STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.,
DEPOSITOR,
JPMORGAN CHASE BANK, N.A.,
TRUSTEE,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
MASTER SERVICER,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
SECURITIES ADMINISTRATOR,
and
EMC
MORTGAGE CORPORATION
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 2005
Structured Asset Mortgage Investments II Trust 2005-AR4
Mortgage Pass-Through Certificates
Series 2005-AR4
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS.......................................................1
SECTION 1.01.
DEFINITIONS....................................................1
SECTION 1.02. CALCULATION OF
LIBOR..........................................36
SECTION 1.03. CALCULATION OF ONE-YEAR
MTA...................................37
ARTICLE II CONVEYANCE OF MORTGAGE
LOANS; ORIGINAL ISSUANCE
OF
CERTIFICATES..................................................38
SECTION 2.01. CONVEYANCE OF MORTGAGE LOANS
TO TRUSTEE.......................38
SECTION 2.02. ACCEPTANCE OF TRUST FUND BY
TRUSTEE...........................40
SECTION 2.03. ASSIGNMENT OF INTEREST IN
THE MORTGAGE LOAN
PURCHASE
AGREEMENT............................................42
SECTION 2.04. SUBSTITUTION OF MORTGAGE
LOANS................................43
SECTION 2.05. ISSUANCE OF
CERTIFICATES......................................45
SECTION 2.06. REPRESENTATIONS AND
WARRANTIES CONCERNING THE DEPOSITOR.......45
SECTION 2.07. COVENANTS OF THE MASTER
SERVICER..............................46
ARTICLE III ADMINISTRATION AND SERVICING OF
MORTGAGE LOANS...................48
SECTION 3.01. MASTER
SERVICER...............................................48
SECTION 3.02. REMIC-RELATED
COVENANTS.......................................49
SECTION 3.03. MONITORING OF THE
SERVICER....................................49
SECTION 3.04. FIDELITY
BOND.................................................50
SECTION 3.05. POWER TO ACT;
PROCEDURES......................................50
SECTION 3.06. DUE-ON-SALE CLAUSES;
ASSUMPTION AGREEMENTS....................52
SECTION 3.07. RELEASE OF MORTGAGE
FILES.....................................52
SECTION 3.08. DOCUMENTS, RECORDS AND FUNDS
IN POSSESSION OF MASTER
SERVICER TO BE HELD FOR
TRUSTEE...............................53
SECTION 3.09. STANDARD HAZARD INSURANCE
AND FLOOD INSURANCE POLICIES........54
SECTION 3.10. PRESENTMENT OF CLAIMS AND
COLLECTION OF PROCEEDS..............54
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SECTION 3.11. MAINTENANCE OF THE PRIMARY
MORTGAGE INSURANCE POLICIES........54
SECTION 3.12. TRUSTEE TO RETAIN POSSESSION
OF CERTAIN INSURANCE
POLICIES AND
DOCUMENTS........................................55
SECTION 3.13. REALIZATION UPON DEFAULTED
MORTGAGE LOANS.....................55
SECTION 3.14. COMPENSATION FOR THE
SERVICER AND THE MASTER SERVICER.........55
SECTION 3.15. REO
PROPERTY..................................................56
SECTION 3.16. ANNUAL OFFICER'S CERTIFICATE
AS TO COMPLIANCE.................56
SECTION 3.17. ANNUAL INDEPENDENT
ACCOUNTANT'S SERVICING REPORT..............57
SECTION 3.18. REPORTS FILED WITH
SECURITIES AND EXCHANGE COMMISSION.........57
SECTION 3.19.
EMC...........................................................59
SECTION 3.20.
UCC...........................................................59
SECTION 3.21. OPTIONAL PURCHASE OF
DEFAULTED MORTGAGE LOANS.................59
ARTICLE IV
ACCOUNTS......................................................60
SECTION 4.01. PROTECTED
ACCOUNTS............................................60
SECTION 4.02. DISTRIBUTION
ACCOUNT..........................................61
SECTION 4.03. PERMITTED WITHDRAWALS AND
TRANSFERS FROM THE
DISTRIBUTION
ACCOUNT..........................................62
SECTION 4.04. DISTRIBUTION OF SENIOR
CARRYOVER SHORTFALL AMOUNT;
SENIOR CARRYOVER SHORTFALL RESERVE
FUND.......................64
SECTION 4.05. DISTRIBUTION OF SUBORDINATE
CARRYOVER SHORTFALL AMOUNT;
SUBORDINATE CARRYOVER SHORTFALL RESERVE
FUND..................65
SECTION 4.06. THE YIELD MAINTENANCE
ACCOUNT AND THE YIELD
MAINTENANCE
AGREEMENT.........................................66
SECTION 4.07. CLASS A-1 SUPPLEMENTAL
FUND...................................68
SECTION 4.08. CLASS A-2 SUPPLEMENTAL
FUND...................................69
ARTICLE V
CERTIFICATES.....................................................70
SECTION 5.01.
CERTIFICATES..................................................70
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SECTION 5.02. REGISTRATION OF TRANSFER AND
EXCHANGE OF CERTIFICATES.........80
SECTION 5.03. MUTILATED, DESTROYED, LOST
OR STOLEN CERTIFICATES.............84
SECTION 5.04. PERSONS DEEMED
OWNERS.........................................84
SECTION 5.05. TRANSFER RESTRICTIONS ON
RESIDUAL CERTIFICATES................85
SECTION 5.06. RESTRICTIONS ON
TRANSFERABILITY OF CERTIFICATES...............86
SECTION 5.07. ERISA
RESTRICTIONS............................................86
SECTION 5.08. RULE 144A
INFORMATION.........................................88
SECTION 5.09. APPOINTMENT OF PAYING AGENT
AND CERTIFICATE REGISTRAR.........88
ARTICLE VI PAYMENTS TO
CERTIFICATEHOLDERS...................................89
SECTION 6.01. DISTRIBUTIONS ON THE
CERTIFICATES.............................89
SECTION 6.02. ALLOCATION OF LOSSES AND
SUBSEQUENT RECOVERIES................92
SECTION 6.03.
PAYMENTS......................................................95
SECTION 6.04. STATEMENTS TO
CERTIFICATEHOLDERS..............................95
SECTION 6.05. MONTHLY
ADVANCES..............................................98
SECTION 6.06. COMPENSATING INTEREST
PAYMENTS................................99
ARTICLE VII THE MASTER
SERVICER.............................................100
SECTION 7.01. LIABILITIES OF THE MASTER
SERVICER...........................100
SECTION 7.02. MERGER OR CONSOLIDATION OF
THE MASTER SERVICER...............100
SECTION 7.03. INDEMNIFICATION OF THE
TRUSTEE, THE CUSTODIAN AND THE
SECURITIES
ADMINISTRATOR.....................................100
SECTION 7.04. LIMITATIONS ON LIABILITY OF
THE MASTER SERVICER AND OTHERS...101
SECTION 7.05. MASTER SERVICER NOT TO
RESIGN................................102
SECTION 7.06. SUCCESSOR MASTER
SERVICER....................................102
SECTION 7.07. SALE AND ASSIGNMENT OF
MASTER SERVICING......................103
ARTICLE VIII
DEFAULT.........................................................104
SECTION 8.01. "EVENT OF
DEFAULT"...........................................104
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SECTION 8.02. TRUSTEE TO ACT; APPOINTMENT
OF SUCCESSOR.....................106
SECTION 8.03. NOTIFICATION TO
CERTIFICATEHOLDERS...........................107
SECTION 8.04. WAIVER OF
DEFAULTS...........................................107
SECTION 8.05. LIST OF
CERTIFICATEHOLDERS...................................107
ARTICLE IX CONCERNING THE TRUSTEE AND
THE SECURITIES ADMINISTRATOR.........108
SECTION 9.01. DUTIES OF
TRUSTEE............................................108
SECTION 9.02. CERTAIN MATTERS AFFECTING
THE TRUSTEE AND THE
SECURITIES
ADMINISTRATOR.....................................110
SECTION 9.03. TRUSTEE AND SECURITIES
ADMINISTRATOR NOT LIABLE FOR
CERTIFICATES OR MORTGAGE
LOANS...............................112
SECTION 9.04. TRUSTEE AND SECURITIES
ADMINISTRATOR MAY OWN CERTIFICATES....113
SECTION 9.05. TRUSTEE'S AND SECURITIES
ADMINISTRATOR'S FEES AND EXPENSES...113
SECTION 9.06. ELIGIBILITY REQUIREMENTS FOR
TRUSTEE, PAYING AGENT
AND SECURITIES
ADMINISTRATOR.................................113
SECTION 9.07.
INSURANCE....................................................114
SECTION 9.08. RESIGNATION AND REMOVAL OF
THE TRUSTEE AND SECURITIES
ADMINISTRATOR................................................114
SECTION 9.09. SUCCESSOR TRUSTEE, PAYING
AGENT AND SUCCESSOR
SECURITIES
ADMINISTRATOR.....................................115
SECTION 9.10. MERGER OR CONSOLIDATION OF
TRUSTEE, PAYING AGENT OR
SECURITIES
ADMINISTRATOR.....................................116
SECTION 9.11. APPOINTMENT OF CO-TRUSTEE OR
SEPARATE TRUSTEE................116
SECTION 9.12. FEDERAL INFORMATION RETURNS
AND REPORTS TO
CERTIFICATEHOLDERS; REMIC
ADMINISTRATION.....................117
ARTICLE X
TERMINATION.....................................................120
SECTION 10.01. TERMINATION UPON REPURCHASE BY THE
DEPOSITOR OR ITS
DESIGNEE OR LIQUIDATION OF THE MORTGAGE
LOANS................120
SECTION 10.02. ADDITIONAL TERMINATION
REQUIREMENTS..........................122
ARTICLE XI MISCELLANEOUS
PROVISIONS........................................124
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SECTION 11.01. INTENT OF
PARTIES............................................124
SECTION 11.02.
AMENDMENT....................................................124
SECTION 11.03. RECORDATION OF
AGREEMENT.....................................126
SECTION 11.04. LIMITATION ON RIGHTS OF
CERTIFICATEHOLDERS...................126
SECTION 11.05. ACTS OF
CERTIFICATEHOLDERS...................................127
SECTION 11.06. GOVERNING
LAW................................................128
SECTION 11.07.
NOTICES......................................................128
SECTION 11.08. SEVERABILITY OF
PROVISIONS...................................128
SECTION 11.09. SUCCESSORS AND
ASSIGNS.......................................129
SECTION 11.10. ARTICLE AND SECTION
HEADINGS.................................129
SECTION 11.11.
COUNTERPARTS.................................................129
SECTION 11.12. NOTICE TO RATING
AGENCIES....................................129
EXHIBITS
Exhibit A-1 - Form of Class A and
Class X Certificates
Exhibit A-2 - Form of Class M
Certificates
Exhibit A-3 - Form of Class B
Certificates
Exhibit A-4 - Form of Class R
Certificates
Exhibit B -
Mortgage
Loan Schedule
Exhibit C -
[Reserved]
Exhibit D -
Request
for Release of Documents
Exhibit E -
Form of
Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1 - Form of Investment
Letter
Exhibit F-2 - Form of Rule 144A and
Related Matters Certificate
Exhibit G - Form of Custodial
Agreement
Exhibit H-1 - Countrywide Servicing
Agreement
Exhibit I -
Assignment
Agreement
Exhibit J -
Mortgage
Loan Purchase Agreement
Exhibit K -
Form of
Trustee Limited Power of Attorney
SCHEDULES
Schedule A -
Schedule
of Strike Prices and Projected Principal Balances
(Yield Maintenance Agreement)
6
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POOLING AND SERVICING AGREEMENT
Pooling and Servicing Agreement, dated as of July 1, 2005,
among
Structured Asset Mortgage Investments II
Inc., a Delaware corporation, as
depositor (the "Depositor"), JPMorgan Chase
Bank, N.A., a banking association
organized under the laws of the United
States of America, not in its individual
capacity but solely as trustee (the
"Trustee"), Wells Fargo Bank, National
Association, as master servicer (in such
capacity, the "Master Servicer") and as
securities administrator (in such capacity,
the "Securities Administrator"), and
EMC Mortgage Corporation ("EMC").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Depositor has acquired the
Mortgage Loans from EMC. On the Closing
Date, the Depositor will sell the
Mortgage Loans and certain other property
to the Trust Fund and receive in
consideration therefor Certificates
evidencing the entire beneficial ownership
interest in the Trust Fund.
The Trustee on behalf of the Trust shall make an election for
the
assets constituting REMIC I to be treated
for federal income tax purposes as a
REMIC. On the Startup Day, the REMIC I
Regular Interests will be designated
"regular interests" in such REMIC and the
Class R-I Certificate will be
designated the "residual interests" in such
REMIC.
The Trustee on behalf of the Trust shall make an election for
the
assets constituting REMIC II to be treated
for federal income tax purposes as a
REMIC. On the Startup Day, the REMIC II
Regular Certificates will be designated
"regular interests" in such REMIC and the
Class R-II Certificate will be
designated the "residual interests" in such
REMIC.
The Trustee on behalf of the Trust shall make an election for
the
assets constituting REMIC III to be treated
for federal income tax purposes as a
REMIC. On the Startup Day, the REMIC III
Regular Certificates will be designated
"regular interests" in such REMIC and the
Class R-III Certificate will be
designated the "residual interests" in such
REMIC.
The aggregate Outstanding Principal Balance of the Mortgage Loans
as of
the Cut-off Date, after application of
scheduled payments due whether or not
received, is approximately
$909,708,325.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the
Securities Administrator, EMC and the
Trustee agree as follows:
Article I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement,
the
following words and phrases, unless
otherwise expressly provided or unless the
context otherwise requires, shall have the
meanings specified in this Article.
Accepted Master Servicing Practices: With respect to any Mortgage
Loan,
as applicable, those customary mortgage
master servicing practices of prudent
institutions that master service
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mortgage loans of the same type and quality
as such mortgage loan in the
jurisdiction where the related Mortgaged
Property is located, to the extent
applicable to the Trustee or the Master
Servicer (except in its capacity as
successor to the Servicer).
Account: The Distribution Account, the Class A-1 Supplemental Fund,
the
Class A-2 Supplemental Fund, the Senior
Carryover Shortfall Reserve Fund, the
Subordinate Carryover Shortfall Reserve
Fund, the Yield Maintenance Account and
the Protected Account, as the context may
require.
Accrued Certificate Interest: For any Certificate (other than a
Residual Certificate) on any Distribution
Date, the amount of interest accrued
during the related Interest Accrual Period
at the applicable Pass-Through Rate
on the Current Principal Amount (or
Notional Amount, with respect to the Class
X-1 Certificates, the Class X-2
Certificates and the Class M-X Certificates) of
such Certificate immediately prior to such
Distribution Date, less (i) in the
case of a Senior Certificate (other than a
Residual Certificate), such
Certificate's share of (a) any Net Interest
Shortfall from the Mortgage Loans,
(b) any interest shortfall on the Mortgage
Loans resulting from the application
of the Relief Act or similar state law, (c)
any shortfalls resulting from Net
Deferred Interest on the Mortgage Loans and
(d) after the Cross-Over Date, the
interest portion of any Realized Losses on
the Mortgage Loans to the extent
allocated thereto in accordance with
Section 6.02(g), and (ii) in the case of a
Subordinate Certificate, such Certificate's
share of (a) any Net Interest
Shortfall from the Mortgage Loans, (b) any
interest shortfall on the Mortgage
Loans resulting from the application of the
Relief Act or similar state law, and
(c) shortfalls resulting from Net Deferred
Interest on the Mortgage Loans and
the interest portion of any Realized Losses
on the Mortgage Loans allocated to
that Class of Certificates, to the extent
allocated thereto in accordance with
Section 6.02(g). The Accrued Certificate
Interest on the Class X-1 Certificates
and the Class M-X Certificates on any
Distribution Date will be reduced by any
amounts necessary to fund the Senior
Carryover Shortfall Reserve Fund and the
Subordinate Carryover Reserve Fund,
respectively, on the related Distribution
Date with respect to the payment of any
Senior Carryover Shortfall Amount and
any Subordination Carryover Shortfall
Amount, as the case may be, and, until the
date that the Class A-1 Supplemental Fund
is terminated, the Accrued Certificate
Interest on the Class X-1 Certificates on
any Distribution Date will be reduced
by any amounts necessary to replenish the
Class A-1 Supplemental Fund on the
related Distribution Date, in each such
instance in the manner and priority set
forth herein. The Senior Percentage of
Prepayment Interest Shortfalls and
interest shortfalls resulting from the
application of the Relief Act or similar
state law will be allocated among the
Senior Certificates (other than the
Residual Certificates) in proportion to the
amount of Accrued Certificate
Interest that would have been allocated
thereto in the absence of such
shortfalls. The Subordinate Percentage of
Prepayment Interest Shortfalls and
interest shortfalls resulting from the
application of the Relief Act and similar
state law will be allocated among the
Subordinate Certificates in proportion to
the amount of Accrued Certificate Interest
that would have been allocated
thereto in the absence of such shortfalls.
The interest portion of Realized
Losses for the Mortgage Loans will be
allocated sequentially, in the following
order, to the Class B-6, Class B-5, Class
B-4, Class B-3, Class B-2, Class B-1,
Class M-6, Class M-5, Class M-4, Class M-3,
Class M-2, Class M-1 and Class M-X
Certificates and, following the Cross-Over
Date, the interest portion of
Realized Losses on the Mortgage Loans will
be allocated on a pro rata basis to
the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3
Certificates, the Class A-4 Certificates
and the Class X-1 Certificates. Accrued
Certificate Interest on the Certificates
(other than the Class
2
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X Certificates, the Class A-2 Certificates,
the Class A-3 Certificates and the
Residual Certificates) shall be calculated
on the basis of a 360 day year and
the actual number of days elapsed in the
related Interest Accrual Period.
Accrued Certificate Interest on the Class X
Certificates, the Class A-2
Certificates and the Class A-3 Certificates
is calculated on the basis of a
360-day year consisting of twelve 30 day
months. The Residual Certificates do
not have a Pass-Through Rate and will not
bear interest. No Accrued Certificate
Interest will be payable with respect to
any Class or Classes of Certificates
that bear interest after the Distribution
Date on which the outstanding Current
Principal Amount or Notional Amount of such
Certificate or Certificates has been
reduced to zero.
Adjustable Rate Certificates: The Class A-1 Certificates, Class
A-2
Certificates, Class A-3 Certificates, Class
A-4 Certificates, Class M-1
Certificates, Class M-2 Certificates, Class
M-3 Certificates, Class M-4
Certificates, Class M-5 Certificates, Class
M-6 Certificates, Class B-1
Certificates, Class B-2 Certificates, Class
B-3 Certificates, Class B-4
Certificates, Class B-5 Certificates and
Class B-6 Certificates.
Affiliate: As to any Person, any other Person controlling,
controlled
by or under common control with such
Person. "Control" means the power to direct
the management and policies of a Person,
directly or indirectly, whether through
ownership of voting securities, by contract
or otherwise. "Controlled" and
"Controlling" have meanings correlative to
the foregoing. The Trustee may
conclusively presume that a Person is not
an Affiliate of another Person unless
a Responsible Officer of the Trustee has
actual knowledge to the contrary.
Agreement: This Pooling and Servicing Agreement and all
amendments
hereof and supplements hereto made in
accordance with the terms herein.
