EXHIBIT 10.2
STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.,
as DEPOSITOR,
and
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as GRANTOR TRUSTEE
GRANTOR TRUST AGREEMENT
Dated as of June 29, 2007
Bear Xxxxxxx Mortgage Funding Grantor Trust 2007-AR5
Mortgage Pass-Through Certificates, Series 2007-AR5
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................................................1
ARTICLE II CONVEYANCE OF UNDERLYING CERTIFICATES; ORIGINAL ISSUANCE OF CERTIFICATES...................7
Section 2.01. CONVEYANCE OF UNDERLYING CERTIFICATES TO GRANTOR TRUSTEE..........................7
Section 2.02. ACCEPTANCE BY GRANTOR TRUSTEE.....................................................8
Section 2.03. SWAP AGREEMENTS...................................................................8
Section 2.04. REPRESENTATIONS AND WARRANTIES CONCERNING THE DEPOSITOR...........................8
ARTICLE III ACCOUNTS...................................................................................9
Section 3.01. GRANTOR TRUST DISTRIBUTION ACCOUNT................................................9
Section 3.02. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE GRANTOR TRUST DISTRIBUTION
ACCOUNT..........................................................................10
ARTICLE IV CERTIFICATES..............................................................................10
Section 4.01. CERTIFICATES.....................................................................10
Section 4.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES............................12
Section 4.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES................................14
Section 4.04. PERSONS DEEMED OWNERS............................................................14
Section 4.05. ERISA RESTRICTIONS...............................................................14
ARTICLE V PAYMENTS TO CERTIFICATEHOLDERS............................................................15
Section 5.01. DISTRIBUTIONS ON THE CERTIFICATES................................................15
Section 5.02. ALLOCATION OF LOSSES.............................................................16
Section 5.03. PAYMENTS.........................................................................16
Section 5.04. STATEMENTS TO CERTIFICATEHOLDERS.................................................17
ARTICLE VI INDEMNIFICATION...........................................................................17
Section 6.01. INDEMNIFICATION OF THE GRANTOR TRUSTEE...........................................17
ARTICLE VII CONCERNING THE GRANTOR TRUSTEE............................................................18
Section 7.01. DUTIES OF THE GRANTOR TRUSTEE....................................................18
Section 7.02. CERTAIN MATTERS AFFECTING THE GRANTOR TRUSTEE....................................20
Section 7.03. GRANTOR TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS....................21
Section 7.04. GRANTOR TRUSTEE MAY OWN CERTIFICATES.............................................21
Section 7.05. EXPENSES.........................................................................22
Section 7.06. ELIGIBILITY REQUIREMENTS FOR GRANTOR TRUSTEE.....................................22
Section 7.07. INSURANCE........................................................................22
Section 7.08. RESIGNATION AND REMOVAL OF THE GRANTOR TRUSTEE...................................22
Section 7.09. SUCCESSOR GRANTOR TRUSTEE........................................................23
Section 7.10. MERGER OR CONSOLIDATION OF GRANTOR TRUSTEE.......................................24
Section 7.11. APPOINTMENT OF CO-GRANTOR TRUSTEE OR SEPARATE GRANTOR TRUSTEE....................24
Section 7.12. FEDERAL INFORMATION RETURNS AND REPORTS TO CERTIFICATEHOLDERS; GRANTOR
TRUST ADMINISTRATION.............................................................25
ARTICLE VIII TERMINATION...............................................................................28
Section 8.01. TERMINATION UPON REPURCHASE BY THE DEPOSITOR OR ITS DESIGNEE OR
LIQUIDATION OF THE MORTGAGE LOANS................................................28
ARTICLE IX MISCELLANEOUS PROVISIONS..................................................................29
Section 9.01. INTENT OF PARTIES................................................................29
Section 9.02. ACTION UNDER UNDERLYING DOCUMENTS................................................29
Section 9.03. AMENDMENT........................................................................29
Section 9.04. RECORDATION OF AGREEMENT.........................................................30
Section 9.05. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.......................................30
Section 9.06. ACTS OF CERTIFICATEHOLDERS.......................................................31
Section 9.07. GOVERNING LAW....................................................................32
Section 9.08. NOTICES..........................................................................32
Section 9.09. SEVERABILITY OF PROVISIONS.......................................................33
Section 9.10. SUCCESSORS AND ASSIGNS...........................................................33
Section 9.11. ARTICLE AND SECTION HEADINGS.....................................................33
Section 9.12. COUNTERPARTS.....................................................................33
Section 9.13. NOTICE TO RATING AGENCIES........................................................33
Section 9.14. ENFORCEMENT OF RIGHTS............................................................33
Exhibit A FORM OF CERTIFICATES
Exhibit B-1 COPY OF UNDERLYING CLASS I-A-1B CERTIFICATE
Exhibit B-2 COPY OF UNDERLYING CLASS I-A-2B CERTIFICATE
Exhibit C FORM OF SWAP AGREEMENT
Exhibit D UNDERLYING POOLING AND SERVICING AGREEMENT
GRANTOR TRUST AGREEMENT
Grantor Trust Agreement, dated as of June 29, 2007, between Structured Asset Mortgage Investments II
Inc., a Delaware corporation, as depositor (the "Depositor") and Xxxxx Fargo Bank, National Association, a
national banking association, as grantor trustee (the "Grantor Trustee").
PRELIMINARY STATEMENT
On the Closing Date, the Depositor will acquire the Underlying Certificates (as defined below). On the
Closing Date, the Depositor will transfer the Underlying Certificates and receive the Certificates evidencing the
entire beneficial ownership interest in the Trust Fund.
The Grantor Trustee on behalf of the Trust shall make an election for the assets constituting the Trust
Fund to be treated for federal income tax purposes as a grantor trust.
In consideration of the mutual agreements herein contained, the Depositor and the Grantor Trustee agree
as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless otherwise expressly provided or
unless the context otherwise requires, shall have the meanings specified in this Article. Capitalized terms not
otherwise defined herein shall have the meanings assigned to such terms in the Underlying Pooling and Servicing
Agreement.
Accrued Certificate Interest: For each Class of Certificates and any Distribution Date, the interest
accrued during the related Interest Accrual Period at the applicable Pass-Through Rate on the Current Principal
Amount of such Certificates immediately prior to such Distribution Date, less any Underlying Interest Shortfall
allocated to the related Class of Underlying Certificates pursuant to the Underlying Pooling and Servicing
Agreement. Interest on the Certificates shall be calculated on the basis of a 360-day year and the actual number
of days in the related Interest Accrual Period.
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 Grantor Trustee may conclusively presume that a Person is not an
Affiliate of another Person unless a Responsible Officer of the Grantor Trustee has actual knowledge to the
contrary.
Agreement: This Grantor Trust Agreement and all amendments hereof and supplements hereto.
Available Funds: The Class I-A-1B Available Funds and the Class I-A-2B Available Funds.
Bankruptcy Code: The United States Bankruptcy Code, as amended as codified in 11 U.S.C. §§ 101-1330.
Book-Entry Certificates: The Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a day on which the New York Stock
Exchange or Federal Reserve is closed or on which banking institutions in the jurisdiction in which the
Underlying Trustee, the Custodian or the Servicer are authorized or obligated by law or executive order to be
closed.
Certificate: Any Class I-A-1B Certificate or Class I-A-2B Certificate evidencing a beneficial ownership
interest in the Trust Fund signed by the Grantor Trustee in substantially the form annexed hereto as Exhibit A
with the blanks therein appropriately completed.
Certificate Owner: Any Person who is the beneficial owner of a Certificate registered in the name of
DTC or its nominee.
Certificate Register: The register maintained pursuant to Section 4.02.
Certificateholder: A Holder of a Certificate.
Class: With respect to the Certificates, Class I-A-1B or Class I-A-2B, as applicable.
Class I-A-1B Available Funds: With respect to any Distribution Date and the Underlying Class I-A-1B
Certificates, the sum of (i) any payments received by the Grantor Trustee with respect to the Underlying Class
I-A-1B Certificates and (ii) any payments received by the Grantor Trustee from or with respect to the Swap
Counterparty pursuant to the related Swap Agreement, following the payment of amounts to reimburse the Grantor
Trustee for its reimbursable expenses as set forth herein.
Class I-A-2B Available Funds: With respect to any Distribution Date and the Underlying Class I-A-2B
Certificates, the sum of (i) any payments received by the Grantor Trustee with respect to the Underlying Class
I-A-2B Certificates and (ii) any payments received by the Grantor Trustee from or with respect to the Swap
Counterparty pursuant to the related Swap Agreement, following the payment of amounts to reimburse the Grantor
Trustee for its reimbursable expenses as set forth herein.
Closing Date: June 29, 2007.
Code: The Internal Revenue Code of 1986, as amended.
Corporate Trust Office: With respect to the Grantor Trustee and the presentment of Certificates for
registration of transfer, exchange or final payment, Xxxxx Fargo Bank, National Association, Xxxxx Xxxxxx xxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Corporate Trust Group, Bear Xxxxxxx Mortgage Funding
Grantor Trust 2007-AR5, and for all other purposes, X.X. Xxx 00, Xxxxxxxx, Xxxxxxxx 00000 (or for overnight
deliveries, 0000 Xxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000), Attention: Corporate Trust Group, Bear Xxxxxxx
Mortgage Funding Grantor Trust 2007-AR5.
Current Principal Amount: With respect to each Certificate and as of any Distribution Date:
(i) the initial principal amount of such Certificate on the Closing Date plus
(ii) (a) the amount of any Net Deferred Interest allocated thereto on the related Distribution Date and
all previous Distribution Dates (b) any Subsequent Recoveries minus
(iii) (a) all amounts distributed on previous Distribution Dates on such Certificate with respect to
principal and (b) any Applied Realized Loss Amounts allocated to such Certificate on previous Distribution Dates,
in each case, indirectly through the related Underlying Certificate. The initial Current Principal
Amount for each Class of Certificates is set forth in Section 4.01(c).
Cut-Off Date: June 1, 2007.
Depositor: Structured Asset Mortgage Investments II Inc., a Delaware corporation, or its successors in
interest.
Distribution Date: The 25th day of any month, beginning in the month immediately following the month of
the Closing Date, or, if such 25th day is not a Business Day, the Business Day immediately following.
DTC: The Depository Trust Company, the nominee of which is Cede & Co., or any successor thereto.
DTC Agreement: The meaning specified in Subsection 4.01(a) hereof.
DTC Custodian: The Grantor Trustee, or its successor in interest as custodian for DTC.
DTC Participant: A broker, dealer, bank or other financial institution or other Person for whom from
time to time DTC effects book-entry transfers and pledges of securities deposited with DTC.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Xxxxxx Mae: Xxxxxx Xxx (also known as Federal National Mortgage Association) or any successor thereto.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
Fractional Undivided Interest: With respect to each Class of Certificates, the fractional undivided
interest evidenced by any Certificate, the numerator of which is the Current Principal Amount allocated to such
Certificate and the denominator of which is the aggregate Current Principal Amounts of such Class of Certificates.
Xxxxxxx Mac: Xxxxxxx Mac (also known as the Federal Home Loan Mortgage Corporation) or any successor
thereto.
Grantor Trust Distribution Account: The trust account or accounts created and maintained pursuant to
Section 3.01, which shall be denominated "Xxxxx Fargo Bank, National Association, as Grantor Trustee for the
benefit of the holders of Structured Asset Mortgage Investments II Inc., Bear Xxxxxxx Mortgage Funding Grantor
Trust 2007-AR5, Mortgage Pass-Through Certificates, Series 2007-AR5 - Grantor Trust Distribution Account."
Grantor Trustee: Xxxxx Fargo Bank, National Association, or its successor in interest, or any successor
grantor trustee appointed as herein provided.
Holder: The Person in whose name a Certificate is registered in the Certificate Register, except that,
subject to Subsections 9.03(b) and 9.06(e), solely for the purpose of giving any consent pursuant to this
Agreement, any Certificate registered in the name of the Depositor or the Grantor 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.
Indemnified Persons: The Grantor Trustee and their respective officers, directors, agents and employees
and any separate grantor trustee or co-grantor trustee and their respective 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 and of any Affiliate of the Depositor, (b) does not have any direct financial
interest or any material indirect financial interest in the Depositor or any Affiliate of the Depositor and (c)
is not connected with the Depositor or any Affiliate of the Depositor as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
Interest Accrual Period: With respect to each Class of Certificates, the period from and including the
preceding Distribution Date (or, in the case of the first Distribution Date, from the Closing Date) to and
including the day prior to the current Distribution Date. For purposes of clarification, if the Closing Date
occurs in a month that contains thirty one (31) days, the first Interest Accrual Period shall include the 31st
day of such month.
LIBOR: LIBOR as determined by the Underlying Trustee pursuant to the Underlying Pooling and Servicing
Agreement.
Moody's: Xxxxx'x Investors Service, Inc. or its successor in interest.
Non-Mortgage Widely Held Fixed Investment Trust: As such term is defined in Treasury Regulations section
1.671-5(b)(12) or successor provisions.
One-Month LIBOR: One-Month LIBOR as determined by the Underlying Trustee pursuant to the Underlying
Pooling and Servicing Agreement.
Opinion of Counsel: A written opinion of counsel who is or are acceptable to the Grantor Trustee and
who, unless required to be Independent (an "Opinion of Independent Counsel"), may be internal counsel for the
Depositor.
Optional Termination Date: As defined in the Underlying Pooling and Servicing Agreement.
Pass-Through Rate: With respect to each Class of Certificates and any Distribution Date, the least of
(a) One-Month LIBOR plus the related Margin (as defined in the Underlying Pooling and Servicing Agreement), (ii)
10.50% per annum and (iii) the related Net Rate Cap (as defined in the Underlying Pooling and Servicing
Agreement), in each case calculated on the basis of a 360-day year and the actual number of days in the related
Interest Accrual Period.
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.
Rating Agency: Each of S&P and Moody's.
Record Date: With respect to the Certificates, the Business Day preceding the applicable Distribution
Date.
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 Grantor 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.
S&P: Standard and Poor's Rating Services, a division of The XxXxxx-Xxxx Companies, Inc., and its
successor in interest.
Swap Agreement: Each of (i) the ISDA Master Agreement and related Confirmation, dated as of the Closing
Date, between the Swap Counterparty and the Grantor Trustee with respect to the Underlying Class I-A-1B
Certificates and (ii) the ISDA Master Agreement and related Confirmation, dated as of the Closing Date, between
the Swap Counterparty and the Grantor Trustee with respect to the Underlying Class I-A-2B Certificates, as the
context requires, a form of which is attached hereto as Exhibit C.
Swap Counterparty: Bear Xxxxxxx Capital Markets Inc., or any successor swap counterparty appointed in
accordance with each of the Swap Agreements.
Swap Counterparty Payment: On each Distribution Date, amounts due to the Swap Counterparty pursuant to
the related Swap Agreement.
Trust Fund or Trust: The corpus of the trust created by this Agreement, consisting of the Underlying
Certificates, the Swap Agreements and the other assets described in Section 2.01.
