate Trust Office, or such other address as
may hereafter be furnished to the other parties hereto in writing; (iii) in the
case of EMC Mortgage Xxxxxxxxxxx, XXX Mortgage Corporation, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Vice President - Servicing, telecopier
number (000) 000-0000, or to such other address as may hereafter be furnished to
the other parties hereto in writing; (iv) in the case of the Master Servicer,
Paying Agent or Securities Administrator, Xxxxx Fargo Bank, National
Association, X.X. Xxx 00, Xxxxxxxx, Xxxxxxxx 00000 and for overnight delivery to
0000 Xxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000 (Attention: XXXX XX 2004-AR5),
telecopier no.: (000) 000-0000, or such other address as may hereafter be
furnished to the other parties hereto in writing; (v) in the case of the
Certificate Registrar, the Certificate Registrar Office; or (vi) in the case of
the Rating Agencies, Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and Standard & Poor's Rating Service, a
division of The XxXxxx-Xxxx Companies, Inc., 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx, 00000, Attention: Residential Mortgage Surveillance, or such
other address as may be furnished to the parties hereto in writing. Any notice
delivered to the Depositor, the Master Servicer, the Securities Administrator,
EMC or the Trustee under this Agreement shall be effective only upon receipt.
Any notice required or permitted to be mailed to a Certificateholder, unless
otherwise provided herein, shall be given by first-class mail, postage prepaid,
at the address of such Certificateholder as shown in the Certificate Register.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given when mailed, whether or not the
Certificateholder receives such notice.
133
Section 11.08. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severed from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
Section 11.09. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto.
Section 11.10. Article and Section Headings. The article and section
headings herein are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof.
Section 11.11. Counterparts. This Agreement may be executed in two or
more counterparts, each of which when so executed and delivered shall be an
original but all of which together shall constitute one and the same instrument.
Section 11.12. Notice to Rating Agencies. The Trustee shall promptly
provide notice to each Rating Agency with respect to each of the following of
which it has actual knowledge:
1. Any material change or amendment to this Agreement or a Servicing
Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Master Servicer, the Trustee
or the Securities Administrator;
4. The repurchase or substitution of Mortgage Loans;
5. The final payment to Certificateholders; and
6. Any change in the location of the Distribution Account.
[Signature page follows]
134
IN WITNESS WHEREOF, the Depositor, the Trustee, the Master Servicer,
the Securities Administrator and EMC Mortgage Corporation have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the day and year first above written.
STRUCTURED ASSET MORTGAGE
INVESTMENTS II INC., as Depositor
By: /s/ Xxxxx Xxxxxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Vice President
JPMORGAN CHASE BANK, as Trustee
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Trust Officer
XXXXX FARGO BANK, NATIONAL
ASSOCIATION, as Master Servicer
By: /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: Assistant Vice President
XXXXX FARGO BANK, NATIONAL
ASSOCIATION, as Securities
Administrator
By: /s/ Xxxxxx Xxxxxx
----------------------------
Name: Xxxxxx Xxxxxx
Title: Assistant Vice President
EMC MORTGAGE CORPORATION
By: /s/ Xxx Xxxxxxxx
---------------------------
Name: Xxx Xxxxxxxx
Title: Executive Vice President
Accepted and Agreed as to
Sections 2.01, 2.02, 2.03, 2.04, 2.07 and 9.09(c)
in its capacity as Seller
EMC MORTGAGE CORPORATION, as Seller
By: /s/ Xxx Xxxxxxxx
------------------------------
Name: Xxx Xxxxxxxx
Title: Executive Vice President
/s/ Xxxxxxx Xxxxxx
------------------------
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 31st day of August, 2004 before me, a notary public in and for
said State, personally appeared Xxxxx Xxxxxxxxxxx, known to me to be a Vice
President of Structured Asset Mortgage Investments II Inc., the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Xxxxxxxx Xxxxxxxx
---------------------
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 31st day of August, 2004 before me, a notary public in and for
said State, personally appeared Xxxxx X. Xxxxxxx, known to me to be a Trust
Officer of JPMorgan Chase Bank, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxxx
------------------
Notary Public
[Notarial Seal]
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On the 31st day of August, 2004 before me, a notary public in and for
said State, personally appeared Xxx Xxxxxxxx, known to me to be an Executive
Vice President of EMC Mortgage Corporation, the corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Xxxxxxx Xxxxxx
------------------
Notary Public
[Notarial Seal]
STATE OF MARYLAND )
) ss.:
COUNTY OF XXXXXX )
On the 31st day of August, 2004 before me, a notary public in and for
said State, personally appeared Xxxxxx Xxxxxx, known to me to be an Assistant
Vice President of Xxxxx Fargo Bank, National Association, the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Xxxxx X. Xxxxxx
-------------------
Notary Public
[Notarial Seal]
STATE OF MARYLAND )
) ss.:
COUNTY OF XXXXXX )
On the 31st day of August, 2004 before me, a notary public in and for
said State, personally appeared Xxxxxx Xxxxxx, known to me to be an Assistant
Vice President of Xxxxx Fargo Bank, National Association, the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Xxxxx X. Xxxxxx
-------------------
Notary Public
[Notarial Seal]
000
XXXXX XX XXXXX )
) ss.:
COUNTY OF DALLAS )
On the 31st day of August, 2004 before me, a notary public in and for
said State, personally appeared Xxx Xxxxxxxx, known to me to be an Executive
Vice President of EMC Mortgage Corporation, the corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Xxxxxxx Xxxxxx
------------------
Notary Public
[Notarial Seal]
EXHIBIT A-1
FORM OF CLASS [__-A-_] [I-X] CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THE [CURRENT PRINCIPAL] [NOTIONAL] AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS [HEREON] AND REALIZED LOSSES [ON THE
MORTGAGE LOANS AS SET FORTH IN THE AGREEMENT (AS DEFINED BELOW)] [ALLOCABLE
HERETO] . ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE
[CURRENT PRINCIPAL] [NOTIONAL] AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM
THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN
ITS [CURRENT PRINCIPAL] [NOTIONAL] AMOUNT BY INQUIRY OF XXXXX FARGO BANK,
NATIONAL ASSOCIATION, AS CERTIFICATE REGISTRAR (THE "CERTIFICATE REGISTRAR")
WITH RESPECT HERETO.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE CERTIFICATE REGISTRAR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
Certificate No.__ Pass-Through Rate: Variable
Class [__-A-_] [I-X] [Senior]
Date of Pooling and Servicing Agreement Aggregate Initial [Current Principal]
and Cut-off Date: [Notional] Amount of this Class of
August 1, 2004 Certificates as of the Cut-off Date:
$____________
First Distribution Date: Initial [Current Principal] [Notional
September 19, 0000 Xxxxxx] of this Certificate as of
the Cut-off Date: $____________
Master Servicer: CUSIP: 86359L____
Xxxxx Fargo Bank, National Association
Assumed Final Distribution Date:
October 19, 2034
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-AR5
evidencing a fractional undivided interest in the
distributions allocable to the Class [__-A-_] [I-X]
Certificates with respect to a Trust Fund consisting
primarily of a pool of one- to four-family adjustable
rate mortgage loans sold by STRUCTURED ASSET MORTGAGE
INVESTMENTS II INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Structured Asset Mortgage
Investments II Inc., the Master Servicer, the Certificate Registrar or the
Trustee referred to below or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by Structured Asset Mortgage Investments
II Inc., the Master Servicer, the Certificate Registrar or the Trustee or any of
their affiliates or any other person. None of Structured Asset Mortgage
Investments II Inc., the Master Servicer or any of their affiliates will have
any obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.
This certifies that Cede & Co. is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust Fund") generally consisting of first lien, adjustable rate mortgage loans
secured by one- to four-family residences and individual condominium units
(collectively,
A-1-2
the "Mortgage Loans") sold by Structured Asset Mortgage Investments II Inc.
("XXXX XX"). The Mortgage Loans were sold by EMC Mortgage Corporation ("EMC") to
XXXX XX. Xxxxx Fargo Bank, National Association ("Xxxxx Fargo") will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust Fund was created pursuant to the Pooling and Servicing Agreement, dated as
of the Cut-off Date specified above (the "Agreement"), among XXXX XX, as
depositor (the "Depositor"), EMC Mortgage Corporation, Xxxxx Fargo, as Master
Servicer and securities administrator and JPMorgan Chase Bank, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
[Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at the per annum Pass-Through Rate set forth in
the Agreement.]
[This Certificate consists of two components, Component 1X and
Component 2X. The Components are not separately transferable.
On the First Distribution Date specified above, the Paying Agent will,
prior to the distribution of Group I Available Funds to any Group I Certificate,
distribute the First Distribution Date Distribution Amount to the Class I-X
Certificates, pro rata, as follows:
(i) from Group I Available Funds, an amount equal to the product of (x)
the First Distribution Date Distribution Amount and (y) the Component 1X
Distribution Percentage; and
(ii) from Group I Available Funds, an amount equal to the product of
(x) the First Distribution Date Distribution Amount and (y) the Component 2X
Distribution Percentage.
Thereafter, interest on this Certificate will accrue during the month prior to
the month in which a Distribution Date occurs on the Notional Amount hereof at a
per annum Pass-Through Rate which varies by Component as follows:
(i) Component 1X will bear interest at a Pass-Through Rate equal to the
greater of (i) zero and (ii) the excess of (x) the weighted average of the Net
Rates of the Loan Subgroup I-1 Mortgage Loans over (y) the Pass-Through Rate on
the Class I-A-1 Certificates, based on a Notional Amount equal to the Current
Principal Amount of the Class I-A-1 Certificates.
(ii) Component 2X will bear interest at a Pass-Through Rate equal to
the greater of (i) zero and (ii) the excess of (x) the weighted average of the
Net Rates of Loan Subgroups I-1 and I-2, weighted in proportion to the results
of subtracting from the aggregate Scheduled Principal Balance of Loan Subgroups
I-1 and I-2 the Current Principal Amount of the related Class of Group I Senior
Certificates, as of the beginning of the Due Period immediately prior to the
related Distribution Date, over (y) the weighted average of the Pass-Through
Rates on the Class I-M, Class I-B-1, Class I-B-2 and Class I-B-3 Certificates,
based on a Notional Amount equal to
A-1-3
the Current Principal Amount of the Class I-M, Class I-B-1, Class I-B-2 and
Class I-B-3 Certificates.]