Allocable Share: With respect to any Class of Subordinate
Certificates
(other than the Class M-X
Certificates):
(a) as to any
Distribution Date and amounts distributable
pursuant to clauses (1) and (4) of the
definition of Subordinate Optimal
Principal Amount, the fraction, expressed
as a percentage, the numerator of
which is the Current Principal Amount of
such Class of Certificates and the
denominator of which is the aggregate
Current Principal Amount of all Classes of
the Subordinate Certificates (other than
the Class M-X Certificates); and
(b) as to any
Distribution Date and amounts distributable
pursuant to clauses (2), (3), (5) and (6)
of the definition of Subordinate
Optimal Principal Amount, after giving
effect to the reduction of the Current
Principal Amount of the principal component
of the Class M-X Certificates on
such Distribution Date,
(1) for any Distribution Date on which the Loss and
Delinquency Test has been satisfied, as to each Class of
Subordinate
Certificates for which (x) the related Class Prepayment
Distribution
Trigger has been satisfied on such Distribution Date, the
fraction,
expressed as a percentage, the numerator of which is the
Current
Principal Amount of such Class of Certificates and the denominator
of
which is the aggregate Current Principal Amount of all such Classes
of
Subordinate Certificates for which the related Class Prepayment
Distribution Trigger has been satisfied and (y) the related
Class
3
<PAGE>
Prepayment Distribution Trigger has not been satisfied on such
Distribution Date, 0%; provided that if on a Distribution Date,
the
Current Principal Amount of any Class of Subordinate Certificates
for
which the related Class Prepayment Distribution Trigger was
satisfied
on such Distribution Date is reduced to zero, any amounts
distributed
pursuant to this clause (b)(1), to the extent of such Class's
remaining
Allocable Share, shall be distributed to the Class of
Subordinate
Certificates having the highest payment priority and to the
Subordinate
Certificates which satisfy the related Class Prepayment
Distribution
Trigger in reduction of their respective Current Principal Amounts,
in
the order of their payment priority; and
(2) for any Distribution Date on which the Loss and
Delinquency Test has not been satisfied, as to the Subordinate
Certificates, 0%; provided that on a Distribution Date, any
remaining
amounts distributed pursuant to this clause (b)(2) shall be
distributed
to the Classes of Subordinate Certificates which satisfy the
related
Class Prepayment Distribution Trigger and to the Class of
Subordinate
Certificates having the highest payment priority in reduction of
their
respective Current Principal Amounts in the order of their
payment
priority.
Applicable Credit Rating: For any long-term deposit or security,
a
credit rating of AAA in the case of S&P
and Aaa in the case of Moody's (or with
respect to investments in money market
funds, a credit rating of "AAAm" or
"AAAm-G", in the case of S&P, and the
highest rating given by Moody's for money
market funds, in the case of Moody's). For
any short-term deposit or security, a
rating of A-l+ in the case of S&P and
P-1 in the case of Moody's.
Applicable State Law: For purposes of Section 9.12(d), the
Applicable
State Law shall be (a) the law of the State
of New York and (b) such other state
law whose applicability shall have been
brought to the attention of the
Securities Administrator and the Trustee by
either (i) an Opinion of Counsel
reasonably acceptable to the Securities
Administrator and the Trustee delivered
to it by the Master Servicer or the
Depositor, or (ii) written notice from the
appropriate taxing authority as to the
applicability of such state law.
Appraised Value: With respect to any Mortgage Loan originated
in
connection with a refinancing, the
appraised value of the related Mortgaged
Property based upon the appraisal made at
the time of such refinancing or, with
respect to any other Mortgage Loan, the
amount set forth as the appraised value
of the related Mortgaged Property in an
appraisal made for the mortgage
originator in connection with its
origination of the related Mortgage Loan.
Assignment Agreement: The agreement attached hereto as Exhibit
I,
whereby the Assigned Loans (as defined
therein) and the Countrywide Servicing
Agreement were assigned to the Trustee for
the benefit of the
Certificateholders.
Assumed Final Distribution Date: December 25, 2035, or if such day
is
not a Business Day, then the next
succeeding Business Day.
Available Funds: With respect to any Distribution Date, an amount
equal
to the aggregate of the following amounts
with respect to the Mortgage Loans:
(a) all previously undistributed payments
on account of principal collections on
the Mortgage Loans (including the
4
<PAGE>
principal portion of Scheduled Payments,
Principal Prepayments and the principal
amount of Net Liquidation Proceeds and
Subsequent Recoveries on the Mortgage
Loans) and all previously undistributed
payments on account of interest
collections on the Mortgage Loans received
after the Cut-off Date and on or
prior to the related Determination Date,
(b) any Monthly Advances and
Compensating Interest Payments by the
Servicer or the Master Servicer (or by the
Trustee, as successor master servicer) with
respect to the Mortgage Loans and
such Distribution Date, (c) any other
miscellaneous amounts remitted by the
Master Servicer or the Servicer pursuant to
the Countrywide Servicing Agreement,
(d) any amounts deposited into the
Distribution Account from the Class A-1
Supplemental Fund, the Class A-2
Supplemental Fund or the Yield Maintenance
Account pursuant to this Agreement, and (e)
any amount reimbursed by the Master
Servicer for such Distribution Date in
connection with losses on certain
eligible investments, except:
(i) all payments that were due on or before the
Cut-off Date with respect to the Mortgage Loans;
(ii) all Principal Prepayments and Liquidation
Proceeds received after the applicable Prepayment Period;
(iii) all payments, other than Principal Prepayments,
that represent early receipt of Scheduled Payments due on a
date or dates subsequent to the related Due Date;
(iv) amounts received on particular Mortgage Loans as
late payments of principal or interest and respecting which,
and to the extent that, there are any unreimbursed Monthly
Advances;
(v) amounts representing Monthly Advances determined
to be Nonrecoverable Advances; and
(vi) any investment earnings on amounts on deposit in
the Distribution Account, the Yield Maintenance Account, the
Class A-1 Supplemental Fund, the Class A-2 Supplemental Fund,
the Senior Carryover Shortfall Reserve Fund and the
Subordinate Carryover Shortfall Reserve Fund, and amounts
permitted to be withdrawn (other than as a distribution of
principal, interest or Carryover Shortfall Amounts or Yield
Maintenance
Payments on the related Certificates) from the
Distribution Account, the Yield Maintenance Account, the Class
A-1 Supplemental Fund, the Class A-2 Supplemental Fund, the
Senior Carryover Shortfall Reserve Fund and the Subordinate
Carryover Shortfall Reserve Fund, and amounts to pay the
Servicing Fees or to reimburse the Servicer, the Securities
Administrator, the Trustee, the Custodian or the Master
Servicer for fees and reimbursable expenses as are due under
the Countrywide Servicing Agreement, this Agreement or the
Custodial Agreement and that have not been retained by or paid
to the Servicer, the Securities Administrator, the Trustee,
the Custodian or the Master Servicer.
5
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Average Loss Severity Percentage: With respect to any
Distribution
Date, the percentage equivalent of a
fraction, the numerator of which is the sum
of the Loss Severity Percentages for each
Mortgage Loan and the denominator of
which is the number of Mortgage Loans.
Bankruptcy Code: The
United States Bankruptcy Code, as amended, as
codified in 11 U.S.C. ss.ss.101-1330.
Bankruptcy Loss: With respect to any Mortgage Loan, any
Deficient
Valuation or Debt Service Reduction related
to such Mortgage Loan as reported by
the applicable Servicer to the Master
Servicer.
Book-Entry Certificates: Initially, all Classes of Certificates
other
than the Private Certificates and the
Residual Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or
(ii) a
day on which the New York Stock Exchange or
the Federal Reserve is closed or on
which banking institutions in New York City
or in any of the jurisdictions in
which the Trustee, the Master Servicer, the
Servicer or the Securities
Administrator is located are authorized or
obligated by law or executive order
to be closed.
Carryover Shortfall: A Senior Carryover Shortfall or
Subordinate
Carryover Shortfall, as applicable.
Carryover Shortfall Amount: A Senior Carryover Shortfall Amount or
a
Subordinate Carryover Shortfall Amount, as
applicable.
Carryover Shortfall Reserve Fund: The Senior Carryover
Shortfall
Reserve Fund or the Subordinate Carryover
Shortfall Reserve Fund, as applicable.
Certificate: Any mortgage pass-through certificate evidencing a
beneficial ownership interest in the Trust
Fund signed by the Trustee and
countersigned by the Certificate Registrar
in substantially the forms annexed
hereto as Exhibits A-1, A-2, A-3 and A-4
with the blanks therein appropriately
completed.
Certificate
Owner: Any Person who is the beneficial owner of a
Certificate registered in the name of the
Depository or its nominee.
Certificate Register:
The register maintained pursuant to Section
5.02.
Certificate Registrar: The Securities Administrator or any
successor
certificate registrar appointed
hereunder.
Certificate Registrar Office: The office of the Certificate
Registrar
located at Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 44579,
Attention: SAMI II Series 2005-AR4.
Certificateholder: A
Holder of a Certificate.
6
<PAGE>
Class: With respect to the Certificates, A-1, A-2, A-3, A-4, X-1,
X-2,
M-X, M-1, M-2, M-3, M-4, M-5, M-6, R-I,
R-II, R-III, B-1, B-2, B-3, B-4, B-5 and
B-6.
Class A Certificates: The Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates
and the Class A-4 Certificates.
Class A-1 Supplemental Fund: An "outside reserve fund" within
the
meaning of Treasury Regulation Section
1.860G-2(h), which is not an asset of any
REMIC and which is established and
maintained pursuant to Section 4.07.
Class A-2 Supplemental Fund: An "outside reserve fund" within
the
meaning of Treasury Regulation Section
1.860G-2(h), which is not an asset of any
REMIC and which is established and
maintained pursuant to Section 4.08.
Class B Certificates: The Class B-1 Certificates, the Class B-2
Certificates, the Class B-3 Certificates,
the Class B-4 Certificates, the Class
B-5 Certificates and the Class B-6
Certificates.
Class M Certificates: The Class M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates,
the Class M-4 Certificates, the Class
M-5 Certificates and the Class M-6
Certificates.
Class Prepayment Distribution Trigger: For a Class of
Subordinate
Certificates (other than the principal
component of the Class M-X Certificates)
for any Distribution Date, the Class
Prepayment Distribution Trigger is
satisfied if the fraction (expressed as a
percentage), the numerator of which is
the aggregate Current Principal Amount of
such Class of Certificates and each
Class of Certificates subordinate thereto,
if any, and the denominator of which
is the aggregate Scheduled Principal
Balance of all of the Mortgage Loans as of
the related Due Date, equals or exceeds
such percentage calculated as of the
Closing Date. If on any Distribution Date
the Current Principal Amount of any
Class of Subordinate Certificates (other
than the principal component of the
Class M-X Certificates) for which the
related Class Prepayment Distribution
Trigger was satisfied on such Distribution
Date is reduced to zero, any amounts
distributable to such Class of Certificates
pursuant to clauses (2), (3), (5)
and (6) of the definition of "Subordinate
Optimal Principal Amount," to the
extent of such Class' remaining Allocable
Share, shall be distributed to the
remaining Class or Classes of Subordinate
Certificates (other than the principal
component of the Class M-X Certificates) in
reduction of their respective
Current Principal Amounts, sequentially, in
the order of their payment priority.
Class R Certificates: The Class R-I, Class R-II and Class R-III
Certificates.
Class R-I Certificate: Any one of the Class R-I Certificates
executed
by the Trustee and authenticated by the
Certificate Registrar substantially in
the form annexed hereto as Exhibit A-4 and
evidencing an interest designated as
a "residual interest" in REMIC I for
purposes of the REMIC Provisions.
Class R-II Certificate: Any one of the Class R-II Certificates
executed
by the Trustee and authenticated by the
Certificate Registrar substantially in
the form annexed hereto as Exhibit A-4 and
evidencing an interest designated as
a "residual interest" in REMIC II for
purposes of the REMIC Provisions.
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<PAGE>
Class R-III Certificate: Any one of the Class R-III
Certificates
executed by the Trustee and authenticated
by the Certificate Registrar
substantially in the form annexed hereto as
Exhibit A-4 and evidencing an
interest designated as a "residual
interest" in REMIC III for purposes of the
REMIC Provisions.
Class X Certificates: The Class X-1 Certificates, the Class X-2
Certificates and the Class M-X
Certificates.
Closing Date: July 29,
2005.
Code: The Internal
Revenue Code of 1986, as amended.
Combined Loan-to-Value Ratio: The fraction, expressed as a
percentage,
the numerator of which is the sum of the
original principal balance of the
related Mortgage Loan at the date of
origination and the principal balance of
the related secondary financing and the
denominator of which is the lesser of
the selling price of the Mortgaged Property
and its Appraised Value.
Commission: The United
States Securities and Exchange Commission.
Compensating Interest Payment: As defined in Section 6.06.
Corporate Trust Office: The office of the Trustee at which at
any
particular time its corporate trust
business is administered, which office, at
the date of the execution of this
Agreement, is located at 4 New York Plaza, 6th
Floor, New York, New York 10004, Attention:
Worldwide Securities Services-Global
Debt, SAMI Series II 2005-AR4. With respect
to the Certificate Registrar and the
presentment of Certificates for
registration of transfer, exchange or final
payment, Wells Fargo Bank, National
Association, Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479,
Attention: Corporate Trust, SAMI II Series
2005-AR4, and for all other purposes, P.O.
Box 98, Columbia, Maryland 21046 (or
for overnight deliveries, 9062 Old
Annapolis Road, Columbia, Maryland 21045),
Attention: Corporate Trust, SAMI II Series
2005-AR4.
Corresponding Certificate: With respect to (i) REMIC I Regular
Interest
A-1, REMIC II Regular Interest A-1, (ii)
REMIC I Regular Interest A-2, REMIC II
Regular Interest A-2, (iii) REMIC I Regular
Interest A-3, REMIC II Regular
Interest A-3, (iv) REMIC I Regular Interest
A-4, REMIC II Regular Interest A-4,
(v) REMIC I Regular Interest M-1, REMIC II
Regular Interest M-1, (vi) REMIC I
Regular Interest M-2, REMIC II Regular
Interest M-2, (vii) REMIC I Regular
Interest M-3, REMIC II Regular Interest
M-3, (viii) REMIC I Regular Interest
M-4, REMIC II Regular Interest M-4, (ix)
REMIC I Regular Interest M-5, REMIC II
Regular Interest M-5, (x) REMIC I Regular
Interest M-6, REMIC II Regular
Interest M-6, (xi) REMIC I Regular Interest
B-1, REMIC II Regular Interest B-1,
(xii) REMIC I Regular Interest B-2, REMIC
II Regular Interest B-2, (xiii) REMIC
I Regular Interest B-3, REMIC II Regular
Interest B-3, (xiv) REMIC I Regular
Interest B-4, REMIC II Regular Interest
B-4, (xv) REMIC I Regular Interest B-5,
REMIC II Regular Interest B-5, (xvi) REMIC
I Regular Interest B-6, REMIC II
Regular Interest B-6, and (xvii) REMIC I
Regular Interest LT-R, REMIC II Regular
Interest MT-R.
Countrywide AAR: That certain Assignment, Assumption and
Recognition
Agreement, entered into as of July 29,
2005, among Countrywide Home Loans,
Countrywide Servicing,
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<PAGE>
EMC and the Trustee, as acknowledged and
agreed to by the Depositor, the Master
Servicer and the Securities
Administrator.
Countrywide Home Loans: Countrywide Home Loans, Inc. and its
successor
in interest.
Countrywide Servicing: Countrywide Home Loans Servicing LP and
its
successor in interest.
Countrywide Servicing Agreement: That certain Seller's Warranties
and
Servicing Agreement, dated as of September
1, 2002, by and between Countrywide
Home Loans and EMC, as amended, as attached
hereto as Exhibit H-1, as modified
pursuant to the Countrywide AAR.
Cross-Over Date: The first Distribution Date on which the
aggregate
Current Principal Amount of the Subordinate
Certificates has been reduced to
zero (after giving effect to all related
distributions on such Distribution
Date).
Current Principal Amount: With respect to any Certificate as of
any
Distribution Date, an amount equal to the
initial principal amount of such
Certificate on the Closing Date (or, with
respect to a Class of the Class X
Certificates, the initial principal amount
of the principal component of such
Certificate on the Closing Date) plus the
amount of any Net Deferred Interest on
the Mortgage Loans allocated thereto on
such Distribution Date and on previous
Distribution Dates, plus, in the case of a
Subordinate Certificate, any
Subsequent Recoveries on the Mortgage Loans
added to the Current Principal
Amount of such Certificate pursuant to
Section 6.02(h) hereof, as reduced by (i)
all amounts allocable to principal
previously distributed with respect to such
Certificate (or, with respect to a Class of
the Class X Certificates, all
amounts allocable to principal previously
distributed with respect to the
principal component of such Certificate),
(ii) the principal portion of all
Realized Losses on the Mortgage Loans
(other than Realized Losses on the
Mortgage Loans resulting from Debt Service
Reductions) previously allocated (as
applicable) to such Certificate (or, with
respect to a Class of the Class X
Certificates, previously allocated (as
applicable) to the principal component of
such Certificate), taking account of the
Loss Allocation Limitation, and (iii)
in the case of a Subordinate Certificate,
such Certificate's pro rata share, if
any, of the applicable Subordinate
Certificate Writedown Amount, as applicable,
for previous Distribution Dates. With
respect to any Class of Certificates, the
Current Principal Amount thereof will equal
the sum of the Current Principal
Amounts of all Certificates in such Class.
Notwithstanding the foregoing, solely
for purposes of giving consents,
directions, waivers, approvals, requests and
notices, the Class R-I, Class R-II and
Class R-III Certificates after the
Distribution Date on which they each
receive the distribution of the last dollar
of their respective original principal
amount shall be deemed to have Current
Principal Amounts equal to their respective
Current Principal Amounts on the day
immediately preceding such Distribution
Date.
Custodial Agreement: An agreement, dated as of the Closing Date,
among
the Depositor, the Master Servicer, the
Trustee and the Custodian, in
substantially the form of Exhibit G
hereto.
Custodian: Wells Fargo Bank, National Association, or any
successor
custodian appointed pursuant to the
provisions hereof and of the Custodial
Agreement.
9
<PAGE>
Cut-off Date: July 1,
2005.
Cut-off Date Balance:
$909,708,325.
Debt Service Reduction: Any reduction of the Scheduled Payments
which a
Mortgagor is obligated to pay with respect
to a Mortgage Loan as a result of any
proceeding under the Bankruptcy Code or any
other similar state law or other
proceeding.
Deferred Interest: The amount of interest which is deferred and
added
to the Outstanding Principal Balance of the
Mortgage Loans due to negative
amortization with respect to the Mortgage
Loans, as described in the Prospectus
Supplement.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
of
the Mortgaged Property by a court of
competent jurisdiction in an amount less
than the then-outstanding indebtedness
under such Mortgage Loan secured by such
Mortgage Property, which valuation results
from a proceeding initiated under the
Bankruptcy Code or any other similar state
law or other proceeding.
Deposit Amount: The amount of $150.00 deposited by the Depositor on
the
Closing Date into the Distribution
Account.
Depositor: Structured Asset Mortgage Investments II Inc., a
Delaware
corporation, or its successors in
interest.
Depository: The Depository Trust Company, the nominee of which is
Cede
& Co., and any successor thereto.
Depository Agreement: The meaning specified in Subsection
5.01(a)
hereof.
Depository Participant: A broker, dealer, bank or other
financial
institution or other Person for whom from
time to time the Depository effects
book-entry transfers and pledges of
securities deposited with the Depository.