Underlying Certificates: The Underlying Class I-A-1B Certificates and the Underlying Class I-A-2B
Certificates issued pursuant to the Underlying Pooling and Servicing Agreement, copies of which are attached
hereto as Exhibit B-1 and Exhibit B-2, respectively.
Underlying Certificates Remittance Report: The remittance report provided to the Holders of the
Underlying Certificates in accordance with Section 6.04 of the Underlying Pooling and Servicing Agreement.
Underlying Interest Shortfalls: Any Underlying Realized Losses and Net Interest Shortfalls (as defined
in the Underlying Pooling and Servicing Agreement) allocated to the Underlying Certificates pursuant to the
Underlying Pooling and Servicing Agreement.
Underlying Mortgage Loans: The Mortgage Loans deposited into the Underlying Trust created by the
Underlying Pooling and Servicing Agreement.
Underlying Pooling and Servicing Agreement: The Pooling and Servicing Agreement dated as of the Closing
Date, by and among Structured Asset Mortgage Investments II Inc., as depositor, Xxxxx Fargo Bank, National
Association, as trustee, and EMC Mortgage Corporation, as servicer and sponsor, attached hereto as Exhibit D.
Underlying Realized Losses: Any Realized Losses on the related Mortgage Loans allocated to the
Underlying Certificates pursuant to the Underlying Pooling and Servicing Agreement.
Underlying Trust: The corpus of the trust created by the Underlying Pooling and Servicing Agreement.
Underlying Trustee: Xxxxx Fargo Bank, National Association, as trustee under the Underlying Pooling and
Servicing Agreement, or its successor in interest, or any successor trustee appointed as provided in the
Underlying Pooling and Servicing Agreement.
Widely Held Fixed Investment Trust: As such term is defined in Treasury Regulations section
1.671-5(b)(22) or successor provisions.
Widely Held Fixed Investment Trust Regulations: Treasury Regulations section 1.671-5, as amended.
ARTICLE II
CONVEYANCE OF UNDERLYING CERTIFICATES;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. CONVEYANCE OF UNDERLYING CERTIFICATES TO GRANTOR TRUSTEE. The Depositor, concurrently
with the execution and delivery hereof, does hereby transfer, convey and assign to the Grantor Trustee, in trust,
for the use and benefit of the Certificateholders, (i) all the right, title and interest of the Depositor in and
to the Underlying Certificates, (ii) all distributions on the Underlying Certificates after the Closing Date and
(iii) all other assets constituting the Trust Fund.
In connection with such transfer and assignment, the Depositor is causing the delivery of the Underlying
Certificates to the Grantor Trustee.
It is intended by the Depositor that the conveyance of the Depositor's right, title and interest in and
to the Underlying Certificates and all other assets constituting the Trust Fund pursuant to this Agreement shall
constitute, and be construed as, an absolute sale of the Underlying Certificates and the other assets
constituting the Trust Fund by the Depositor to the Grantor Trustee for the benefit of the Certificateholders.
Furthermore, it is not intended by the Depositor that such conveyance be deemed a pledge of the Underlying
Certificates and the other assets constituting the Trust Fund by the Depositor to the Grantor Trustee to secure a
debt or other obligation of the Depositor. However, in the event that, notwithstanding the intent of the parties,
the Underlying Certificates and the other assets constituting the Trust Fund are held to be the property of the
Depositor, or if for any other reason this Agreement is held or deemed to create a security interest in the
Underlying Certificates and the other assets constituting the Trust Fund, then it is intended by the Depositor as
follows: (a) this Agreement shall also be deemed to be a security agreement within the meaning of Articles 8 and
9 of the Uniform Commercial Code; (b) the conveyance provided for in this Section shall be deemed to be a grant
by the Depositor to the Grantor Trustee of a security interest in all of the Depositor's right, title and
interest in and to the Underlying Certificates, and all amounts payable to the holders of the Underlying
Certificates and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash,
instruments, securities or other property, including without limitation all amounts from time to time held or
invested in the Grantor Trust Distribution Account, whether in the form of cash, instruments, securities or other
property; (c) the possession by the Grantor Trustee (or its agent, providing that the agent authenticates a
record acknowledging that it holds possession for the benefit of the Grantor Trustee) of the Underlying
Certificates and such other items of property as constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession by the secured party" for purposes of perfecting the security interest
pursuant to Section 9-313 of the Uniform Commercial Code; and (d) notifications to persons holding such property,
and acknowledgments, receipts or confirmations from persons holding such property, shall be deemed to be
notifications to or acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents
(as applicable) of the Grantor Trustee for the purpose of perfecting such security interest under applicable law.
It is also intended that the Trust Fund be classified (for Federal tax purposes) as a grantor trust under subpart
E, part I of subchapter J of chapter 1 of the Code, of which the Certificateholders are owners, rather than as an
association taxable as a corporation. The powers granted and obligations undertaken in this Agreement shall be
construed so as to further such intent.
Section 2.02 ACCEPTANCE BY GRANTOR TRUSTEE. The Grantor Trustee hereby acknowledges the receipt by it
of the Underlying Certificates and declares that it holds and will hold such Underlying Certificates and all other
assets and documents included in the Trust Fund, in trust, upon the trusts herein set forth, for the exclusive use
and benefit of all present and future Certificateholders in accordance with the terms of this Agreement.
Section 2.03 SWAP AGREEMENTS. On the Closing Date, the Grantor Trustee shall enter into each of the
Swap Agreements with the Swap Counterparty.
Section 2.04 REPRESENTATIONS AND WARRANTIES CONCERNING THE DEPOSITOR. The Depositor hereby represents
and warrants to the Grantor Trustee as follows:
(i) the Depositor (a) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and (b) is qualified and in good standing as a foreign
corporation to do business in each jurisdiction where such qualification is necessary, except where the
failure so to qualify would not reasonably be expected to have a material adverse effect on the
Depositor's business as presently conducted or on the Depositor's ability to enter into this Agreement
and to consummate the transactions contemplated hereby;
(ii) the Depositor has full corporate power to own its property, to carry on its business
as presently conducted and to enter into and perform its obligations under this Agreement;
(iii) the execution and delivery by the Depositor of this Agreement have been duly
authorized by all necessary corporate action on the part of the Depositor; and neither the execution and
delivery of this Agreement, nor the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of, or constitute a default under,
any of the provisions of any law, governmental rule, regulation, judgment, decree or order binding on
the Depositor or its properties or the articles of incorporation or by-laws of the Depositor, except
those conflicts, breaches or defaults which would not reasonably be expected to have a material adverse
effect on the Depositor's ability to enter into this Agreement and to consummate the transactions
contemplated hereby;
(iv) the execution, delivery and performance by the Depositor of this Agreement and the
consummation of the transactions contemplated hereby do not require the consent or approval of, the
giving of notice to, the registration with, or the taking of any other action in respect of, any state,
federal or other governmental authority or agency, except those consents, approvals, notices,
registrations or other actions as have already been obtained, given or made;
(v) this Agreement has been duly executed and delivered by the Depositor and, assuming due
authorization, execution and delivery by the other parties hereto, constitutes a valid and binding
obligation of the Depositor enforceable against it in accordance with its terms (subject to applicable
bankruptcy and insolvency laws and other similar laws affecting the enforcement of the rights of
creditors generally);
(vi) there are no actions, suits or proceedings pending or, to the knowledge of the
Depositor, threatened against the Depositor, before or by any court, administrative agency, arbitrator
or governmental body (i) with respect to any of the transactions contemplated by this Agreement or
(ii) with respect to any other matter which in the judgment of the Depositor will be determined adversely
to the Depositor and will if determined adversely to the Depositor materially and adversely affect the
Depositor's ability to enter into this Agreement or perform its obligations under this Agreement; and
the Depositor is not in default with respect to any order of any court, administrative agency,
arbitrator or governmental body so as to materially and adversely affect the transactions contemplated
by this Agreement; and
(vii) immediately prior to the transfer and assignment to the Grantor Trustee, each
Underlying Certificate 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 such
Underlying Certificate to the Grantor Trustee free and clear of any encumbrance, equity, lien, pledge,
charge, claim or security interest.
ARTICLE III
ACCOUNTS
Section 3.01. GRANTOR TRUST DISTRIBUTION ACCOUNT.
(a) The Grantor Trustee shall establish and maintain in the name of the Grantor Trustee, for the
benefit of the Certificateholders, the Grantor Trust Distribution Account as a segregated trust account or
accounts. The Grantor Trustee will deposit in the Grantor Trust Distribution Account any amounts paid to the
Grantor Trust by the Underlying Trust to or with respect to the Underlying Certificates pursuant to the
Underlying Pooling and Servicing Agreement and any amounts paid to the Grantor Trust pursuant to either Swap
Agreement.
(b) All amounts deposited to the Grantor Trust Distribution Account shall be held by the Grantor
Trustee in the name of the Grantor Trustee in trust for the benefit of the Certificateholders in accordance with
the terms and provisions of this Agreement.
(c) The Grantor Trust Distribution Account shall constitute a trust account of the Trust Fund
segregated on the books of the Grantor Trustee and held by the Grantor Trustee in trust in its Corporate Trust
Office, and the Grantor Trust Distribution Account and the funds deposited therein shall not be subject to, and
shall be protected from, all claims, liens, and encumbrances of any creditors or depositors of the Grantor
Trustee (whether made directly, or indirectly through a liquidator or receiver of the Grantor Trustee). The
amount at any time credited to the Grantor Trust Distribution Account shall be uninvested.
Section 3.02. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE GRANTOR TRUST DISTRIBUTION ACCOUNT.
(a) The Grantor Trustee may clear and terminate the Grantor Trust Distribution Account pursuant to
Section 8.01(d) and remove amounts from time to time deposited in error into the Grantor Trust Distribution
Account.
(b) On an ongoing basis, the Grantor Trustee shall withdraw from the Grantor Trust Distribution
Account any expenses, disbursements and advances recoverable by the Grantor Trustee pursuant to Section 7.05 and
any amounts payable as indemnification pursuant to Section 6.01; provided however, to the extent the amounts
recoverable pursuant to Sections 6.01 or 7.05 relate to a specific Class of Certificates or a specific Swap
Agreement, such amounts shall be deducted from the Available Funds allocated to such Class of Certificates.
(c) On each Distribution Date, the Grantor Trustee shall pay the amount distributable to the Swap
Counterparty and the Holders of the Certificates in accordance with Section 5.01 from the related Available Funds
in the Grantor Trust Distribution Account.
ARTICLE IV
CERTIFICATES
Section 4.01. CERTIFICATES.
(a) DTC, the Depositor and the Grantor Trustee have entered into a Depository Agreement dated as of
June 29, 2007 (the "DTC Agreement"). The Certificates shall at all times remain registered in the name of DTC or
its nominee and at all times: (i) registration of such Certificates may not be transferred by the Grantor Trustee
except to a successor to DTC; (ii) ownership and transfers of registration of such Certificates on the books of
DTC shall be governed by applicable rules established by DTC; (iii) DTC may collect its usual and customary fees,
charges and expenses from its DTC Participants; (iv) the Grantor Trustee shall deal with DTC as representative of
the Certificate Owners 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 Grantor Trustee may rely and shall be fully
protected in relying upon information furnished by DTC with respect to its DTC Participants.
All transfers by Certificate Owners of the Book-Entry Certificates shall be made in accordance with the
procedures established by the DTC Participant or brokerage firm representing such Certificate Owners. Each DTC
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 DTC's normal procedures.
(b) If (i)(A) the Depositor advises the Grantor Trustee in writing that DTC is no longer willing or
able to properly discharge its responsibilities under the DTC Agreement and (B) the Grantor Trustee or the
Depositor is unable to locate a qualified successor within 30 days thereafter or (ii) the Depositor at its option
advises the Grantor Trustee in writing that it elects to terminate the book-entry system through DTC, the Grantor
Trustee shall request that DTC 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 Grantor Trustee of the Certificates by DTC, accompanied by registration instructions from DTC
for registration, the Grantor Trustee shall issue and sign the definitive Certificates. Neither of the Depositor
nor the Grantor Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions.
(c) The Certificates shall have the following designations and initial Current Principal Amounts:
Designation Initial Principal Amount
_______________________________________________________________________________
I-A-1B $50,000,000
_______________________________________________________________________________
I-A-2B $50,000,000
_______________________________________________________________________________
The Certificates shall have the Pass-Through Rate as defined herein.
(d) With respect to each Distribution Date, each Class of Certificates shall accrue interest during
the related Interest Accrual Period. Interest on such Certificates shall be calculated on the basis of a 360-day
year and the actual number of days in the related Interest Accrual Period, based upon the Pass-Through Rate set
forth herein and the Current Principal Amount of such Certificates applicable to such Distribution Date.
(e) The Certificates shall be substantially in the form set forth in Exhibit A. On original
issuance, the Grantor Trustee shall sign the Certificates and shall deliver the Certificates at the direction of
the Depositor. Pending the preparation of definitive Certificates, the Grantor Trustee may sign temporary
Certificates that are printed, lithographed or typewritten, in authorized denominations, substantially of the
tenor of the definitive Certificates in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers or authorized signatories executing such
Certificates may determine, as evidenced by their execution of such Certificates. If temporary Certificates are
issued, the Depositor will cause definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive
Certificates upon surrender of the temporary Certificates at the office of the Grantor Trustee, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary Certificates, the Grantor Trustee shall
sign and shall deliver in exchange therefor, a like aggregate principal amount, in authorized denominations, of
definitive Certificates. Until so exchanged, such temporary Certificates shall in all respects be entitled to the
same benefits as definitive Certificates.
(f) The Book-Entry Certificates will be registered as a single Certificate held by a nominee of DTC
or the DTC Custodian, and beneficial interests will be held by investors through the book-entry facilities of DTC
in minimum denominations of $1,000 and increments of $1.00 in excess thereof. On the Closing Date, the Grantor
Trustee shall execute the Certificate in the entire Current Principal Amount of the Certificates. The Grantor
Trustee shall sign the Certificates by facsimile or manual signature on behalf of the Grantor Trustee by one of
its authorized signatories, who shall be a Responsible Officer of the Grantor Trustee or its agent. A
Certificate bearing the manual or facsimile signature of an individual who was an authorized signatory of the
Grantor Trustee or its agent at the time of issuance shall bind the Grantor Trustee, notwithstanding that such
individual has ceased to hold such position prior to the delivery of such Certificate.
(g) 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 signature of the Grantor Trustee, or its
agent, and such signature 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 signature.
Section 4.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Grantor Trustee shall maintain at its Corporate Trust Office a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Grantor Trustee shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as herein provided.
(b) Subject to Subsection 4.01(a), upon surrender for registration of transfer of any Certificate
at any office or agency of the Grantor Trustee maintained for such purpose, the Grantor Trustee shall sign and
shall deliver, in the name of the designated transferee or transferees, a new Certificate of a like aggregate
Fractional Undivided Interest, but bearing a different number.