The Trustee will distribute on the 19th day of each month, or, if such
19th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered [at the close of
business on the last Business Day of the calendar month preceding the month] [on
the 18th day of the month] of such Distribution Date, an amount equal to the
product of the Fractional Undivided Interest evidenced by this Certificate and
the amount (of interest and principal, if any) required to be distributed to the
Holders of Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first Distribution Date in the month immediately
following the month of the latest scheduled maturity date of any Mortgage Loan
and is not likely to be the date on which the [Current Principal] [Notional]
Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Paying Agent by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests,
by notifying the Paying Agent in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Paying Agent of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency appointed by the Paying Agent for that purpose and designated in such
notice. The Initial [Current Principal] [Notional] Amount of this Certificate is
set forth above. The Current [Principal] [Notional] Amount hereof will be
reduced to the extent of distributions allocable to principal hereon and any
Realized Losses allocable hereto as set forth in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty-two Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that
neither the Trustee, the Master Servicer nor the Certificate Registrar is liable
to the Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee, the Master Servicer and the Certificate
Registrar.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement from time
to time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund (or in certain cases, Holders of Certificates of affected
A-1-4
Classes evidencing such percentage of the Fractional Undivided Interests
thereof). Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in lieu hereof whether or
not notation of such action is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Certificate
Registrar upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Certificate Registrar for such purposes,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates in authorized denominations representing a like aggregate
Fractional Undivided Interest will be issued to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Fractional Undivided Interest, as requested by
the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith. The Depositor , the Master Servicer, the Trustee, the
Certificate Registrar and any agent of any of them may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of Depositor, the Master Servicer, the Trustee, the Certificate Registrar
or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon (i) the later
of the (A) final payment or other liquidation (or Advance with respect thereto)
of the last Mortgage Loan remaining in the Trust Fund and (B) disposition of all
property acquired with respect to any Mortgage Loan, (ii) the payment to
Certificateholders of all amounts required to be paid to them under the
Agreement, or (iii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only (A) if (i)
the aggregate Scheduled Principal Balance of the Mortgage Loans at the time of
any such repurchase is less than or equal to 10% of the Cut-off Date Balance, or
(ii) the Depositor, based upon an Opinion of Counsel, has determined that the
REMIC status of any REMIC under the Agreement has been lost or a substantial
risk exists that such REMIC status will be lost for the then-current taxable
year, and (B) following the satisfaction of certain additional termination
requirements specified in the Agreement. The exercise of such right will effect
the early retirement of the Certificates. In no event, however, will the Trust
Fund created by the Agreement continue beyond the expiration of 21 years after
the death of certain persons identified in the Agreement.
A-1-5
Unless this Certificate has been countersigned by an authorized
signatory of the Certificate Registrar by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
[Signature page follows]
A-1-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: August 31, 2004 JPMORGAN CHASE BANK,
not in its individual capacity but
solely as Trustee
By:
---------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R-[__-A-__] [I-X] Certificates referred to in
the within-mentioned Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION, as Certificate
Registrar
By:
---------------------------------
Authorized Signatory
A-1-7
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Fractional Undivided
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
Dated:
---------------
-------------------------------------
Signature by or on behalf of assignor
-------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to
_____________________________________________.
This information is provided by __________________, the assignee named
above, or ________________________, as its agent.
X-0-0
XXXXXXX X-0
CLASS I-M CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE GROUP I
SENIOR CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY
THE PRINCIPAL PAYMENTS HEREON AND ANY REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT
PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF XXXXX FARGO BANK, NATIONAL ASSOCIATION, AS
CERTIFICATE REGISTRAR (THE "CERTIFICATE REGISTRAR") WITH RESPECT HERETO.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE CERTIFICATE REGISTRAR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
A-2-1
Pass-Through Rate: Variable
Class I-M Group I Senior Mezzanine
Date of Pooling and Servicing Agreement Aggregate Initial Current Principal
and Cut-off Date: Amount of this Class of Certificates
August 1, 2004 as of the Cut-off Date:
$30,657,400
First Distribution Date: Initial Current Principal Amount of
September 19, 2004 this Certificate as of the Cut-off
Date: $30,657,400
Master Servicer: CUSIP: 86359L EG 0
Xxxxx Fargo Bank, National Association
Assumed Final Distribution Date:
October 19, 2034
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-AR5
evidencing a fractional undivided interest in the
distributions allocable to the Class I-M Certificates
with respect to a Trust Fund consisting primarily of a
pool of one- to four-family adjustable interest rate
mortgage loans sold by STRUCTURED ASSET MORTGAGE
INVESTMENTS II INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Structured Asset Mortgage
Investments II Inc., the Master Servicer or the Certificate Registrar referred
to below or any of their affiliates or any other person. Neither this
Certificate nor the underlying Mortgage Loans are guaranteed or insured by any
governmental entity or by Structured Asset Mortgage Investments II Inc., the
Master Servicer or the Certificate Registrar or any of their affiliates or any
other person. None of Structured Asset Mortgage Investments II Inc., the Master
Servicer, the Certificate Registrar or any of their affiliates will have any
obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.
This certifies that Cede & Co. is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust Fund") generally consisting of first lien, adjustable rate mortgage
A-2-2
loans secured by one- to four-family residences and individual condominium units
(collectively, the "Mortgage Loans") sold by Structured Asset Mortgage
Investments II Inc. ("XXXX XX"). The Mortgage Loans were sold by EMC Mortgage
Corporation ("EMC") to XXXX XX. Xxxxx Fargo Bank, National Association ("Xxxxx
Fargo") will act as master servicer of the Mortgage Loans (the "Master
Servicer," which term includes any successors thereto under the Agreement
referred to below). The Trust Fund was created pursuant to the Pooling and
Servicing Agreement, dated as of the Cut-off Date specified above (the
"Agreement"), among XXXX XX, as depositor (the "Depositor"), EMC Mortgage
Corporation, Xxxxx Fargo, as Master Servicer and securities administrator and
JPMorgan Chase Bank, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, capitalized terms used herein shall have the meaning ascribed to them in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum Pass-Through Rate equal to the
least of (i) One-Month LIBOR plus a margin initially equal to 0.450%, (ii)
11.00% per annum and (iii) the weighted average of the Net Rates of Loan
Subgroups I-1 and I-2, weighted in proportion to the results of subtracting from
the aggregate Scheduled Principal Balance of each such Loan Subgroup the Current
Principal Amount of the related Class of Group I Senior Certificates immediately
prior to the related Distribution Date. The Certificate Registrar will
distribute on the 19th day of each month, or, if such 19th day is not a Business
Day, the immediately following Business Day (each, a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the 18th day of the month of such
Distribution Date, an amount equal to the product of the Fractional Undivided
Interest evidenced by this Certificate and the amount (of interest and
principal, if any) required to be distributed to the Holders of Certificates of
the same Class as this Certificate. The Assumed Final Distribution Date is the
first Distribution Date in the month immediately following the month of the
latest scheduled maturity date of any Mortgage Loan and is not likely to be the
date on which the Current Principal Amount of this Class of Certificates will be
reduced to zero.
Distributions on this Certificate will be made by the Paying Agent by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests,
by notifying the Paying Agent in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Paying Agent of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency appointed by the Paying Agent for that purpose and designated in such
notice. The Initial Current Principal Amount of this Certificate is set forth
above. The Current Principal Amount hereof will be reduced to the extent of
distributions allocable to principal hereon and any Realized Losses allocable
hereto.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty-two Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
A-2-3
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that
neither the Trustee nor the Certificate Registrar is liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee and the Certificate Registrar.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement from time
to time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund (or in certain cases, Holders of Certificates of affected
Classes evidencing such percentage of the Fractional Undivided Interests
thereof). Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in lieu hereof, whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Certificate
Registrar upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Certificate Registrar for such purposes,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates in authorized denominations representing a like aggregate
Fractional Undivided Interest will be issued to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Fractional Undivided Interest, as requested by
the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith. The Depositor, the Master Servicer, the Trustee, the
Certificate Registrar and any agent of any of them may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Master Servicer, the Trustee, the Certificate
Registrar or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the
A-2-4
Agreement) shall terminate upon (i) the later of the (A) final payment or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and (B) disposition of all property acquired with
respect to any Mortgage Loan, (ii) the payment to Certificateholders of all
amounts required to be paid to them under the Agreement, or (iii) the optional
repurchase by the party named in the Agreement of all the Mortgage Loans and
other assets of the Trust Fund in accordance with the terms of the Agreement.
Such optional repurchase may be made only (A) if (i) the aggregate Scheduled
Principal Balance of the Mortgage Loans at the time of any such repurchase is
less than or equal to 10% of the Cut-off Date Balance, or (ii) the Depositor,
based upon an Opinion of Counsel, has determined that the REMIC status of any
REMIC under the Agreement has been lost or a substantial risk exists that such
REMIC status will be lost for the then-current taxable year, and (B) following
the satisfaction of certain additional termination requirements specified in the
Agreement. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.
Unless this Certificate has been countersigned by an authorized
signatory of the Certificate Registrar by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
[Signature page follows]
A-2-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: August 31, 2004
JPMORGAN CHASE BANK, not in its
individual capacity but solely as
Trustee
By:__________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class I-M Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION, as Certificate
Registrar
By:__________________________________
Authorized Signatory
A-2-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Fractional Undivided
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
Dated:
---------------
-------------------------------------
Signature by or on behalf of assignor
-------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
-------------------------
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to
_____________________________________________.
This information is provided by __________________, the assignee named
above, or ________________________, as its agent.
X-0-0
XXXXXXX X-0
CLASS __-B-__ CERTIFICATE
[THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE GROUP I
SENIOR CERTIFICATES [AND] THE GROUP I SENIOR MEZZANINE CERTIFICATES [AND THE
CLASS I-B-_ CERTIFICATES] AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).]
[THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE GROUP II
SENIOR CERTIFICATES [AND THE CLASS II-B-_ CERTIFICATES] AS DESCRIBED IN THE
AGREEMENT (AS DEFINED HEREIN).]
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY
THE PRINCIPAL PAYMENTS HEREON AND ANY REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT
PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF XXXXX FARGO BANK, NATIONAL ASSOCIATION, AS
CERTIFICATE REGISTRAR (THE "CERTIFICATE REGISTRAR") WITH RESPECT HERETO.
[FOR CLASS I-B-1, CLASS I-B-2, CLASS I-B-3, CLASS II-B-1, CLASS II-B-2
AND CLASS II-B-3 CERTIFICATES] [UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE CERTIFICATE
REGISTRAR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[FOR CLASS I-B-1, CLASS I-B-2, CLASS I-B-3, CLASS II-B-1, CLASS II-B-2
AND CLASS II-B-3 CERTIFICATES] [EACH BENEFICIAL OWNER OF THIS CERTIFICATE OR ANY
INTEREST HEREIN SHALL BE DEEMED TO HAVE REPRESENTED, BY VIRTUE OF ITS
ACQUISITION OR HOLDING OF THIS CERTIFICATE OR INTEREST HEREIN, THAT EITHER (I)
IT IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT
A-3-1
TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED OR SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED ("PLAN"), OR INVESTING
WITH ASSETS OF A PLAN OR (II) IT HAS ACQUIRED AND IS HOLDING SUCH CERTIFICATE IN
RELIANCE ON PROHIBITED TRANSACTION EXEMPTION 90-30, AS AMENDED FROM TIME TO TIME
("EXEMPTION"), AND THAT IT UNDERSTANDS THAT THERE ARE CERTAIN CONDITIONS TO THE
AVAILABILITY OF THE EXEMPTION, INCLUDING THAT THE CERTIFICATE MUST BE RATED, AT
THE TIME OF PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY STANDARD &
POOR'S, FITCH, INC. OR XXXXX'X INVESTORS SERVICE, INC., AND THE CERTIFICATE IS
SO RATED OR (III) (1) IT IS AN INSURANCE COMPANY, (2) THE SOURCE OF FUNDS USED
TO ACQUIRE OR HOLD THE CERTIFICATE OR INTEREST HEREIN IS AN "INSURANCE COMPANY
GENERAL ACCOUNT", AS SUCH TERM IS DEFINED IN PROHIBITED TRANSACTION CLASS
EXEMPTION ("PTCE") 95-60, AND (3) THE CONDITIONS IN SECTIONS I AND III OF PTCE
95-60 HAVE BEEN SATISFIED.]