Designated Depository Institution: A depository institution
(commercial
bank, federal savings bank, mutual savings
bank or savings and loan association)
or trust company (which may include the
Trustee), the deposits of which are
fully insured by the FDIC to the extent
provided by law.
Determination Date: With respect to any Distribution Date and
each
Mortgage Loan, the Determination Date as
defined in the Countrywide Servicing
Agreement.
Disqualified Organization: Any of the following: (i) the United
States,
any State or political subdivision thereof,
any possession of the United States,
or any agency or instrumentality of any of
the foregoing (other than an
instrumentality which is a corporation if
all of its activities are subject to
tax and, except for Freddie Mac or any
successor thereto, a majority of its
board of directors is not selected by such
governmental unit), (ii) any foreign
government, any international organization,
or any agency or instrumentality of
any of the foregoing, (iii) any
organization (other than certain farmers'
cooperatives described in Section 521 of
the Code)
10
<PAGE>
which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax
imposed by Section 511 of the Code on
unrelated business taxable income), (iv)
rural electric and telephone cooperatives
described in Section 1381(a)(2)(C) of
the Code, (v) any Person with respect to
which income on any Residual
Certificate is attributable to a foreign
permanent establishment or fixed base,
within the meaning of an applicable income
tax treaty, of such Person or any
other Person, (vi) any Person that does not
satisfy the requirements of United
States Treasury Department Regulation
Section 1.860E-1(c) with respect to a
transfer of a noneconomic residual
interest, as defined therein, or (vii) any
other Person so designated by the Trustee
and the Certificate Registrar based
upon an Opinion of Counsel that the holding
of an ownership interest in a
Residual Certificate by such Person may
cause any REMIC contained in the Trust
or any Person having an ownership interest
in the Residual Certificate (other
than such Person) to incur a liability for
any federal tax imposed under the
Code that would not otherwise be imposed
but for the transfer of an ownership
interest in a Residual Certificate to such
Person. The terms "United States,"
"State" and "international organization"
shall have the meanings set forth in
Section 7701 of the Code or successor
provisions.
Distribution Account: The trust account or accounts created and
maintained pursuant to Section 4.02, which
shall be denominated "Wells Fargo
Bank, National Association, as Paying
Agent, for the benefit of the registered
holders of Structured Asset Mortgage
Investments II Trust 2005-AR4, Mortgage
Pass-Through Certificates, Series 2005-AR4
- Distribution Account," and which
shall be an Eligible Account.
Distribution Account Deposit Date: The Business Day prior to
each
Distribution Date.
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 Custodian: The Securities Administrator, and its successors
in
interest as custodian for the
Depository.
Due Date: With respect to each Mortgage Loan, the date in each
month on
which its Scheduled Payment is due, if such
due date is the first day of a
month, and otherwise is deemed to be the
first day of the following month or
such other date specified in the
Countrywide Servicing Agreement. For purposes
of calculating the Net Rates of the
Mortgage Loans for the first Distribution
Date, the second preceding Due Date with
respect to the first Distribution Date
will be the Cut-off Date.
Due Period: With respect to any Distribution Date and each
Mortgage
Loan, the period commencing on the second
day of the month immediately preceding
the month in which such Distribution Date
occurs and ending at the close of
business on the first day of the month in
which such Distribution Date occurs.
Eligible Account: Any of (i) a segregated account maintained with
a
federal or state chartered depository
institution (A) the short-term obligations
of which are rated A-1+ or better by
S&P and P-1 by Moody's at the time of any
deposit therein or (B) insured by the FDIC
(to the limits established by such
Corporation), the uninsured deposits in
which account are otherwise
11
<PAGE>
secured such that, as evidenced by an
Opinion of Counsel (obtained by the Person
requesting that the account be held
pursuant to this clause (i)(B)) delivered to
the Trustee prior to the establishment of
such account, the Certificateholders
will have a claim with respect to the funds
in such account and a perfected
first priority security interest against
any collateral (which shall be limited
to Permitted Investments, each of which
shall mature not later than the Business
Day immediately preceding the Distribution
Date next following the date of
investment in such collateral, or the
Distribution Date (if such Permitted
Investment is an obligation of the
institution that maintains the Distribution
Account)) securing such funds that is
superior to claims of any other depositors
or general creditors of the depository
institution with which such account is
maintained, (ii) a segregated trust account
or accounts maintained with a
federal or state chartered depository
institution or trust company with trust
powers acting in its fiduciary capacity or
(iii) a segregated account or
accounts of a depository institution
acceptable to the Rating Agencies (as
evidenced in writing by the Rating Agencies
that use of any such account as the
Distribution Account will not have an
adverse effect on the then-current ratings
assigned to the Classes of the Certificates
then rated by the respective Rating
Agencies). Eligible Accounts may bear
interest.
EMC: EMC Mortgage
Corporation and its successor in interest.
ERISA: The Employee
Retirement Income Security Act of 1974,
as amended.
Event of Default: An
event of default described in Section 8.01.
Excess Liquidation Proceeds: To the extent that such amount is
not
required by law to be paid to the related
Mortgagor, the amount, if any, by
which the sum of any Liquidation Proceeds
with respect to a Liquidated Mortgage
Loan received in the calendar month in
which such Mortgage Loan became a
Liquidated Mortgage Loan exceeds the sum of
(i) the Scheduled Principal Balance
of such Liquidated Mortgage Loan plus (ii)
accrued interest at the Mortgage
Interest Rate from the Due Date as to which
interest was last paid or advanced
(and not reimbursed) to the related
Certificateholders up to the Due Date
applicable to the Distribution Date
immediately following the calendar month
during which such liquidation occurred plus
(iii) related Liquidation Expenses.
Exchange Act: As
defined in Section 3.18.
Fannie Mae: Fannie Mae (also known as Federal National Mortgage
Association) or any successor thereto.
FDIC: Federal Deposit
Insurance Corporation or any successor thereto.
Final Certification: The certification substantially in the form
of
Exhibit Three to the Custodial
Agreement.
Fiscal Quarter: December 1 through the last day of February, March
1
through May 31, June 1 through August 31,
or September 1 through November 30, as
applicable.
Fractional Undivided Interest: With respect to any Class of
Certificates, the fractional undivided
interest evidenced by any Certificate of
such Class of Certificates the numerator
of
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<PAGE>
which is the Current Principal Amount, or
Notional Amount in the case of the
Class X Certificates, of such Certificate
and the denominator of which is the
Current Principal Amount, or Notional
Amount in the case of the Class X
Certificates, of such Class of
Certificates. With respect to the Certificates in
the aggregate, the fractional undivided
interest evidenced by (i) each Class of
Residual Certificates will be deemed to
equal 0.25%, (ii) each Class of Class X
Certificates will be deemed to equal 1.0%
multiplied by a fraction, the
numerator of which is the Notional Amount
of such Certificate and the
denominator of which is the aggregate
Notional Amount of such respective Class
of Certificates and (iii) a Certificate of
any other Class will be deemed to
equal 96.25% multiplied by a fraction, the
numerator of which is the Current
Principal Amount of such Certificate and
the denominator of which is the
aggregate Current Principal Amount of all
the Certificates; provided, however,
the percentage in clause (iii) above shall
be increased by 1% upon the
retirement of each Class of Class X
Certificates.
Freddie Mac: Freddie Mac (also known as Federal Home Loan
Mortgage
Corporation), or any successor thereto.
Global Certificate: Any Private Certificate registered in the name
of
the Depository or its nominee, beneficial
interests in which are reflected on
the books of the Depository or on the books
of a Person maintaining an account
with such Depository (directly or as an
indirect participant in accordance with
the rules of such depository).
Gross Margin: As to each Mortgage Loan, the fixed percentage set
forth
in the related Mortgage Note and indicated
on the Mortgage Loan Schedule, which
percentage is added to the related Index on
each Interest Adjustment Date to
determine (subject to rounding, the Minimum
Lifetime Mortgage Rate, the Maximum
Lifetime Mortgage Rate and the Periodic
Rate Cap) the Mortgage Interest Rate
from such Interest Adjustment Date until
the next Interest Adjustment Date.
Holder: The Person in whose name a Certificate is registered in
the
Certificate Register, except that, subject
to Subsections 11.02(b) and 11.05(e),
solely for the purpose of giving any
consent pursuant to this Agreement, any
Certificate registered in the name of the
Depositor, the Master Servicer or the
Trustee or any Affiliate thereof shall be
deemed not to be outstanding and the
Fractional Undivided Interest evidenced
thereby shall not be taken into account
in determining whether the requisite
percentage of Fractional Undivided
Interests necessary to effect any such
consent has been obtained.
Indemnified Persons: The Trustee, the Master Servicer, the
Custodian
and the Securities Administrator and their
respective officers, directors,
agents and employees and, with respect to
the Trustee, any separate co-trustee
and its officers, directors, agents and
employees.
Independent: When used with respect to any specified Person, this
term
means that such Person (a) is in fact
independent of the Depositor or the Master
Servicer and of any Affiliate of the
Depositor or the Master Servicer, (b) does
not have any direct financial interest or
any material indirect financial
interest in the Depositor or the Master
Servicer or any Affiliate of the
Depositor or the Master Servicer and (c) is
not connected with the Depositor or
the Master Servicer or any Affiliate of the
Depositor or the Master Servicer as
an officer, employee, promoter,
underwriter, trustee, partner, director or
person performing similar functions.
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<PAGE>
Index: The index, if any, specified in a Mortgage Note by reference
to
which the related Mortgage Interest Rate
will be adjusted from time to time.
Individual Certificate: Any Private Certificate registered in the
name
of the Holder other than the Depository or
its nominee.
Initial Certification: The certification substantially in the form
of
Exhibit One to the Custodial Agreement.
Institutional Accredited Investor: Any Person meeting the
requirements
of Rule 501(a)(l), (2), (3) or (7) of
Regulation D under the Securities Act or
any entity all of the equity holders in
which come within such paragraphs.
Insurance Policy: With respect to any Mortgage Loan, any
standard
hazard insurance policy, flood insurance
policy or title insurance policy.
Insurance Proceeds: Amounts paid by the insurer under any
Primary
Mortgage Insurance Policy or Insurance
Policy covering any Mortgage Loan or
Mortgaged Property, other than amounts
required to be paid over to the related
Mortgagor pursuant to law or the related
Mortgage Note or Security Instrument,
and other than amounts used to repair or
restore the related Mortgaged Property
or to reimburse insured expenses, including
the Servicer's costs and expenses
incurred in connection with presenting
claims under the related Insurance
Policies.
Interest Accrual Period: With respect to each Distribution Date,
for
each Class of Certificates (other than the
Residual Certificates and the
Subordinate Certificates), the calendar
month preceding the month in which such
Distribution Date occurs. With respect to
each Distribution Date and the
Subordinate Certificates, the period
commencing on the Distribution Date of the
preceding calendar month (or in the case of
the first Distribution Date, the
Closing Date) and ending on the day prior
to the related Distribution Date. The
Residual Certificates shall not bear
interest.
Interest Adjustment Date: With respect to a Mortgage Loan, the
date, if
any, specified in the related Mortgage Note
on which the Mortgage Interest Rate
is subject to adjustment.
Interest Determination Date: With respect to each Distribution Date
and
the Adjustable Rate Certificates, the
second LIBOR Business Day immediately
preceding the commencement of the related
Interest Accrual Period.
Interest Shortfall: With respect to any Distribution Date and
each
Mortgage Loan that during the related
Prepayment Period was the subject of a
Principal Prepayment or constitutes a
Relief Act Mortgage Loan, an amount
determined as follows:
(a) Partial Principal
Prepayments received during the
relevant Prepayment Period: The difference
between (i) one month's interest at
the applicable Net Rate on the amount of
such prepayment and (ii) the amount of
interest for the calendar month of such
prepayment (adjusted to the applicable
Net Rate) received at the time of such
prepayment;
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<PAGE>
(b) Principal
Prepayments in full received during the
relevant Prepayment Period: The difference
between (i) one month's interest at
the applicable Net Rate on the Scheduled
Principal Balance of such Mortgage Loan
immediately prior to such prepayment and
(ii) the amount of interest for the
calendar month of such prepayment (adjusted
to the applicable Net Rate) received
at the time of such prepayment; and
(c) Relief Act
Mortgage Loans: As to any Relief Act
Mortgage Loan, the excess of (i) 30 days'
interest (or, in the case of a
Principal Prepayment in full, interest to
the date of prepayment) on the
Scheduled Principal Balance thereof (or, in
the case of a Principal Prepayment
in part, on the amount so prepaid) at the
related Net Rate over (ii) 30 days'
interest (or, in the case of a Principal
Prepayment in full, interest to the
date of prepayment) on such Scheduled
Principal Balance (or, in the case of a
Principal Prepayment in part, on the amount
so prepaid) at the Net Rate required
to be paid by the Mortgagor as limited by
application of the Relief Act or
similar state laws.
Interim Certification: The certification substantially in the form
of
Exhibit Two to the Custodial Agreement.
Investment Letter: The letter to be furnished by each
Institutional
Accredited Investor which purchases any of
the Private Certificates in
connection with such purchase,
substantially in the form set forth as Exhibit
F-1 hereto.
Lender-Paid PMI Rate: With respect to any Mortgage Loan covered by
a
lender-paid Primary Mortgage Insurance
Policy, the premium to be paid by the
Servicer out of interest collections on the
related Mortgage Loan, as stated in
the Mortgage Loan Schedule.
LIBOR: With respect to any Distribution Date, the arithmetic mean
of
the London interbank offered rate
quotations for one-month U.S. dollar deposits,
expressed on a per annum basis, determined
in accordance with Section 1.02.
LIBOR Business Day: A day on which banks are open for dealing
in
foreign currency and exchange in London,
England and New York City.
Liquidated Mortgage Loan: With respect to any Distribution Date,
a
defaulted Mortgage Loan that has been
liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's
sale or other realization as provided
by applicable law governing the real
property subject to the related Mortgage
and any security agreements and as to which
the Servicer has certified (in
accordance with Section 3.07) in the
related Prepayment Period that it has
received all amounts it expects to receive
in connection with such liquidation.
Liquidation Date: With respect to any Liquidated Mortgage Loan,
the
date on which the Servicer has certified
that such Mortgage Loan has become a
Liquidated Mortgage Loan.
Liquidation Expenses: With respect to a Mortgage Loan in
liquidation,
unreimbursed expenses paid or incurred by
or for the account of the Servicer or
the Master Servicer in connection with the
liquidation of such Mortgage Loan and
the related Mortgaged Property, such
expenses including (a) property protection
expenses, (b) property sales expenses, (c)
foreclosure
15
<PAGE>
and sale costs, including court costs and
reasonable attorneys' fees, and (d)
similar expenses reasonably paid or
incurred in connection with the liquidation
of a Mortgage Loan.
Liquidation Proceeds: Amounts received by the Servicer in
connection
with the liquidation of a defaulted
Mortgage Loan, whether through trustee's
sale, foreclosure sale, Insurance Proceeds,
condemnation proceeds or otherwise.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the
fraction,
expressed as a percentage, the numerator of
which is the principal balance of
the related Mortgage Loan at origination
and the denominator of which is the
Original Value of the related Mortgaged
Property.
Loss Allocation Limitation: The meaning specified in Section
6.02(c)
hereof.
Loss and Delinquency Test: On any Distribution Date, the Loss
and
Delinquency Test is satisfied if, as of the
last day of the month preceding such
Distribution Date, (A) the aggregate
Scheduled Principal Balance of the Mortgage
Loans delinquent 60 days or more (including
for this purpose any such Mortgage
Loans in foreclosure and Mortgage Loans
with respect to which the related
Mortgaged Property has been acquired by the
Trust), averaged over the last six
months, as a percentage of the aggregate
Current Principal Amount of the
Subordinate Certificates, does not exceed
50%; and (B) cumulative Realized
Losses on the Mortgage Loans do not exceed
(a) 30% of the Original Subordinate
Principal Balance if such Distribution Date
occurs between and including August
2015 and July 2016, (b) 35% of the Original
Subordinate Principal Balance if
such Distribution Date occurs between and
including August 2016 and July 2017,
(c) 40% of the Original Subordinate
Principal Balance if such Distribution Date
occurs between and including August 2017
and July 2018, (d) 45% of the Original
Subordinate Principal Balance if such
Distribution Date occurs between and
including August 2018 and July 2019, and
(e) 50% of the Original Subordinate
Principal Balance if such Distribution Date
occurs on or after August 25, 2019.
Loss Severity Percentage: With respect to any Distribution Date,
the
percentage equivalent of a fraction, the
numerator of which is the amount of
Realized Losses incurred on a Mortgage Loan
and the denominator of which is the
Scheduled Principal Balance of such
Mortgage Loan immediately prior to the
liquidation of such Mortgage Loan.
Lost Notes: The original Mortgage Notes that have been lost, as
indicated on the Mortgage Loan
Schedule.
Margin: With respect to the Class A-1, Class A-2, Class A-3, Class
A-4,
Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class B-1,
Class B-2, Class B-3, Class B-4, Class B-5
and Class B-6 Certificates, initially
0.310%, 2.300%, 1.400%, 0.430%, 0.530%,
0.580%, 0.630%, 0.750%, 0.770%, 0.820%,
1.400%, 1.550%, 2.100%, 2.150%, 2.150% and
2.150%, respectively, per annum, and
starting on the first Distribution Date
after the first possible Optional
Termination Date and on each Distribution
Date thereafter, 0.620%, 2.300%,
1.400%, 0.860%, 0.795%, 0.870%, 0.945%,
1.125%, 1.155%, 1.230%, 2.100%, 2.325%,
3.150%, 3.225%, 3.225% and 3.225%,
respectively, per annum.
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Master Servicer: As of the Closing Date, Wells Fargo Bank,
National
Association and, thereafter, its respective
successors in interest who meet the
qualifications of a successor Master
Servicer as set forth in this Agreement.
Master Servicer Certification: A written certification covering
servicing of the Mortgage Loans by the
Servicer and signed by an officer of the
Master Servicer that complies with (i) the
Sarbanes-Oxley Act of 2002, as
amended from time to time, and (ii) the
February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of
the Securities and Exchange Commission
Regarding Compliance by Asset-Backed
Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time,
provided that if after the Closing Date
(a) the Sarbanes-Oxley Act of 2002 is
amended, (b) the Statement referred to in
clause (ii) is modified or superceded by
any subsequent statement, rule or
regulation of the Commission or any
statement of a division thereof, or (c) any
future releases, rules and regulations are
published by the Commission from time
to time pursuant to the Sarbanes-Oxley Act
of 2002, which in any such case
affects the form or substance of the
required certification and results in the
required certification being, in the
reasonable judgment of the Master Servicer,
materially more onerous than the form of
the required certification as of the
Closing Date, the Master Servicer
Certification shall be as agreed to by the
Master Servicer and the Depositor following
a negotiation in good faith to
determine how to comply with any such new
requirements.
Master Servicing Compensation: The meaning specified in Section
3.14.
Maximum Lifetime Mortgage Rate: As to each Mortgage Loan, the rate,
if
any, set forth in the related Mortgage Note
and indicated on the Mortgage Loan
Schedule, that is the maximum level to
which a Mortgage Interest Rate can adjust
in accordance with its terms, regardless of
changes in the applicable Index.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation
organized and existing under the laws of
the State of Delaware, and any
successor thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans
registered
with MERS on the MERS(R) System.
Minimum Lifetime Mortgage Rate: As to each Mortgage Loan, the rate,
if
any, set forth in the related Mortgage Note
and indicated on the Mortgage Loan
Schedule, that is the minimum level to
which a Mortgage Interest Rate can adjust
in accordance with its terms, regardless of
changes in the applicable Index.