(c) At the option of the Certificateholders, Certificates may be exchanged for other Certificates
of authorized denominations of a like 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
Grantor Trustee in writing. Whenever any Certificates are so surrendered for exchange, the Grantor Trustee shall
sign and deliver the Certificates which the Certificateholder making the exchange is entitled to receive.
(d) If the Grantor Trustee so requires, every Certificate presented or surrendered for transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of transfer, with a signature
guarantee, in form satisfactory to the Grantor Trustee, duly executed by the holder thereof or his or her
attorney duly authorized in writing.
(e) No service charge shall be made for any transfer or exchange of Certificates, but the Grantor
Trustee may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(f) The Grantor Trustee shall cancel all Certificates surrendered for transfer or exchange but
shall retain such Certificates in accordance with its standard retention policy or for such further time as is
required by the record retention requirements of the Securities Exchange Act of 1934, as amended, and thereafter
may destroy such Certificates.
(g) The following legend shall be placed on the Certificates, whether upon original issuance or
upon issuance of any other Certificate 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
(ERISA), UNLESS THE PURCHASE OF THE CERTIFICATES ON BEHALF OF SUCH PERSON WILL NOT RESULT IN OR
CONSTITUTE A NONEXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE, IS PERMISSIBLE
UNDER APPLICABLE LAW AND WILL NOT GIVE RISE TO ANY OBLIGATIONS ON THE PART OF THE DEPOSITOR, THE
SERVICER, THE UNDERLYING TRUSTEE OR THE GRANTOR TRUSTEE IN ADDITION TO THOSE OBLIGATIONS SET FORTH IN
THE UNDERLYING POOLING AND SERVICING AGREEMENT.
ANY PERSON ACQUIRING AN INTEREST IN A CERTIFICATE, BY ACQUISITION OF SUCH CERTIFICATE, SHALL BE DEEMED
TO HAVE REPRESENTED TO THE GRANTOR TRUSTEE THAT 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 WHICH IS NOT COVERED UNDER A STATUTORY OR AN ADMINISTRATIVE INDIVIDUAL OR CLASS PROHIBITED
TRANSACTION EXEMPTION ("PTE"), INCLUDING, BUT NOT LIMITED TO, SECTION 408(B)(17) OF ERISA, XXX 00-00,
XXX 00-00, XXX 00-0, XXX 95-60 OR PTE 96-23 AND (II) WILL NOT SUBJECT THE DEPOSITOR, THE SERVICER, THE
UNDERLYING TRUSTEE OR THE GRANTOR TRUSTEE TO ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN IN THE
UNDERLYING POOLING AND SERVICING AGREEMENT. THE GRANTOR TRUSTEE WILL NOT BE REQUIRED TO MONITOR,
DETERMINE OR INQUIRE AS TO COMPLIANCE WITH THE FOREGOING TRANSFER RESTRICTIONS AND NONE OF SUCH PERSONS
SHALL HAVE ANY LIABILITY FOR THE TRANSFER OF ANY BOOK-ENTRY CERTIFICATES MADE IN VIOLATION OF THE
TRANSFER RESTRICTIONS SET FORTH IN THE GRANTOR TRUST AGREEMENT.
Section 4.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
(a) If (i) any mutilated Certificate is surrendered to the Grantor Trustee, or the Grantor Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (ii) there is
delivered to the Grantor Trustee such security or indemnity as it may require to save it harmless, and (iii) the
Grantor Trustee has not received notice that such Certificate has been acquired by a third Person, the Grantor
Trustee shall sign and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and Fractional Undivided Interest but in each case bearing a
different number. The mutilated, destroyed, lost or stolen Certificate shall thereupon be canceled of record by
the Grantor Trustee and shall be of no further effect and evidence no rights.
(b) Upon the issuance of any new Certificate under this Section 4.03, the Grantor 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 Grantor Trustee) connected therewith. Any
duplicate Certificate issued pursuant to this Section 4.03 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 4.04. PERSONS DEEMED OWNERS. Prior to due presentation of a Certificate for registration of
transfer, the Depositor, the Grantor Trustee and any agent of the Depositor or the Grantor 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 5.01 and for all other purposes whatsoever. Neither the Depositor, the Grantor
Trustee, nor any agent of the Depositor or the Grantor 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 4.05. ERISA RESTRICTIONS.
(a) Subject to the provisions of subsection (b), no 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 Section 4975 of the Code, unless the purchase of such Certificates by or on behalf of such
Plan is permissible under applicable law, will not constitute or result in a non-exempt prohibited transaction
under ERISA or Section 4975 of the Code and will not subject the Depositor, the Servicer, the Underlying Trustee
or the Grantor Trustee to any obligation in addition to those undertaken in the Underlying Pooling and Servicing
Agreement.
(b) Any Person acquiring an interest in a Certificate, by acquisition of such Certificate, shall be
deemed to have represented to the Grantor Trustee that 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 which is not covered under a statutory or
an administrative individual or class prohibited transaction exemption ("PTE"), including, but not limited to,
Section 408(b)(17) of ERISA, XXX 00-00, XXX 00-00, XXX 00-0, XXX 95-60 or PTE 96-23 and (II) will not subject the
Depositor, the Servicer, the Underlying Trustee or the Grantor Trustee to any obligation in addition to those
undertaken in the Underlying Pooling and Servicing Agreement. The Grantor Trustee will not be required to
monitor, determine or inquire as to compliance with the foregoing transfer restrictions and none of such Persons
shall have any liability for the transfer of any Book-Entry Certificates made in violation of the transfer
restrictions set forth herein.
ARTICLE V
PAYMENTS TO CERTIFICATEHOLDERS
Section 5.01. DISTRIBUTIONS ON THE CERTIFICATES.
(a) Interest and principal on the Certificates will be distributed monthly on each Distribution
Date, commencing in July 2007, in an aggregate amount equal to the Available Funds for such Distribution Date.
(I) On each Distribution Date, the Class I-A-1B Available Funds shall be distributed as follows:
(i) FIRST, to the Swap Counterparty, the related Swap Counterparty Payment (if any) and
certain termination payments (as set forth in the related Swap Agreement), if applicable, for such
Distribution Date (other than where the Swap Counterparty is the sole defaulting or sole affected party);
(ii) SECOND, to the extent of remaining Class I-A-1B Available Funds, to the Class I-A-1B
Certificates, the Accrued Certificate Interest on such Class for such Distribution Date;
(iii) THIRD, to the extent of remaining Class I-A-1B Available Funds, to the Class I-A-1B
Certificates, any principal distributions received from the Underlying Class I-A-1B Certificates, in
reduction of the Current Principal Amount thereof, until the Current Principal Amount thereof has been
reduced to zero; and
(iv) FOURTH, to the extent of remaining Class I-A-1B Available Funds, to the Swap
Counterparty, any termination payments (as set forth in the related Swap Agreement) where the Swap
Counterparty is the sole defaulting or sole affected party.
(II) On each Distribution Date, the Class I-A-2B Available Funds shall be distributed as follows:
(v) FIRST, to the Swap Counterparty, the related Swap Counterparty Payment (if any) and
certain termination payments (as set forth in the related Swap Agreement), if applicable, for such
Distribution Date (other than where the Swap Counterparty is the sole defaulting or sole affected party);
(vi) SECOND, to the extent of remaining Class I-A-2B Available Funds, to the Class I-A-2B
Certificates, the Accrued Certificate Interest on such Class for such Distribution Date;
(vii) THIRD, to the extent of remaining Class I-A-2B Available Funds, to the Class I-A-2B
Certificates, any principal distributions received from the Underlying Class I-A-2B Certificates, in
reduction of the Current Principal Amount thereof, until the Current Principal Amount thereof has been
reduced to zero; and
(viii) FOURTH, to the extent of remaining Class I-A-2B Available Funds, to the Swap
Counterparty, any termination payments (as set forth in the related Swap Agreement) where the Swap
Counterparty is the sole defaulting or sole affected party.
(b) No Accrued Certificate Interest will be payable with respect to each Class of Certificates
after the Distribution Date on which the Current Principal Amount of such Class of Certificates has been reduced
to zero.
Section 5.02. ALLOCATION OF LOSSES.
(a) On or prior to each Determination Date, the Grantor Trustee, based solely upon information
provided to it and calculations with respect thereto conducted by the Underlying Trustee pursuant to Section 6.04
of the Underlying Pooling and Servicing Agreement, shall determine the amount of any Underlying Realized Losses
on the Mortgage Loans in the related Loan Group to be allocated to the related Underlying Certificates (and,
correspondingly, to the related Certificates).
(b) With respect to any Certificates on any Distribution Date, the principal portion of each
Underlying Realized Loss allocated to the related Underlying Certificates (and, correspondingly, to such
Certificates) shall be allocated among the Class I-A-1B Certificates and the Class I-A-2B Certificates, as
applicable, in proportion to their respective Current Principal Amounts, until the Current Principal Amount of
each such Class has been reduced to zero.
Section 5.03. PAYMENTS.
(a) On each Distribution Date, other than the final Distribution Date, the Grantor Trustee shall
distribute to each Certificateholder of record on the directly preceding Record Date the Certificateholder's pro
rata share (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 the related Certificates, based solely on
information provided to the Grantor Trustee and calculations with respect thereto conducted by the Underlying
Trustee and the Swap Counterparty. The Grantor Trustee 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 Grantor Trustee, on or before the fifth Business Day preceding the related 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 the Certificates will be made only upon presentation and
surrender of such respective Certificates at the office or agency of the Grantor Trustee specified in the notice
to Certificateholders of such final payment.
Section 5.04. STATEMENTS TO CERTIFICATEHOLDERS.
(a) Concurrently with each distribution to Certificateholders, the Grantor Trustee shall make
available via the Grantor Trustee's internet website as set forth below, all of the information provided to the
Grantor Trustee with respect to the Underlying Certificates pursuant to Section 6.04 of the Underlying Pooling
and Servicing Agreement.
The Grantor Trustee may make available each month, to any interested party, the monthly statement to
Certificateholders via the Grantor Trustee's website initially located at xxx.xxxxxxx.xxx. Assistance in using
the website can be obtained by calling the Grantor Trustee'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 customer service desk and indicating such. The Grantor Trustee shall have the right to
change the way such reports are distributed in order to make such distribution more convenient and/or more
accessible to the parties, and the Grantor Trustee shall provide timely and adequate written notification to all
parties regarding any such change.
(b) Within a reasonable period of time after the end of the preceding calendar year, beginning in
2008, the Grantor 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)(i) and (a)(ii)
of Section 6.04 of the Underlying Pooling and Servicing Agreement with respect to the Certificates, and at the
request of the Holders, any other amounts which would 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 Grantor Trustee to such Holders pursuant to the requirements of
the Code.
ARTICLE VI
INDEMNIFICATION
Section 6.01. INDEMNIFICATION OF THE GRANTOR TRUSTEE. The Trust shall indemnify the Indemnified Persons
for, and will hold them harmless against, any loss, liability or expense incurred on their part, arising out of, or
in connection with, this Agreement, each of the Swap Agreements and the Certificates, including the costs and
expenses (including reasonable legal fees and expenses) of defending themselves against any such claim other than
(i) any loss, liability or expense related to such Indemnified Person's failure to perform such Indemnified
Person's duties in strict compliance with this Agreement (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and (ii) any loss, liability or expense incurred by reason of
such Indemnified Person's willful misfeasance, bad faith or negligence in the performance or non-performance of
duties hereunder or by reason of such Indemnified Person's reckless disregard of obligations and duties hereunder.
Any amounts payable to an Indemnified Person as set forth herein shall be paid by the Grantor Trustee to such
Indemnified Person from the Grantor Trust Distribution Account. This indemnity shall survive the resignation or
removal of the Grantor Trustee and the termination of this Agreement.
ARTICLE VII
CONCERNING THE GRANTOR TRUSTEE
Section 7.01. DUTIES OF THE GRANTOR TRUSTEE.
(a) The Grantor Trustee undertakes to perform such duties and only such duties as are specifically
set forth in this Agreement as duties of the Grantor Trustee.
(b) Upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders
or other instruments which are specifically required to be furnished to the Grantor Trustee pursuant to any
provision of this Agreement, the Grantor Trustee shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that the Grantor Trustee shall not be responsible for the accuracy
or verification of any calculation provided to it pursuant to this Agreement.
(c) On each Distribution Date, the Grantor Trustee shall make monthly distributions and the final
distribution to the Certificateholders from Available Funds in the Grantor Trust Distribution Account as provided
in Section 5.01 herein based on a report prepared by the Underlying Trustee with respect to such distributions.
(d) No provision of this Agreement shall be construed to relieve the Grantor Trustee from liability
for its own negligent action, its own negligent failure to act or its own willful misconduct; provided, however,
that:
(i) The duties and obligations of the Grantor Trustee shall be determined solely by the
express provisions of this Agreement, the Grantor Trustee shall not be liable except for the performance
of its duties and obligations as are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Grantor Trustee and, in the absence of bad
faith on the part of the Grantor Trustee, the Grantor Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Grantor Trustee and conforming to the requirements of this Agreement;
(ii) The Grantor Trustee shall not be liable in its individual capacity for an error of
judgment made in good faith by a Responsible Officer or Responsible Officers of the Grantor Trustee
unless it shall be proved that the Grantor Trustee was negligent in ascertaining the pertinent facts;
(iii) The Grantor Trustee shall not be liable with respect to any action taken, suffered or
omitted to be taken by it in good faith in accordance with the directions of the Holders of Certificates
evidencing 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 Grantor Trustee or exercising any trust or other power conferred upon the Grantor
Trustee under this Agreement;
(iv) The Grantor Trustee shall not in any way be liable by reason of any insufficiency in
the Grantor Trust Distribution Account unless it is determined by a court of competent jurisdiction that
the Grantor Trustee's negligence, negligent failure to act or willful misconduct was the primary cause
of such insufficiency (except to the extent that the Grantor Trustee is obligor and has defaulted
thereon); and
(v) Anything in this Agreement to the contrary notwithstanding, in no event shall the
Grantor Trustee be liable for special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Grantor Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action.
The Grantor Trustee shall not be required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers,
if there is reasonable ground for believing that the repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) All funds received by the Grantor Trustee and required to be deposited in the Grantor Trust
Distribution Account pursuant to this Agreement will be promptly so deposited by the Grantor Trustee.
(f) Except for those actions that the Grantor Trustee is required expressly to take hereunder, the
Grantor Trustee shall not 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.
(g) The Grantor Trustee hereby acknowledges and agrees to reasonably cooperate with the Underlying
Trustee and the Depositor in facilitating compliance by such parties with the provisions of Regulation AB and
related rules and regulations of the Commission, including any filings required thereby. The Grantor
Trustee acknowledges that interpretations of the requirements of the requirements of Regulation AB may change over
time, whether due to interpretive guidance provided by the Commission or its staff, consensus among participants
in the mortgage-backed securities markets, advice of counsel, or otherwise, and agrees to comply with requests
made by the Underlying Trustee and the Depositor in good faith for delivery of information on the basis of
evolving interpretations of Regulation AB to the extent reasonably practicable. The Grantor Trustee shall
cooperate reasonably with the Underlying Trustee and the Depositor to deliver to such parties (including any of
their respective assignees or designees), any and all disclosure, statements, reports, certifications, records
and any other information necessary in the reasonable, good faith determination of the Underlying Trustee and the
Depositor to permit the Underlying Trustee and the Depositor to comply with the provisions of Regulation AB.