[FOR CLASS I-B-4, CLASS I-B-5, CLASS I-B-6, CLASS II-B-4, CLASS II-B-5
AND CLASS II-B-6 CERTIFICATES] [THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3)
IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE AND THE CERTIFICATE REGISTRAR OF A
LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B) THE RECEIPT
BY THE TRUSTEE AND THE CERTIFICATE REGISTRAR OF SUCH OTHER EVIDENCE ACCEPTABLE
TO THE TRUSTEE AND THE CERTIFICATE REGISTRAR THAT SUCH REOFFER, RESALE, PLEDGE
OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS
OR IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED
STATES AND ANY OTHER APPLICABLE JURISDICTION.]
A-3-2
[FOR CLASS I-B-4, CLASS I-B-5, CLASS I-B-6, CLASS II-B-4, CLASS II-B-5
AND CLASS II-B-6 CERTIFICATES] [THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR
INDIRECTLY BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, UNLESS THE TRANSFEREE CERTIFIES OR REPRESENTS THAT THE
PROPOSED TRANSFER AND HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND
OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED
TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED
TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION
CLASS EXEMPTION ("PTCE") 84-14, XXXX 00-00, XXXX 00-0, XXXX 95-60 OR PTCE 96-23
AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL OBLIGATIONS ON THE PART OF THE
DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER, THE CERTIFICATE
REGISTRAR, ANY SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN
OWNER OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE, OR UNLESS THE OPINION
SPECIFIED IN SECTION 5.07 OF THE AGREEMENT IS PROVIDED.]
A-3-3
Pass-Through Rate: Variable
Class __-B-__ Subordinate
Date of Pooling and Servicing Agreement and Aggregate Initial Current Principal Amount
Cut-off Date: of this Class of Certificates as of the Cut-off
August 1, 2004 Date:
$______________
First Distribution Date: Initial Current Principal Amount of this
September 19, 2004 Certificate as of the Cut-off Date:
$______________
Master Servicer: CUSIP: 86359L_____
Xxxxx Fargo Bank, National Association
Assumed Final Distribution Date:
October 19, 2034
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-AR5
evidencing a fractional undivided interest in
the distributions allocable to the Class __-B-__
Certificates with respect to a Trust Fund
consisting primarily of a pool of one- to
four-family adjustable interest rate mortgage
loans sold by STRUCTURED ASSET MORTGAGE
INVESTMENTS II INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Structured Asset Mortgage
Investments II Inc., the Master Servicer, the Certificate Registrar or the
Trustee referred to below or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by Structured Asset Mortgage Investments
II Inc., the Master Servicer, the Certificate Registrar or the Trustee or any of
their affiliates or any other person. None of Structured Asset Mortgage
Investments II Inc., the Master Servicer or any of their affiliates will have
any obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.
This certifies that [Cede & Co.] [Bear, Xxxxxxx Securities Corp.] is
the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust Fund") generally consisting of first lien,
adjustable rate mortgage loans secured by one- to four-family residences and
A-3-4
individual condominium units (collectively, the "Mortgage Loans") sold by
Structured Asset Mortgage Investments II Inc. ("XXXX XX"). The Mortgage Loans
were sold by EMC Mortgage Corporation ("EMC") to XXXX XX. Xxxxx Fargo Bank,
National Association ("Xxxxx Fargo") will act as master servicer of the Mortgage
Loans (the "Master Servicer," which term includes any successors thereto under
the Agreement referred to below). The Trust Fund was created pursuant to the
Pooling and Servicing Agreement, dated as of the Cut-off Date specified above
(the "Agreement"), among XXXX XX, as depositor (the "Depositor"), EMC Mortgage
Corporation, Xxxxx Fargo, as Master Servicer and securities administrator and
JPMorgan Chase Bank, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, capitalized terms used herein shall have the meaning ascribed to them in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at the per annum Pass-Through Rate set forth in
the Agreement. The Trustee will distribute on the 19th day of each month, or, if
such 19th day is not a Business Day, the immediately following Business Day
(each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered [on
the last Business Day of the month next preceding] [on the 18th day of] the
month of such Distribution Date, an amount equal to the product of the
Fractional Undivided Interest evidenced by this Certificate and the amount (of
interest and principal, if any) required to be distributed to the Holders of
Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first Distribution Date in the month immediately
following the month of the latest scheduled maturity date of any Mortgage Loan
and is not likely to be the date on which the Current Principal Amount of this
Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Paying Agent by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests,
by notifying the Paying Agent in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Paying Agent of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency appointed by the Paying Agent for that purpose and designated in such
notice. The Initial Current Principal Amount of this Certificate is set forth
above. The Current Principal Amount hereof will be reduced to the extent of
distributions allocable to principal hereon and any Realized Losses allocable
hereto.
[For Class I-B-1, Class I-B-2, Class I-B-3, Class II-B-1, Class II-B-2
and II-Class B-3 Certificates] [Each beneficial owner of this Certificate or any
interest herein shall be deemed to have represented, by virtue of its
acquisition or holding of this certificate or interest herein, that either (i)
it is not an employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended or section 4975 of the Internal Revenue Code of
1986, as amended ("Plan"), or investing with assets of a Plan or (ii) it has
acquired and is holding such certificate in reliance on Prohibited Transaction
Exemption 90-30, as amended from time to time ("Exemption"), and that it
understands that there are certain conditions to the availability of the
Exemption, including that the certificate must be rated, at the time of
purchase, not lower than
A-3-5
"BBB-" (or its equivalent) by Standard & Poor's, Fitch, Inc. or Xxxxx'x
Investors Service, Inc., and the certificate is so rated or (iii) (1) it is an
insurance company, (2) the source of funds used to acquire or hold the
certificate or interest therein is an "insurance company general account", as
such term is defined in Prohibited Transaction Class Exemption ("PTCE") 95-60,
and (3) the conditions in Sections I and III of PTCE 95-60 have been satisfied.]
[For Class I-B-4, Class I-B-5, Class I-B-6, Class II-B-4, Class II-B-5
and Class II-B-6 Certificates] [No transfer of this Certificate shall be made
unless the transfer is made pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), and an
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification, and is made in accordance with Section 5.02 of the Agreement. In
the event that such transfer is to be made the Certificate Registrar shall
register such transfer if: (i) made to a transferee who has provided the
Certificate Registrar and the Trustee with evidence as to its QIB status; or
(ii) (A) the transferor has advised the Trustee and the Certificate Registrar in
writing that the Certificate is being transferred to an Institutional Accredited
Investor and (B) prior to such transfer the transferee furnishes to the Trustee
and the Certificate Registrar an Investment Letter; or (iii) based upon an
Opinion of Counsel to the effect that (A) and (B) above are met sufficient to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
and other applicable laws.]
Neither the Depositor nor the Certificate Registrar nor the Trustee is
obligated to register or qualify the Class of Certificates specified on the face
hereof under the Securities Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Certificate Registrar, the Securities Administrator, the Depositor,
EMC 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.
[For Class I-B-4, Class I-B-5, Class I-B-6, Class II-B-4, Class II-B-5
and Class II-B-6 Certificates] [This Certificate may not be acquired directly or
indirectly by, or on behalf of, an employee benefit plan or other retirement
arrangement which is subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended, or Section 4975 of the Internal Revenue Code
of 1986, as amended, unless the transferee certifies or represents that the
proposed transfer and holding of this Certificate and the servicing, management
and operation of the Trust and its assets: (i) will not result in any prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code which is not
covered under an individual or class prohibited transaction exemption,
including, but not limited to Department of Labor Prohibited Transaction Class
Exemption ("PTCE") 84-14 (Class Exemption for Plan Asset Transactions Determined
by Independent Qualified Professional Asset Managers); PTCE 91-38 (Class
Exemption for Certain Transactions Involving Bank Collective Investment Funds);
PTCE 90-1 (Class Exemption for Certain Transactions Involving Insurance Company
Pooled Separate Accounts); PTCE 95-60 (Class Exemption for Certain Transactions
Involving Insurance Company General Accounts); and PTCE 96-23 (Class Exemption
for Plan Asset Transactions Determined by In-House Asset Managers), or Section
401(c) of ERISA and the regulations promulgated thereunder; (ii) will not
constitute or result in the assets of the Trust being deemed to be "plan assets"
subject to the
A-3-6
prohibited transaction provisions of ERISA or Section 4975 of the Code; and
(iii) will not give rise to any additional obligations on the part of the
Depositor, the Securities Administrator, any Servicer, the Master Servicer, the
Certificate Registrar or the Trustee in addition to those undertaken in the
Agreement, which will be deemed represented by an owner of a Book-Entry
Certificate or a Global Certificate, or unless the opinion specified in Section
5.07 of the Agreement is provided.]
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty-two Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that
neither the Trustee nor the Certificate Registrar is liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee and the Certificate Registrar.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement from time
to time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund (or in certain cases, Holders of Certificates of affected
Classes evidencing such percentage of the Fractional Undivided Interests
thereof). Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in lieu hereof, whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Certificate
Registrar upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Certificate Registrar for such purposes,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates in authorized denominations representing a like aggregate
Fractional Undivided Interest will be issued to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more
A-3-7
new Certificates evidencing the same Class and in the same aggregate Fractional
Undivided Interest, as requested by the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith. The Depositor, the Master Servicer, the Certificate
Registrar, the Trustee and any agent of any of them may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and none of the Depositor, the Master Servicer, the Certificate Registrar, the
Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon (i) the later
of the (A) final payment or other liquidation (or Advance with respect thereto)
of the last Mortgage Loan remaining in the Trust Fund and (B) disposition of all
property acquired with respect to any Mortgage Loan, (ii) the payment to
Certificateholders of all amounts required to be paid to them under the
Agreement, or (iii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only (A) if (i)
the aggregate Scheduled Principal Balance of the Mortgage Loans at the time of
any such repurchase is less than or equal to 10% of the Cut-off Date Balance, or
(ii) the Depositor, based upon an Opinion of Counsel, has determined that the
REMIC status of any REMIC under the Agreement has been lost or a substantial
risk exists that such REMIC status will be lost for the then-current taxable
year, and (B) following the satisfaction of certain additional termination
requirements specified in the Agreement. The exercise of such right will effect
the early retirement of the Certificates. In no event, however, will the Trust
Fund created by the Agreement continue beyond the expiration of 21 years after
the death of certain persons identified in the Agreement.