MOM Loan: With respect to any Mortgage Loan, MERS acting as the
mortgagee of such Mortgage Loan, solely as
nominee for the originator of such
Mortgage Loan and its successors and
assigns, at the origination thereof, or as
nominee for any subsequent assignee of the
originator pursuant to an assignment
of mortgage to MERS.
Monthly Advance: The aggregate of all payments of principal and
interest, net of the Servicing Fee, that
were due during the related Due Period
on the Mortgage Loans serviced by
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<PAGE>
the Servicer and that were delinquent on
the related Due Date (other than
shortfalls in interest due to the
application of the Relief Act or similar state
law).
Monthly Payment: With respect to any Mortgage Loan and any month,
the
scheduled payment or payments of principal
and interest due during such month on
such Mortgage Loan which either is payable
by a Mortgagor in such month under
the related Mortgage Note, or in the case
of an REO Property, would otherwise
have been payable under the related
Mortgage Note.
Moody's: Moody's
Investors Service, Inc. and its successor in
interest.
Mortgage File: The mortgage documents listed in Section 2.01(b)
pertaining to a particular Mortgage Loan
and any additional documents required
to be added to the Mortgage File pursuant
to this Agreement or the Mortgage Loan
Purchase Agreement.
Mortgage Interest Rate: The annual rate at which interest accrues
from
time to time on any Mortgage Loan pursuant
to the related Mortgage Note, which
rate is equal to the "Mortgage Interest
Rate" set forth with respect thereto on
the Mortgage Loan Schedule.
Mortgage Loan: A Mortgage Loan transferred and assigned to the
Trustee
pursuant to Section 2.01 or Section 2.04
and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule
attached hereto as Exhibit B,
including a mortgage loan the property
securing which has become an REO
Property. Any Mortgage Loan that was
intended by the parties hereto to be
transferred to the Trust Fund as indicated
by the Mortgage Loan Schedule which
is in fact not so transferred for any
reason including, without limitation, a
breach of a representation or warranty with
respect thereto, shall continue to
be a Mortgage Loan hereunder until the
Repurchase Price with respect thereto has
been paid to the Trust Fund.
Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase
Agreement,
dated as of July 29, 2005, between EMC, as
seller, and Structured Asset Mortgage
Investments II Inc., as purchaser, and all
amendments thereof and supplements
thereto, attached hereto as Exhibit J.
Mortgage Loan Schedule: The schedule attached hereto as Exhibit B,
as
amended from time to time to reflect the
repurchase or substitution of Mortgage
Loans pursuant to this Agreement or the
Mortgage Loan Purchase Agreement.
Mortgage Note: The originally executed note or other evidence of
the
indebtedness of a Mortgagor under the
related Mortgage Loan.
Mortgaged Property: Land and improvements securing the indebtedness
of
a Mortgagor under the related Mortgage Loan
or, in the case of REO Property,
such REO Property.
Mortgagor: The obligor
on a Mortgage Note.
Net Deferred Interest: On any Distribution Date, Deferred Interest
on
the Mortgage Loans during the related Due
Period net of Principal Prepayments in
full, partial Principal Prepayments, Net
Liquidation Proceeds, Repurchase
Proceeds and Scheduled Principal, in that
order, included in the related
Available Funds for such Distribution Date
and available to be distributed on
the related Certificates on that
Distribution Date.
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<PAGE>
Net Interest Shortfall: With respect to any Distribution Date,
Prepayment Interest Shortfalls, if any, for
such Distribution Date net of
Compensating Interest Payments made with
respect to such Distribution Date.
Net Liquidation Proceeds: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of (i) Liquidation
Expenses which are payable therefrom
to the Servicer in accordance with the
Countrywide Servicing Agreement or this
Agreement, (ii) unreimbursed advances by
the Servicer and Monthly Advances made
with respect to such Mortgage Loan and the
related Mortgaged Property, and (iii)
any other amounts payable to the Servicer
under the Countrywide Servicing
Agreement.
Net Rate: With respect to each Mortgage Loan, the Mortgage
Interest
Rate (to the extent applicable, as adjusted
to an effective rate reflecting the
accrual of interest on an actual/360 basis)
less the Servicing Fee Rate, the
Master Servicing Fee Rate and the
Lender-Paid PMI Rate, if any, attributable
thereto, in each case expressed as per
annum rate.
Net Rate Cap:
The weighted average of the Net Rates of the Mortgage
Loans (to the extent applicable, as
adjusted to an effective rate reflecting the
accrual of interest on an actual/360
basis).
Nonrecoverable Advance: Any advance or Monthly Advance (i) which
was
previously made or is proposed to be made
by the Master Servicer, the Trustee
(as successor Master Servicer) or the
Servicer and (ii) which, in the good faith
judgment of the Master Servicer, the
Trustee or the Servicer, as the case may
be, will not or, in the case of a proposed
advance or Monthly Advance, would
not, be ultimately recoverable by the
Master Servicer, the Trustee (as successor
Master Servicer) or the Servicer from
Liquidation Proceeds, Insurance Proceeds
or future payments on the Mortgage Loan for
which such advance or Monthly
Advance was made or is proposed to be
made.
Notional Amount: On any Distribution Date, the Notional Amount of
the
Class X-1 Certificates is equal to the sum
of the aggregate Current Principal
Amount of the Class A-1 and Class A-4
Certificates and the Current Principal
Amount of the principal component of the
Class X-1 Certificates (before taking
into account the payment of principal on
such Classes of Certificates (or, in
the case of the Class X-1 Certificates, the
payment of principal on the
principal component of such Class of
Certificates) on such Distribution Date).
On any Distribution Date, the Notional
Amount of the Class X-2 Certificates is
equal to the sum of the aggregate Current
Principal Amount of the Class A-2 and
Class A-3 Certificates and the Current
Principal Amount of the principal
component of the Class X-2 Certificates
(before taking into account the payment
of principal on such Classes of
Certificates (or, in the case of the Class X-2
Certificates, the payment of principal on
the principal component of such Class
of Certificates) on such Distribution
Date). On any Distribution Date, the
Notional Amount of the Class M-X
Certificates is equal to the sum of the
aggregate Current Principal Amount of the
Class M Certificates and the Class B
Certificates and the Current Principal
Amount of the principal component of the
Class M-X Certificates (before taking into
account the payment of principal on
such Classes of Certificates (or, in the
case of the Class M-X Certificates, the
payment of principal on the principal
component of such Class of Certificates)
on such Distribution Date).
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<PAGE>
Offered Certificate: Any Senior Certificate or any Offered
Subordinate
Certificate.
Offered Subordinate Certificates: The Class M-X, Class M-1, Class
M-2,
Class M-3, Class M-4, Class M-5, Class M-6,
Class B-1, Class B-2 and Class B-3
Certificates.
Officer's Certificate: A certificate signed by the Chairman of
the
Board, the Vice Chairman of the Board, the
President or a Vice President or
Assistant Vice President or other
authorized officer of the Master Servicer or
the Depositor, as applicable, and delivered
to the Trustee, as required by this
Agreement.
One-Month LIBOR: A per annum rate equal to the average of
interbank
offered rates for one-month U.S.
dollar-denominated deposits in the London
market based on quotations of major banks
as published in The Wall Street
Journal and most recently available as of
the time specified in the related
Mortgage Note.
One-Year MTA: A per annum rate equal to the twelve-month moving
average
monthly yield on United States Treasury
Securities adjusted to a constant
maturity of one year as published by the
Federal Reserve Board in the Federal
Reserve Statistical Release "Selected
Interest Rates (H.15)," determined by
averaging the monthly yields for the most
recently available twelve months.
Opinion of Counsel: A written opinion of counsel who is or are
acceptable to each addressee of such
opinion and who, unless required to be
Independent (an "Opinion of Independent
Counsel"), may be internal counsel for
EMC, the Master Servicer or the
Depositor.
Optional Termination Date: Any Distribution Date on or after which
the
Scheduled Principal Balance (before giving
effect to distributions to be made on
such Distribution Date) of the Mortgage
Loans is less than or equal to 10% of
the Cut-off Date Balance.
Original Subordinate Principal Balance: The aggregate Current
Principal
Amount of the Subordinate Certificates as
of the Closing Date.
Original Value: The lesser of (i) the Appraised Value or (ii) the
sales
price of a Mortgaged Property at the time
of origination of a Mortgage Loan,
except if either clause (i) or clause (ii)
is unavailable, then the other may be
used to determine the Original Value, or if
both clauses (i) and (ii) are
unavailable, then Original Value may be
determined from other sources reasonably
acceptable to the Depositor.
Outstanding Mortgage Loan: With respect to any Due Date, a
Mortgage
Loan with a Scheduled Principal Balance
greater than zero which, prior to such
Due Date, was not the subject of a
Principal Prepayment in full, did not become
a Liquidated Mortgage Loan and was not
purchased or replaced.
Outstanding Principal Balance: As of the time of any determination,
the
principal balance of a Mortgage Loan
remaining to be paid by the Mortgagor, or,
in the case of an REO Property, the
principal balance of the related Mortgage
Loan remaining to be paid by the Mortgagor
at the time such property was
acquired by the Trust Fund less any Net
Liquidation Proceeds with respect
thereto to the extent applied to
principal.
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<PAGE>
Pass-Through Rate: As to each Class of Certificates (other than
the
Residual Certificates) and the REMIC I
Regular Interests and the REMIC II
Regular Interests, the rate of interest
determined as provided with respect
thereto, in Section 5.01(c). The Residual
Certificates do not have a
Pass-Through Rate and shall not bear
interest.
Paying Agent: The Securities Administrator or any successor
paying
agent appointed hereunder.
Periodic Rate Cap: As to each Mortgage Loan, the rate, if any,
set
forth in the related Mortgage Note and
indicated on the Mortgage Loan Schedule,
that is the maximum adjustment that can be
made to the Mortgage Interest Rate on
each Interest Adjustment Date in accordance
with its terms, regardless of
changes in the applicable Index.
Permitted Investments: Any one or more of the following obligations
or
securities held in the name of the Trustee
for the benefit of the
Certificateholders:
(i) direct obligations
of, and obligations the timely payment
of which are fully guaranteed by the United States of America or
any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of
the
United States of America;
(ii) (a) demand or time deposits, federal funds or bankers'
acceptances (which shall each have a maturity of not more than 90
days
and, in the case of bankers' acceptances, shall in no event have
an
original maturity of more than 365 days or a remaining maturity of
more
than 30 days) issued by any depository institution or trust
company
incorporated under the laws of the United States of America or
any
state thereof (including the Trustee or the Master Servicer or
its
Affiliates acting in its commercial banking capacity) and subject
to
supervision and examination by federal and/or state banking
authorities, provided that the commercial paper and/or the
short-term
debt rating and/or the long-term unsecured debt obligations of
such
depository institution or trust company at the time of such
investment
or contractual commitment providing for such investment have
the
Applicable Credit Rating or better from each Rating Agency and (b)
any
other demand or time deposit or certificate of deposit that is
fully
insured by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued
or
guaranteed by an agency or instrumentality of the United States
of
America, the
obligations of which are backed by the full faith and
credit of the United States of America, in either case entered
into
with a depository institution or trust company (acting as
principal)
described in clause (ii)(a) above where the Trustee holds the
security
therefor; provided that such repurchase obligations shall have
a
remaining maturity of not more than 365 days;
(iv) securities bearing interest or sold at a discount issued
by any corporation (including the Trustee or the Master Servicer or
its
Affiliates) incorporated under the laws of the United States of
America
or any state thereof that have the Applicable Credit Rating or
better
from each Rating Agency at the time of such investment or
contractual
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<PAGE>
commitment providing for such investment; provided, however,
that
securities issued by any particular corporation will not be
Permitted
Investments to the extent that investments therein will cause the
then
outstanding principal amount of securities issued by such
corporation
and held as part of the Trust to exceed 10% of the aggregate
Outstanding Principal Balances of all the Mortgage Loans and
Permitted
Investments held as part of the Trust;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on
demand
or on a specified date not more than one year after the date of
issuance thereof) having the Applicable Credit Rating or better
from
each Rating Agency at the time of such investment; provided, that
such
commercial paper shall have a remaining maturity of not more than
365
days;
(vi) a Reinvestment Agreement issued by any bank, insurance
company or other corporation or entity;
(vii) any other demand, money market or time deposit,
obligation, security or investment as may be acceptable to each
Rating
Agency as evidenced in writing by each Rating Agency to the
Trustee;
and
(viii) interests in any money market fund (including any such
fund managed or advised by the Trustee or the Master Servicer or
any
affiliate thereof) which at the date of acquisition of the
interests in
such fund and throughout the time such interests are held in such
fund
has the highest
applicable short term rating by each Rating Agency
rating such funds or such lower rating as will not result in
the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each Rating Agency, as evidenced in writing;
provided,
however, that no instrument or security shall be a Permitted
Investment
if such instrument or security evidences a right to receive
only
interest payments with respect to the obligations underlying
such
instrument or if such security provides for payment of both
principal
and interest with a yield to maturity in excess of 120% of the
yield to
maturity at par or if such instrument or security is purchased at
a
price greater
than par; provided, further, that, if rated, any such
obligation or security shall not have an "r" highlighter affixed to
its
rating.
Permitted Transferee: Any Person other than a Disqualified
Organization
or an "electing large partnership" (as
defined by Section 775 of the Code).
Person: Any individual, corporation, partnership, joint
venture,
association, limited liability company,
joint-stock company, trust,
unincorporated organization or government
or any agency or political subdivision
thereof.
Physical Certificates: The Residual Certificates and the
Private
Certificates.
Prepayment Charge: With respect to any Mortgage Loan, the charges
or
premiums, if any, due in connection with a
full or partial prepayment of such
Mortgage Loan in accordance with the terms
of the related Mortgage Note.
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<PAGE>
Prepayment Interest Shortfalls: With respect to any Distribution
Date,
for each Mortgage Loan that was the subject
of a partial Principal Prepayment or
a Principal Prepayment in full during the
related Prepayment Period, the amount,
if any, by which (i) one month's interest
at the applicable Net Rate on the
Scheduled Principal Balance of such
Mortgage Loan immediately prior to such
prepayment, or, in the case of a partial
Principal Prepayment, on the amount of
such prepayment, exceeds (ii) the amount of
interest paid or collected in
connection with such Principal Prepayment
less the sum of (a) any Prepayment
Charges relating to such Mortgage Loan and
(b) the Servicing Fee.
Prepayment Period: As to any Distribution Date and the Mortgage
Loans
serviced by the Servicer, the prepayment
period specified in the Countrywide
Servicing Agreement.
Primary Mortgage Insurance Policy: Any primary mortgage
guaranty
insurance policy issued in connection with
a Mortgage Loan which provides
compensation to a Mortgage Note holder in
the event of default by the obligor
under such Mortgage Note or the related
Security Instrument, if any, or any
replacement policy therefor through the
related Interest Accrual Period for such
Class relating to a Distribution Date.
Principal Prepayment: Any payment (whether partial or full) or
other
recovery of (or proceeds with respect to)
principal on a Mortgage Loan which is
received in advance of its scheduled Due
Date to the extent that it is not
accompanied by an amount as to interest
representing scheduled interest due on
any date or dates in any month or months
subsequent to the month of prepayment,
including Insurance Proceeds and Repurchase
Proceeds, but excluding the
principal portion of Net Liquidation
Proceeds received at the time a Mortgage
Loan becomes a Liquidated Mortgage
Loan.
Private
Certificates: Any Class B-4, Class B-5 or Class B-6
Certificate.
Projected Principal Balance: For each specified Distribution Date,
as
set forth on Schedule A to this
Agreement.
Prospectus: The Prospectus, dated December 20, 2004, relating to
the
offering of the Offered Certificates.
Prospectus Supplement: The Prospectus Supplement, dated July 27,
2005,
relating to the offering of the Offered
Certificates.
Protected Account: An account or accounts established and
maintained
for the benefit of Certificateholders by
the Servicer with respect to the
Mortgage Loans and with respect to REO
Property serviced by the Servicer
pursuant to the Countrywide Servicing
Agreement, and which is an Eligible
Account.
QIB: A Qualified
Institutional Buyer as defined in Rule 144A
promulgated under the Securities Act.
Qualified Insurer: Any insurance company duly qualified as such
under
the laws of the state or states in which
the related Mortgaged Property or
Mortgaged Properties is or are located,
duly authorized and licensed in such
state or states to transact the type of
insurance business in
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<PAGE>
which it is engaged and approved as an
insurer by the Master Servicer, so long
as its claims-paying ability is acceptable
to the Rating Agencies for
pass-through certificates having the same
rating as the Certificates rated by
the Rating Agencies as of the Closing
Date.
Rating Agencies: Each of S&P and Moody's. If any such
organization or
its successor is no longer in existence,
"Rating Agency" shall be a nationally
recognized statistical rating organization,
or other comparable Person,
designated by the Depositor, notice of
which designation shall be given to the
Trustee. References herein to a given
rating category of a Rating Agency shall
mean such rating category without giving
effect to any modifiers.
Realized Loss: With respect to (i) a Mortgage Loan, a Bankruptcy
Loss,
and (ii) a Liquidated Mortgage Loan, an
amount (not less than zero nor greater
than the Scheduled Principal Balance of
such Mortgage Loan) equal to (x) the
Outstanding Principal Balance of such
Liquidated Mortgage Loan plus accrued and
unpaid interest thereon at the related
Mortgage Interest Rate through the last
day of the month of such liquidation, less
(y) the Net Liquidation Proceeds with
respect to such Liquidated Mortgage Loan
and the related Mortgaged Property that
are allocated to principal. In addition, to
the extent the Paying Agent receives
from the Servicer Subsequent Recoveries
with respect to any Mortgage Loan, the
amount of the Realized Loss with respect to
that Mortgage Loan will be reduced
to the extent such recoveries are applied
to reduce the Current Principal Amount
of any Class or Classes of Certificates
(other than the Residual Certificates)
on any Distribution Date. As to any
Mortgage Loan which has become the subject
of a Deficient Valuation, if the principal
amount due under the related Mortgage
Note has been reduced, then "Realized Loss"
is the difference between the
principal balance of such Mortgage Loan
outstanding immediately prior to such
Deficient Valuation and the principal
balance of such Mortgage Loan as reduced
by the Deficient Valuation.
Record Date: With
respect to each Distribution Date and each Class of
Certificates (other than the Residual
Certificates, the Class A-1 Certificates,
the Class A-4 Certificates and the
Subordinate Certificates), the close of
business on the last Business Day of the
month next preceding the month in which
the related Distribution Date occurs. With
respect to each Distribution Date and
the Class A-1 Certificates, the Class A-4
Certificates and the Subordinate
Certificates, the 24th day of the month of
such Distribution Date. With respect
to the Residual Certificates, the Closing
Date.
Reinvestment Agreements: One or more reinvestment agreements,
acceptable to the Rating Agencies, from a
bank, insurance company or other
corporation or entity (including the
Trustee).
Relief Act: The
Servicemembers' Civil Relief Act or similar state law.
Relief Act Mortgage Loan: Any Mortgage Loan as to which the
Scheduled
Payment thereof has been reduced due to the
application of the Relief Act or
similar state laws.
REMIC: A real estate mortgage investment conduit, as defined in
the
Code.