Section 7.02. CERTAIN MATTERS AFFECTING THE GRANTOR TRUSTEE.
Except as otherwise provided in Section 7.01:
(i) The Grantor Trustee may rely and shall be protected in acting or refraining from acting in reliance on
any resolution, certificate of the Depositor, the Servicer or the Underlying Trustee, any 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 Grantor Trustee may consult with counsel and any written 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 written advice or Opinion of Counsel;
(iii) The Grantor Trustee shall not be under any obligation to exercise any of the trusts or powers vested
in it by this Agreement, other than its obligation to give notices pursuant to this Agreement, and shall not be
under any obligation 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 Grantor Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
(iv) The Grantor Trustee shall not be liable in its individual capacity for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(v) The Grantor Trustee shall not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by Holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than 25% of the Trust Fund and provided that the payment within
a reasonable time to the Grantor Trustee of the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Grantor Trustee, reasonably assured to the Grantor Trustee
by the security afforded to it by the terms of this Agreement. The Grantor Trustee may require reasonable indemnity
against such expense or liability as a condition to taking any such action. The reasonable expense of every such
examination shall be paid pro rata by the Certificateholders requesting the investigation;
(vi) The Grantor Trustee may (to the extent it is authorized hereunder to so execute or perform) execute
any of the trusts or powers hereunder or perform any duties hereunder either directly or through its Affiliates,
agents or attorneys. The Grantor Trustee shall not be liable or responsible for the misconduct or negligence of any
agent or attorney of the Grantor Trustee appointed hereunder by the Grantor Trustee with due care;
(vii) Should the Grantor Trustee deem the nature of any action required on its part, other than a payment
or transfer under Section 3.02 or Section 5.01, to be unclear, the Grantor Trustee may require prior to such action
that it be provided by the Depositor with reasonable further instructions;
(viii) The right of the Grantor Trustee to perform any discretionary act enumerated in this Agreement
shall not be construed as a duty, and the Grantor Trustee shall not be accountable for other than its negligence,
bad faith, negligent failure to act or willful misconduct in the performance of any such act; and
(ix) The Grantor Trustee shall not be required to give any bond or surety with respect to the execution of
the trust created hereby or the powers granted hereunder, except as provided in Section 7.07.
Section 7.03. GRANTOR TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS. The recitals contained herein
and in the Certificates (other than the signature of the Grantor Trustee on the Certificates) shall be taken as the
statements of the Depositor, and the Grantor Trustee shall not have any responsibility for their correctness. The
Grantor Trustee does not make any representation as to the validity or sufficiency of the Certificates (other than
the signature of the Grantor Trustee on the Certificates). The Grantor Trustee's signature on the Certificates
shall be solely in its capacity as Grantor Trustee, and shall not constitute the Certificates an obligation of the
Grantor Trustee in any other capacity. The Grantor Trustee shall not be accountable for the use or application by
the Depositor of any of the Certificates or of the proceeds of such Certificates, or for the use or application of
any funds paid to the Depositor with respect to the Underlying Certificates. The Grantor Trustee shall not be
responsible for the legality, sufficiency or validity of this Agreement, each of the Swap Agreements 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 by any Person other than it, or the validity, priority,
perfection or sufficiency of the security for the Certificates issued hereunder or intended to be issued hereunder.
The Grantor Trustee shall not at any time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage or any Mortgage Loan, or the perfection and priority of any Mortgage or
the maintenance of any such perfection and priority, or for or with respect to the sufficiency of the Trust Fund or
its ability to generate the payments to be distributed to Certificateholders under this Agreement. The Grantor
Trustee shall not have any responsibility for filing any financing or continuation statement in any public office
at any time or to otherwise perfect or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 7.04. GRANTOR TRUSTEE MAY OWN CERTIFICATES. The Grantor Trustee, in its individual capacity or in
any capacity other than as Grantor Trustee hereunder, may become the owner or pledgee of any Certificates with the
same rights it would have if it were not Grantor Trustee and may otherwise deal with the parties hereto.
Section 7.05. EXPENSES. The Grantor Trustee and any director, officer, employee or agent of such party,
will be entitled to recover from the Grantor Trust Distribution Account pursuant to Section 3.02(b) all reasonable
out- of-pocket expenses, disbursements and advances of such party in connection with any event of default or breach
of this Agreement or any claim or legal action (including any pending or threatened claim or legal action) incurred
or made by such party in the administration of the trusts hereunder (including the reasonable compensation,
expenses and disbursements of its counsel) except any such expense, disbursement or advance as may arise from its
negligence, negligent failure to act, or intentional misconduct or which is the responsibility of the
Certificateholders or the Trust Fund hereunder. If funds in the Grantor Trust Distribution Account are insufficient
therefor, such party shall recover such expenses, disbursements and advances 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 7.06. ELIGIBILITY REQUIREMENTS FOR GRANTOR TRUSTEE. The Grantor Trustee, and any successor Grantor
Trustee, shall during the entire duration of this Agreement be a state bank or trust company or a national banking
association organized and doing business under the laws of 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 Grantor Trustee, $50,000,000, subject to supervision or
examination by federal or state authority and rated "BBB" or higher by Standard & Poor's and "Baa2" or higher by
Moody's with respect to any outstanding long-term unsecured unsubordinated debt, and, in the case of a successor
Grantor Trustee other than pursuant to Section 7.10, rated in one of the two highest long-term debt categories of,
or otherwise acceptable to, each of the Rating Agencies. If the Grantor 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 7.06 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 Grantor Trustee shall cease to be eligible in accordance with the provisions of
this Section 7.06, the Grantor Trustee shall resign immediately in the manner and with the effect specified in
Section 7.08.
Section 7.07. INSURANCE. The Grantor Trustee, at its own expense, shall at all times maintain and keep in
full force and effect: (i) fidelity insurance, (ii) theft of documents insurance and (iii) forgery insurance (which
may be collectively satisfied by a "Financial Institution Bond" and/or a "Bankers' Blanket Bond"). 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 Grantor Trustee as to such party's compliance with this Section 7.07 shall be
furnished to any Certificateholder upon reasonable written request.
Section 7.08. RESIGNATION AND REMOVAL OF THE GRANTOR TRUSTEE.
(a) Subject to the terms of this Agreement, the Grantor Trustee may at any time resign and be
discharged from the Trust hereby created by giving written notice thereof to the Depositor, with a copy to the
Rating Agencies. Upon receiving such notice of resignation, the Depositor shall promptly appoint a successor
Grantor Trustee, by written instrument, in triplicate, one copy of which instrument shall be delivered to each of
the resigning Grantor Trustee and the successor Grantor Trustee. If no successor Grantor Trustee shall have been
so appointed and have accepted appointment within 30 days after the giving of such notice of resignation, the
resigning Grantor Trustee may assign its duties and obligations hereunder to a Person who satisfies the
requirements of Section 7.06 or may petition any court of competent jurisdiction for the appointment of a
successor Grantor Trustee. The Grantor Trustee may resign hereunder unless it shall also resign as Underlying
Trustee under the Underlying Pooling and Servicing Agreement.
(b) If at any time the Grantor Trustee shall cease to be eligible in accordance with the provisions
of Section 7.06 and shall fail to resign after written request therefor by the Depositor, or if at any time the
Grantor Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Grantor Trustee or of its property shall be appointed, or any public officer shall take charge or control of
the Grantor Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then the Depositor shall promptly remove the Grantor Trustee and appoint a successor Grantor Trustee by written
instrument, in triplicate, one copy of which instrument shall be delivered to the Grantor Trustee so removed and
one copy of which instrument shall be delivered to the successor Grantor Trustee so appointed.
(c) The Holders of Certificates evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund may at any time remove the Grantor Trustee and appoint a successor Grantor Trustee by
written instrument or instruments, in quadruplicate, signed by such Holders or their attorneys-in-fact duly
authorized, one complete set of which instruments shall be delivered to the Depositor and such party so removed
and one copy of which instrument shall be delivered to the successor so appointed.
(d) No resignation or removal of the Grantor Trustee and appointment of a successor Grantor Trustee
pursuant to any of the provisions of this Section 7.08 shall become effective except upon appointment of and
acceptance of such appointment by the successor Grantor Trustee as provided in Section 7.09.
Section 7.09. SUCCESSOR GRANTOR TRUSTEE.
(a) Any successor Grantor Trustee appointed as provided in Section 7.08 shall execute, acknowledge
and deliver to the Depositor and to its predecessor Grantor Trustee an instrument accepting such appointment
hereunder. The resignation or removal of the predecessor Grantor Trustee shall then become effective and such
successor Grantor Trustee without any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as
Grantor Trustee herein. The predecessor Grantor Trustee shall, after its receipt of payment of its outstanding
fees and expenses, promptly deliver to the successor Grantor Trustee all assets and records of the Trust held by
it hereunder, and the Depositor and the predecessor Grantor Trustee 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 Grantor Trustee all such rights, powers, duties and obligations.
(b) No successor Grantor Trustee shall accept appointment as provided in this Section 7.09 unless
at the time of such acceptance such successor Grantor Trustee shall be eligible under the provisions of Section
7.06.
(c) Upon acceptance of appointment by a successor Grantor Trustee as provided in this Section 7.09,
the successor Grantor Trustee shall mail notice of the succession of such Grantor Trustee hereunder to all
Certificateholders at their addresses as shown in the Certificate Register and to the Rating Agencies.
Section 7.10. MERGER OR CONSOLIDATION OF GRANTOR TRUSTEE. Any state bank or trust company or national
banking association into which the Grantor Trustee 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 Grantor Trustee shall be a party, or any state bank or trust company or national banking
association succeeding to all or substantially all of the corporate business of the Grantor Trustee shall be the
successor of the Grantor Trustee hereunder, provided such state bank or trust company or national banking
association shall be eligible under the provisions of Section 7.06. 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 7.11. APPOINTMENT OF CO-GRANTOR TRUSTEE OR SEPARATE GRANTOR 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 Grantor Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Grantor Trustee and the Depositor to act
as co-grantor trustee or co-grantor trustees, jointly with the Grantor Trustee, or separate grantor trustee or
separate grantor 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
7.11, such powers, duties, obligations, rights and trusts as the Depositor and the Grantor Trustee may consider
necessary or desirable.
(b) If the Depositor shall not have joined in such appointment within 15 days after the receipt by
it of a written request so to do, the Grantor Trustee shall have the power to make such appointment without any
action by or consent of the Depositor.
(c) No co-grantor trustee or separate grantor trustee hereunder shall be required to meet the terms
of eligibility as a successor Grantor Trustee under Section 7.06 hereunder and no notice to Certificateholders of
the appointment of co-grantor trustee(s) or separate grantor trustee(s) shall be required under Section 7.08
hereof.
(d) In the case of any appointment of a co-grantor trustee or separate grantor trustee pursuant to
this Section 7.11, all rights, powers, duties and obligations conferred or imposed upon the Grantor Trustee and
required to be conferred on such co-grantor trustee shall be conferred or imposed upon and exercised or performed
by the Grantor Trustee and such separate grantor trustee or co-grantor trustee jointly, except to the extent that
under any law of any jurisdiction in which any particular act or acts are to be performed, the Grantor 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 grantor trustee or co-grantor trustee at the direction of the Grantor
Trustee.
(e) Any notice, request or other writing given to the Grantor Trustee shall be deemed to have been
given to each of the then separate grantor trustees and co-grantor trustees, as effectively as if given to each
of them. Every instrument appointing any separate grantor trustee or co-grantor trustee shall refer to this
Agreement and the conditions of this Article VII. Each separate grantor trustee and co-grantor 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 Grantor 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 Grantor Trustee. Every such instrument
shall be filed with the Grantor Trustee.
(f) To the extent not prohibited by law, any separate grantor trustee or co-grantor trustee may, at
any time, request the Grantor Trustee, its agent or attorney-in-fact, with full power and authority, to do any
lawful act under or with respect to this Agreement on its behalf and in its name. If any separate grantor trustee
or co-grantor 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 Grantor Trustee, to the extent permitted by
law, without the appointment of a new or successor Grantor Trustee.
(g) No grantor trustee under this Agreement shall be personally liable by reason of any act or
omission of another grantor trustee under this Agreement. The Depositor and the Grantor Trustee acting jointly
may at any time accept the resignation of or remove any separate grantor trustee or co-grantor trustee.
Section 7.12. FEDERAL INFORMATION RETURNS AND REPORTS TO CERTIFICATEHOLDERS; GRANTOR TRUST
ADMINISTRATION.
(a) The Grantor Trustee shall perform its obligations relating to the Trust in a manner so as to
maintain the status of the Trust Fund as a grantor trust under subpart E, part I of subchapter J of chapter 1 of
the Code and not as an association taxable as a corporation, as a taxable mortgage pool, or as a partnership and
to prevent the imposition of any federal, state or local income or other tax on the Trust Fund.
(i) The Trust is a Widely Held Fixed Investment Trust that is a Non-Mortgage Widely Held Fixed
Investment Trust. The Grantor Trustee will report as required under the Widely Held Fixed Investment Trust
Regulations to the extent such information as is reasonably necessary to enable the Grantor Trustee to do so, and
is not in its possession, is provided to the Grantor Trustee on a timely basis. The Grantor Trustee is hereby
directed to assume that DTC is the only "middleman" (as such term is defined in the Widely Held Fixed Investment
Trust Regulations) unless the Depositor provides the Grantor Trustee with the identities of other "middlemen" that
are Certificateholders. The Grantor Trustee will not be liable for any tax reporting penalties that may arise under
the Widely Held Fixed Investment Trust Regulations as a result of the Depositor incorrectly determining the status
of the Grantor Trust as a Widely Held Fixed Investment Trust or failing to identify whether or not the Grantor
Trust is a Widely Held Fixed Investment Trust..
(ii) The Grantor Trustee, in its discretion, will report required Widely Held Fixed
Investment Trust information using either the cash or accrual method, except to the extent the Widely Held Fixed
Investment Trust Regulations specifically require a different method. The Grantor Trustee will be under no
obligation to determine whether any interest holder in the Trust uses the cash or accrual method. The Grantor
Trustee will make available Widely Held Fixed Investment Trust information to holders annually. In addition, the
Grantor Trustee will not be responsible or liable for providing subsequently amended, revised or updated
information to any interest holder in the Trust, unless requested by such holder.
(iii) The Grantor Trustee shall not be liable for failure to meet the reporting requirements
of the Widely Held Fixed Investment Trust Regulations nor for any penalties thereunder if such failure is due to:
(i) the lack of reasonably necessary information being provided to the Grantor Trustee, (ii) incomplete,
inaccurate or untimely information being provided to the Grantor Trustee or (iii) the inability of the Grantor
Trustee, after good faith efforts, to alter its existing information reporting systems to capture information
necessary to fully comply with the Widely Held Fixed Investment Trust Regulations for the 2007 calendar year.