Unless this Certificate has been countersigned by an authorized
signatory of the Certificate Registrar by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
[Signature page follows]
A-3-8
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: August 31, 2004
JPMORGAN CHASE BANK, not in its
individual capacity but solely as Trustee
By:
-------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class __-B-__ Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION, as Certificate
Registrar
By:
-------------------------------------
Authorized Signatory
A-3-9
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Fractional Undivided
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
Dated:
--------------------------
----------------------------------------
Signature by or on behalf of assignor
----------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
-------------------------
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to
______________________________________________.
This information is provided by __________________, the assignee named
above, or ________________________, as its agent.
X-0-00
XXXXXXX X-0
CLASS R-__ CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED
STATES PERSON, A PUBLICLY TRADED PARTNERSHIP OR A DISQUALIFIED ORGANIZATION (AS
DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFEREE PROVIDES THE CERTIFICATE REGISTRAR AND THE
TRUSTEE WITH AN OPINION OF COUNSEL ADDRESSED TO THE TRUSTEE, THE DEPOSITOR, THE
MASTER SERVICER, THE CERTIFICATE REGISTRAR AND THE SECURITIES ADMINISTRATOR, AND
ON WHICH THEY MAY RELY, IN A FORM SATISFACTORY TO THE TRUSTEE AND THE
CERTIFICATE REGISTRAR, THAT THE PROPOSED TRANSFER AND HOLDING OF A CERTIFICATE
AND THE SERVICING, MANAGEMENT AND OPERATION OF THE TRUST AND ITS ASSETS: (I)
WILL NOT CONSTITUTE OR RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE
"PLAN ASSETS" SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA OR
SECTION 4975 OF THE CODE; (II) WILL NOT RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE; (III) IS
PERMISSIBLE UNDER APPLICABLE LAW; AND (IV) WILL NOT SUBJECT THE DEPOSITOR, THE
SECURITIES ADMINISTRATOR, THE MASTER SERVICER, THE CERTIFICATE REGISTRAR, ANY
SERVICER OR THE TRUSTEE TO ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN IN THE
AGREEMENT (AS DEFINED HEREIN).
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE OBTAINS THE PRIOR WRITTEN CONSENT OF
STRUCTURED ASSET MORTGAGE INVESTMENTS II INC. AND THE SECURITIES ADMINISTRATOR
AND PROVIDES A TRANSFER AFFIDAVIT TO THE TAX MATTERS PERSON, THE SELLER, THE
CERTIFICATE REGISTRAR AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE
UNITED STATES (AS DEFINED IN SECTION 7701 OF THE CODE), ANY STATE (AS DEFINED IN
SECTION 7701 OF THE CODE) OR POLITICAL SUBDIVISION THEREOF, ANY POSSESSION OF
THE UNITED STATES, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING
(OTHER THAN
A-4-1
AN INSTRUMENTALITY WHICH IS A CORPORATION IF ALL OF ITS ACTIVITIES
ARE SUBJECT TO TAX AND, EXCEPT FOR XXXXXXX MAC OR ANY SUCCESSOR THERETO, A
MAJORITY OF ITS BOARD OF DIRECTORS IS NOT SELECTED BY SUCH GOVERNMENTAL UNIT),
(B) ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION (AS DEFINED IN
SECTION 7701 OF THE CODE), OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (C) ANY ORGANIZATION (OTHER THAN CERTAIN FARMERS' COOPERATIVES
DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY
CHAPTER 1 OF THE CODE (INCLUDING THE TAX IMPOSED BY SECTION 511 OF THE CODE ON
UNRELATED BUSINESS TAXABLE INCOME), (D) ANY ORGANIZATION DESCRIBED IN SECTION
1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES
(A), (B), (C) OR (D) BEING HEREIN REFERRED TO AS A "DISQUALIFIED ORGANIZATION")
OR (E) AN AGENT OF A DISQUALIFIED ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER
IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH TRANSFEREE
SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF
THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH
REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND
SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
A-4-2
Certificate No. 1 Pass-Through Rate: N/A
Class R-__
Date of Pooling and Servicing Agreement and Aggregate Initial Current Principal Amount of
Cut-off Date: this Class of Certificates as of the Cut-off
August 1, 2004 Date: $50.00
First Distribution Date: Initial Current Principal Amount of this
September 19, 2004 Certificate as of the Cut-off Date: $50.00
Master Servicer: CUSIP: 86359L_____
Xxxxx Fargo Bank, National Association
Assumed Final Distribution Date:
October 19, 2034
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-AR5
evidencing a fractional undivided interest in the
distributions allocable to the Class R-__ Certificates
with respect to a Trust Fund consisting primarily of
a pool of one- to four-family adjustable interest
rate mortgage loans sold by STRUCTURED ASSET
MORTGAGE INVESTMENTS II INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Structured Asset Mortgage
Investments II Inc., the Master Servicer, the Certificate Registrar or the
Trustee referred to below or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by Structured Asset Mortgage Investments
II Inc., the Master Servicer, the Certificate Registrar or the Trustee or any of
their affiliates or any other person. None of Structured Asset Mortgage
Investments II Inc., the Master Servicer or any of their affiliates will have
any obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.
This certifies that Bear, Xxxxxxx Securities Corp. is the registered
owner of the Fractional Undivided Interest evidenced hereby in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust Fund") generally consisting of first lien, adjustable rate
mortgage loans secured by one- to four-family residences and individual
condominium units (collectively, the "Mortgage Loans") sold by Structured Asset
Mortgage Investments II Inc. ("XXXX XX"). The Mortgage Loans were sold by EMC
Mortgage Corporation
A-4-3
("EMC") to XXXX XX. Xxxxx Fargo Bank, National Association ("Xxxxx Fargo") will
act as master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust Fund was created pursuant to the Pooling and Servicing Agreement, dated as
of the Cut-off Date specified above (the "Agreement"), among XXXX XX, as
depositor (the "Depositor"), EMC Mortgage Corporation, Xxxxx Fargo, as Master
Servicer and securities administrator and JPMorgan Chase Bank, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
This Certificate will not bear interest. The Trustee will distribute on
the 19th day of each month, or, if such 19th day is not a Business Day, the
immediately following Business Day (each, a "Distribution Date"), to the Person
in whose name this Certificate is registered at the close of business on the
last Business Day of the calendar month preceding the month of such Distribution
Date, an amount equal to the product of the Fractional Undivided Interest
evidenced by this Certificate and the amount, if any, required to be distributed
to the Holders of Certificates of the same Class as this Certificate. The
Assumed Final Distribution Date is the first Distribution Date in the month
immediately following the month of the latest scheduled maturity date of any
Mortgage Loan and is not likely to be the date on which the Current Principal
Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Paying Agent by
check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests,
by notifying the Paying Agent in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Paying Agent of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency appointed by the Paying Agent for that purpose and designated in such
notice. The Initial Current Principal Amount of this Certificate is set forth
above. The Current Principal Amount hereof will be reduced to the extent of
distributions allocable to principal hereon and any Realized Losses allocable
hereto.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any ownership interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
ownership interest in this Certificate will be conditioned upon the delivery to
XXXX XX, the Securities Administrator, the Trustee and the Certificate Registrar
of, among other things, an affidavit to the effect that it is a United States
Person and Permitted Transferee, (iii) any attempted or purported transfer of
any ownership interest in this Certificate in violation of such restrictions
will be absolutely null and void and will vest no rights in the purported
transferee, and (iv) if any person other than a person that is a United States
Person and a Permitted Transferee acquires any ownership interest in this
Certificate in violation of such restrictions, then the Depositor will have the
right, in its sole discretion and without notice to the Holder of this
Certificate, to sell this Certificate to a purchaser selected by the Depositor,
or any affiliate of the Depositor, on such terms and conditions as the Depositor
may impose.
A-4-4
This Certificate may not be acquired directly or indirectly by, or on
behalf of, an employee benefit plan or other retirement arrangement which is
subject to title I of the Employee Retirement Income Security Act of 1974, as
amended, and/or Section 4975 of the Internal Revenue Code of 1986, as amended,
unless the proposed transferee provides the Certificate Registrar and the
Trustee with an opinion of counsel addressed to the Trustee, the Certificate
Registrar, the Master Servicer and the Securities Administrator and on which
they may rely (which shall not be at the expense of the Trustee, the Certificate
Registrar, the Master Servicer or the Securities Administrator) which is
acceptable to the Certificate Registrar and the Trustee, that the purchase of
this Certificate will not result in or constitute a nonexempt prohibited
transaction, is permissible under applicable law and will not give rise to any
additional fiduciary obligations on the part of the Depositor, the Master
Servicer, the Securities Administrator, the Certificate Registrar or the
Trustee.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty-two Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that
neither the Trustee nor the Certificate Registrar is liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee and the Certificate Registrar.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor and
the Trustee with the consent of the Holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than 51% of the Trust Fund
(or in certain cases, Holders of Certificates of affected Classes evidencing
such percentage of the Fractional Undivided Interests thereof). Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Certificate
Registrar upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Certificate Registrar for such purposes,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates in
A-4-5
authorized denominations representing a like aggregate Fractional Undivided
Interest will be issued to the designated transferee.
By accepting this Certificate, the purchaser hereof agrees to be a Tax
Matters Person and appoints the Securities Administrator to act as its agent
with respect to all matters concerning the tax obligations of the Trust.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Fractional Undivided Interest, as requested by
the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith. The Depositor, the Master Servicer, the Certificate
Registrar, the Trustee and any agent of any of them may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and none of the Depositor, the Master Servicer, the Certificate Registrar, the
Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon (i) the later
of the (A) final payment or other liquidation (or Advance with respect thereto)
of the last Mortgage Loan remaining in the Trust Fund and (B) disposition of all
property acquired with respect to any Mortgage Loan, (ii) the payment to
Certificateholders of all amounts required to be paid to them under the
Agreement, or (iii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only (A) if (i)
the aggregate Scheduled Principal Balance of the Mortgage Loans at the time of
any such repurchase is less than or equal to 10% of the Cut-off Date Balance, or
(ii) the Depositor, based upon an Opinion of Counsel, has determined that the
REMIC status of any REMIC under the Agreement has been lost or a substantial
risk exists that such REMIC status will be lost for the then-current taxable
year, and (B) following the satisfaction of certain additional termination
requirements specified in the Agreement. The exercise of such right will effect
the early retirement of the Certificates. In no event, however, will the Trust
Fund created by the Agreement continue beyond the expiration of 21 years after
the death of certain persons identified in the Agreement.
A-4-6
Unless this Certificate has been countersigned by an authorized
signatory of the Certificate Registrar by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
[Signature page follows]
A-4-7
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: August 31, 2004 JPMORGAN CHASE BANK,
not in its individual capacity but solely as
Trustee
By:
---------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R-__ Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION, as Certificate
Registrar
By:
---------------------------------------
Authorized Signatory
A-4-8
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Fractional Undivided
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
Dated:
----------------
-------------------------------------
Signature by or on behalf of assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the assignee named
above, or ________________________, as its agent.