REMIC I: That group of assets contained in the Trust Fund
designated as
a REMIC consisting of (i) all of the
Depositor's right, title and interest in
and to the Mortgage Loans, the related
Mortgage Notes, Mortgages and other
related documents, including all interest
and
24
<PAGE>
principal due after the Cut-off Date with
respect to the Mortgage Loans, but
excluding any payments of principal or
interest due on or prior to the Cut-off
Date with respect to the Mortgage Loans,
(ii) such assets relating to the
Mortgage Loans as from time to time may be
held in the Protected Accounts, (iii)
any REO Property relating to the Mortgage
Loans, and any revenues received
thereon, (iv) the rights of the Depositor
under the Mortgage Loan Purchase
Agreement, (v) the rights with respect to
the Countrywide Servicing Agreement,
to the extent assigned to the Trustee, (vi)
the rights of the Depositor with
respect to the Yield Maintenance Agreement
and the Assignment Agreement, (vii)
such funds or assets relating to the
Mortgage Loans as from time to time are
credited in the Distribution Account (or
are required by the terms of this
Agreement to be credited to the
Distribution Account) and belonging to the Trust
Fund (exclusive of the Class A-1
Supplemental Fund, the Class A-2 Supplemental
Fund, the Senior Carryover Shortfall
Reserve Fund, the Subordinate Carryover
Shortfall Reserve Fund, and the Yield
Maintenance Account), (viii) the rights of
the Trustee under all insurance policies
required to be maintained pursuant to
this Agreement, and any amounts paid or
payable by the related insurer under any
such insurance policy (to the extent the
related mortgagee has a claim thereto),
and (ix) any proceeds of the foregoing.
REMIC I Interests: The REMIC I Regular Interests and the Class
R-I
Certificates.
REMIC I Regular Interests: The REMIC I Regular Interests, with
such
terms as described in Section 5.01(c).
REMIC I Subordinated Balance Ratio: The ratio among the
Uncertificated
Principal Balances of each of the REMIC I
Regular Interests ending with the
designation "A", equal to the ratio
between, with respect to each such REMIC I
Regular Interest, the excess of (x) the
aggregate Scheduled Principal Balance of
the Mortgage Loans over (y) the aggregate
Current Principal Amount of the Senior
Certificates (other than the Residual
Certificates).
REMIC II: That group of assets contained in the Trust Fund
designated
as a REMIC consisting of the REMIC I
Regular Interests.
REMIC II Interests: The REMIC II Regular Interests and the Class
R-II
Certificates.
REMIC II Regular Interests: The REMIC II Regular Interests, with
such
terms as described in Section 5.01(c).
REMIC III: That group of assets contained in the Trust Fund
designated
as a REMIC consisting of the REMIC II
Regular Interests.
REMIC III Interests: The REMIC III Regular Certificates and the
Class
R-III Certificates.
REMIC III Regular Certificates: The REMIC III Regular Interests,
with
such terms as described in Section
5.01(c).
REMIC Opinion: An Opinion of Independent Counsel, to the effect
that
the proposed action described therein would
not, under the REMIC Provisions, (i)
cause REMIC I, REMIC II or REMIC III to
fail to qualify as a REMIC while any
regular interest in such REMIC is
25
<PAGE>
outstanding, (ii) result in a tax on
prohibited transactions with respect to any
REMIC or (iii) constitute a taxable
contribution to any REMIC after the Startup
Day.
REMIC Provisions: The provisions of the federal income tax law
relating
to REMICs, which appear at Sections 860A
through 860G of the Code, and related
provisions and regulations promulgated
thereunder, as the foregoing may be in
effect from time to time.
REO Property: A Mortgaged Property acquired in the name of the
Trustee,
for the benefit of Certificateholders, by
foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted
Mortgage Loan.
Repurchase Price: With respect to any Mortgage Loan (or any
property
acquired with respect thereto) required or
permitted to be repurchased by the
Seller pursuant to the Mortgage Loan
Purchase Agreement or Article II or Section
3.21 of this Agreement, an amount equal to
the sum of (i) (A) 100% of the
Outstanding Principal Balance of such
Mortgage Loan as of the date of repurchase
(or if the related Mortgaged Property was
acquired with respect thereto, 100% of
the Outstanding Principal Balance of such
Mortgage Loan as of the date of the
acquisition), plus (B) accrued but unpaid
interest on the Outstanding Principal
Balance of such Mortgage Loan at the
related Mortgage Interest Rate from the
date through which interest was last paid
on such Mortgage Loan by the related
Mortgagor or advanced with respect to such
Mortgage Loan to the first day of the
month in which such amount is to be
distributed, through and including the last
day of the month of repurchase, and reduced
by (C) any portion of the Master
Servicing Compensation, Servicing Fee and
Monthly Advances relating to such
Mortgage Loan and advances payable to the
purchaser of such Mortgage Loan, and
(ii) any costs and damages incurred by the
Trust and the Trustee in connection
with any violation of such Mortgage Loan of
any predatory or abusive lending
laws.
Repurchase Proceeds: The Repurchase Price in connection with
any
repurchase of a Mortgage Loan by the Seller
or any cash deposit in connection
with the substitution of a Mortgage
Loan.
Request for Release: A request for release in the form attached
hereto
as Exhibit D.
Required Insurance Policy: With respect to any Mortgage Loan,
any
insurance policy which is required to be
maintained from time to time under this
Agreement or the Countrywide Servicing
Agreement with respect to such Mortgage
Loan.
Residual Certificates:
Any of the Class R Certificates.
Responsible Officer: Any officer assigned to the Corporate Trust
Office
(or any successor thereto), including any
Vice President, Assistant Vice
President, Trust Officer, any Assistant
Secretary, any trust officer or any
other officer of the Trustee customarily
performing functions similar to those
performed by any of the above designated
officers and having direct
responsibility for the administration of
this Agreement, and any other officer
of the Trustee to whom a matter arising
hereunder may be referred.
Rule 144A: Rule 144A promulgated under the Securities Act.
26
<PAGE>
Rule 144A Certificate: The certificate to be furnished by each
purchaser of a Private Certificate (which
is also a Physical Certificate) which
is a Qualified Institutional Buyer as
defined under Rule 144A promulgated under
the Securities Act, substantially in the
form set forth as Exhibit F-2 hereto.
S&P: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.,
and its successors in interest.
Scheduled Payment: With respect to any Mortgage Loan and any
Due
Period, the scheduled payment or payments
of principal and interest due during
such Due Period on such Mortgage Loan which
either is payable by a Mortgagor in
such month under the related Mortgage Note
or, in the case of REO Property,
would otherwise have been payable under the
related Mortgage Note.
Scheduled Principal: The principal portion of any Scheduled
Payment.
Scheduled Principal Balance: With respect to any Mortgage Loan
or
related REO Property on any Distribution
Date, the principal balance thereof as
of the Cut-off Date plus any Deferred
Interest that is added to the Outstanding
Principal Balance of such Mortgage Loan,
and minus the sum of (1) the principal
portion of the scheduled Monthly Payments
due from Mortgagors with respect to
such Mortgage Loan during each Due Period
ending prior to such Distribution
Date, irrespective of any delinquency in
its payment, as specified in the
amortization schedule at the time relating
thereto (before any adjustment to
such amortization schedule by reason of any
bankruptcy or similar proceeding
occurring after the Cut-off Date (other
than a Deficient Valuation) or any
moratorium or similar waiver or grace
period), (2) all Principal Prepayments
with respect to such Mortgage Loan received
prior to or during the related
Prepayment Period, and all Net Liquidation
Proceeds relating to such Mortgage
Loan, to the extent applied by the Servicer
as recoveries of principal in
accordance with this Agreement or the
Countrywide Servicing Agreement, that were
received by the Servicer as of the close of
business on the last day of the
Prepayment Period related to such
Distribution Date and (3) any Realized Loss
thereon incurred prior to or during the
related Prepayment Period; provided that
the Scheduled Principal Balance of any
Liquidated Mortgage Loan is zero.
Securities Act: The
Securities Act of 1933, as amended.
Securities Administrator: Wells Fargo Bank, National Association,
and
its successor in interest, and any
successor securities administrator appointed
as herein provided.
Securities Legend: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT
BE
REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES LAWS. THE
HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE
MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE
WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON THAT THE HOLDER
REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A (A "QIB"),
27
<PAGE>
PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (3) IN CERTIFICATED FORM TO
AN "INSTITUTIONAL ACCREDITED INVESTOR"
WITHIN THE MEANING THEREOF IN RULE
501(a)(1), (2), (3) or (7) OF REGULATION D
UNDER THE SECURITIES ACT OR ANY ENTITY IN
WHICH ALL OF THE EQUITY OWNERS COME
WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR
DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, SUBJECT TO (A) THE RECEIPT
BY THE TRUSTEE AND THE CERTIFICATE
REGISTRAR OF A LETTER SUBSTANTIALLY IN THE
FORM PROVIDED IN THE AGREEMENT AND
(B) THE RECEIPT BY THE TRUSTEE AND THE
CERTIFICATE REGISTRAR OF SUCH OTHER
EVIDENCE ACCEPTABLE TO THE TRUSTEE AND THE
CERTIFICATE REGISTRAR THAT SUCH
REOFFER, RESALE, PLEDGE OR TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT AND
OTHER APPLICABLE LAWS OR IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE UNITED STATES AND
ANY OTHER APPLICABLE JURISDICTION. THIS
CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR
INDIRECTLY BY, OR ON BEHALF OF, AN
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT WHICH IS SUBJECT TO TITLE
I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED [in the case of a Residual
Certificate or a Private Certificate]
UNLESS THE OPINION OF COUNSEL REQUIRED BY
SECTION 5.07 OF THE POOLING AND SERVICING
AGREEMENT IS PROVIDED [in the case of
the Class B-4, Class B-5 and Class B-6
Certificates]:, UNLESS THE TRANSFEREE
CERTIFIES OR REPRESENTS THAT THE PROPOSED
TRANSFER AND HOLDING OF A CERTIFICATE
AND THE SERVICING, MANAGEMENT AND OPERATION
OF THE TRUST AND ITS ASSETS: (I)
WILL NOT RESULT IN ANY PROHIBITED
TRANSACTION WHICH IS NOT COVERED UNDER AN
INDIVIDUAL OR CLASS PROHIBITED TRANSACTION
EXEMPTION, INCLUDING, BUT NOT LIMITED
TO, PROHIBITED TRANSACTION EXEMPTION
("PTE") 84-14, PTE 91-38, PTE 90-1, PTE
95-60 OR PTE 96-23 AND (II) WILL NOT GIVE
RISE TO ANY ADDITIONAL FIDUCIARY
DUTIES ON THE PART OF THE DEPOSITOR, THE
SECURITIES ADMINISTRATOR, THE MASTER
SERVICER, THE SERVICER OR THE TRUSTEE,
WHICH WILL BE DEEMED REPRESENTED BY AN
OWNER OF A BOOK-ENTRY CERTIFICATE OR A
GLOBAL CERTIFICATE AND WILL BE EVIDENCED
BY A REPRESENTATION OR AN OPINION OF
COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF
AN INSTITUTIONAL ACCREDITED INVESTOR."
Security Instrument: A written instrument creating a valid first
lien
on a Mortgaged Property securing a Mortgage
Note, which may be any applicable
form of mortgage, deed of trust, deed to
secure debt or security deed, including
any riders or addenda thereto.
Seller: EMC Mortgage Corporation, as seller under the Mortgage
Loan
Purchase Agreement.
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<PAGE>
Senior Carryover Shortfall: With respect to the Class A-1
Certificates
and the Class A-4 Certificates,
respectively, and any Distribution Date for
which the respective Pass-Through Rate for
such Certificates is equal to the
weighted average of the Net Rates on the
Mortgage Loans, the excess, if any, of
(x) Accrued Certificate Interest on the
Class A-1 Certificates and the Class A-4
Certificates, respectively, for such
Distribution Date, using a per annum rate
of One-Month LIBOR plus the related Margin,
as calculated for such Distribution
Date, over (y) Accrued Certificate Interest
on the Class A-1 Certificates and
the Class A-4 Certificates, respectively,
for such Distribution Date at the
weighted average of the Net Rates on the
Mortgage Loans.
Senior Carryover Shortfall Amount: With respect to the Class
A-1
Certificates and the Class A-4
Certificates, respectively, and each Distribution
Date, the sum of (a) the aggregate amount
of Senior Carryover Shortfall for such
Classes of Certificates on such
Distribution Date which is not covered on such
Distribution Date by payments made thereon
from the Senior Carryover Shortfall
Reserve Fund, plus (b) any Senior Carryover
Shortfall Amount for such Classes of
Certificates remaining unpaid from the
preceding Distribution Date, plus (c) one
month's interest on the amount in clause
(b) (based on the number of days in the
preceding Interest Accrual Period) at a per
annum rate equal to One-Month LIBOR
plus the related Margin for such
Distribution Date.
Senior Carryover Shortfall Reserve Fund: An "outside reserve
fund"
within the meaning of Treasury Regulation
Section 1.860G-2(h), which is not an
asset of any REMIC, ownership of which is
evidenced by the Class X-1
Certificates, and which is established and
maintained pursuant to Section 4.04.
Senior Certificates: The Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates,
the Class A-4 Certificates, the Class
X-1 Certificates, the Class X-2
Certificates, the Class R-I Certificates, the
Class R-II Certificates and the Class R-III
Certificates.
Senior Optimal Principal Amount: With respect to each Distribution
Date
and the Senior Certificates (other than the
Residual Certificates), an amount
equal to the sum, without duplication, of
the following (after giving effect to
the application of such amounts to cover
Deferred Interest on the Mortgage
Loans, but in no event greater than the
aggregate Current Principal Amount of
such Senior Certificates immediately prior
to such Distribution Date):
(1) the Senior
Percentage of all scheduled payments of
principal allocated to the Scheduled Principal Balance due on
each
Outstanding Mortgage Loan on the related Due Date as specified in
the
amortization schedule at the time applicable thereto (after
adjustments
for previous Principal Prepayments but before any adjustment to
such
amortization schedule by reason of any bankruptcy or similar
proceeding
or any moratorium or similar waiver or grace period, if the
Distribution Date occurs prior to the Cross-over Date);
(2) the Senior
Prepayment Percentage of the Scheduled
Principal Balance of each Mortgage Loan which was the subject of
a
Principal Prepayment in full received by the Master Servicer during
the
related Prepayment Period;
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<PAGE>
(3) the Senior
Prepayment Percentage of all Principal
Prepayments in part received by the Master Servicer during the
related
Prepayment Period with respect to each Mortgage Loan;
(4) the lesser of (a)
the Senior Prepayment Percentage of the
sum of (i) all Net Liquidation Proceeds allocable to principal
received
in respect of each Mortgage Loan which became a Liquidated
Mortgage
Loan during the related Prepayment Period (other than Mortgage
Loans
described in the immediately following clause (ii)) and all
Subsequent
Recoveries received in respect of each Liquidated Mortgage Loan
during
the related Due Period and (ii) the Scheduled Principal Balance of
each
such Mortgage Loan purchased by an insurer from the Trustee during
the
related Prepayment Period pursuant to the related Primary
Mortgage
Insurance Policy, if any, or otherwise; and (b) the Senior
Percentage
of the sum of (i) the Scheduled Principal Balance of each Mortgage
Loan
which became a Liquidated Mortgage Loan during the related
Prepayment
Period (other than the Mortgage Loans described in the
immediately
following clause (ii)) and all Subsequent Recoveries received
in
respect of each Liquidated Mortgage Loan during the related Due
Period
and (ii) the Scheduled Principal Balance of each such Mortgage
Loan
that was purchased by an insurer from the Trustee during the
related
Prepayment Period pursuant to the related Primary Mortgage
Insurance
Policy, if any, or otherwise; and
(5) the Senior
Prepayment Percentage of the sum of (a) the
Scheduled Principal Balance of each Mortgage Loan which was
repurchased
by the Seller in connection with such Distribution Date and (b)
the
excess, if any, of the Scheduled Principal Balance of a Mortgage
Loan
that has been replaced by the Seller with a Substitute Mortgage
Loan
pursuant to the Agreement or the Mortgage Loan Purchase Agreement
in
connection with such Distribution Date over the Scheduled
Principal
Balance of such Substitute Mortgage Loan.
Senior Percentage: Initially, 90.95%. On any Distribution Date,
the
lesser of (i) 100% and (ii) the percentage
(carried to six places rounded up)
obtained by dividing the aggregate Current
Principal Amount of the Senior
Certificates (other than the Residual
Certificates) (or, with respect to the
Class X-1 Certificates and the Class X-2
Certificates, the Current Principal
Amount of the principal component of such
respective Class of Certificates),
immediately preceding such Distribution
Date by the aggregate Scheduled
Principal Balance of the Mortgage Loans as
of the beginning of the related Due
Period.
Senior Prepayment Percentage: The Senior Prepayment Percentage for
the
Senior Certificates (other than the
Residual Certificates) on any Distribution
Date occurring during the periods set forth
below will be as follows:
------------------------------------------------------------------------
Period (dates inclusive)
Senior Prepayment Percentage
------------------------------------------------------------------------
August 25, 2005 - July 25, 2015
100%
August 25, 2015 - July 25, 2016
Senior Percentage plus 70% of the
Subordinate Percentage
August 25, 2016 - July 25, 2017
Senior Percentage plus 60% of the
Subordinate Percentage
August 25, 2017 - July 25, 2018
Senior Percentage plus
40% of the
Subordinate Percentage
30
<PAGE>
August 25, 2018 - July 25, 2019
Senior Percentage plus 20% of the
Subordinate Percentage
August 25, 2019 and thereafter
Senior Percentage
In addition, no reduction of the Senior Prepayment Percentage
shall
occur on any Distribution Date unless, as
of the last day of the month preceding
such Distribution Date, (A) the aggregate
Scheduled Principal Balance of the
Mortgage Loans delinquent 60 days or more
(including for this purpose any such
Mortgage Loans in foreclosure and Mortgage
Loans with respect to which the
related Mortgaged Property has been
acquired by the Trust), averaged over the
last six months, as a percentage of the sum
of the aggregate Current Principal
Amount of the Subordinate Certificates,
does not exceed 50%; and (B) cumulative
Realized Losses on the Mortgage Loans do
not exceed (a) 30% of the Original
Subordinate Principal Balance if such
Distribution Date occurs between and
including August 2015 and July 2016, (b)
35% of the Original Subordinate
Principal Balance if such Distribution Date
occurs between and including August
2016 and July 2017, (c) 40% of the Original
Subordinate Principal Balance if
such Distribution Date occurs between and
including August 2017 and July 2018,
(d) 45% of the Original Subordinate
Principal Balance if such Distribution Date
occurs between and including August 2018
and July 2019, and (e) 50% of the
Original Subordinate Principal Balance if
such Distribution Date occurs during
or after August 2019.
In addition, if on any Distribution Date after the Distribution
Date
occurring in July 2008 the current weighted
average of the Subordinate
Percentage for such Distribution Date is
equal to or greater than two times the
initial weighted average of the Subordinate
Percentage and (a) the aggregate
Scheduled Principal Balances of the
Mortgage Loans delinquent 60 days or more
(including for this purpose any such
Mortgage Loans in foreclosure and such
Mortgage Loans with respect to which the
related Mortgaged Property has been
acquired by the Trust), averaged over the
last six months, as a percentage of
the sum of the aggregate Current Principal
Amount of the Subordinate
Certificates, does not exceed 50% and
(b)(i) on or prior to the Distribution
Date in July 2008, cumulative Realized
Losses on the Mortgage Loans as of the
end of the related Prepayment Period do not
exceed 20% of the Original
Subordinate Principal Balance and (ii)
after the Distribution Date in July 2008,
cumulative Realized Losses on the Mortgage
Loans as of the end of the related
Prepayment Period do not exceed 30% of the
Original Subordinate Principal
Balance, then, in each case, the Senior
Prepayment Percentage for such
Distribution Date will equal the Senior
Percentage; provided, however, if on a
Distribution Date prior to the Distribution
Date in July 2008 the current
Subordinate Percentage is equal to or
greater than two times the initial
Subordinate Percentage for the Senior
Certificates and the above delinquency and
loss tests are met, then the Senior
Prepayment Percentage for such Distribution
Date will equal the Senior Percentage plus
50% of the Subordinate Percentage.