Each Certificate holder, by acceptance of its interest in its Certificate, will be deemed to have agreed to
provide the Grantor Trustee with information regarding any sale of such Certificate, including the price, amount
of proceeds and date of sale. Absent receipt of such information, and unless informed otherwise by the
Depositor, the Grantor Trustee will assume there is no secondary market trading of Widely Held Fixed Investment
Trust interests.
(iv) To the extent required by the Widely Held Fixed Investment Trust Regulations, the
Grantor Trustee will use reasonable efforts to publish on an appropriate website the CUSIPs for the
Certificates. The CUSIPs so published will represent the Rule 144A CUSIPs. The Grantor Trustee will not publish
any associated Regulation S CUSIPs. The Grantor Trustee will make reasonable good faith efforts to keep the
website accurate and updated to the extent CUSIPs have been received. Absent the receipt of a CUSIP, the Grantor
Trustee will use a reasonable identifier number in lieu of a CUSIP. The Grantor Trustee will not be liable for
investor reporting delays that result from the receipt of inaccurate or untimely CUSIP information.
(v) The Grantor Trustee shall be entitled to additional reasonable compensation for
changes in reporting required in respect of (i) the failure of the Depositor to timely inform the Grantor Trustee
of the designation of the Grantor Trust as a Widely Held Fixed Investment or (ii) a change in the Widely Held
Fixed Investment Trust Regulations or a change in interpretation of the Widely Held Fixed Investment Trust
Regulations by the IRS or the Depositor or its counsel, if such change requires, in the Grantor Trustee's
reasonable discretion, a material increase in the Grantor Trustee's reporting obligations in respect of the
Grantor Trust.
(b) Notwithstanding any other provisions of this Agreement, the Grantor Trustee shall comply with
all federal withholding requirements with respect to payments to Certificateholders. The consent of
Certificateholders shall not be required for any such withholding. In the event the Grantor Trustee, based
solely on instructions from such Certificateholder or other Person, withholds any amount from any
Certificateholder pursuant to federal withholdings requirements, the Grantor Trustee shall indicate to such
Certificateholder the amount so withheld.
(c) The Grantor Trustee agrees to indemnify the Trust Fund and the Depositor for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on or incurred by the Trust Fund or
the Depositor as a result of a breach of the Grantor Trustee's obligations set forth in this Section 7.12.
ARTICLE VIII
TERMINATION
Section 8.01. TERMINATION UPON REPURCHASE BY THE DEPOSITOR OR ITS DESIGNEE OR LIQUIDATION OF THE
MORTGAGE LOANS.
(a) The respective obligations and responsibilities of the Depositor and the Grantor Trustee
created hereby, other than the obligation of the Grantor Trustee to make payments to Certificateholders as
hereinafter set forth, shall terminate upon the termination of the Underlying Pooling and Servicing Agreement or
upon the making of the final payment or other liquidation of each of the Underlying Certificates, or any advance
with respect thereto.
(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 Grantor Trustee shall give notice of any termination of the Trust to the
Certificateholders, with a copy to the Rating Agencies, upon which the Certificateholders shall surrender their
Certificates to the Grantor Trustee for payment by the Grantor Trustee of the final distribution and cancellation
with respect thereto. Such notice shall be given by letter, mailed not later than the 20th day of 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 Grantor Trustee therein
designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made by the Grantor Trustee only upon presentation and
surrender of the Certificates at the office of the Grantor Trustee therein specified.
(d) Upon the presentation and surrender of the Certificates, the Grantor Trustee shall distribute
to the remaining Certificateholders, in accordance with their respective interests and based solely upon
information provided to it by the Underlying Trustee and calculations conducted by the Underlying Trustee with
respect thereto, all Available Funds remaining in the Grantor Trust Distribution Account.
(e) 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, then the Grantor Trustee shall give a
second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and
receive the final distribution with respect thereto. If, within six months after the second notice, not all the
Certificates shall have been surrendered for cancellation, then the Grantor Trustee may take appropriate steps,
or appoint any agent to take appropriate steps, to contact the remaining Certificateholders concerning surrender
of their Certificates, and the cost thereof shall be paid out of the funds and other assets which remain subject
to this Agreement.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. INTENT OF PARTIES. The parties intend that the Trust Fund shall be treated as a grantor
trust for federal income tax purposes and that the provisions of this Agreement should be construed in furtherance
of this intent.
Section 9.02. ACTION UNDER UNDERLYING DOCUMENTS. In the event that there are any matters arising under the
Underlying Pooling and Servicing Agreement related to an Underlying Certificate which require the vote or direction
of holders of the Underlying Certificates thereunder, the Grantor Trustee, as holder of the Underlying Certificates
will vote such Underlying Certificate in accordance with the written instructions received from holders of the
related Certificates evidencing at least 51% of the Fractional Undivided Interest of the related Class of
Certificates. In the absence of any such instructions, the Grantor Trustee will not vote such Underlying
Certificates.
Upon written request, the Grantor Trustee will forward to the Certificateholders copies of any
communications received regarding matters arising that require action by holders of the Underlying Certificates.
Section 9.03. AMENDMENT.
(a) This Agreement may be amended from time to time by the Depositor and the Grantor Trustee
without the consent of the Swap Counterparty (other than with respect to any amendment hereto that materially and
adversely affects the rights of the Swap Counterparty hereunder, which amendment shall require the consent of the
Swap Counterparty) and without notice to or the consent of any of the Certificateholders, (i) to cure any
ambiguity, (ii) to correct or supplement any provisions herein that may be defective or inconsistent with any
other provisions herein, (iii) to conform the terms hereof to the disclosure in the Prospectus or the Prospectus
Supplement (as each such term is defined in the Underlying Pooling and Servicing Agreement), (iv) to comply with
any changes in the Code or (v) to make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this Agreement; provided, however, that,
with regard to clauses (iv) and (v) of this Section 9.03(a), such action shall not, as evidenced by an Opinion of
Independent Counsel, adversely affect in any material respect the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by the Depositor and Grantor Trustee with
the consent of the Holders of Certificates evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund, for the purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any Certificate, without the consent of the
Holder of such Certificate, (ii) reduce the aforesaid percentage of Certificates the Holders of which are
required to consent to any such amendment, without the consent of the Holders of all Certificates then
outstanding, or (iii) result in the imposition of a tax on the Trust Fund or cause the Trust Fund to fail to be
classified as a grantor trust under subpart E, part I of subchapter J of chapter 1 of the Code, as evidenced by
an Opinion of Counsel which shall be provided to the Grantor Trustee other than at the Grantor Trustee's
expense. Notwithstanding any other provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 9.03(b), Certificates registered in the name of or held for the benefit of the
Depositor, the Grantor Trustee or any Affiliate thereof or nominee 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 Grantor Trustee shall furnish a copy of
such amendment or written notification of the substance of such amendment to the Swap Counterparty and each
Certificateholder, with a copy to the Rating Agencies.
(d) In the case of an amendment under Section 9.03(b) above, it shall not be necessary for the
Certificateholders to approve the particular form of such an amendment. Rather, it shall be sufficient if the
Certificateholders approve the substance of the amendment. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Grantor Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the parties hereto 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 parties hereto may, but shall not be obligated to, enter into any such amendment
which affects such parties' respective rights, duties or immunities under this Agreement.
Section 9.04. 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 and
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 9.05. 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 or any successor to any such parties unless (i) such Certificateholder previously shall
have given to the Grantor 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 Grantor Trustee to institute such action, suit or proceeding in its own name
as Grantor Trustee hereunder and shall have offered to the Grantor Trustee such reasonable indemnity as it may
require against the costs and expenses and liabilities to be incurred therein or thereby, and (iii) the Grantor
Trustee, for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding.
(d) No one or more Certificateholders shall have any right by virtue of any provision of this
Agreement to affect the rights of any other Certificateholders or to obtain or seek to obtain priority or
preference over any other such Certificateholder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section 9.05, each and every Certificateholder and the
Grantor Trustee shall be entitled to such relief as can be given either at law or in equity.
Section 9.06. 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 Grantor Trustee and/or, where it is expressly required by
this Agreement, to the Depositor and/or the Grantor Trustee. 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 Grantor Trustee and the Depositor if made in the manner provided in this Section 9.06.
(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 Grantor 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 4.02 made on a Certificate presented in
accordance with Section 4.04) shall be proved by the Certificate Register, and neither the Grantor Trustee, the
Depositor 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 Grantor Trustee, the Depositor or any successor
to any such party in reliance thereon, whether or not notation of such action is made upon such Certificates.
(e) In determining whether the Holders of the requisite percentage of Certificates evidencing
Fractional Undivided Interests have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Certificates owned by the Grantor Trustee, the Depositor or any Affiliate thereof shall be
disregarded, except as otherwise provided in Section 9.03(b) and except that, in determining whether the Grantor
Trustee and the Depositor and any Affiliate thereof shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Certificates which such party knows to be so owned
shall be so disregarded. Certificates which have been pledged in good faith to the Grantor Trustee, the Depositor
or any Affiliate thereof may be regarded as outstanding if the pledgor establishes to the satisfaction of the
Grantor Trustee the pledgor's right to act with respect to such Certificates and that the pledgor is not an
Affiliate of the Grantor Trustee or the Depositor, as the case may be.
Section 9.07. 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 NEW YORK 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 9.08. 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 Grantor Trustee, at its
Corporate Trust Office, or such other address as may hereafter be furnished to the other parties hereto in writing
or (iii) 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 Services, a division of The XxXxxx-Xxxx Companies, Inc., 00
Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Residential Mortgage Surveillance. Any notice
delivered to the Depositor or the Grantor Trustee under this Agreement shall be effective only upon receipt. Any
notice required or permitted to be mailed to a Certificateholder, unless otherwise provided herein, shall be given
by first-class mail, postage prepaid, at the address of such Certificateholder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement shall be conclusively presumed to have
been duly given when mailed, whether or not the Certificateholder receives such notice.
Section 9.09. 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 9.10. 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 9.11. 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 9.12. 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 9.13. NOTICE TO RATING AGENCIES. The article and section headings herein are for convenience of
reference only, and shall not limited or otherwise affect the meaning hereof. The Grantor 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;
(2) The resignation or termination of the Grantor Trustee under this Agreement;
(3) The final payment to Certificateholders; and
(4) Any change in the location of the Grantor Trust Distribution Account.
Section 9.14. ENFORCEMENT OF RIGHTS. THE GRANTOR TRUSTEE SHALL TAKE SUCH ACTION AS MAY BE NECESSARY
TO ENFORCE THE RIGHTS OF THE TRUST PURSUANT TO THE SWAP AGREEMENTS AND, TO THE EXTENT ANY SWAP AGREEMENT IS
TERMINATED PRIOR TO THE TERMINATION DATE SET FORTH THEREIN, SHALL ENTER INTO ANY REPLACEMENT SWAP AGREEMENT AS
DIRECTED BY THE DEPOSITOR.
[Signatures Follow]
IN WITNESS WHEREOF, the Depositor and the Grantor Trustee have caused their names to be signed hereto by
their respective officers thereunto duly authorized as of the day and year first above written.
STRUCTURED ASSET MORTGAGE INVESTMENTS II INC, as Depositor
By: /s/ Xxxxx Xxxxxxxxxxx
Name: Xxxxx Xxxxxxxxxxx
Title: Senior Managing Director
XXXXX FARGO BANK, NATIONAL ASSOCIATION, as Grantor Trustee
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Vice President
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 29th day of June, 2007, before me, a notary public in and for said State, personally appeared
Xxxxx Xxxxxxxxxxx, known to me to be a Senior Managing Director 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 MARYLAND )
) ss.:
COUNTY OF XXXXXX )
On the 29th day of June, 2007, before me, a notary public in and for said State, personally appeared
Xxxxxx Xxxxxx, known to me to be a 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/ Xxxxxx Xxxxx
Notary Public
[Notarial Seal]
EXHIBIT A
Form of Class [I-A-1B] [I-A-2B] Certificate
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE INCREASED OR DECREASED AS SET FORTH IN THE
AGREEMENT. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS
CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN
ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE GRANTOR TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO
THE GRANTOR TRUSTEE 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.
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 (ERISA), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, UNLESS THE
PURCHASE OF THE CLASS I-A-1B CERTIFICATES ON BEHALF OF SUCH PERSON WILL NOT RESULT IN OR CONSTITUTE A NONEXEMPT
PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE, IS PERMISSIBLE UNDER APPLICABLE LAW AND WILL NOT
GIVE RISE TO ANY OBLIGATIONS ON THE PART OF THE DEPOSITOR, THE SERVICER, THE UNDERLYING TRUSTEE OR THE GRANTOR
TRUSTEE IN ADDITION TO THOSE OBLIGATIONS SET FORTH IN THE UNDERLYING POOLING AND SERVICING AGREEMENT.
ANY PERSON ACQUIRING AN INTEREST IN A CERTIFICATE, BY ACQUISITION OF SUCH CERTIFICATE, SHALL BE DEEMED
TO HAVE REPRESENTED TO THE GRANTOR TRUSTEE THAT 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 WHICH IS NOT COVERED UNDER A STATUTORY OR AN
ADMINISTRATIVE INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION ("PTE"), INCLUDING, BUT NOT LIMITED TO,
SECTION 408(B)(17) OF ERISA, XXX 00-00, XXX 00-00, XXX 00-0, XXX 95-60 OR PTE 96-23 AND (II) WILL NOT SUBJECT THE
DEPOSITOR, THE SERVICER, THE UNDERLYING TRUSTEE OR THE GRANTOR TRUSTEE TO ANY OBLIGATION IN ADDITION TO THOSE
UNDERTAKEN IN THE UNDERLYING POOLING AND SERVICING AGREEMENT. THE GRANTOR TRUSTEE WILL NOT BE REQUIRED TO
MONITOR, DETERMINE OR INQUIRE AS TO COMPLIANCE WITH THE FOREGOING TRANSFER RESTRICTIONS AND NONE OF SUCH PERSONS
SHALL HAVE ANY LIABILITY FOR THE TRANSFER OF ANY BOOK-ENTRY CERTIFICATES MADE IN VIOLATION OF THE TRANSFER
RESTRICTIONS SET FORTH IN THE GRANTOR TRUST AGREEMENT.