A-4-9
EXHIBIT B
MORTGAGE LOAN SCHEDULE
----------------------
[PROVIDED UPON REQUEST]
EXHIBIT C
[RESERVED]
EXHIBIT D
REQUEST FOR RELEASE OF DOCUMENTS
To: JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
RE: Pooling and Servicing Agreement dated as of
August 1, 2004, among Structured Asset Mortgage Investments II Inc.,
EMC Mortgage Corporation, Xxxxx Fargo
Bank Minnesota, National Association and
JPMorgan Chase Bank
as Trustee
In connection with the administration of the Mortgage Loans (as defined
in the Agreement) held by you pursuant to the above-captioned Pooling and
Servicing Agreement (the "Agreement"), we request the release, and hereby
acknowledge receipt, of the Mortgage File (as defined in the Agreement) for the
Mortgage Loan described below, for the reason indicated. The release of such
Mortgage File will not invalidate any insurance coverage provided in respect of
such Mortgage Loan under any of the Insurance Policies (as defined in the
Agreement).
Mortgage Loan Number:
---------------------
Mortgagor Name, Address & Zip Code:
-----------------------------------
Reason for Requesting Documents (check one):
--------------------------------------------
_____ 1. Mortgage paid in full and proceeds have been deposited into the
Custodial Account
_____ 2. Foreclosure
_____ 3. Substitution
_____ 4. Other Liquidation
_____ 5. Nonliquidation Reason:
------------------------------
_____ 6. California Mortgage Loan paid in full
By:
----------------------------------
(authorized signer)
Issuer:
------------------------------
Address:
-----------------------------
Date:
--------------------------------
EXHIBIT E
FORM OF AFFIDAVIT PURSUANT TO SECTION 860E(E)(4)
Affidavit pursuant to Section
860E(e)(4) of the Internal Revenue
Code of 1986, as amended, and for
other purposes
STATE OF )
: ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of ______] [the United States], on behalf of which
he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" as
defined in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), and will not be a disqualified organization as of [Closing Date]
[date of purchase]; (ii) it is not acquiring the Structured Asset Mortgage
Investments II Trust 2004-AR5, Mortgage Pass-Through Certificates, Series
2004-AR5, Class R-I, Class R-II and Class R-III Certificates (the "Residual
Certificates") for the account of a disqualified organization; (iii) it consents
to any amendment of the Pooling and Servicing Agreement that shall be deemed
necessary by Structured Asset Mortgage Investments II Inc. (upon advice of
counsel) to constitute a reasonable arrangement to ensure that the Residual
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Residual Certificates unless
(a) it has received from the transferee an affidavit in substantially the same
form as this affidavit containing these same four representations and (b) as of
the time of the transfer, it does not have actual knowledge that such affidavit
is false.
3. That the Investor is one of the following: (i) a citizen or resident
of the United States, (ii) a corporation or partnership (including an entity
treated as a corporation or partnership for federal income tax purposes) created
or organized in, or under the laws of, the United States or any state thereof or
the District of Columbia (except, in the case of a partnership, to the extent
provided in regulations), provided that no partnership or other entity treated
as a partnership for United States federal income tax purposes shall be treated
as a United States Person unless all persons that own an interest in such
partnership, either directly or through any entity that is not a corporation for
United States federal income tax purposes, are United States Persons, (iii) an
estate whose income is subject to United States federal income tax regardless of
its source, or (iv) a trust other than a "foreign trust," as defined in Section
7701 (a)(31) of the Code.
4. That the Investor's taxpayer identification number is
______________________.
5. That no purpose of the acquisition of the Residual Certificates is
to avoid or impede the assessment or collection of tax.
6. That the Investor understands that, as the holder of the Residual
Certificates, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificates.
7. That the Investor intends to pay taxes associated with holding the
Residual Certificates as they become due.
8. The Investor is not an employee benefit plan or other plan subject
to the prohibited transaction provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code"), or an investment manager, named
fiduciary or a trustee of any such plan, or any other Person acting, directly or
indirectly, on behalf of or purchasing any Certificate with "plan assets" of any
such plan.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] this ____ day of _________, 20__.
[NAME OF INVESTOR]
By:
----------------------------------------
[Name of Officer]
[Title of Officer]
[Address of Investor for receipt of
distributions]
Address of Investor for receipt of tax
information:
E-2
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this ___ day of _________, 20___.
NOTARY PUBLIC
COUNTY OF
STATE OF
My commission expires the ___ day of ___________________, 20___.
E-3
EXHIBIT F-1
FORM OF INVESTMENT LETTER
___________________[Date]
[DEPOSITOR]
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx Fargo Bank, National Association
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Structured Asset Mortgage Investments II Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Structured Asset Mortgage Investments II Trust 2004-AR5, Mortgage
Pass-Through Certificates Series 2004-AR5 (the "Certificates"),
including the [Class I-B-4, Class I-B-5, Class I-B-6, Class II-B-4,
Class II-B-5, Class II-B-6] Certificates (the "Privately Offered
Certificates")
----------------------------------------------------------------
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered Certificates, we
confirm that:
(i) we understand that the Privately Offered Certificates are not being
registered under the Securities Act of 1933, as amended (the "Act"), or any
applicable state securities or "Blue Sky" laws, and are being sold to us in a
transaction that is exempt from the registration requirements of such laws;
(ii) any information we desired concerning the Certificates, including
the Privately Offered Certificates, the trust in which the Certificates
represent the entire beneficial ownership interest (the "Trust") or any other
matter we deemed relevant to our decision to purchase Privately Offered
Certificates has been made available to us;
(iii) we are able to bear the economic risk of investment in Privately
Offered Certificates; we are an institutional "accredited investor" as defined
in Section 501(a) of Regulation D promulgated under the Act and a sophisticated
institutional investor;
(iv) we are acquiring Privately Offered Certificates for our own
account, not as nominee for any other person, and not with a present view to any
distribution or other disposition of the Privately Offered Certificates;
(v) we agree the Privately Offered Certificates must be held
indefinitely by us (and may not be sold, pledged, hypothecated or in any way
disposed of) unless subsequently registered under the Act and any applicable
state securities or "Blue Sky" laws or an exemption from the registration
requirements of the Act and any applicable state securities or "Blue Sky" laws
is available;
(vi) we agree that in the event that at some future time we wish to
dispose of or exchange any of the Privately Offered Certificates (such
disposition or exchange not being currently foreseen or contemplated), we will
not transfer or exchange any of the Privately Offered Certificates unless:
(A) (1) the sale is to an Eligible Purchaser (as defined below), (2) if
required by the Pooling and Servicing Agreement (as defined below), a letter to
substantially the same effect as either this letter or, if the Eligible
Purchaser is a Qualified Institutional Buyer as defined under Rule 144A of the
Act, the Rule 144A and Related Matters Certificate in the form attached as
Exhibit F-2 to the Pooling and Servicing Agreement (as defined below) (or such
other documentation as may be acceptable to the Trustee and the Certificate
Registrar (each such term as defined below)) is executed promptly by the
purchaser and delivered to the addressees hereof and (3) all offers or
solicitations in connection with the sale, whether directly or through any agent
acting on our behalf, are limited only to Eligible Purchasers and are not made
by means of any form of general solicitation or general advertising whatsoever;
and
(B) if the Privately Offered Certificate is not registered under the
Act (as to which we acknowledge you have no obligation), the Privately Offered
Certificate is sold in a transaction that does not require registration under
the Act and any applicable state securities or "blue sky" laws and, if JPMorgan
Chase Bank (the "Trustee") or Xxxxx Fargo Bank, National Association (the
"Certificate Registrar") so requests, a satisfactory Opinion of Counsel (as
defined in the Pooling and Servicing Agreement) is furnished to such effect,
which Opinion of Counsel shall be an expense of the transferor or the
transferee;
(vii) we agree to be bound by all of the terms (including those
relating to restrictions on transfer) of the Pooling and Servicing Agreement,
pursuant to which the Trust was formed; we have reviewed carefully and
understand the terms of the Pooling and Servicing Agreement;
(viii) we either: (i) are not acquiring the Privately Offered
Certificate directly or indirectly by, or on behalf of, an employee benefit plan
or other retirement arrangement which is subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended, and/or Section 4975 of the
Internal Revenue Code of 1986, as amended, or (ii) are providing a
representation or an Opinion of Counsel to the effect that the proposed transfer
and/or holding of a Privately Offered Certificate and the servicing, management
and/or operation of the Trust and its assets: (I) will not result in any
prohibited transaction unless it is covered under an individual or prohibited
transaction class exemption, including, but not limited to, Class Prohibited
Transaction Exemption ("PTCE") 84-14, XXXX 00-00, XXXX 00-0, XXXX 95-60, PTCE
96-23 or Section 401(c) of ERISA and the regulations promulgated thereunder;
(II) will not constitute or result in the assets of the Trust being deemed to be
"plan assets" subject to the prohibited transaction provisions of ERISA or
Section 4975 of the Code; and (III) will not give rise to any
F-1-2
additional fiduciary duties on the part of the Seller, the Master Servicer, the
Certificate Registrar, the Securities Administrator, any Servicer or the
Trustee.
(ix) We understand that each of the [Class I-B-4, Class I-B-5, Class
I-B-6, Class II-B-4, Class II-B-5 and Class II-B-6] Certificates bears, and will
continue to bear, a legend to substantially the following effect: "THIS
CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS. THE
HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY
BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH
THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A
"QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR"
WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D
UNDER THE SECURITIES ACT OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME
WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE AND THE CERTIFICATE
REGISTRAR OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND
(B) THE RECEIPT BY THE TRUSTEE AND THE CERTIFICATE REGISTRAR OF SUCH OTHER
EVIDENCE ACCEPTABLE TO THE TRUSTEE AND THE CERTIFICATE REGISTRAR THAT SUCH
REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND
OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. NO
TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.07 OF THE AGREEMENT OR ANY
OPINION OR COUNSEL SATISFACTORY TO THE MASTER SERVICER, THE TRUSTEE, THE
CERTIFICATE REGISTRAR AND THE SECURITIES ADMINISTRATOR THAT THE PURCHASE OF THIS
CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN THE ASSETS OF THE TRUST BEING
DEEMED TO BE "PLAN ASSETS" SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE CODE, WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION
UNDER ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE MASTER
SERVICER, THE TRUSTEE, THE CERTIFICATE REGISTRAR, THE SELLER, ANY SERVICER OR
THE SECURITIES ADMINISTRATOR TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT."
F-1-3
"Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.
Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement, dated as of August 1, 2004, among
Structured Asset Mortgage Investments II Inc., EMC Mortgage Corporation, Xxxxx
Fargo Bank, National Association and JPMorgan Chase Bank, as Trustee (the
"Pooling and Servicing Agreement').
If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.
Name of Nominee (if any):
-------------------------
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Eligible Purchaser
on the ___ day of ________, 20___.
Very truly yours,
[PURCHASER]
By:
------------------------------
(Authorized Officer)
[By:
------------------------------
Attorney-in-fact]
F-1-4
NOMINEE ACKNOWLEDGMENT
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.