Notwithstanding the foregoing, if on any Distribution Date, the
percentage, the numerator of which is the
aggregate Current Principal Amount of
the Senior Certificates (other than the
Residual Certificates) immediately
preceding such Distribution Date, and the
denominator of which is the aggregate
Scheduled Principal Balance of the Mortgage
Loans as of the beginning of the
related Due Period, exceeds such percentage
as of the Cut-off Date, then the
Senior Prepayment Percentage for such
Distribution Date will equal 100%.
Servicer: With respect to each Mortgage Loan, Countrywide Home
Loans
Servicing LP.
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<PAGE>
Servicer Remittance Date: With respect to each Mortgage Loan, the
18th
day of each month, or if such day is not a
Business Day, then the following
Business Day.
Servicing Agreement:
The Countrywide Servicing Agreement.
Servicing Fee: As to any Mortgage Loan and a Distribution Date,
an
amount equal to the product of (i) the
Scheduled Principal Balance of such
Mortgage Loan as of the Due Date in the
month preceding the month in which such
Distribution Date occurs and (ii) the
applicable Servicing Fee Rate, or, in the
event of any payment of interest that
accompanies a Principal Prepayment in full
during the related Due Period made by the
Mortgagor immediately prior to such
prepayment, interest at the Servicing Fee
Rate on the Scheduled Principal
Balance of such Mortgage Loan for the
period covered by such payment of
interest.
Servicing Fee Rate: As to any Mortgage Loan, a per annum rate
(including, as applicable, any additional
servicing fees) as set forth in the
Mortgage Loan Schedule.
Servicing Officer: As
defined in the Countrywide Servicing Agreement.
Startup Day: July 29,
2005.
Strike Price: With respect to the Yield Maintenance Agreement, for
the
respective Distribution Dates occurring
during the term of such Agreement, as
set forth with respect thereto on Schedule
A hereto.
Subordinate Carryover Shortfall: With respect to the
Subordinate
Certificates (other than the Class M-X
Certificates) and any Distribution Date
for which the respective Pass-Through Rate
for such Certificates is equal to the
weighted average of the Net Rates on the
Mortgage Loans, the excess, if any, of
(x) Accrued Certificate Interest on the
Subordinate Certificates (other than the
Class M-X Certificates) for such
Distribution Date, using a per annum rate of
the lesser of (a) One-Month LIBOR plus the
related Margin, as calculated for
such Distribution Date, and (b) 10.50%,
over (y) Accrued Certificate Interest on
the Subordinate Certificates (other than
the Class M-X Certificates) for such
Distribution Date at the weighted average
of the Net Rates on the Mortgage
Loans.
Subordinate Carryover Shortfall Amount: With respect to the
Subordinate
Certificates (other than the Class M-X
Certificates) and each Distribution Date,
the sum of (a) the aggregate amount of
Subordinate Carryover Shortfall for such
Classes of Certificates on such
Distribution Date which is not covered on such
Distribution Date by payments made thereon
from the Subordinate Carryover
Shortfall Reserve Fund, plus (b) any
Subordinate Carryover Shortfall Amount for
such Classes of Certificates remaining
unpaid from the preceding Distribution
Date, plus (c) one month's interest on the
amount in clause (b) (based on the
number of days in the preceding Interest
Accrual Period) at a per annum rate
equal to the lesser of (i) One-Month LIBOR
plus the related Margin for such
Distribution Date and (ii) 10.50%.
Subordinate Carryover Shortfall Reserve Fund: An "outside reserve
fund"
within the meaning of Treasury Regulation
Section 1.860G-2(h), which is not an
asset of any REMIC, ownership of which is
evidenced by the Class M-X
Certificates, and which is established and
maintained pursuant to Section 4.05.
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<PAGE>
Subordinate Certificates: The Class M-X, Class M-1, Class M-2,
Class
M-3, Class M-4, Class M-5, Class M-6, Class
B-1, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6
Certificates.
Subordinate Certificate Writedown Amount: With respect to the
Subordinate Certificates, the amount by
which (a) the sum of the aggregate
Current Principal Amount of all of the
Certificates other than the Residual
Certificates (after giving effect to the
distribution of principal collections
on the Mortgage Loans and the allocation of
applicable Realized Losses on the
Mortgage Loans on a pro rata basis in
reduction of the respective Current
Principal Amount of such Certificates on
such Distribution Date) exceeds (b) the
aggregate Scheduled Principal Balance of
the Mortgage Loans on the Due Date
related to such Distribution Date.
Subordinate Optimal Principal Amount: With respect to the
Subordinate
Certificates and each Distribution Date
will be an amount equal to the sum,
without duplication, of the following
(after giving effect to the application of
such amounts to cover Deferred Interest on
the Mortgage Loans, but in no event
greater than the aggregate Current
Principal Amount of the Subordinate
Certificates immediately prior to such
Distribution Date):
(1) the Subordinate Percentage of the
principal portion of all
Monthly Payments due on each Mortgage Loan on the related Due Date,
as
specified in the amortization schedule at the time applicable
thereto
(after adjustment for previous Principal Prepayments but before
any
adjustment to such amortization schedule by reason of any
bankruptcy or
similar proceeding or any moratorium or similar waiver or grace
period);
(2) the Subordinate
Prepayment Percentage of the Scheduled
Principal Balance of each Mortgage Loan which was the subject of
a
prepayment in full received by the Master Servicer during the
applicable Prepayment Period;
(3) the Subordinate
Prepayment Percentage of all partial
prepayments of principal received by the Master Servicer during
the
applicable Prepayment Period for each Mortgage Loan;
(4) the excess, if
any, of (a) the Net Liquidation Proceeds
allocable to principal received in respect of each Mortgage Loan
that
became a Liquidated Mortgage Loan during the related Prepayment
Period
and all Subsequent Recoveries received in respect of each
Liquidated
Mortgage Loan during the related Due Period over (b) the sum of
the
amounts distributable to the holders of the Senior Certificates on
such
Distribution Date pursuant to clause (4) of the definition of
"Senior
Optimal Principal Amount";
(5) the Subordinate
Prepayment Percentage of the sum of (a)
the Scheduled Principal Balance of each Mortgage Loan or related
REO
Property which was repurchased by the Seller in connection with
such
Distribution Date and (b) the amount, if any, by which the
Scheduled
Principal Balance of a Mortgage Loan that has been replaced by
the
Seller with a substitute Mortgage Loan pursuant to this Agreement
or
the Mortgage Loan Purchase Agreement in connection with such
Distribution Date exceeds the Scheduled Principal Balance of
such
substitute Mortgage Loan; and
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<PAGE>
(6) on the
Distribution Date on which the Current Principal
Amount of each of the Senior Certificates (other than the
Residual
Certificates) has been reduced to zero, 100% of any Senior
Optimal
Principal Amount.
After the aggregate Current Principal Amount of the Subordinate
Certificates has been reduced to zero, the
Subordinate Optimal Principal Amount
will be zero.
Subordinate Percentage: As of any Distribution Date, 100% minus
the
Senior Percentage. The initial Subordinate
Percentage is equal to 9.05%.
Subordinate Prepayment
Percentage: For the Subordinate Certificates and
as of any Distribution Date, will equal
100% minus the Senior Prepayment
Percentage except that on any Distribution
Date after the Current Principal
Amount of each Class of Senior Certificates
(other than the Residual
Certificates) has been reduced to zero, the
Subordinate Prepayment Percentage
for the Subordinate Certificates will equal
100%.
Subsequent Recoveries: As of any Distribution Date, amounts
received
during the related Due Period by the
Servicer or surplus amounts held by the
Master Servicer to cover estimated expenses
(including, but not limited to,
recoveries in respect of the
representations and warranties made by the Seller)
specifically related to a Liquidated
Mortgage Loan or disposition of an REO
property prior to the related Prepayment
Period that result in a Realized Loss
on a Mortgage Loan, after liquidation or
disposition of such Mortgage Loan.
Substitute Mortgage Loan: A mortgage loan tendered to the
Trustee
pursuant to the Countrywide Servicing
Agreement, the Mortgage Loan Purchase
Agreement or Section 2.04 of this
Agreement, as applicable, in each case, (i)
which has an Outstanding Principal Balance
not greater nor materially less than
the Mortgage Loan for which it is to be
substituted; (ii) which has a Mortgage
Interest Rate and Net Rate not less than,
and not materially greater than, such
Mortgage Loan; (iii) which has a maturity
date not materially earlier or later
than such Mortgage Loan and not later than
the latest maturity date of any
Mortgage Loan; (iv) which is of the same
property type and occupancy type as
such Mortgage Loan; (v) which has a
Loan-to-Value Ratio not greater than the
Loan-to-Value Ratio of such Mortgage Loan;
(vi) which (to the extent applicable)
has a Combined Loan-to-Value Ratio not
greater than the Combined Loan-to-Value
Ratio of such Mortgage Loan; (vii) which is
current in payment of principal and
interest as of the date of substitution;
(viii) as to which the payment terms do
not vary in any material respect from the
payment terms of the Mortgage Loan for
which it is to be substituted; (ix) which
has a Gross Margin, Periodic Rate Cap
and Maximum Lifetime Mortgage Rate no less
than those of such Mortgage Loan, has
the same Index and interval between
Interest Adjustment Dates as such Mortgage
Loan, and has a Minimum Lifetime Mortgage
Rate no lower than that of such
Mortgage Loan; and (x) which is not secured
by Mortgaged Property located in (A)
the State of New Jersey, if such Mortgage
Loan was originated on or after
November 27, 2003 or (B) the State of New
Mexico, if such Mortgage Loan was
originated on or after January 1, 2004.
Tax Administration and Tax Matters Person: The person designated
as
"tax matters person" in the manner provided
under Treasury regulation ss.
1.860F-4(d) and temporary Treasury
regulation ss. 301.6231(a)(7)-1T. The
Securities Administrator or any successor
thereto or assignee thereof shall
serve as tax administrator hereunder and as
agent for the Tax Matters Person.
The Holder of each Class of Residual
Certificates shall be the Tax Matters
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Person for the related REMIC, as more
particularly set forth in Section 9.12
hereof.
Termination Costs: The costs and expenses related to the
termination of
the Servicer, the appointment of a
successor servicer or the transfer and
assumption of servicing with respect to the
Countrywide Servicing Agreement,
including, without limitation, the items
set forth in Section 3.03(c).
Termination Purchase Price: As defined in Section 10.01.
Trust Fund or Trust: The corpus of the trust created by this
Agreement,
consisting of the Mortgage Loans and the
other assets described in Section
2.01(a).
Trustee: JPMorgan Chase Bank, N.A., and its successor in interest,
or
any successor trustee appointed as herein
provided.
Uncertificated Principal Balance: With respect to any REMIC I
Regular
Interest or REMIC II Regular Interest as of
any Distribution Date, the initial
principal amount of such Regular Interest,
reduced by (i) all amounts
distributed on previous Distribution Dates
on such Regular Interest with respect
to principal, (ii) the principal portion of
all Realized Losses on the Mortgage
Loans allocated prior to such Distribution
Date to such Regular Interest, taking
account of the Loss Allocation Limitation
and (iii) in the case of a REMIC II
Regular Interest for which the
Corresponding Certificate is a Subordinate
Certificate, such Regular Interest's pro
rata share, if any, of the applicable
Subordinate Certificate Writedown Amount
allocated to such Corresponding
Certificate for previous Distribution
Dates.
Underlying Seller: With respect to each Mortgage Loan, Countrywide
Home
Loans.
Uninsured Cause: Any cause of damage to a Mortgaged Property or
related
REO Property such that the complete
restoration of such Mortgaged Property or
related REO Property is not fully
reimbursable by the hazard insurance policies
or flood insurance policies required to be
maintained pursuant to the
Countrywide Servicing Agreement, without
regard to whether or not such policy is
maintained.
United States Person: A citizen or individual resident of the
United
States, a corporation or partnership
(including an entity treated as a
corporation or partnership for federal
income tax purposes) created or organized
in, or under the laws of, the United States
or any state thereof or the District
of Columbia (except, in the case of a
partnership, to the extent provided in
regulations), provided that, for purposes
solely of the Class R Certificates, no
partnership or other entity treated as a
partnership for United States federal
income tax purposes shall be treated as a
United States Person unless all
persons that own an interest in such
partnership, either directly or through any
entity that is not a corporation for United
States federal income tax purposes,
are United States Persons, or an estate
whose income is subject to United States
federal income tax regardless of its
source, or a trust if a court within the
United States is able to exercise primary
supervision over the administration of
such trust and one or more such United
States Persons have the authority to
control all substantial decisions of such
trust or if the Trust was in existence
on August 20, 1996 and properly elected to
continue to be treated as such a
United States Person.
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Yield Maintenance Account: The account to be established and
maintained
pursuant to the Yield Maintenance
Agreement, which account will be an asset of
the Trust but not of any REMIC.
Yield Maintenance Agreement: The Interest Rate Corridor Letter
Agreement, dated July 29, 2005, entered
into by the Yield Maintenance Provider
and the Trustee on behalf of the Trust and
relating to the Class A-1
Certificates, the Class A-4 Certificates,
the Class M Certificates and the Class
B Certificates.
Yield Maintenance Payment: An amount equal to the result of
multiplying
(A) the actual number of days in the
applicable Interest Accrual Period divided
by 360 by (B) the product of (i) the per
annum rate equal to the excess of (x)
the lesser of then-current One-Month LIBOR
and 10.50% over (y) the applicable
Strike Price and (ii) an amount equal to
the lesser of the principal balance of
the applicable Class of Certificates and
the Projected Principal Balance for
such Class of Certificates for such
Distribution Date.
Yield
Maintenance Provider:
Wells Fargo Bank, National Association.
Section 1.02. Calculation of LIBOR(a) . LIBOR applicable to the
calculation of the Pass-Through Rate on the
applicable Adjustable Rate
Certificates for any Interest Accrual
Period will be determined on each Interest
Determination Date. On each Interest
Determination Date, LIBOR shall be
established by the Securities Administrator
and, as to any Interest Accrual
Period, will equal the rate for one month
United States dollar deposits that
appears on the Telerate Screen Page 3750 as
of 11:00 a.m., London time, on such
Interest Determination Date. "Telerate
Screen Page 3750" means the display
designated as page 3750 on the Telerate
Service (or such other page as may
replace page 3750 on that service for the
purpose of displaying London interbank
offered rates of major banks). If such rate
does not appear on such page (or
such other page as may replace that page on
that service, or if such service is
no longer offered, LIBOR shall be so
established by use of such other service
for displaying LIBOR or comparable rates as
may be reasonably selected by the
Securities Administrator), the rate will be
the Reference Bank Rate. The
"Reference Bank Rate" will be determined on
the basis of the rates at which
deposits in U.S. dollars are offered by the
reference banks (which shall be any
three major banks that are engaged in
transactions in the London interbank
market, selected by the Securities
Administrator) as of 11:00 a.m., London time,
on the Interest Determination Date to prime
banks in the London interbank market
for a period of one month in amounts
approximately equal to the aggregate
Current Principal Amounts of the applicable
Adjustable Rate Certificates, then
outstanding. The Securities Administrator
will request the principal London
office of each of the reference banks to
provide a quotation of its rate. If at
least two such quotations are provided, the
rate will be the arithmetic mean of
the quotations rounded up to the nearest
whole multiple of 0.03125%. If on such
date fewer than two quotations are provided
as requested, the rate will be the
arithmetic mean of the rates quoted by one
or more major banks in New York City,
selected by the Securities Administrator,
as of 11:00 a.m., New York City time,
on such date for loans in U.S. dollars to
leading European banks for a period of
one month in amounts approximately equal to
the aggregate Current Principal
Amounts of the applicable Adjustable Rate
Certificates, then outstanding. If no
such quotations can be obtained, the rate
will be LIBOR for the prior
Distribution Date; provided, however, if,
under the priorities described above,
LIBOR for a Distribution Date would be
based on LIBOR for the previous
Distribution Date for the third
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consecutive Distribution Date, the
Securities Administrator shall select an
alternative comparable index (over which
the Securities Administrator has no
control), used for determining one-month
Eurodollar lending rates that is
calculated and published (or otherwise made
available) by an independent party.
The establishment of LIBOR by the
Securities Administrator on any Interest
Determination Date and the Securities
Administrator's subsequent calculation of
the Pass-Through Rate applicable to the
Adjustable Rate Certificates that are
based on One-Month LIBOR for the relevant
Interest Accrual Period, in the
absence of manifest error, will be final
and binding. Promptly following each
Interest Determination Date, the Securities
Administrator shall supply the
Master Servicer with the results of its
determination of LIBOR on such date.
Section 1.03. Calculation of One-Year MTA. One-Year MTA applicable
to
the calculation of the Pass-Through Rate on
the applicable Adjustable Rate
Certificates for any Interest Accrual
Period will be determined on each Interest
Determination Date. On each Interest
Determination Date, One-Year MTA shall be
established by the Securities Administrator
and, as to any Interest Accrual
Period, will equal the one-year MTA rate
published by the Federal Reserve Board
in the Federal Reserve Statistical Release
`Selected Interest Rates (H.15)',
determined by averaging the monthly yields
for the most recently available
twelve months. The One-Year MTA figure used
for each Interest Rate Adjustment
Date will be the most recent One-Year MTA
figure available as of fifteen
Business Days before such date. If such
rate is no longer available, then the
Index used to determine the certificate
interest rate on the Class A-2
Certificates and the Class A-3 Certificates
will be the same Index selected to
determine the Mortgage Interest Rate on the
Mortgage Loans. The establishment of
One-Year MTA by the Securities
Administrator on any Interest Determination Date
and the Securities Administrator's
subsequent calculation of the Pass-Through
Rate applicable to the Adjustable Rate
Certificates that are based on One-Year
MTA for the relevant Interest Accrual
Period, in the absence of manifest error,
will be final and binding. Promptly
following each Interest Determination Date,
the Securities Administrator shall supply
the Master Servicer with the results
of its determination of One-Year MTA on
such date.
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Article II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans to Trustee.