Certificate No. [_] Variable Pass-Through Rate
Grantor Trust Class [I-A-1B][I-A-2B]
Date of Grantor Trust Agreement: Aggregate Initial Current Principal Amount of this
June 29, 2007 Certificate as of the Cut-off Date: $[____________]
Cut-off Date: June 1, 2007
First Distribution Date: Initial Current Principal Amount of this Certificate as
July 25, 2007 of the Cut-off Date: $[____________]
Assumed Final Distribution Date: June 25, 2037 CUSIP: [____________]
BEAR XXXXXXX MORTGAGE FUNDING GRANTOR TRUST
2007-AR5
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2007-AR5
evidencing a fractional undivided interest in the distributions allocable to the Grantor Trust Class
[I-A-1B][I-A-2B] Certificates with respect to a Trust Fund consisting primarily of the Underlying
Certificates 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 "Depositor") or the Grantor
Trustee referred to below or any of their affiliates or any other person. Neither this Certificate nor the
Underlying Certificates are guaranteed or insured by any governmental entity or by the Depositor, the Grantor
Trustee or any of their respective affiliates or any other person. None of the Depositor, the Servicer or the
Grantor Trustee nor any of their respective 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") consisting primarily of the Class [I-A-1B][I-A-2B] Certificates (the "Underlying Certificates")
sold by the Depositor. The Trust Fund was created pursuant to the Grantor Trust Agreement, dated as of June 29,
2007 (the "Agreement"), among the Depositor, as depositor, Xxxxx Fargo Bank, National Association, as grantor
trustee (the "Grantor 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 period from and including the preceding Distribution
Date (or in the case of the first Distribution Date, from the Closing Date) to and including the day prior to the
current Distribution Date on the Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth in the Agreement. The Grantor Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a "Distribution Date"), commencing
on the first Distribution Date specified above, to the Person in whose name this Certificate is registered at the
close of business on the Business Day immediately preceding such Distribution Date, an amount equal to the
product of the Fractional Undivided Interest evidenced by this Certificate and the amount (of interest and
principal, if any) required to be distributed to the Holders of Certificates of the same Class as this
Certificate. The Assumed Final Distribution Date is the Distribution Date in the month immediately following the
month of the latest scheduled maturity date of any Mortgage Loan and is not likely to be the date on which the
Current Principal Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Grantor Trustee by check mailed to the address of
the Person entitled thereto as such name and address shall appear on the Certificate Register or, if such Person
so requests by notifying the Grantor Trustee in writing, as specified in the Agreement. Notwithstanding the
above, the final distribution on this Certificate will be made after due notice by the Grantor Trustee of the
pendency of such distribution and only upon presentation and surrender of this Certificate at the office or
agency appointed by the Grantor Trustee for that purpose and designated in such notice. The Initial Current
Principal Amount of this Certificate is set forth above. The Current Principal Amount hereof will be reduced to
the extent of distributions allocable to principal hereon and any Underlying Realized Losses on the Mortgage
Loans allocable to the Underlying Certificates (and, correspondingly, to the Certificates). This Certificate is
one of a duly authorized issue of Certificates designated as set forth on the face hereof (the "Certificates"),
issued in one Class. The Certificates, in the aggregate, evidence the entire beneficial ownership interest in the
Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it will look solely to the
Trust Fund for payment hereunder and that the Grantor Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly provided in the Agreement, subject
to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is made to the Agreement for
the interests, rights and limitations of rights, benefits, obligations and duties evidenced hereby, and the
rights, duties and immunities of the Grantor Trustee with respect thereto.
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 Grantor Trustee with the consent of the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than 51% of the Trust Fund. 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 or the consent of
the Swap Counterparty, or without the consent of the Holders of any of the Certificates but with the consent of
the Swap Counterparty.
As provided in the Agreement and subject to certain limitations therein set forth, the transfer of this
Certificate is registerable with the Grantor Trustee upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Grantor Trustee for such purposes, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to, the Grantor Trustee, duly executed by
the Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates in authorized denominations representing a like aggregate Fractional Undivided Interest will be
issued to the designated transferee. The Certificates are issuable only as registered Certificates without
coupons in the Class 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
Grantor Trustee may require payment of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. The Depositor, the Grantor 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 Depositor, the
Grantor Trustee or any such agent shall be affected by notice to the contrary. The obligations created by the
Agreement and the Trust Fund created thereby (other than the obligations to make payments to Certificateholders
with respect to the termination of the Agreement) shall terminate upon the termination of the Underlying Pooling
and Servicing Agreement or upon the making of the final payment or other liquidation with respect to the
Underlying 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 counter-signed by an authorized signatory of the Grantor Trustee by
manual signature, this Certificate shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Grantor Trustee has caused this Certificate to be duly executed.
Dated: June 29, 2007
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
Not in its individual capacity but solely as Grantor Trustee
By: _____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [I-A-1B][I-A-2B] Certificates referred to in the within-mentioned Agreement.
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as Grantor Trustee
By: _____________________________________
Authorized Signatory
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 Grantor Trustee 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.
EXHIBIT B-1
COPY OF UNDERLYING CLASS I-A-1B CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE INCREASED OR DECREASED AS SET FORTH IN
THE AGREEMENT. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF
THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF XXXXX FARGO BANK, NATIONAL ASSOCIATION, AS GRANTOR TRUSTEE OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO XXXXX FARGO
BANK, NATIONAL ASSOCIATION, AS GRANTOR TRUSTEE, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, XXXXX FARGO BANK, NATIONAL ASSOCIATION, AS
GRANTOR TRUSTEE, HAS AN INTEREST HEREIN.
Certificate No. 1 Variable Pass-Through Rate
Underlying Class I-A-1B
Super Senior
Aggregate Initial Current Principal Amount of this
Date of Pooling and Servicing Agreement and Cut-off Date: Certificate as of the Cut-off Date:
June 1, 2007 $50,000,000
Initial Current Principal Amount of this Certificate as of
First Distribution Date: the Cut-off Date:
July 25, 2007 $50,000,000
Servicer: CUSIP: 07400N BH2
EMC Mortgage Corporation
Assumed Final Distribution Date:
June 25, 2037
BEAR XXXXXXX MORTGAGE FUNDING TRUST 2007-AR5
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2007-AR5
evidencing a fractional undivided interest in the distributions allocable to the Underlying
Class I-A-1B Certificates with respect to a Trust Fund consisting primarily of a pool of
adjustable interest rate mortgage loans secured by first liens on one- to four-family
residential properties (the "Mortgage Loans") and 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 an interest in Structured Asset Mortgage Investments II Inc. ("XXXX XX"), the Servicer or the
Trustee referred to below or any of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity or by XXXX XX, the Servicer or the
Trustee or any of their affiliates or any other person. None of XXXX XX, the 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 Xxxxx Fargo Bank, National Association, as Grantor Trustee is the
registered owner of the Fractional Undivided Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund") primarily consisting of the
Mortgage Loans sold by XXXX XX. The Mortgage Loans were sold by EMC Mortgage Corporation ("EMC") to XXXX XX. EMC
will act as servicer of the Mortgage Loans (the "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 "Seller"), EMC and Xxxxx
Fargo Bank, National Association, as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, capitalized terms used herein shall have the
meaning ascribed to them in the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the period from and including the preceding
Distribution Date (as hereinafter defined) (or in the case of the first Distribution Date, from the Closing Date)
to and including the day prior to the current Distribution Date on the Current Principal Amount hereof at a per
annum rate equal to the Pass-Through Rate set forth in the Agreement. The Trustee will distribute on the 25th day
of each month, or, if such 25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of the calendar month preceding the
month in which such Distribution Date occurs, an amount equal to the product of the Fractional Undivided Interest
evidenced by this Certificate and the amount (of interest, if any) required to be distributed to the Holders of
Certificates of the same Class as this Certificate. The Assumed Final Distribution Date is the Distribution Date
in the month following the latest scheduled maturity date of any Mortgage Loan and is not likely to be the date
on which the Current Principal Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check mailed to the address of
the Person entitled thereto as such name and address shall appear on the Certificate Register or, if such Person
so requests by notifying the Trustee in writing as specified in the Agreement, by wire transfer. Notwithstanding
the above, the final distribution on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose and designated in such notice. The initial Current Principal
Amount of this Certificate is set forth above. The Current Principal Amount hereof will be reduced increased 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"). The Certificates, in the aggregate, evidence the entire beneficial
ownership interest in the Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it will look solely
to the Trust Fund for payment hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly provided in the Agreement, subject
to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is made to the
Agreement for the interests, rights and limitations of rights, benefits, obligations and duties evidenced hereby,
and the rights, duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided: (i) the amendment thereof and
the modification of the rights and obligations of the Seller, the Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Seller, the Servicer and the Trustee, and (ii)
the amendment thereof by the 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 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 will be registered with the Trustee upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Trustee for such purposes, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Trustee duly executed by the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Fractional Undivided Interest will be issued to the designated
transferee.
The Certificates are issuable only as registered Certificates without coupons in the Classes
and denominations specified in the Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, this Certificate is exchangeable for one or more new Certificates evidencing the same Class
and in the same aggregate Fractional Undivided Interest, as requested by the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such registration of transfer,
but the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. The Seller, the Servicer, the Trustee and any agent of any of them may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes, and none of the Seller, the
Servicer, the Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created thereby (other than the
obligations to make payments to Certificateholders with respect to the termination of the Agreement) shall
terminate upon the earlier of (i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (B) the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement of all the Mortgage Loans and
other assets of the Trust Fund in accordance with the terms of the Agreement. Such optional repurchase may be
made only if (i) the Stated Principal Balance of the Mortgage Loans in a Loan Group at the time of any such
repurchase is less than 10% of the Cut-off Date Balance of such Mortgage Loans or (ii) the Depositor, based upon
an Opinion of Counsel addressed to the Depositor and the Trustee has determined that the REMIC status of any
REMIC under the Agreement has been lost or that a substantial risk exists that such REMIC status will be lost for
the then-current taxable year. The exercise of such right will effect the early retirement of the Certificates.
In no event, however, will the Trust Fund created by the Agreement continue beyond the expiration of 21 years
after the death of certain persons identified in the Agreement.
Unless this Certificate has been countersigned by an authorized signatory of the Trustee by
manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.
Dated: June 29, 2007 XXXXX FARGO BANK, NATIONAL ASSOCIATION
Not in its individual capacity but solely as Trustee
By:_________________________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Underlying Class I-A-1B Certificates referred to in the within-mentioned
Agreement.
XXXXX FARGO BANK, NATIONAL ASSOCIATION
Authorized signatory of Xxxxx Fargo Bank, National
Association, not in its individual capacity but
solely as Trustee
By:__________________________________________________
Authorized Signatory
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.
EXHIBIT B-2
COPY OF UNDERLYING CLASS I-A-2B CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE INCREASED OR DECREASED AS SET FORTH IN
THE AGREEMENT. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF
THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF XXXXX FARGO BANK, NATIONAL ASSOCIATION, AS GRANTOR TRUSTEE, OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO XXXXX FARGO
BANK, NATIONAL ASSOCIATION, AS GRANTOR TRUSTEE, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, XXXXX FARGO BANK, NATIONAL ASSOCIATION, AS
GRANTOR TRUSTEE, HAS AN INTEREST HEREIN.
Certificate No. 1 Variable Pass-Through Rate
Underlying Class I-A-2B
Level 1 Senior Support
Aggregate Initial Current Principal Amount of this
Date of Pooling and Servicing Agreement and Cut-off Date: Certificate as of the Cut-off Date:
June 1, 2007 $50,000,000
Initial Current Principal Amount of this Certificate as of
First Distribution Date: the Cut-off Date:
July 25, 2007 $50,000,000
Servicer: CUSIP: 07400N BJ8
EMC Mortgage Corporation
Assumed Final Distribution Date:
June 25, 2037
BEAR XXXXXXX MORTGAGE FUNDING TRUST 2007-AR5
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2007-AR5
evidencing a fractional undivided interest in the distributions allocable to the Underlying
Class I-A-2B Certificates with respect to a Trust Fund consisting primarily of a pool of
adjustable interest rate mortgage loans secured by first liens on one- to four-family
residential properties (the "Mortgage Loans") and 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 an interest in Structured Asset Mortgage Investments II Inc. ("XXXX XX"), the Servicer or the
Trustee referred to below or any of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity or by XXXX XX, the Servicer or the
Trustee or any of their affiliates or any other person. None of XXXX XX, the 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 Xxxxx Fargo Bank, National Association, as Grantor Trustee is the
registered owner of the Fractional Undivided Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund") primarily consisting of the
Mortgage Loans sold by XXXX XX. The Mortgage Loans were sold by EMC Mortgage Corporation ("EMC") to XXXX XX. EMC
will act as servicer of the Mortgage Loans (the "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 "Seller"), EMC and Xxxxx
Fargo Bank, National Association, as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, capitalized terms used herein shall have the
meaning ascribed to them in the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the period from and including the preceding
Distribution Date (as hereinafter defined) (or in the case of the first Distribution Date, from the Closing Date)
to and including the day prior to the current Distribution Date on the Current Principal Amount hereof at a per
annum rate equal to the Pass-Through Rate set forth in the Agreement. The Trustee will distribute on the 25th day
of each month, or, if such 25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of the calendar month preceding the
month in which such Distribution Date occurs, an amount equal to the product of the Fractional Undivided Interest
evidenced by this Certificate and the amount (of interest, if any) required to be distributed to the Holders of
Certificates of the same Class as this Certificate. The Assumed Final Distribution Date is the Distribution Date
in the month following the latest scheduled maturity date of any Mortgage Loan and is not likely to be the date
on which the Current Principal Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check mailed to the address of
the Person entitled thereto as such name and address shall appear on the Certificate Register or, if such Person
so requests by notifying the Trustee in writing as specified in the Agreement, by wire transfer. Notwithstanding
the above, the final distribution on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose and designated in such notice. The initial Current Principal
Amount of this Certificate is set forth above. The Current Principal Amount hereof will be reduced or increased
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"). The Certificates, in the aggregate, evidence the entire beneficial
ownership interest in the Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it will look solely
to the Trust Fund for payment hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly provided in the Agreement, subject
to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is made to the
Agreement for the interests, rights and limitations of rights, benefits, obligations and duties evidenced hereby,
and the rights, duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided: (i) the amendment thereof and
the modification of the rights and obligations of the Seller, the Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Seller, the Servicer and the Trustee, and (ii)
the amendment thereof by the 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 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 will be registered with the Trustee upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Trustee for such purposes, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Trustee duly executed by the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Fractional Undivided Interest will be issued to the designated
transferee.
The Certificates are issuable only as registered Certificates without coupons in the Classes
and denominations specified in the Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, this Certificate is exchangeable for one or more new Certificates evidencing the same Class
and in the same aggregate Fractional Undivided Interest, as requested by the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such registration of transfer,
but the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. The Seller, the Servicer, the Trustee and any agent of any of them may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes, and none of the Seller, the
Servicer, the Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created thereby (other than the
obligations to make payments to Certificateholders with respect to the termination of the Agreement) shall
terminate upon the earlier of (i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (B) the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement of all the Mortgage Loans and
other assets of the Trust Fund in accordance with the terms of the Agreement. Such optional repurchase may be
made only if (i) the Stated Principal Balance of the Mortgage Loans in a Loan Group at the time of any such
repurchase is less than 10% of the Cut-off Date Balance of such Mortgage Loans or (ii) the Depositor, based upon
an Opinion of Counsel addressed to the Depositor and the Trustee has determined that the REMIC status of any
REMIC under the Agreement has been lost or that a substantial risk exists that such REMIC status will be lost for
the then-current taxable year. The exercise of such right will effect the early retirement of the Certificates.
In no event, however, will the Trust Fund created by the Agreement continue beyond the expiration of 21 years
after the death of certain persons identified in the Agreement.