[NAME OF NOMINEE]
By: ------------------------------
(Authorized Officer)
By: -------------------------------
Attorney-in-fact]
F-1-5
EXHIBIT F-2
FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE
______________________[Date]
[DEPOSITOR]
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx Fargo Bank, National Association
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Structured Asset Mortgage Investments II Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Structured Asset Mortgage Investments II Trust 2004-AR5, Mortgage
Pass-Through Certificates, Series 2004-AR5 Class I-B-4, Class I-B-5,
Class I-B-6, Class II-B-4, Class II-B-5 and Class II-B-6 Certificates
(the "Privately Offered Certificates")
----------------------------------------------------------------------
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered Certificates, the
undersigned certifies to each of the parties to whom this letter is addressed
that it is a qualified institutional buyer (as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Act")) as follows:
1. It owned and/or invested on a discretionary basis eligible
securities (excluding affiliate's securities, bank deposit notes and CD's, loan
participations, repurchase agreements, securities owned but subject to a
repurchase agreement and swaps), as described below:
Date: ______________, 20__ (must be on or after the close of its most
recent fiscal year)
Amount: $ _____________________; and
2. The dollar amount set forth above is:
a. greater than $100 million and the undersigned is one of the
following entities:
F-2-1
(i) an insurance company as defined in Section 2(a)(13) of the
Act1;(1) or
(ii) an investment company registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), or any
"business development company" as defined in Section 2(a)(48) of the
Investment Company Act; or
(iii) a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; or
(iv) a plan (i) established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or
its political subdivisions, the laws of which permit the purchase of
securities of this type, for the benefit of its employees and (ii) the
governing investment guidelines of which permit the purchase of
securities of this type; or
(v) a "business development company" as defined in Section
202(a)(22) of the Investment Advisers Act of 1940; or
(vi) a corporation (other than a U.S. bank, savings and loan
association or equivalent foreign institution), partnership,
Massachusetts or similar business trust, or an organization described
in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended;
or
(vii) a U.S. bank, savings and loan association or equivalent
foreign institution, which has an audited net worth of at least $25
million as demonstrated in its latest annual financial statements; or
(viii) an investment adviser registered under the Investment
Advisers Act; or
b. greater than $10 million, and the undersigned is a broker-dealer
registered with the Securities and Exchange Commission ("SEC"); or
c. less than $10 million, and the undersigned is a broker-dealer
registered with the SEC and will only purchase Rule 144A securities in
transactions in which it acts as a riskless principal (as defined in Rule 144A);
or
d. less than $100 million, and the undersigned is an investment company
registered under the Investment Company Act of 1940, which, together with one or
more registered investment companies having the same or an affiliated investment
adviser, owns at least $100 million of eligible securities; or
e. less than $100 million, and the undersigned is an entity, all the
equity owners of which are "qualified institutional buyers."
(1) A purchase by an insurance company for one or more of its "separate
accounts", as defined by Section 2(a)(37) of the Investment Company Act of
1940, as amended, which are neither registered nor required to be registered
thereunder, shall be deemed to be a purchase for the account of such
insurance company
F-2-2
The undersigned further certifies that it is purchasing a Privately
Offered Certificate for its own account or for the account of others that
independently qualify as "Qualified Institutional Buyers" as defined in Rule
144A. It is aware that the sale of the Privately Offered Certificates is being
made in reliance on its continued compliance with Rule 144A. It is aware that
the transferor may rely on the exemption from the provisions of Section 5 of the
Act provided by Rule 144A. The undersigned understands that the Privately
Offered Certificates may be resold, pledged or transferred only to (i) a person
reasonably believed to be a Qualified Institutional Buyer that purchases for its
own account or for the account of a Qualified Institutional Buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance in Rule
144A, or (ii) an institutional "accredited investor," as such term is defined
under Rule 501(a) of the Act, in a transaction that otherwise does not
constitute a public offering.
The undersigned agrees that if at some future time it wishes to dispose
of or exchange any of the Privately Offered Certificates, it will not transfer
or exchange any of the Privately Offered Certificates to a Qualified
Institutional Buyer without first obtaining a Rule 144A and Related Matters
Certificate in the form hereof from the transferee and delivering such
certificate to the addressees hereof. Prior to making any transfer of Privately
Offered Certificates, if the proposed transferee is an institutional "accredited
investor," the transferor shall obtain from the transferee and deliver to the
addressees hereof an Investment Letter in the form attached as Exhibit F-1 to
the Pooling and Servicing Agreement, dated as of August 1, 2004, among
Structured Asset Mortgage Investments II Inc., EMC Mortgage Corporation, Xxxxx
Fargo Bank, National Association and JPMorgan Chase Bank, as Trustee, pursuant
to Certificates were issued.
The undersigned certifies that it either: (i) is not acquiring the
Privately Offered Certificate directly or indirectly by, or on behalf of, an
employee benefit plan or other retirement arrangement which is subject to Title
I of the Employee Retirement Income Security Act of 1974, as amended, and/or
Section 4975 of the Internal Revenue Code of 1986, as amended, or (ii) is
providing a representation or an opinion of counsel to the effect that the
proposed transfer and/or holding of a Privately Offered Certificate and the
servicing, management and/or operation of the Trust and its assets: (I) will not
result in any prohibited transaction unless it is covered under an individual or
class prohibited transaction exemption, including, but not limited to, Class
Prohibited Transaction Exemption ("PTCE") 84-14, XXXX 00-00, XXXX 00-0, XXXX
95-60, PTCE 96-23 or Section 401(c) of ERISA and the regulations to be
promulgated thereunder; (II) will not constitute or result in the assets of the
Trust being deemed to be "plan assets" subject to the prohibited transaction
provisions of ERISA or Section 4975 of the Code; and (III) will not give rise to
any additional fiduciary duties on the part of the Depositor, the Master
Servicer, the Certificate Registrar, the Securities Administrator, any Servicer
or the Trustee.
If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.
Name of Nominee (if any):
F-2-3
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned purchaser (the
"Purchaser") on the ____ day of ___________, 20___.
Very truly yours,
[PURCHASER]
By:
-------------------------------
(Authorized Officer)
[By:
-------------------------------
Attorney-in-fact]
F-2-4
NOMINEE ACKNOWLEDGMENT
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.
[NAME OF NOMINEE]
By:
--------------------------------
(Authorized Officer)
[By:
-------------------------------
Attorney-in-fact]
F-2-5
EXHIBIT G
FORM OF CUSTODIAL AGREEMENT
---------------------------
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to
time, the "Agreement"), dated as of August 31, 2004, by and among JPMORGAN CHASE
BANK, as trustee (including its successors under the Pooling and Servicing
Agreement defined below, the "Trustee"), STRUCTURED ASSET MORTGAGE INVESTMENTS
II INC., as depositor (together with any successor in interest, the
"Depositor"), XXXXX FARGO BANK, NATIONAL ASSOCIATION, as master servicer and
securities administrator (together with any successor in interest or successor
under the Pooling and Servicing Agreement referred to below, the "Master
Servicer") and XXXXX FARGO BANK, NATIONAL ASSOCIATION, as custodian (together
with any successor in interest or any successor appointed hereunder, the
"Custodian").
WITNESSETH THAT:
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WHEREAS, the Depositor, the Master Servicer, the Trustee and EMC
Mortgage Corporation (the "Seller") have entered into a Pooling and Servicing
Agreement, dated as of August 1, 2004, relating to the issuance of Structured
Asset Mortgage Investments II Trust 2004-AR5, Mortgage Pass-Through
Certificates, Series 2004-AR5 (as in effect on the date of this agreement, the
"Original Pooling and Servicing Agreement," and as amended and supplemented from
time to time, the "Pooling and Servicing Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the Trustee for
the purposes of receiving and holding certain documents and other instruments
delivered by (i) the Depositor or the Master Servicer under the Pooling and
Servicing Agreement and (ii) the related Servicer under their respective
Servicing Agreements, all upon the terms and conditions and subject to the
limitations hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Trustee, the Depositor, the
Master Servicer and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned in the Original Pooling and Servicing Agreement,
unless otherwise required by the context herein.
ARTICLE II
CUSTODY OF MORTGAGE DOCUMENTS
Section 2.1 Custodian to Act as Agent: Acceptance of Mortgage Files.
The Custodian, as the duly appointed agent of the Trustee for these purposes,
acknowledges (subject to any exceptions noted in the Initial Certification
referred to in Section 2.3(a)) receipt of the Mortgage Files relating to the
Mortgage Loans identified on Schedule 1 attached hereto (as such Schedule shall
be updated from time to time) (the "Mortgage Files") and declares that it holds
and will hold such Mortgage Files as agent for the Trustee, in trust, for the
use and benefit of all present and future Certificateholders.
Section 2.2 Recordation of Assignments. If any Mortgage File includes
one or more assignments of Mortgage to the Trustee in a state which is
specifically excluded from the Opinion of Counsel delivered by the Seller to the
Trustee and the Custodian pursuant to the provisions of Section 2.01 of the
Pooling and Servicing Agreement, each such assignment shall be delivered by the
Custodian to the Depositor for the purpose of recording it in the appropriate
public office for real property records, and the Depositor, at no expense to the
Custodian, shall promptly cause to be recorded in the appropriate public office
for real property records each such assignment of Mortgage and, upon receipt
thereof from such public office, shall return each such assignment of Mortgage
to the Custodian.
Section 2.3 Review of Mortgage Files.
(a) On or prior to the Closing Date, with respect to the Mortgage
Loans, in accordance with Section 2.02 of the Pooling and Servicing Agreement,
the Custodian shall deliver to the Depositor and the Trustee an Initial
Certification in the form annexed hereto as Exhibit One evidencing receipt
(subject to any exceptions noted therein) of a Mortgage File for each of the
Mortgage Loans listed on Schedule 1 attached hereto (the "Mortgage Loan
Schedule").
(b) Within 90 days of the Closing Date (or, with respect to any
Substitute Mortgage Loans, within 5 Business Days after the receipt by the
Custodian thereof), the Custodian agrees, for the benefit of Certificateholders,
to review, in accordance with the provisions of Section 2.02 of the Pooling and
Servicing Agreement, each such document, and shall execute and deliver to the
Depositor and the Trustee an Interim Certification in the form annexed hereto as
Exhibit Two to the effect that all such documents have been executed and
received and that such documents relate to the Mortgage Loans identified on the
Mortgage Loan Schedule, except for any exceptions listed on Schedule A attached
to such Interim Certification. The Custodian shall be under no duty or
obligation to inspect, review or examine said documents, instruments,
certificates or other papers to determine that the same are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face.
(c) Not later than 180 days after the Closing Date (or, with respect
to any Substitute Mortgage Loans, within 5 Business Days after the receipt by
the Custodian thereof), the Custodian shall review the Mortgage Files as
provided in Section 2.02 of the Pooling and Servicing Agreement and execute and
deliver to the Depositor and the Trustee (and if the Custodian is not also the
Master Servicer, then to the Master Servicer) a Final Certification in the form
annexed hereto as Exhibit Three evidencing the completeness of the Mortgage
Files.
(d) In reviewing the Mortgage Files as provided herein and in the
Pooling and Servicing Agreement, the Custodian shall make no representation as
to and shall not be responsible to verify (i) the validity, legality,
enforceability, due authorization, recordability, sufficiency or genuineness of
any of the documents included in any Mortgage File or (ii) the
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collectibility, insurability, effectiveness or suitability of any of the
documents in any Mortgage File.