(a) The Depositor,
concurrently with the execution and
delivery of this Agreement, sells,
transfers and assigns to the Trust without
recourse all its right, title and interest
in and to (i) the Mortgage Loans
identified in the Mortgage Loan Schedule,
and the related Mortgage Notes,
mortgages and other related documents,
including all interest and principal due
with respect to the Mortgage Loans after
the Cut-off Date, but excluding any
payments of principal and interest due on
or prior to the Cut-off Date with
respect to the Mortgage Loans, (ii) such
assets as shall from time to time be
credited or are required by the terms of
this Agreement to be credited to the
Distribution Account, (iii) such assets
relating to the Mortgage Loans as from
time to time may be held by the Servicer in
Protected Accounts and the Paying
Agent in the Senior Carryover Shortfall
Reserve Fund, the Class A-1 Supplemental
Fund, the Class A-2 Supplemental Fund, the
Subordinate Carryover Shortfall
Reserve Fund, the Yield Maintenance Account
and the Distribution Account for the
benefit of the Paying Agent on behalf of
the Certificateholders, (iv) any REO
Property, and any revenues received
thereon, (v) the Required Insurance Policies
and any amounts paid or payable by the
related insurer under any Insurance
Policy (to the extent the related mortgagee
has a claim thereto), (vi) the
Mortgage Loan Purchase Agreement to the
extent provided in Subsection 2.03(a),
(vii) the rights with respect to the
Countrywide Servicing Agreement as assigned
to the Trustee on behalf of the
Certificateholders by the Assignment Agreement,
(viii) the rights of the Depositor with
respect to the Yield Maintenance
Agreement, and (ix) any proceeds of the
foregoing. Although it is the intent of
the parties to this Agreement that the
conveyance of the Depositor's right,
title and interest in and to the Mortgage
Loans and other assets in the Trust
Fund pursuant to this Agreement shall
constitute a purchase and sale and not a
loan, in the event that such conveyance is
deemed to be a loan, it is the intent
of the parties to this Agreement that the
Depositor shall be deemed to have
granted to the Trustee a first priority
perfected security interest in all of
the Depositor's right, title and interest
in, to and under the Mortgage Loans
and other assets in the Trust Fund, and
that this Agreement shall constitute a
security agreement under applicable
law.
(b) In connection with
the above sale, transfer and assignment,
the Depositor hereby deposits with the
Trustee, or the Custodian, as its agent,
as described in the Mortgage Loan Purchase
Agreement, with respect to each
Mortgage Loan, (i) the original Mortgage
Note, including any riders thereto,
endorsed without recourse (A) to the order
of the Trustee, or (B) in the case of
a Mortgage Loan registered on the MERS(R)
System, in blank, and in each case
showing an unbroken chain of endorsements
from the original payee thereof to the
Person endorsing it to the Trustee, or a
lost note affidavit with indemnity,
together with a copy of the related
Mortgage Note, (ii) the original Security
Instrument (noting the presence of the MIN
of the Mortgage Loan and language
indicating that the Mortgage Loan is a MOM
Loan if the Mortgage Loan is a MOM
Loan), which shall have been recorded (or
if the original is not available, a
copy), with evidence of such recording
indicated thereon (or if clause (x) in
the proviso below applies, shall be in
recordable form), (iii) unless the
Mortgage Loan is registered on the MERS(R)
System, a certified copy of the
assignment (which may be in the form of
a
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blanket assignment if permitted in the
jurisdiction in which the Mortgaged
Property is located) to "JPMorgan Chase
Bank, N.A., as Trustee," with evidence
of recording with respect to each Mortgage
Loan in the name of the Trustee
thereon (or if clause (x) in the proviso
below applies or for Mortgage Loans
with respect to which the related Mortgaged
Property is located in a state other
than Maryland or an Opinion of Counsel has
been provided as set forth in this
Section 2.01(b), shall be in recordable
form), (iv) all intervening assignments
of the Security Instrument, if applicable
and only to the extent available to
the Depositor with evidence of recording
thereon, (v) the original or a copy of
the policy or certificate of primary
mortgage guaranty insurance, to the extent
available, if any, (vi) the original policy
of title insurance or mortgagee's
certificate of title insurance or
commitment or binder for title insurance and
(vii) originals of all assumption and
modification agreements, if applicable and
available; provided, however, that in lieu
of the foregoing, the Depositor may
deliver the following documents, under the
circumstances set forth below: (x) in
lieu of the original Security Instrument,
assignments to the Trustee or
intervening assignments thereof which have
been delivered, are being delivered
or will, upon receipt of recording
information relating to the Security
Instrument required to be included thereon,
be delivered to recording offices
for recording and have not been returned to
the Depositor in time to permit
their delivery as specified above, the
Depositor may deliver, or cause to be
delivered, a true copy thereof with a
certification by the Depositor, the
applicable Servicer or the title company
issuing the related commitment for
title insurance, on the face of such copy,
substantially as follows: "Certified
to be a true and correct copy of the
original, which has been transmitted for
recording"; (y) in lieu of the Security
Instrument, assignment to the Trustee or
intervening assignments thereof, if the
applicable jurisdiction retains the
originals of such documents (as evidenced
by a certification from the Depositor,
to such effect) the Depositor may deliver,
or cause to be delivered, photocopies
of such documents containing an original
certification by the judicial or other
governmental authority of the jurisdiction
where such documents were recorded;
and (z) the Depositor shall not be required
to deliver intervening assignments
or Mortgage Note endorsements between the
related Underlying Seller and EMC
Mortgage Corporation, between EMC Mortgage
Corporation and the Depositor, and
between the Depositor and the Trustee; and
provided, further, however, that, in
the case of Mortgage Loans which have been
prepaid in full after the Cut-off
Date and prior to the Closing Date, the
Depositor, in lieu of delivering the
above documents, may deliver to the Trustee
or the Custodian, as its agent, a
certification to such effect and shall
deposit all amounts paid in respect of
such Mortgage Loans in the Distribution
Account on the Closing Date. The
Depositor shall deliver such original
documents (including any original
documents as to which certified copies had
previously been delivered) to the
Trustee or the Custodian, as its agent,
promptly after they are received. The
Depositor shall cause, at its expense, the
assignment of the related Security
Instrument to the Trustee to be recorded
not later than 180 days after the
Closing Date, unless (1) such recordation
is not required by the Rating
Agencies, (2) an Opinion of Counsel has
been provided to the Trustee (with a
copy to the Custodian) which states that
recordation of such Security Instrument
is not required to protect the interests of
the Certificateholders in the
Mortgage Loans or (3) MERS is identified on
the related Security Instrument or
on a properly recorded assignment of such
Security Instrument as mortgagee of
record solely as nominee for Depositor and
its successors and assigns; provided,
however, that each assignment shall be
submitted for recording by the Depositor
in the manner described above, at no
expense to the Trust or the Trustee, or the
Custodian, as its agent, upon the earliest
to occur of: (i) reasonable direction
by the Holders of Certificates evidencing
Fractional Undivided Interests
aggregating
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not less than 25% of the Trust, (ii) the
occurrence of an Event of Default,
(iii) the occurrence of a bankruptcy,
insolvency or foreclosure relating to the
Depositor, (iv) the rating of The Bear
Stearns Companies Inc. falls below Baa3,
(v) the occurrence of a servicing transfer
as described in Section 8.02 hereof,
or (vi) with respect to any one assignment
of Mortgage, the occurrence of a
bankruptcy, insolvency or foreclosure
relating to the Mortgagor under the
related Mortgage. Notwithstanding the
foregoing, if the Depositor fails to pay
the cost of recording the assignments, such
expense will be paid by the Trustee
and the Trustee shall be reimbursed for
such expenses by the Trust in accordance
with Section 9.05.
Section 2.02. Acceptance of Trust Fund by Trustee.
(a) The Trustee
acknowledges the sale, transfer and assignment of
the Trust Fund to it by the Depositor and
receipt of, subject to further review
and the exceptions which may be noted
pursuant to the procedures described
below, and declares that it holds, the
documents (or certified copies thereof)
delivered to it pursuant to Section 2.01,
and declares that it will continue to
hold those documents and any amendments,
replacements or supplements thereto and
all other assets of the Trust Fund
delivered to it as Trustee in trust for the
use and benefit of all present and future
Holders of the Certificates. On the
Closing Date, the Custodian shall
acknowledge, with respect to each Mortgage
Loan by an Initial Certification
substantially in the form of Exhibit One to the
Custodial Agreement, receipt of the
Mortgage File, but without review of such
Mortgage File, except to the extent
necessary to confirm that such Mortgage File
contains the related Mortgage Note or a
lost note affidavit in lieu thereof. No
later than 90 days after the Closing Date
(or, with respect to any Substitute
Mortgage Loan, within five Business Days
after the receipt by the Trustee or
Custodian thereof), the Trustee agrees, for
the benefit of the
Certificateholders, to review or cause to
be reviewed by the Custodian on its
behalf (under the Custodial Agreement),
each Mortgage File delivered to it and
to execute and deliver, or cause to be
executed and delivered, to the Depositor
and the Trustee an Interim Certification
substantially in the form annexed as
Exhibit Two to the Custodial Agreement. In
conducting such review, the Trustee
or Custodian will ascertain whether all
required documents have been executed
and received, and based on the Mortgage
Loan Schedule, whether those documents
relate, determined on the basis of the
Mortgagor name, original principal
balance and loan number, to the Mortgage
Loans it has received, as identified in
the Mortgage Loan Schedule. In performing
any such review, the Trustee or the
Custodian, as its agent, may conclusively
rely on the purported due execution
and genuineness of any such document and on
the purported genuineness of any
signature thereon. If the Trustee or the
Custodian, as its agent, finds any
document constituting part of the Mortgage
File not to have been executed or
received, or to be unrelated to the
Mortgage Loans identified on Exhibit B or to
appear to be defective on its face, then
the Trustee or the Custodian, as its
agent, shall promptly notify the Seller. In
accordance with the Mortgage Loan
Purchase Agreement, the Seller shall
correct or cure any such defect within
ninety (90) days from the date of notice
from the Trustee or the Custodian, as
its agent, of the defect and, if the Seller
fails to correct or cure the defect
within such period, and such defect
materially and adversely affects the
interests of the Certificateholders in the
related Mortgage Loan, the Trustee or
the Custodian, as its agent, shall enforce
the Seller's obligation pursuant to
the Mortgage Loan Purchase Agreement to,
within 90 days from the Trustee's or
the Custodian's notification, provide a
Substitute Mortgage Loan (if within two
years of the Closing Date) or purchase such
Mortgage Loan at the Repurchase
Price; provided that, if such defect would
cause the Mortgage Loan to be other
than a "qualified mortgage" as defined in
Section 860G(a)(3)(A)
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of the Code and Treasury Regulation Section
1.860G-2(a)(1), (2), (4), (5), (6),
(7) and (9), without reliance on the
provisions of Treasury Regulation Section
1.860G-2(a)(3) or Treasury Regulation
Section 1.860G 2(f)(2) or any other
provision that would allow a Mortgage Loan
to be treated as a "qualified
mortgage" notwithstanding its failure to
meet the requirements of Section
860G(a)(3)(A) of the Code and Treasury
Regulation Section 1.860G-2(a)(1), (2),
(4), (5), (6), (7) and (9), any such cure
or repurchase must occur within 90
days from the date such breach was
discovered; provided, however, that if such
defect relates solely to the inability of
the Seller to deliver the original
Security Instrument or intervening
assignments thereof, or a certified copy
thereof, because the originals of such
documents or a certified copy have not
been returned by the applicable
jurisdiction, then the Seller shall not be
required to purchase such Mortgage Loan if
the Seller delivers such original
documents or certified copy promptly upon
receipt, but in no event later than
360 days after the Closing Date. The
foregoing repurchase obligation shall not
apply in the event that the Seller cannot
deliver such original or copy of any
document submitted for recording to the
appropriate recording office in the
jurisdiction because such document has not
been returned by such office;
provided that the Seller shall instead
deliver a recording receipt of such
recording office or, if such receipt is not
available, a certificate of the
Seller or a Servicing Officer confirming
that such documents have been accepted
for recording, and delivery to the Trustee
or the Custodian, as its agent, shall
be effected by the Seller within thirty
days of its receipt of the original
recorded document.
(b) No later than 180
days after the Closing Date (or
with respect to any Substitute Mortgage
Loan, within five Business Days after
the receipt by the Trustee or the Custodian
thereof), the Trustee or the
Custodian, as its agent, will review, for
the benefit of the Certificateholders,
the Mortgage Files delivered to it and will
execute and deliver or cause to be
executed and delivered to the Depositor and
the Trustee a Final Certification
substantially in the form annexed as
Exhibit Three to the Custodial Agreement.
In conducting such review, the Trustee or
the Custodian, as its agent, will
ascertain whether an original of each
document required to be recorded has been
returned from the recording office with
evidence of recording thereon or a
certified copy has been obtained from the
recording office. If the Trustee or
the Custodian, as its agent, finds any
document constituting part of the
Mortgage File has not been received, or to
be unrelated, determined on the basis
of the Mortgagor name, original principal
balance and loan number, to the
Mortgage Loans identified on Exhibit B or
to appear defective on its face, the
Trustee or the Custodian, as its agent,
shall promptly notify the Seller
(provided, however, that with respect to
those documents described in subsection
(b)(iv), (b)(v) and (b)(vii) of Section
2.01, the Trustee's and the Custodian's
obligations shall extend only to the
documents actually delivered to the Trustee
or Custodian pursuant to such subsections).
In accordance with the Mortgage Loan
Purchase Agreement, the Seller shall
correct or cure any such defect or EMC
shall deliver to the Trustee an Opinion of
Counsel to the effect that such
defect does not materially or adversely
affect the interests of
Certificateholders in such Mortgage Loan
within 90 days from the date of notice
from the Trustee of the defect and if the
Seller is unable to cure such defect
within such period, and if such defect
materially and adversely affects the
interests of the Certificateholders in the
related Mortgage Loan, then the
Trustee shall enforce the Seller's
obligation under the Mortgage Loan Purchase
Agreement to, within 90 days from the
Trustee's or Custodian's notification,
provide a Substitute Mortgage Loan (if
within two years of the Closing Date) or
purchase such Mortgage Loan at the
Repurchase Price; provided that, if such
defect would cause the Mortgage Loan to be
other than a "qualified mortgage" as
defined in Section 860G(a)(3)(A) of the
Code and Treasury Regulation Section
1.860G-2(a)(1), (2), (4),
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(5), (6), (7) and (9), without reliance on
the provisions of Treasury Regulation
Section 1.860G-2(a)(3) or Treasury
Regulation Section 1.860G 2(f)(2) or any
other provision that would allow a Mortgage
Loan to be treated as a "qualified
mortgage" notwithstanding its failure to
meet the requirements of Section
860G(a)(3)(A) of the Code and Treasury
Regulation Section 1.860G-2(a)(1), (2),
(4), (5), (6), (7) and (9), any such cure,
repurchase or substitution must occur
within 90 days from the date such breach
was discovered; provided, further,
however, that if such defect relates solely
to the inability of the Seller to
deliver the original Security Instrument or
intervening assignments thereof, or
a certified copy thereof, because the
originals of such documents or a certified
copy have not been returned by the
applicable jurisdiction, then the Seller
shall not be required to purchase such
Mortgage Loan if the Seller delivers such
original documents or certified copy
promptly upon receipt, but in no event
later than 360 days after the Closing Date.
The foregoing repurchase obligation
shall not apply in the event that the
Seller cannot deliver such original or
copy of any document submitted for
recording to the appropriate recording office
in the applicable jurisdiction because such
document has not been returned by
such office; provided that the Seller shall
instead deliver a recording receipt
of such recording office or, if such
receipt is not available, a certificate
confirming that such documents have been
accepted for recording, and delivery to
the Trustee or the Custodian, as its agent,
shall be effected by the Seller
within thirty days of its receipt of the
original recorded document.
(c) In the event that
a Mortgage Loan is purchased by the
Seller in accordance with Subsections
2.02(a) or (b) above, the Seller shall
remit to the Paying Agent the applicable
Repurchase Price for deposit in the
Distribution Account and the Seller shall
provide to the Master Servicer, the
Paying Agent and the Trustee written
notification detailing the components of
the Repurchase Price. Upon deposit of the
Repurchase Price in the Distribution
Account, the Depositor shall notify the
Trustee and the Trustee or the
Custodian, as its agent (upon receipt of a
Request for Release in the form of
Exhibit D attached hereto with respect to
such Mortgage Loan), shall release to
the Seller the related Mortgage File and
the Trustee shall execute and deliver
all instruments of transfer or assignment,
without recourse, furnished to it by
the Seller as are necessary to vest in the
Seller title to and rights under the
related Mortgage Loan. Such purchase shall
be deemed to have occurred on the
date on which the Repurchase Price in
available funds is received by the Paying
Agent. The Trustee shall amend the Mortgage
Loan Schedule, which was previously
delivered to it by the Depositor in a form
agreed to between the Depositor and
the Trustee, to reflect such repurchase and
shall promptly notify the Rating
Agencies and the Master Servicer of such
amendment. The obligation of the Seller
to repurchase any Mortgage Loan as to which
such a defect in a constituent
document exists shall be the sole remedy
respecting such defect available to the
Certificateholders or to the Trustee on
their behalf.
Section 2.03. Assignment of Interest in the Mortgage Loan
Purchase
Agreement.
(a) The Depositor
hereby assigns to the Trustee, on
behalf of the Certificateholders, all of
its right, title and interest in the
Mortgage Loan Purchase Agreement, including
but not limited to the Depositor's
rights and obligations pursuant to the
Countrywide Servicing Agreement (noting
that the Seller has retained the right in
the event of breach of the
representations, warranties and covenants,
if any, with respect to the Mortgage
Loans under the Countrywide Servicing
Agreement to enforce the provisions
thereof and to seek all or any available
remedies). The obligations of the
Seller to substitute or repurchase, as
applicable, a
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Mortgage Loan shall be the Trustee's and
the Certificateholders' sole remedy for
any breach thereof. At the request of the
Trustee, the Depositor shall take such
actions as may be necessary to enforce the
above right, title and interest on
behalf of the Trustee and the
Certificateholders or shall execute such further
documents as the Trustee may reasonably
require in order to enable the Trustee
to carry out such enforcement.
(b) If the Depositor,
the Securities Administrator or the
Trustee discovers a breach of any of the
representations and warranties set
forth in the Mortgage Loan Purchase
Agreement, which breach materially and
adversely affects the value of the
interests of Certificateholders or the
Trustee in the related Mortgage Loan, the
party discovering the breach shall
give prompt written notice of the breach to
the other parties. The Seller,
within 90 days of its discovery or receipt
of notice that such breach has
occurred (whichever occurs earlier), shall
cure the breach in all material
respects or, subject to the Mortgage Loan
Purchase Agreement, or Section 2.04 of
this Agreement, as applicable, shall
purchase the Mortgage Loan or any property
acquired with respect thereto from the
Trustee; provided, however, that if there
is a breach of any representation set forth
in the Mortgage Loan Purchase
Agreement or Section 2.04 of this
Agreement, as applicable, and the Mortgage
Loan or the related property acquired with
respect thereto has been sold, then
the Seller shall pay, in lieu of the
Repurchase Price, any excess of the
Repurchase Price over the Net Liquidation
Proceeds received upon such sale. (If
the Net Liquidation Proceeds exceed the
Repurchase Price, any excess shall be
paid to the Seller, to the extent not
required by law to be paid to the related
borrower.) Any such purchase by the Seller
shall be made by providing an amount
equal to the Repurchase Price to the Paying
Agent for deposit in the
Distribution Account and written
notification detailing the components of such
Repurchase Price to the Trustee, the Paying
Agent and the Master Servicer. The
Depositor shall notify the Trustee and
submit to the Trustee or the Custodian,
as its agent, a Request for Release in the
form of Exhibit D attached hereto,
and the Trustee shall release, or the
Trustee shall cause the Custodian to
release, to the Seller, the related
Mortgage File and the Trustee shall execute
and deliver all instruments of transfer or
assignment furnished to it by the
Seller, without recourse, as are necessary
to vest in the Seller title to and
rights under the Mortgage Loan or any
property acquired with respect thereto.
Such purchase shall be deemed to have
occurred on the date on which the
Repurchase Price in available funds is
received by the Securities Administrator.
The Trustee shall amend the Mortgage Loan
Schedule to reflect such repurchase
and shall promptly notify the Master
Servicer and the Rating Agencies of such
amendment. Enforcement of the obligation of
the Seller to purchase (or
substitute a Substitute Mortgage Loan for)
any Mortgage Loan or any property
acquired with respect thereto (or pay the
Repurchase Price as set forth in the
above proviso) as to which a breach has
occurred and is continuing shall
constitute the sole remedy respecting such
breach available to the
Certificateholders or the Trustee on their
behalf.