Unless this Certificate has been countersigned by an authorized signatory of the Trustee by
manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.
Dated: June 29, 2007 XXXXX FARGO BANK, NATIONAL ASSOCIATION
Not in its individual capacity but solely as Trustee
By:_________________________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Underlying Class I-A-2B Certificates referred to in the within-mentioned
Agreement.
XXXXX FARGO BANK, NATIONAL ASSOCIATION
Authorized signatory of Xxxxx Fargo Bank, National
Association, not in its individual capacity but
solely as Trustee
By:__________________________________________________
Authorized Signatory
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.
EXHIBIT C
FORM OF SWAP AGREEMENT
BEAR XXXXXXX CAPITAL MARKETS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
TEL 000-000-0000
DATE: June 29, 2007
TO: Bear Xxxxxxx Mortgage Funding Grantor Trust 2007-AR5
COPY TO: Xxxxx Fargo Bank, National Association
ATTENTION: Client Manager, BSMF 07-AR5
TELEPHONE: 410-884-2000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
SUBJECT: Mortgage Derivatives Confirmation
REFERENCE NUMBER(S): [________________]
The purpose of this letter agreement is to confirm the terms and conditions of the Transaction entered into on the
Trade Date specified below (the "Transaction") between Bear Xxxxxxx Capital Markets Inc. ("Bear Xxxxxxx") and Bear
Xxxxxxx Mortgage Funding Grantor Trust 2007-AR5 ("Counterparty"). This letter agreement constitutes the sole and
complete "Confirmation," as referred to in the "Master Agreement" (as defined below), with respect to the
Transaction.
1. This Confirmation is subject to and incorporates the 2000 ISDA Definitions (the "Definitions"), as
published by the International Swaps and Derivatives Association, Inc. ("ISDA"). The parties agree to negotiate,
execute and deliver an agreement in the form of the 1992 ISDA Master Agreement (Multicurrency—Cross Border) (the
"Form Master Agreement"), together with the schedule thereto and any other related documents, each in form and
substance as the parties shall in good faith agree (collectively, the "Executed Master Agreement"). In addition,
the parties agree that until execution and delivery of the Executed Master Agreement, a Form Master Agreement,
shall be deemed to have been executed and delivered by the parties on the Trade Date of the first transaction that
by its terms is intended to be governed by a Master Agreement. All provisions contained in, or incorporated by
reference to, the Form Master Agreement or the Executed Master Agreement (as applicable, the "Master Agreement")
shall govern the Transaction referenced in this Confirmation, except as expressly modified below. This
Confirmation, together with all of the other documents confirming any and all Transactions entered into between us
(regardless of which branch, if any, either of us has acted through) that by their terms are intended to be
governed by a Master Agreement, shall supplement, form a part of and be subject to the Master Agreement. In the
event of any inconsistency between the provisions of this Confirmation and the Definitions or Master Agreement,
this Confirmation shall prevail for the purpose of this
Transaction. Terms capitalized but not defined herein shall have the meaning ascribed to them in the Grantor Trust
Agreement, dated as of June 29, 2007 (the "Grantor Trust Agreement") among Structured Asset Mortgage Investment II
Inc., as depositor (the "Depositor"), and Xxxxx Fargo Bank, National Association, as grantor trustee (the "Grantor
Trustee").
2. The terms of the particular Transaction to which this Confirmation relates are as follows:
Trade Date: June 27, 2007
Effective Date: June 29, 2007
Notional Amount: For any Calculation Period, the Current Principal Amount of the
Grantor Trust Certificates (defined below) as of the close of business on
the 25th day of the month in which such Calculation Period begins (or, if
remittances on such Grantor Trust Certificates are not made on such day,
as of the close of business on the next day on which such remittances are
made).
Termination Date: The earlier to occur of (a) the Distribution Date (as defined in the
Underlying Pooling and Servicing Agreement) following the date on which
the aggregate outstanding principal balance of the Underlying Reference
Certificates is reduced to zero and the Deferred Interest Carry-Forward
Balance is zero or (b) July 25, 2037, subject, in each case, to
adjustment in accordance with the Business Day Convention.
Grantor Trust Certificates: The Class [___] Certificates issued pursuant to the Grantor Trust
Agreement.
Underlying Reference
Certificates: The Class [___] Certificates issued pursuant to the Underlying
Pooling and Servicing Agreement.
Bear Xxxxxxx
Payment Amounts:
Bear Xxxxxxx
Payment Dates: The 25th calendar day of each month during the Term of this
Transaction, commencing July 25, 2007 and ending on the Termination
Date, subject to adjustment in accordance with the Business Day
Convention
Bear Xxxxxxx
Payment Amounts: On each Bear Xxxxxxx Payment Date, Bear Xxxxxxx shall pay to
Counterparty an amount equal to any Net Deferred Interest allocated
to the Current Principal Amount of the Underlying Reference
Certificates in accordance with the definition of Net Deferred
Interest in the Underlying and Servicing Agreement for the
Distribution Date (as defined in the Underlying Pooling and Servicing
Agreement) occurring on such Bear Xxxxxxx Payment Date.
Counterparty Payments:
Counterparty
Payment Dates: Each Bear Xxxxxxx Payment Date.
Counterparty
Payment Amounts #1: On the initial Counterparty Payment Date, zero and for each
Counterparty Payment Date thereafter, Counterparty shall pay to Bear
Xxxxxxx an amount equal to the lesser of:
(a) the Deferred Interest Carry-Forward Balance for the previous
Counterparty Payment Date, and
(b) the amount distributed on the Distribution Date (as defined in
the Underlying Pooling and Servicing Agreement) occurring on such
Counterparty Payment Date to the Underlying Reference Certificates
in respect of (i) principal reducing the Current Principal Amount of
the Underlying Reference Certificates and (ii) Unpaid Realized Loss
Amounts.
Deferred Interest
Carry-Forward Balance: For each Counterparty Payment Date, an amount equal to the sum of:
(a) the Deferred Interest Carry-Forward Balance as of the
preceding Counterparty Payment Date (which for the initial
Counterparty Payment Date shall be deemed to be zero), plus (b)
any Bear Xxxxxxx Payment Amounts paid by Bear Xxxxxxx to
Counterparty on such Counterparty Payment Date less (c) any
Counterparty Payment Amounts #1 paid to Bear Xxxxxxx by the
Counterparty on such Counterparty Payment Date.
Counterparty
Payment Amounts #2: On each Counterparty Payment Date, Counterparty shall pay to
Bear Xxxxxxx an amount equal to interest on the Deferred
Interest Carry-Forward Balance as of the preceding Payment Date
accrued from and including, the Period End Date preceding such
Payment Date to, but excluding, the Period End Date for such
Counterparty Payment Date at a rate equal to the Pass-Through
Rate (as defined in the Underlying Pooling and Servicing
Agreement) for the Underlying Reference Certificates.
Additional Payment: On June 29, 2007, subject to adjustment in accordance with the
Business Day Convention, Counterparty shall pay to Bear Xxxxxxx
the amount of USD 10,000.00.
Business Day Convention: Following
Business Days: Any day other than (i) a Saturday or a Sunday, or (ii) a day on which
(a) the New York Stock Exchange or Federal Reserve is closed or (b)
banking institutions in New York City or in any of the jurisdictions
in which the Trustee or the Servicer (each as defined in the
Underlying Pooling and Servicing Agreement) is located are authorized
or obligated by law or executive order to be closed.
Calculation Agent: Bear Xxxxxxx
3. Additional Provisions: (a) Each party hereto is hereby advised and acknowledges that the
other party has engaged in (or refrained from engaging in)
substantial financial transactions and has taken (or refrained from
taking) other material actions in reliance upon the entry by the
parties into the Transaction being entered into on the terms and
conditions set forth herein and in the Confirmation relating to such
Transaction, as applicable. This paragraph shall be deemed repeated
on the trade date of each Transaction.
(b) On the second Business Day prior to each Payment Date, the
Paying Agent shall provide Bear Xxxxxxx with the amount and
supporting calculations of any Bear Xxxxxxx Payment Amounts,
Counterparty Payment Amounts #1, and Counterparty Payment Amounts
#2, if any, to be paid on such Payment Date. For the avoidance of
doubt, Bear Xxxxxxx shall not be obligated to make any payment on a
Payment Date until it has received from the Paying Agent the
information set forth in the preceding sentence.
(c) Notwithstanding anything in Section 2(c) of the Form Master
Agreement to the contrary, if on any date an amount would be owned
by Bear Xxxxxxx to Counterparty after application of the netting
provisions of Section 2(c) of the Form Master Agreement with respect
to such date, subject to Section 3(b) above, Bear Xxxxxxx hereby
agrees to remit such payment to Counterparty one Business Day prior
to such date
4. Provisions Deemed Incorporated in a Schedule to the Form Master Agreement:
1) The parties agree that subparagraph (ii) of Section 2(c) of the Form Master Agreement will apply to any
Transaction.
2) Termination Provisions. For purposes of the Form Master Agreement:
(a) "Specified Entity" is not applicable to Bear Xxxxxxx or Counterparty for any purpose.
(b) "Specified Transaction" is not applicable to Bear Xxxxxxx or Counterparty for any purpose, and,
accordingly, Section 5(a)(v) will not apply to Bear Xxxxxxx and will not apply to Counterparty.
(c) Section 5(a)(i) of the Form Master Agreement is hereby amended by deleting the word "third" therein and
replacing it with the word "second."
(d) "Breach of Agreement" provision of Section 5(a)(ii) will not apply to Bear Xxxxxxx and will not apply to
Counterparty.
(e) "Credit Support Default" provisions of Section 5(a)(iii) will apply to Bear Xxxxxxx and will not apply to
Counterparty.
(f) "Misrepresentation" provisions of Section 5(a)(iv) will not apply to Bear Xxxxxxx and will not apply to
Counterparty.
(g) The "Merger Without Assumption" provision of Section 5(a)(viii) will apply to Bear Xxxxxxx and will not
apply to Counterparty.
(h) The "Cross Default" provision of Section 5(a)(vi) will not apply to Bear Xxxxxxx and will not apply to
Counterparty.
(i) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply to Bear Xxxxxxx and will not
apply to Counterparty.
(j) The "Bankruptcy" provision of Section 5(a)(vii)(2) will apply to Bear Xxxxxxx and will not apply to
Counterparty.
(k) The "Automatic Early Termination" provision of Section 6(a) will not apply to Bear Xxxxxxx or to
Counterparty.
(l) Payments on Early Termination. For the purpose of Section 6(e) of the Form Master Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(m) "Termination Currency" means United States Dollars.
(n) Additional Termination Events.
(i) The following shall constitute an Additional Termination Event, upon which Counterparty will have
the right to designate an Additional Termination Event, Bear Xxxxxxx will be the sole Affected Party and
all Transactions hereunder will be Affected Transactions. For avoidance of doubt, the above remedy shall
be the sole remedy available to Counterparty upon the occurrence of such Additional Termination Event.
(a) After failing to satisfy the First Trigger Required Ratings, the failure by Bear Xxxxxxx to
comply with Section 18(a) below; and
(b) After failing to satisfy the Second Trigger Required Ratings, the failure by Bear Xxxxxxx to,
within 30 days from such failure, at its own expense, (i) transfer its rights and obligations
under the Form Master Agreement to a replacement party that has (or whose guarantor has) the
First Trigger Required Ratings, (ii) obtain a guarantor having the First Trigger Required Ratings
for Bear Xxxxxxx' obligations under the Form Master Agreement with a form of guaranty satisfying
the Rating Agency Condition; provided that if such form of guaranty is identical to the Guaranty
(other than the name of the guarantor, the effective date and the date of such guaranty),
satisfaction of the Rating Agency Condition shall not be required and Bear Xxxxxxx shall provide
a copy of such guaranty to each Rating Agency then rating the Grantor Trust Certificates or (iii)
take such other steps that satisfies the Rating Agency Condition.
(ii) The failure by Counterparty to comply with Section 16 below shall constitute an Additional
Termination Event hereunder, upon which Counterparty shall be the sole Affected Party and all Transactions
hereunder shall be Affected Transactions.
3) Tax Representations. Bear Xxxxxxx represents that it is a corporation duly organized and validly existing under
the laws of the State of Delaware, and Counterparty represents that it is a statutory trust duly organized and
validly existing under the laws of the State of Delaware.
4) Reserved
5) Documents to be Delivered. For the purpose of Section 4(a):
(1) Tax forms, documents, or certificates to be delivered are:
Party required to deliver Form/Document/ Date by which to
document Certificate be delivered
Bear Xxxxxxx and Any document required or Promptly after the earlier of (i) reasonable
the Counterparty reasonably requested to allow demand by either party or (ii) learning that
the other party to make such form or document is required
payments under the Form
Master Agreement without any
deduction or withholding for
or on the account of any Tax
or with such deduction or
withholding at a reduced rate
(2) Other documents to be delivered are:
Party required to Form/Document/ Date by which to Covered by Section 3(d)
deliver document Certificate be delivered Representation
Bear Xxxxxxx and Any documents required by Upon the execution and Yes
the Counterparty the receiving party to delivery of the Form
evidence the authority of Master Agreement and
the delivering party or such Confirmation
its Credit Support
Provider, if any, for it
to execute and deliver the
Form Master Agreement, any
Confirmation , and any
Credit Support Documents
to which it is a party,
and to evidence the
authority of the
delivering party or its
Credit Support Provider to
perform its obligations
under the Form Master
Agreement, such
Confirmation and/or Credit
Support Document, as the
case may be
Bear Xxxxxxx and A certificate of an Upon the execution and Yes
the Counterparty authorized officer of the delivery of the Form
party, as to the incumbency Master Agreement and
and authority of the such Confirmation
respective officers of the
party signing the Form
Master Agreement, any
relevant Credit Support
Document, or any
Confirmation, as the case
may be
Bear Xxxxxxx A copy of its most recent Promptly after the
audited consolidated request of by other Party
financial statements
6) Miscellaneous.
(a) Address for Notices: For the purposes of Section 12(a) of the Form Master Agreement:
Contact details for notices or communications to Bear Xxxxxxx:
Tel: 000-000-0000
Fax: 000-000-0000
Attention: Credit Derivatives Department
(For all purposes)
Contact details for notices or communications to the Counterparty:
Xxxxx Fargo Bank, National Association
0000 Xxx Xxxxxxxxx Xx.
Xxxxxxxx, Xxxxxxxx 00000
Attention: Client Manager, BSMF 2007-AR5
Facsimile: 000-000-0000
Phone: 000-000-0000
(For all purposes)
(b) Process Agent. For the purpose of Section 13(c):
Bear Xxxxxxx appoints as its
Process Agent: Not Applicable
The Counterparty appoints as its
Process Agent: Not Applicable
(c) Offices. The provisions of Section 10(a) will not apply to the Form Master Agreement; neither Bear Xxxxxxx
nor the Counterparty have any Offices other than as set forth in the Notices Section and Bear Xxxxxxx
agrees that, for purposes of Section 6(b) of the Form Master Agreement, it shall not in future have any
Office other than one in the United States.