Upon receipt of written request from the Trustee, the Custodian shall
as soon as practicable supply the Trustee with a list of all of the documents
relating to the Mortgage Loans then contained in the Mortgage Files.
Section 2.4 Notification of Breaches of Representations and Warranties.
Upon discovery by the Custodian of a breach of any representation or warranty
made by the Depositor as set forth in the Pooling and Servicing Agreement with
respect to a Mortgage Loan relating to a Mortgage File, the Custodian shall give
prompt written notice to the Company, the applicable Servicer and the Trustee.
Section 2.5 Custodian to Cooperate: Release of Mortgage Files. Upon
receipt of written notice from the Trustee that the Mortgage Loan Seller has
repurchased a Mortgage Loan pursuant to Article II of the Pooling and Servicing
Agreement, and that the Repurchase Price therefor has been deposited in the
Distribution Account, the Custodian agrees to promptly release to the Mortgage
Loan Seller the related Mortgage File.
Upon the Custodian's receipt of a request for release (a "Request for
Release") substantially in the form of Exhibit D to the Pooling and Servicing
Agreement signed by a Servicing Officer of the related Servicer stating that it
has received payment in full of a Mortgage Loan or that payment in full will be
escrowed in a manner customary for such purposes, the Custodian agrees to
promptly release to such Servicer the related Mortgage File. The Depositor shall
deliver to the Custodian, and the Custodian agrees to accept, the Mortgage Note
and other documents constituting the Mortgage File with respect to any
Substitute Mortgage Loan.
From time to time as is appropriate for the servicing or foreclosure of
any Mortgage Loan, including, for this purpose, collection under any Primary
Mortgage Insurance Policy, the related Servicer shall (or, if the related
Servicer does not, then the Master Servicer may) deliver to the Custodian a
Request for Release signed by a Servicing Officer requesting that possession of
all of the Mortgage File be released to such Servicer and certifying as to the
reason for such release and that such release will not invalidate any insurance
coverage provided in respect of the Mortgage Loan under any of the Insurance
Policies. Upon receipt of the foregoing, the Custodian shall deliver the
Mortgage File to the related Servicer. The related Servicer shall cause each
Mortgage File or any document therein so released to be returned to the
Custodian when the need therefor by such Servicer no longer exists, unless (i)
the Mortgage Loan has been liquidated and the Liquidation Proceeds relating to
the Mortgage Loan have been deposited in the Distribution Account or (ii) the
Mortgage File or such document has been delivered to an attorney, or to a public
trustee or other public official as required by law, for purposes of initiating
or pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non-judicially, and the related Servicer
has delivered to the Custodian a certificate of a Servicing Officer certifying
as to the name and address of the Person to which such Mortgage File or such
document was delivered and the purpose or purposes of such delivery.
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At any time that a Servicer is required to deliver to the Custodian a
Request for Release, such Servicer shall deliver two copies of the Request for
Release if delivered in hard copy or such Servicer may furnish such Request for
Release electronically to the Custodian, in which event the Servicing Officer
transmitting the same shall be deemed to have signed the Request for Release. In
connection with any Request for Release of a Mortgage File because of a
repurchase of a Mortgage Loan, such Request for Release shall be accompanied by
an assignment of Mortgage, without recourse, from the Trustee to the Seller and
the related Mortgage Note shall be endorsed without recourse by the Trustee and
be returned to the Seller. In connection with any Request for Release of a
Mortgage File because of the payment in full of a Mortgage Loan, such Request
for Release shall be accompanied by a certificate of satisfaction or other
similar instrument to be executed by or on behalf of the Trustee and returned to
the related Servicer.
Section 2.6 Assumption Agreements. In the event that any assumption
agreement, substitution of liability agreement or sale of servicing agreement is
entered into with respect to any Mortgage Loan subject to this Agreement in
accordance with the terms and provisions of the Pooling and Servicing Agreement,
the Master Servicer, to the extent provided in the related Servicing Agreement,
shall cause the related Servicer to notify the Custodian that such assumption
agreement, substitution of liability agreement or sale of servicing agreement
has been completed by forwarding to the Custodian the original of such
assumption agreement, substitution of liability agreement or sale of servicing
agreement, which shall be added to the related Mortgage File and, for all
purposes, shall be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting parts thereof.
ARTICLE III
CONCERNING THE CUSTODIAN
Section 3.1 Custodian a Bailee and Agent of the Trustee. With respect
to each Mortgage Note, Mortgage and other documents constituting each Mortgage
File which are delivered to the Custodian, the Custodian is exclusively the
bailee and agent of the Trustee and has no instructions to hold any Mortgage
Note or Mortgage for the benefit of any person other than the Trustee and the
Certificateholders and undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement. Except upon compliance with the
provisions of Section 2.5 of this Agreement, no Mortgage Note, Mortgage or
Mortgage File shall be delivered by the Custodian to the Depositor, the Seller,
any Servicer or the Master Servicer or otherwise released from the possession of
the Custodian.
Section 3.2 Reserved.
Section 3.3 Custodian May Own Certificates. The Custodian in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Custodian.
Section 3.4 Master Servicer to Pay Custodian's Fees and Expenses. The
Master Servicer covenants and agrees to pay to the Custodian from time to time,
and the Custodian shall be entitled to, reasonable compensation for all services
rendered by it in the exercise and performance of any of the powers and duties
hereunder of the Custodian, and the Master Servicer will pay or reimburse the
Custodian upon its request for all reasonable expenses, disbursements
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and advances incurred or made by the Custodian in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ), except any such expense, disbursement or advance as may arise from
its negligence or bad faith or to the extent that such cost or expense is
indemnified by the Depositor pursuant to the Pooling and Servicing Agreement.
Section 3.5 Custodian May Resign; Trustee May Remove Custodian. The
Custodian may resign from the obligations and duties hereby imposed upon it as
such obligations and duties relate to its acting as Custodian of the Mortgage
Loans. Upon receiving such notice of resignation, the Trustee shall either take
custody of the Mortgage Files itself and give prompt notice thereof to the
Depositor, the Master Servicer and the Custodian, or promptly appoint a
successor Custodian by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Custodian and one copy to the
successor Custodian. If the Trustee shall not have taken custody of the Mortgage
Files and no successor Custodian shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Custodian may petition any court of competent jurisdiction for the
appointment of a successor Custodian.
The Trustee may remove the Custodian at any time with the consent of
the Master Servicer. In such event, the Trustee shall appoint, or petition a
court of competent jurisdiction to appoint, a successor Custodian hereunder. Any
successor Custodian shall be a depository institution subject to supervision or
examination by federal or state authority, shall be able to satisfy the other
requirements contained in Section 3.7 and shall be unaffiliated with any
Servicer or the Depositor.
Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 3.5 shall
become effective upon acceptance of appointment by the successor Custodian. The
Trustee shall give prompt notice to the Depositor and the Master Servicer of the
appointment of any successor Custodian. No successor Custodian shall be
appointed by the Trustee without the prior approval of the Depositor and the
Master Servicer.
Section 3.6 Merger or Consolidation of Custodian. Any Person into which
the Custodian may be merged or converted or with which it may be consolidated,
or any Person resulting from any merger, conversion or consolidation to which
the Custodian shall be a party, or any Person succeeding to the business of the
Custodian, shall be the successor of the Custodian hereunder (provided such
Person shall satisfy the requirements set forth in Section 3.7), without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 3.7 Representations of the Custodian. The Custodian hereby
represents, and any successor Custodian hereunder shall represent, that it is a
depository institution subject to supervision or examination by a federal or
state authority, has a combined capital and surplus of at least $15,000,000 and
is qualified to do business in the jurisdictions in which it will hold any
Mortgage File.
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ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.1 Notices. All notices, requests, consents and demands and
other communications required under this Agreement or pursuant to any other
instrument or document delivered hereunder shall be in writing and, unless
otherwise specifically provided, may be delivered personally, by telegram or
telex, or by registered or certified mail, postage prepaid, return receipt
requested, at the addresses specified on the signature page hereof (unless
changed by the particular party whose address is stated herein by similar notice
in writing), in which case the notice will be deemed delivered when received.
Section 4.2 Amendments. No modification or amendment of or supplement
to this Agreement shall be valid or effective unless the same is in writing and
signed by all parties hereto, and neither the Depositor, the Master Servicer nor
the Trustee shall enter into any amendment hereof except as permitted by the
Pooling and Servicing Agreement. The Trustee shall give prompt notice to the
Custodian of any amendment or supplement to the Pooling and Servicing Agreement
and furnish the Custodian with written copies thereof.
Section 4.3 GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES.
Section 4.4 Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Depositor and at the Trust's expense on
direction by the Trustee, but only upon direction accompanied by an Opinion of
Counsel reasonably satisfactory to the Depositor to the effect that the failure
to effect such recordation is likely to materially and adversely affect the
interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 4.5 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
[Signature page follows]
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IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
Address: JPMORGAN CHASE BANK, as Trustee
By:
-----------------------------------
0 Xxx Xxxx Xxxxx, 0xx Xxxxx Name:
Xxx Xxxx, Xxx Xxxx 00000 Title:
Attention: Institutional Trust Services,
Global Debt
XXXX XX Series 2004-AR5
Telecopy: (000) 000-0000
Address: STRUCTURED ASSET MORTGAGE
INVESTMENTS II INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 By:
-----------------------------------
Name:
Title:
Address: XXXXX FARGO BANK,
NATIONAL ASSOCIATION, as Master
0000 Xxx Xxxxxxxxx Xxxx Xxxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
By:
--------------------------------
Name:
Title:
Address: XXXXX FARGO BANK,
NATIONAL ASSOCIATION, as Custodian
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxxx, Xxxxxxxxx 00000 By:
-----------------------------------
Name:
Title:
X-0
XXXXX XX XXX XXXX )
: ss:
COUNTY OF NEW YORK )
On the 31st day of August 2004 before me, a notary public in and for
said State, personally appeared _______________, known to me to be a
_________________of JPMorgan Chase Bank, a New York banking corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
----------------------------------
Notary Public
[SEAL]
X-0
XXXXX XX XXXXXXXX )
: ss:
COUNTY OF XXXXXX )
On the 31st day of August 2004 before me, a notary public in and for
said State, personally appeared _________________, known to me to be an _______
of Xxxxx Fargo Bank, National Association, a national banking association that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said national banking association, and acknowledged to
me that such national banking association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
----------------------------------
Notary Public
[SEAL]
X-0
XXXXX XX XXX XXXX )
: ss:
COUNTY OF NEW YORK )
On the 31st day of August 2004 before me, a notary public in and for
said State, personally appeared _________________, known to me to be a
_________________ of Structured Asset Mortgage Investments II Inc., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
----------------------------------
Notary Public
[SEAL]
X-00
XXXXX XX XXXXXXXX )
: ss:
COUNTY OF XXXXXX )
On the 31st day of August 2004 before me, a notary public in and for
said State, personally appeared ____________, known to me to be a ______________
of Xxxxx Fargo Bank, National Association, one of the corporations that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
----------------------------------
Notary Public
[SEAL]
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SCHEDULE 1
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MORTGAGE LOANS
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G-12
EXHIBIT ONE
FORM OF CUSTODIAN INITIAL CERTIFICATION
August 31, 2004
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Structured Asset Mortgage Investments II Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Asset Mortgage Investments II Inc., Series 2004-AR5
Re: Custodial Agreement, dated as of August 31, 2004, by and
among JPMorgan Chase Bank, Structured Asset Mortgage Investments
II Inc. and Xxxxx Fargo Bank, National Association relating to
Structured Asset Mortgage Investments II Trust 2004-AR5, Mortgage
Pass-Through Certificates, Series 2004-AR5
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned
Custodial Agreement, and subject to Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File (which contains an original Mortgage Note or lost note
affidavit) to the extent required in Section 2.01 of the Pooling and Servicing
Agreement with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule, with any exceptions listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By: /s/
----------------------------------
Name:
Title:
G-13
Schedule A to Exhibit One
-------------------------
Exceptions
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EXHIBIT TWO
FORM OF CUSTODIAN INTERIM CERTIFICATION
_______ __, 20__
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Structured Asset Mortgage Investments II Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Asset Mortgage Investments II Inc., Series 2004-AR5
Re: Custodial Agreement, dated as of August 31, 2004, by and
among JPMorgan Chase Bank, Structured Asset Mortgage Investments
II Inc. and Xxxxx Fargo Bank, National Association relating to
Structured Asset Mortgage Investments II Trust 2004-AR5, Mortgage
Pass-Through Certificates, Series 2004-AR5
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned
Custodial Agreement, the undersigned, as Custodian, hereby certifies that it has
received a Mortgage File to the extent required pursuant to Section 2.01 of the
Pooling and Servicing Agreement with respect to each Mortgage Loan listed in the
Mortgage Loan Schedule, and it has reviewed the Mortgage File and the Mortgage
Loan Schedule and has determined that: all required documents have been executed
and received and that such documents related to the Mortgage Loans identified on
the Mortgage Loan Schedule, with any exceptions listed on Schedule A attached
hereto.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By: /s/
----------------------------------
Name:
Title:
G-15
Schedule A to Exhibit Two
-------------------------
Exceptions
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EXHIBIT THREE
FORM OF CUSTODIAN FINAL CERTIFICATION
_______ __, 20__
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Structured Asset Mortgage Investments II Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Asset Mortgage Investments II Inc., Series 2004-AR5
Re: Custodial Agreement, dated as of August 31, 2004, by and
among JPMorgan Chase Bank, Structured Asset Mortgage Investments
II Inc. and Xxxxx Fargo Bank, National Association relating to
Structured Asset Mortgage Investments II Trust 2004-AR5, Mortgage
Pass-Through Certificates, Series 2004-AR5
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned Custodial
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File to the extent required pursuant to the Pooling and Servicing
Agreement with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule, and it has reviewed the Mortgage File and the Mortgage Loan Schedule
and has determined that an original of each document related thereto required to
be recorded has been returned from the related recording office with evidence of
recording thereon, or a certified copy has been obtained from the related
recording office, with any exceptions listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By: /s/
----------------------------------
Name:
Title:
G-17
EXHIBIT H-1
EMC MORTGAGE CORPORATION AND EVERHOME MORTGAGE COMPANY
SUBSERVICING AGREEMENT
DATED AS OF AUGUST 1, 2002
EXHIBIT H-2
EMC MORTGAGE CORPORATION AND
SOUTHTRUST MORTGAGE CORPORATION
PURCHASE, WARRANTIES AND SERVICING AGREEMENT
DATED AS OF NOVEMBER 1, 2002, AS AMENDED
EXHIBIT H-3
HOMEBANC MORTGAGE CORPORATION AND
EMC MORTGAGE CORPORATION
PURCHASE, WARRANTIES AND SERVICING AGREEMENT
DATED AS OF FEBRUARY 1, 2004
EXHIBIT H-4
GREENPOINT MORTGAGE FUNDING, INC.
AND EMC MORTGAGE CORPORATION
PURCHASE, WARRANTIES AND SERVICING AGREEMENT
DATED AS OF SEPTEMBER 1, 2003
EXHIBIT H-5
EMC AND COUNTRYWIDE HOME LOANS, INC.
SELLER'S WARRANTIES AND SERVICING AGREEMENT
DATED AS OF SEPTEMBER 1, 2002,
AS AMENDED
EXHIBIT H-6
EMC, FIRST TENNESSEE SERVICING, INC. AND
FIRST HORIZON HOME LOAN CORPORATION
PURCHASE, WARRANTIES AND SERVICING AGREEMENT
DATED AS OF SEPTEMBER 1, 2003,
AS AMENDED
EXHIBIT H-7
EVERHOME MORTGAGE COMPANY AND
EMC MORTGAGE CORPORATION
SERVICING AGREEMENT
DATED AS OF MARCH 31, 2003
EXHIBIT H-8
EMC MORTGAGE CORPORATION AND
BANK OF AMERICA, N.A. FLOW MORTGAGE LOAN
SALE AND SERVICING AGREEMENT
DATED AS OF MARCH 1, 2003
EXHIBIT H-9
EMC MORTGAGE CORPORATION AND
STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.
SERVICING AGREEMENT
DATED AS OF AUGUST 1, 2004
EXHIBIT I
ASSIGNMENT AGREEMENTS
---------------------
(Available upon request)
EXHIBIT J
MORTGAGE LOAN PURCHASE AGREEMENT
--------------------------------
(Available upon request)
EXHIBIT K
FORM OF TRUSTEE LIMITED POWER OF ATTORNEY
-----------------------------------------
KNOW ALL MEN BY THESE PRESENTS, that JPMorgan Chase Bank, a New York banking
corporation, having a place of business at 0 Xxx Xxxx Xxxxx, 0xx Xxxxx,
Xxx Xxxx, X.X. 00000, as Trustee (and in no personal or other
representative capacity) under the Pooling and Servicing Agreement,
dated as of August 1, 2004, by and among Structured Asset Mortgage
Investments II Inc., the Trustee, Xxxxx Fargo Bank, National
Association and EMC Mortgage Corporation (as amended, restated,
supplemented or otherwise modified from time to time, the "Agreement";
capitalized terms not defined herein have the definitions assigned to
such terms in the Agreement), relating to the Structured Asset Mortgage
Investments II Trust 2004-AR5, Mortgage Pass-Through Certificates,
Series 2004-AR5, hereby appoints _______________, in its capacity as a
Servicer under the Agreement, as the Trustee's true and lawful Special
Attorney-in-Fact, in the Trustee's name, place and stead and for the
Trustee's benefit, but only in its capacity as Trustee aforesaid, to
perform all acts and execute all documents as may be customary,
necessary and appropriate to effectuate the following enumerated
transactions in respect of any mortgage, deed of trust, promissory note
or real estate owned from time to time owned (beneficially or in title,
whether the Trustee is named therein as mortgagee or beneficiary or has
become mortgagee or beneficiary by virtue of endorsement, assignment or
other conveyance) or held by or registered to the Trustee (directly or
through custodians or nominees), or in respect of which the Trustee has
a security interest or other lien, all as provided under the applicable
Agreement and only to the extent the respective Trustee has an interest
therein under the Agreement, and in respect of which the Servicer is
acting as servicer pursuant to the Agreement (the "Mortgage
Documents").
This appointment shall apply to the following enumerated transactions under the
Agreement only:
1. The modification or re-recording of any Mortgage Document for the
purpose of correcting it to conform to the original intent of the parties
thereto or to correct title errors discovered after title insurance was issued
and where such modification or re-recording does not adversely affect the lien
under the Mortgage Document as insured.
2. The subordination of the lien under a Mortgage Document to an
easement in favor of a public utility company or a state or federal agency or
unit with powers of eminent domain including, without limitation, the execution
of partial satisfactions/releases, partial reconveyances and the execution of
requests to trustees to accomplish same.
3. The conveyance of the properties subject to a Mortgage Document to
the applicable mortgage insurer, or the closing of the title to the property to
be acquired as real estate so owned, or conveyance of title to real estate so
owned.
4. The completion of loan assumption and modification agreements in
respect of Mortgage Documents.
5. The full or partial satisfaction/release of a Mortgage Document or
full conveyance upon payment and discharge of all sums secured thereby,
including, without limitation, cancellation of the related note.
6. The assignment of any Mortgage Document, in connection with the
repurchase of the mortgage loan secured and evidenced thereby.
7. The full assignment of a Mortgage Document upon payment and
discharge of all sums secured thereby in conjunction with the refinancing
thereof, including, without limitation, the assignment of the related note.
8. With respect to a Mortgage Document, the foreclosure, the taking of
a deed in lieu of foreclosure, or the completion of judicial or non-judicial
foreclosure or termination, cancellation or rescission of any such foreclosure,
including, without limitation, any and all of the following acts:
a. the substitution of trustee(s) serving under a deed of trust, in
accordance with state law and the deed of trust;
b. the preparation and issuance of statements of breach or
non-performance;
c. the preparation and filing of notices of default and/or notices
of sale;
d. the cancellation/rescission of notices of default and/or notices
of sale;
e. the taking of a deed in lieu of foreclosure; and
f. the preparation and execution of such other documents and
performance of such other actions as may be necessary under the
terms of the Mortgage Document or state law to expeditiously
complete said transactions in paragraphs 8(a) through 8(e),
above.
9. Demand, xxx for, recover, collection and receive each and every sum
of money, debt, account and interest (which now is, or hereafter shall become
due and payable) belonging to or claimed by the Trustee under the Mortgage
Documents, and to use or take any lawful means for recovery thereof by legal
process or otherwise.
10. Endorse on behalf of the Trustee all checks, drafts and/or
negotiable instruments made payable to the Trustee in respect of the Mortgage
Documents.
The Trustee gives the Special Attorney-in-Fact full power and authority to
execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by this
Limited Power of Attorney, subject to the terms and conditions set forth in the
Agreement including the standard of care applicable to servicers in the
Agreement, and hereby does ratify and confirm what such Special Attorney-in-Fact
shall lawfully do or cause to be done by authority hereof.
IN WITNESS WHEREOF, the Trustee has caused its corporate name and seal to be
hereto signed and affixed and these presents to be acknowledged by its duly
elected and authorized officer this ___ day of ___ , 2004.
JPMORGAN CHASE BANK, AS TRUSTEE
By: /s/
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Name:
Title:
WITNESS: WITNESS:
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Name: Name:
Title: Title:
XXXXX XX XXX XXXX
XX
XXXXXX XX XXX XXXX
Xx ______________, 2004, before me, the undersigned, a Notary Public in
and for said state, personally appeared __________________, personally known to
me to be the person whose name is subscribed to the within instrument and to be
a duly authorized and acting Senior Vice President of JPMorgan Chase Bank, and
such person acknowledged to me that such person executed the within instrument
in such person's authorized capacity as a Senior Vice President of JPMorgan
Chase Bank, and that by such signature on the within instrument the entity upon
behalf of which such person acted executed the instrument.
WITNESS my hand and official seal.
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Notary Public