(d) Multibranch Party. For the purpose of Section 10(c) of the Form Master Agreement:
Bear Xxxxxxx is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is Bear Xxxxxxx.
(f) Credit Support Document.
Bear Xxxxxxx: Guaranty (the "Guaranty") of The Bear Xxxxxxx Companies Inc.
The Counterparty: Not Applicable
(g) Credit Support Provider.
Bear Xxxxxxx: The Bear Xxxxxxx Companies Inc.
The Counterparty: Not Applicable
(h) Governing Law. The parties to the Form Master Agreement hereby agree that the law of the State of New
York shall govern their rights and duties in whole without regard to conflict of law provisions thereof other than
New York General Obligations Law Sections 5-1401 and 5-1402
(i) Severability. If any term, provision, covenant, or condition of the Form Master Agreement, or the
application thereof to any party or circumstance, shall be held to be invalid or unenforceable (in whole or in
part) for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full
force and effect as if the Form Master Agreement had been executed with the invalid or unenforceable portion
eliminated, so long as the Form Master Agreement as so modified continues to express, without material change, the
original intentions of the parties as to the subject matter of the Form Master Agreement and the deletion of such
portion of the Form Master Agreement will not substantially impair the respective benefits or expectations of the
parties.
The parties shall endeavor to engage in good faith negotiations to replace any invalid or unenforceable term,
provision, covenant or condition with a valid or enforceable term, provision, covenant or condition, the economic
effect of which comes as close as possible to that of the invalid or unenforceable term, provision, covenant or
condition.
(j) Consent to Recording. Each party hereto consents to the monitoring or recording, at any time and
from time to time, by the other party of any and all communications between officers or employees of the parties,
waives any further notice of such monitoring or recording, and agrees to notify its officers and employees of such
monitoring or recording.
(k) Waiver of Jury Trial. Each party waives any right it may have to a trial by jury in respect of any
Proceedings relating to the Form Master Agreement or any Credit Support Document.
7) Affiliate. Notwithstanding the definition of Affiliate in Section 14 of the Form Master Agreement,
for purposes hereof each party will be deemed not to have any Affiliates.
8) Relationship Between Parties. Section 3 of the Form Master Agreement is hereby amended by adding at
the end thereof the following subsection (g):
"(g) Relationship Between Parties.
Each party represents to the other party on each date when it enters into a
Transaction that:
(1) Nonreliance. It is not relying on any statement or representation of the other party
regarding the Transaction (whether written or oral), other than the representations expressly made in the Form
Master Agreement or the Confirmation in respect of that Transaction.
(2) Evaluation and Understanding.
(i) It has the capacity to evaluate (internally or through independent professional
advice) the Transaction and has made its own decision to enter into the Transaction; and
(ii) It understands the terms, conditions and risks of the Transaction and is willing and
able to accept those terms and conditions and to assume those risks, financially and otherwise.
(3) Purpose. It is entering into the Transaction for the purposes of managing its borrowings or
investments, hedging its underlying assets or liabilities or in connection with a line of business.
(4) Principal. The other party is not acting as a fiduciary for or an adviser to it in respect of
the Transaction."
9) Proceedings. Bear Xxxxxxx shall not institute against or cause any other person to institute
against, or join any other person in instituting against Counterparty any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any federal or state bankruptcy or similar law
for a period of one year and one day (or, if longer, the applicable preference period) following payment in full
of the Grantor Trust Certificates and the Underlying Reference Certificates.
10) Set-off. Notwithstanding any provision of the Form Master Agreement or any other existing or future
agreement, each party irrevocably waives any and all rights it may have to set off, net, recoup or otherwise
withhold or suspend or condition payment or performance of any obligation between it and the other party hereunder
against any obligation between it and the other party under any other agreements. The provisions for Set-off set
forth in Section 6(e) of the Form Master Agreement shall not apply for purposes of this Transaction.
11) Transfer, Amendment and Assignment. No transfer, amendment, waiver, supplement, assignment or other
modification of this Transaction shall be permitted by either party unless each Rating Agency has been provided
prior notice of the same and confirms in writing (including by facsimile transmission) that it will not downgrade,
qualify, withdraw or otherwise modify its then-current rating of the Grantor Trust Certificates as a result of such
transfer, amendment, waiver, supplement, assignment or other modification; provided that upon notice to the Rating
Agencies, Bear Xxxxxxx may transfer the Transaction(s) pursuant to the Form Master Agreement and all of its
interests in such Transaction(s) and all of its Obligations in or under the Form Master Agreement to its Credit
Support Provider or any affiliates thereof, and if such transfer is to an entity other than its Credit Support
Provider, Bear Xxxxxxx will furnish to Counterparty a Guaranty of such Credit Support Provider which guarantees all
of such transferee's Obligations in the form of the Guaranty of the Credit Support Provider of Bear Xxxxxxx
delivered in connection with the Form Master Agreement (other than the name of the guaranteed party, the effective
date and the date of such guaranty). Upon such transfer, Bear Xxxxxxx will be fully released from any and all
Obligations and liabilities related to the interests assigned.
12) Limited Recourse; Non-petition. The liability of the Counterparty in relation to the Form Master Agreement
and any Confirmation hereunder is limited in recourse to assets in the Trust Fund (as defined in the Grantor Trust
Agreement) and payments of interest proceeds and principal proceeds thereon applied in accordance with the terms of
the Grantor Trust Agreement. Upon application of all of the assets in the Trust Fund (and proceeds thereon) in
accordance with the Grantor Trust Agreement, Bear Xxxxxxx shall not be entitled to take any further steps against
the Counterparty to recover any sums due but still unpaid hereunder or thereunder, all claims in respect of which
shall be extinguished.
13) Non-Reliance. Each party represents to the other party that (a) it has not received and is not relying upon any
legal, tax, regulatory, accounting or other advice (whether written or oral) of the other party regarding this
Transaction, other than representations expressly made by that other party in this Confirmation and in the Form
Master Agreement and (b) in respect of this Transaction, (i) it has the capacity to evaluate (internally or through
independent professional advice) this Transaction and has made its own decision to enter into this Transaction and
(ii) it understands the terms, conditions and risks of this Transaction and is willing to assume (financially and
otherwise) those risks. Counterparty acknowledges that Bear Xxxxxxx has advised Counterparty to consult its own
tax, accounting and legal advisors in connection with this Transaction evidenced by this Confirmation and that the
Counterparty has done so.
14) Eligible Contract Participant. Each party represents that it constitutes an "eligible contract participant" as
such term is defined in Section 1(a)12 of the Commodity Exchange Act, as amended.
15) Limitation of Liability. It is expressly understood and agreed by the parties hereto that (a) this letter
agreement is executed and delivered by the Counterparty, not individually or personally but solely as the Grantor
Trustee for the Trust, in the exercise of the powers and authority conferred and vested in it, (b) the
representation, undertakings and agreements herein made on part of the Trust are made and intended not as personal
representations, undertakings and agreements by the Counterparty but are made and intended for the purpose of
binding only the Trust, (c) nothing herein contained shall be construed as creating any liability on the
Counterparty, individually or personally, to perform any convenient either expressed or implied contained herein,
all such liability, if any, being expressly waived by the parties who are signatories to this letter agreement and
by any person claiming by, through or under such parties and (d) under no circumstances shall the Counterparty be
personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this letter
agreement.
16) Amendments to Grantor Trust Agreement and Underlying Pooling and Servicing Agreement. Without the prior
written consent of Bear Xxxxxxx, Counterparty shall not (i) amend the Grantor Trust Agreement or enter into any
amendment or supplemental agreement to the Grantor Trust Agreement if such amendment or supplemental agreement
could reasonably be expected to have a material adverse effect on the interests of Bear Xxxxxxx hereunder or under
the Grantor Trust Agreement or (ii) consent to any amendment or supplemental agreement to the Underlying Pooling
and Servicing Agreement if such amendment or supplemental agreement could reasonably be expected to have a material
adverse effect on the interests of Bear Xxxxxxx hereunder or on the interests of a holder of the Underlying
Reference Certificates under the Underlying Pooling and Servicing Agreement. Counterparty will furnish to Bear
Xxxxxxx a copy of each proposed and each executed amendment or supplemental agreement and copies of any related
Rating Agency confirmation therewith, if any.
17) Permitted Security Interest. For purposes of Section 7 of the Form Master Agreement, Bear Xxxxxxx hereby
consents to the Permitted Security Interest.
"Permitted Security Interest" means the collateral assignment by Counterparty of the Swap Collateral to
the Indenture Trustee pursuant to the Indenture, and the granting to the Indenture Trustee of a security
interest in the Swap Collateral pursuant to the Indenture.
"Swap Collateral" means all right, title and interest of Counterparty in the Form Master Agreement, each
Transaction hereunder, and all present and future amounts payable by Bear Xxxxxxx to Counterparty under
or in connection with the Form Master Agreement or any Transaction governed by the Form Master
Agreement, whether or not evidenced by a Confirmation, including, without limitation, any transfer or
termination of any such Transaction.
(18) (a) If Bear Xxxxxxx (or its guarantor) fails to have the First Trigger Required Ratings, Bear
Xxxxxxx shall (within 30 days from such failure), at its own expense, (i) transfer its rights and
obligations under the Form Master Agreement to a replacement party that has (or whose guarantor has) the
First Trigger Required Ratings, (ii) post collateral to Counterparty to secure Bear Xxxxxxx' obligations
under the Form Master Agreement in such amount that the Rating Agencies confirm in writing will be
sufficient to maintain the rating on the Grantor Trust Certificates, (iii) obtain a guarantor having the
First Trigger Required Ratings for Bear Xxxxxxx' obligations under the Form Master Agreement with a form
of guaranty satisfying the Rating Agency Condition; provided that if such form of guaranty is identical
to the Guaranty (other than the name of the guarantor, the effective date and the date of such
guaranty), satisfaction of the Rating Agency Condition shall not be required and Bear Xxxxxxx shall
provide a copy of such guaranty to each Rating Agency then rating the Grantor Trust Certificates or (iv)
take such other steps that satisfies the Rating Agency Condition.
(b) If Bear Xxxxxxx (or its guarantor) fails to have the Second Trigger Required Ratings, Bear
Xxxxxxx shall, within 10 days from such failure, at its own expense, seek to (i) transfer its rights and
obligations under the Form Master Agreement to a replacement party that has (or whose guarantor has) the
First Trigger Required Ratings, (ii) obtain a guarantor having the First Trigger Required Ratings for
Bear Xxxxxxx' obligations under the Form Master Agreement with a form of guaranty satisfying the Rating
Agency Condition; provided that if such form of guaranty is identical to the Guaranty (other than the
name of the guarantor, the effective date and the date of such guaranty), satisfaction of the Rating
Agency Condition shall not be required and Bear Xxxxxxx shall provide a copy of such guaranty to each
Rating Agency then rating the Grantor Trust Certificates or (iii) take such other steps that satisfies
the Rating Agency Condition.
As used herein:
"First Trigger Required Ratings" shall mean, with respect to any entity (a) either (i) the
unsecured, short-term debt obligations of such entity (or its Credit Support Provider) are
rated at least 'A-1' by S&P or (ii) if such entity does not have a short-term rating from S&P,
the unsecured, long-term senior debt obligations of such entity (or its Credit Support
Provider) are rated at least 'A+' by S&P, and (b) either (i) the unsecured, long-term senior
debt obligations of such entity (or its Credit Support Provider) are rated at least 'A1' by
Moody's (and if rated 'A1' by Moody's, such rating is not on watch for possible downgrade) and
the unsecured, short-term debt obligations of such entity (or its Credit Support Provider) are
rated at least 'P-1' by Moody's (and if rated 'P-1' by Moody's, such rating is not on watch for
possible downgrade and remaining on watch for possible downgrade), or (ii) if such entity (or
its Credit Support Provider) does not have a short-term debt rating from Moody's, the
unsecured, long-term senior debt obligations of such entity (or its Credit Support Provider)
are rated at least 'Aa3' by Moody's (and if rated 'Aa3' by Moody's, such rating is not on watch
for possible downgrade).
"Second Trigger Required Ratings" shall mean, with respect to any entity (a) the unsecured,
long-term senior debt obligations of such entity (or its Credit Support Provider) are rated at
least 'BBB-' by S&P, and (b) either (i) the unsecured, long-term senior debt obligations of
such entity (or its Credit Support Provider) are rated at least 'A3' by Moody's (and such
rating is not on watch for possible downgrade) and the unsecured, short-term debt obligations
of such entity (or its Credit Support Provider) are rated at least 'P-2' by Moody's (and such
rating is not on watch for possible downgrade) or (ii) if such entity (or its Credit Support
Provider) does not have a short-term rating from Moody's, the unsecured, long-term senior debt
obligations of such entity (or its Credit Support Provider) are rated at least 'A2' by Xxxxx'x.
"Rating Agency Condition" means, with respect to any particular proposed act or omission to act
hereunder that the party acting or failing to act must consult with any of Rating Agency then
providing a rating of the Grantor Trust Certificates and receive from each Rating Agency a
prior written confirmation that the proposed action or inaction would not cause a downgrade or
withdrawal of the then-current rating of the Grantor Trust Certificates.
5. Account Details and
Settlement information: Payments to Bear Xxxxxxx:
Citibank, N.A., New York
ABA Number: 000-0000-00, for the account of
Bear, Xxxxxxx Securities Corp.
Account Number: 0925-3186, for further credit to
Bear Xxxxxxx Capital Markets
Sub-account Number: 000-00000-00
Attention: Derivatives Operations
Payments to Counterparty:
Xxxxx Fargo Bank, National Association
San Francisco, CA
ABA# 000-000-000
A/C: 0000000000
Account Name: SAS Clearing
For Further Credit to: 53165101, BSMF 2007-AR5 Grantor Trust
Distribution Account
This Confirmation may be executed in several counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly sets forth the
terms of the Transaction by signing in the space provided below and returning to Bear Xxxxxxx a facsimile of the
fully-executed Confirmation to 000-000-0000. For inquiries please contact XxxxxxXxxxxxxxxxxXxxxxxxxxxxxx@xxxx.xxx.
To discuss an inquiry regarding U.S. Transactions, please contact Xxxx Xxxxxxx by telephone at 000-000-0000. For
all other inquiries please contact Derivatives Documentation by telephone at 000-0-000-0000. Originals will be
provided for your execution upon your request.
We are very pleased to have executed this Transaction with you and we look forward to completing other transactions
with you in the near future.
Very truly yours,
BEAR XXXXXXX CAPITAL MARKETS INC.
By: _________________________________
Name:
Title:
Counterparty, acting through its duly authorized signatory, hereby agrees to, accepts and confirms the terms of the
foregoing as of the Trade Date.
XXXXX FARGO BANK, NATIONAL ASSOCIATION, NOT INDIVIDUALLY, BUT SOLELY AS TRUSTEE FOR BEAR XXXXXXX
MORTGAGE FUNDING TRUST 2007-AR5
By: ________________________________
Name:
Title:
EXHIBIT D
Underlying Pooling and Servicing Agreement
(On file with the Depositor)