Section 2.04. Substitution of Mortgage Loans.
(a) Notwithstanding
anything to the contrary in this Agreement, in
lieu of purchasing a Mortgage Loan pursuant
to the Mortgage Loan Purchase
Agreement or Sections 2.02 or 2.03 of this
Agreement, the Seller may, no later
than the date by which such purchase by the
Seller would otherwise be required,
tender to the Trustee a Substitute Mortgage
Loan accompanied by a certificate of
an authorized officer of the Seller that
such Substitute Mortgage Loan conforms
to the requirements set forth in the
definition of "Substitute Mortgage Loan" in
the Mortgage Loan Purchase Agreement or
this Agreement, as applicable; provided,
however, that substitution pursuant to the
Mortgage Loan
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Purchase Agreement or Section 2.04 of this
Agreement, as applicable, in lieu of
purchase shall not be permitted after the
termination of the two-year period
beginning on the Startup Day; provided,
further, that if the breach of a
Mortgage Loan representation or warranty
would cause such Mortgage Loan to be
other than a "qualified mortgage" as
defined in Section 860G(a)(3)(A) of the
Code and Treasury Regulation Section
1.860G-2(a)(1), (2), (4), (5), (6), (7) and
(9), without reliance on the provisions of
Treasury Regulation Section
1.860G-2(a)(3) or Treasury Regulation
Section 1.860G 2(f)(2) or any other
provision that would allow a Mortgage Loan
to be treated as a "qualified
mortgage" notwithstanding its failure to
meet the requirements of Section
860G(a)(3)(A) of the Code and Treasury
Regulation Section 1.860G-2(a)(1), (2),
(4), (5), (6), (7) and (9), then any such
substitution must occur within 90 days
from the date the breach was discovered.
The Trustee or the Custodian, as its
agent, shall examine the Mortgage File for
any Substitute Mortgage Loan in the
manner set forth in Section 2.02(a) and the
Trustee or the Custodian, as its
agent, shall notify the Seller in writing,
within five Business Days after
receipt, whether or not the documents
relating to the Substitute Mortgage Loan
satisfy the requirements of the fourth
sentence of Subsection 2.02(a). Within
two Business Days after such notification,
the Seller shall provide to the
Paying Agent for deposit in the
Distribution Account the amount, if any, by
which the Outstanding Principal Balance as
of the next preceding Due Date of the
Mortgage Loan for which substitution is
being made, after giving effect to
Scheduled Principal due on such date,
exceeds the Outstanding Principal Balance
as of such date of the Substitute Mortgage
Loan, after giving effect to
Scheduled Principal due on such date, which
amount shall be treated for the
purposes of this Agreement as if it were
the payment by the Seller of the
Repurchase Price for the purchase of a
Mortgage Loan by the Seller. After such
notification to the Seller and, if any such
excess exists, upon receipt of such
deposit, the Trustee shall accept such
Substitute Mortgage Loan which shall
thereafter be deemed to be a Mortgage Loan
hereunder. In the event of such a
substitution, accrued interest on the
Substitute Mortgage Loan for the month in
which the substitution occurs and any
Principal Prepayments made thereon during
such month shall be the property of the
Trust Fund and accrued interest for such
month on the Mortgage Loan for which the
substitution is made and any Principal
Prepayments made thereon during such month
shall be the property of the Seller.
The Scheduled Principal on a Substitute
Mortgage Loan due on the Due Date in the
month of substitution shall be the property
of the Seller and the Scheduled
Principal on the Mortgage Loan for which
the substitution is made due on such
Due Date shall be the property of the Trust
Fund. Upon acceptance of the
Substitute Mortgage Loan (and delivery to
the Trustee or Custodian of a Request
for Release for such Mortgage Loan), the
Trustee (or the Custodian, as its
agent) shall release to the Seller the
Mortgage File related to any Mortgage
Loan released pursuant to the Mortgage Loan
Purchase Agreement or Section 2.04
of this Agreement, as applicable, and the
Trustee shall execute and deliver all
instruments of transfer or assignment,
without recourse, in form as provided to
it as are necessary to vest in the Seller
title to and rights under any Mortgage
Loan released pursuant to the Mortgage Loan
Purchase Agreement or Section 2.04
of this Agreement, as applicable. The
Seller shall deliver the documents related
to the Substitute Mortgage Loan in
accordance with the provisions of the
Mortgage Loan Purchase Agreement or
Subsections 2.01(b) and 2.02(b) of this
Agreement, as applicable, with the date of
acceptance of the Substitute Mortgage
Loan deemed to be the Closing Date for
purposes of the time periods set forth in
those Subsections. The representations and
warranties set forth in the Mortgage
Loan Purchase Agreement shall be deemed to
have been made by the Seller with
respect to each Substitute Mortgage Loan as
of the date of acceptance of such
Mortgage Loan by the Trustee.
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The Securities Administrator shall amend
the Mortgage Loan Schedule to reflect
such substitution and shall provide a copy
of such amended Mortgage Loan
Schedule to the Master Servicer, the
Trustee and the Rating Agencies.
Section 2.05. Issuance of Certificates The Trustee acknowledges
the assignment to it of the Mortgage Loans
and the other assets comprising the
Trust Fund and, concurrently therewith, has
signed, and the Certificate
Registrar has countersigned and delivered
to the Depositor, in exchange
therefor, Certificates in such authorized
denominations representing such
Fractional Undivided Interests as the
Depositor has requested. The Trustee
agrees that it will hold the Mortgage Loans
and such other assets as may from
time to time be delivered to it segregated
on the books of the Trustee in trust
for the benefit of the
Certificateholders.
The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and
otherwise convey in trust to the
Trustee without recourse all the right,
title and interest of the Depositor in
and to the REMIC I Regular Interests and
the other assets of REMIC II for the
benefit of the holders of the REMIC II
Interests. The Trustee acknowledges
receipt of the REMIC I Regular Interests
(which are uncertificated) and the
other assets of REMIC II and declares that
it holds and will hold the same in
trust for the exclusive use and benefit of
the holders of the REMIC II
Certificates.
The Depositor, concurrently with the execution and delivery
hereof,
does hereby transfer, assign, set over and
otherwise convey in trust to the
Trustee without recourse all the right,
title and interest of the Depositor in
and to the REMIC II Regular Interests, and
the other assets of REMIC III for the
benefit of the holders of the REMIC III
Certificates. The Trustee acknowledges
receipt of the REMIC II Regular Interests
(which are uncertificated) and the
other assets of REMIC III and declares that
it holds and will hold the same in
trust for the exclusive use and benefit of
the holders of the REMIC III
Certificates.
Section 2.06. Representations and
Warranties Concerning the Depositor(a) . The
Depositor hereby represents and warrants to
the Trustee, the Master Servicer and
the Securities Administrator as
follows:
(i) the Depositor (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware
and (b) is qualified and in good standing as a foreign corporation
to
do business in each jurisdiction where such qualification is
necessary,
except where the failure so to qualify would not reasonably be
expected
to have a material adverse effect on the Depositor's business
as
presently conducted or on the Depositor's ability to enter into
this
Agreement and to consummate the transactions contemplated
hereby;
(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
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herein contemplated, nor compliance with the provisions hereof,
will
conflict with or result in a breach of, or constitute a default
under,
any of the provisions of any law, governmental rule,
regulation,
judgment, decree or order binding on the Depositor or its
properties
or the articles of incorporation or by-laws of the Depositor,
except
those conflicts, breaches or defaults which would not reasonably
be
expected to have a material adverse effect on the Depositor's
ability
to enter into this Agreement and to consummate the transactions
contemplated hereby;
(iv) the execution, delivery and performance by the Depositor
of this Agreement and the consummation of the transactions
contemplated
hereby do not require the consent or approval of, the giving of
notice
to, the registration with, or the taking of any other action in
respect
of, any state, federal or other governmental authority or
agency,
except those
consents, approvals, notices, registrations or other
actions as have already been obtained, given or made;
(v) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery
by
the other parties hereto, constitutes a valid and binding
obligation of
the Depositor enforceable against it in accordance with its
terms
(subject to applicable bankruptcy and insolvency laws and other
similar
laws affecting the enforcement of the rights of creditors
generally);
(vi) there are no actions, suits or proceedings pending or, to
the knowledge of the Depositor, threatened against the
Depositor,
before or by any court, administrative agency, arbitrator or
governmental body (i) with respect to any of the transactions
contemplated by this Agreement or (ii) with respect to any other
matter
which in the judgment of the Depositor will be determined adversely
to
the Depositor and will, if determined adversely to the
Depositor,
materially and adversely affect the Depositor's ability to enter
into
this Agreement or perform its obligations under this Agreement; and
the
Depositor is not in default with respect to any order of any
court,
administrative agency, arbitrator or governmental body so as to
materially and adversely affect the transactions contemplated by
this
Agreement;
and
(vii) immediately prior to the transfer and assignment thereof
to the Trustee, each Mortgage Note and each Mortgage was not
subject to
an assignment or pledge, and the Depositor had good and
marketable
title to and was the sole owner thereof and had full right to
transfer
and sell the Mortgage Loans to the Trustee free and clear of
any
encumbrance, equity, lien, pledge, charge, claim or security
interest.
Section 2.07. Covenants of the Master Servicer(a). The Master
Servicer
covenants to the Depositor, the Securities
Administrator and the Trustee, as
follows:
(i) it shall comply in
the performance of its obligations
under this Agreement;
(ii) no written information, certificate of an officer,
statement furnished in writing or written report prepared by the
Master
Servicer pursuant to this Agreement and delivered to the
Securities
Administrator, the Depositor, any affiliate of the Depositor or
the
Trustee will contain any untrue statement of a material
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fact or omit to state a material fact necessary to make the
information, certificate, statement or report not misleading;
and
(iii) it shall (only in its capacity as successor servicer
pursuant to the Countrywide Servicing Agreement) accurately and
fully
provide information regarding payment performance of the Mortgagors
to
the nationally recognized credit repositories, to the extent
such
reporting remains customary and prudent in the servicing of
mortgage
loans similar to the Mortgage Loans.
Nothing in this Section shall derogate from the obligation of
the
Master Servicer to observe any applicable
law prohibiting disclosure of
information regarding the Mortgagors, and
the failure of the Master Servicer to
provide access as provided in this Section
as a result of such obligation shall
not constitute a breach of this
Section.
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Article III
Administration and Servicing of Mortgage Loans
Section 3.01. Master Servicer. The Master Servicer shall, from
and
after the Closing Date, supervise, monitor
and oversee the obligation of the
Servicer to service and administer the
Mortgage Loans in accordance with the
terms of the Countrywide Servicing
Agreement and shall have full power and
authority to do any and all things which it
may deem necessary or desirable in
connection with such master servicing and
administration. In performing its
obligations hereunder, the Master Servicer
shall act in a manner consistent with
Accepted Master Servicing Practices.
Furthermore, the Master Servicer shall
oversee and consult with the Servicer as
necessary from time-to-time to carry
out the Master Servicer's obligations
hereunder, shall receive, review and
evaluate all reports, information and other
data provided to the Master Servicer
by the Servicer and shall cause the
Servicer to perform and observe the
covenants, obligations and conditions to be
performed or observed by the
Servicer under the Countrywide Servicing
Agreement. The Master Servicer shall
independently and separately monitor the
Servicer's servicing activities with
respect to each Mortgage Loan, reconcile
the results of such monitoring with
such information provided in the previous
sentence on a monthly basis and
coordinate corrective adjustments to the
Servicer's and Master Servicer's
records, and based on such reconciled and
corrected information, the Master
Servicer shall provide such information to
the Securities Administrator as shall
be necessary in order for it to prepare the
statements specified in Section
6.04, and prepare any other information and
statements required to be forwarded
by the Master Servicer hereunder. The
Master Servicer shall reconcile the
results of its Mortgage Loan monitoring
with the actual remittances of the
Servicer to the Distribution Account
pursuant to the Countrywide Servicing
Agreement.
The Trustee shall furnish the Servicer and the Master Servicer with
any
powers of attorney, in substantially the
form attached hereto as Exhibit K, and
other documents in form as provided to it
necessary or appropriate to enable the
Servicer and the Master Servicer to service
and administer the Mortgage Loans
and REO Property.
The Trustee shall provide access to the records and documentation
in
possession of the Trustee regarding the
Mortgage Loans and REO Property and the
servicing thereof to the
Certificateholders, the FDIC, and the supervisory
agents and examiners of the FDIC, such
access being afforded only upon
reasonable prior written request and during
normal business hours at the office
of the Trustee; provided, however, that,
unless otherwise required by law, the
Trustee shall not be required to provide
access to such records and
documentation if the provision thereof
would violate the legal right to privacy
of any Mortgagor. The Trustee shall allow
representatives of the above entities
to photocopy any of the records and
documentation and shall provide equipment
for that purpose at a charge that covers
the Trustee's actual costs.
The Trustee shall execute and deliver to the Servicer and the
Master
Servicer any court pleadings, requests for
trustee's sale or other documents
necessary or desirable to (i) the
foreclosure or trustee's sale with respect to
a Mortgaged Property; (ii) any legal action
brought to obtain judgment against
any Mortgagor on the Mortgage Note or
Security Instrument; (iii) obtain
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a deficiency judgment against the
Mortgagor; or (iv) enforce any other rights or
remedies provided by the Mortgage Note or
Security Instrument or otherwise
available at law or equity.
Section 3.02. REMIC-Related Covenants(a). For as long as each
REMIC
shall exist, the Trustee and the Securities
Administrator shall act in
accordance herewith to assure continuing
treatment of such REMIC as a REMIC, and
the Trustee and the Securities
Administrator shall comply with any directions of
the Depositor, the Servicer or the Master
Servicer to assure such continuing
treatment. In particular, the Trustee shall
not (a) sell or permit the sale of
all or any portion of the Mortgage Loans or
of any investment of deposits in an
Account unless such sale is as a result of
a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee
has received a REMIC Opinion, prepared
at the expense of the Trust Fund; and (b)
other than with respect to a
substitution pursuant to the Mortgage Loan
Purchase Agreement or Section 2.04 of
this Agreement, as applicable, accept any
contribution to any REMIC after the
Startup Day without receipt of a REMIC
Opinion. In addition, the Trustee shall
comply with all of the requirements of
Treasury Regulation ss. 1.860F-2(a)(2),
including, without limitation, the
requirement that each REMIC account for items
of income and ownership of assets in a
manner that respects the separate
existence of each REMIC.
Section 3.03. Monitoring of the Servicer.
(a) The Master
Servicer shall be responsible for reporting to the
Trustee and the Depositor the compliance by
the Servicer with its duties under
the Countrywide Servicing Agreement. In the
review of the Servicer's activities,
the Master Servicer may rely upon an
officer's certificate of the Servicer (or
similar document signed by an officer of
the Servicer) with regard to the
Servicer's compliance with the terms of the
Countrywide Servicing Agreement. In
the event that the Master Servicer, in its
judgment, determines that the
Servicer should be terminated in accordance
with the Countrywide Servicing
Agreement, or that a notice should be sent
pursuant to the Countrywide Servicing
Agreement with respect to the occurrence of
an event that, unless cured, would
constitute grounds for such termination,
the Master Servicer shall notify the
Depositor and the Trustee thereof and the
Master Servicer shall issue such
notice or take such other action as it
deems appropriate.
(b) The Master
Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the
obligations of the Servicer under the
Countrywide Servicing Agreement, and shall,
in the event that the Servicer
fails to perform its obligations in
accordance with the Countrywide Servicing
Agreement, subject to the preceding
paragraph, terminate the rights and
obligations of the Servicer thereunder and
act as servicer of the Mortgage Loans
or cause the Trustee to enter into a new
Servicing Agreement with a successor
Servicer selected by the Master Servicer;
provided, however, it is understood
and acknowledged by the parties hereto that
there will be a period of transition
(not to exceed 90 days) before the actual
servicing functions can be fully
transferred to such successor Servicer.
Such enforcement, including, without
limitation, the legal prosecution of
claims, termination of the Countrywide
Servicing Agreement and the pursuit of
other appropriate remedies, shall be in
such form and carried out to such an extent
and at such time as the Master
Servicer, in its good faith business
judgment, would require were it the owner
of the Mortgage Loans. The Master Servicer
shall pay the costs of such
enforcement at its own expense, provided
that the Master Servicer shall not be
required
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to prosecute or defend any legal action
except to the extent that the Master
Servicer shall have received reasonable
indemnity for its costs and expenses in
pursuing such action.
(c) To the extent that
the costs and expenses of the Master
Servicer related to any termination of the
Servicer, appointment of a successor
Servicer or the transfer and assumption of
servicing by the Master Servicer with
respect to the Countrywide Servicing
Agreement (including, without limitation,
(i) all legal costs and expenses and all
due diligence costs and expenses
associated with an evaluation of the
potential termination of the Servicer as a
result of an event of default by the
Servicer and (ii) all costs and expenses
associated with the complete transfer of
servicing, including all servicing
files and all servicing data and the
completion, correction or manipulation of
such servicing data as may be required by
the successor servicer to correct any
errors or insufficiencies in the servicing
data or otherwise to enable the
successor servicer to service the Mortgage
Loans in accordance with the
Countrywide Servicing Agreement) are not
fully and timely reimbursed by the
terminated Servicer, the Master Servicer
shall be entitled to reimbursement of
such costs and expenses from the
Distribution Account.
(d) The Master
Servicer shall require the Servicer to comply
with the remittance requirements and other
obligations set forth in the
Countrywide Servicing Agreement, including
the Assignment Agreement. The Master
Servicer shall enforce the obligation of
the Servicer pursuant to the
Countrywide Servicing Agreement to provide
it with the annual officer's
certificate of compliance and annual
independent accountants' servicing reports,
as well as back-up certifications to each
Master Servicer Certification pursuant
to Section 3.18.
(e) If the Master
Servicer acts as Servicer, it will not assume
liability for the representations and
warranties of the Servicer, if any,
that it replaces.
Section 3.04. Fidelity Bond. The Master Servicer, at its
expense,
shall maintain in effect a blanket fidelity
bond and an errors and omissions
insurance policy, affording coverage with
respect to all directors, officers,
employees and other Persons acting on such
Master Servicer's behalf, and
covering errors and omissions in the
performance of the Master Servicer's
obligations hereunder. The amount of
coverage to be maintained by the Master
Servicer with respect to the blanket
fidelity bond policy shall be $50,000,000
per occurrence, and, with respect to the
errors and omissions insurance policy,
shall be $20,000,000 per occurrence.
Section 3.05. Power to Act; Procedures. The Master Servicer
shall
master service the Mortgage Loans and shall
have full power and authority,
subject to the REMIC Provisions and the
provisions of Article X hereof, to do
any and all things that it may deem
necessary or desirable in connection with
the master servicing and administration of
the Mortgage Loans, including but not
limited to the power and authority (i) to
execute and deliver, on behalf of the
Certificateholders and the Trustee,
customary consents or waivers and other
instruments and documents, (ii) to consent
to transfers of any Mortgaged
Property and assumptions of the Mortgage
Notes and related Mortgages, (iii) to
collect any Insurance Proceeds and
Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the
ownership of the Mortgaged Property
securing any Mortgage Loan, in each case,
in accordance with the provisions of
this Agreement and the Countrywide
Servicing Agreement, as applicable; provided,
however, that the Master Servicer shall not
(and, consistent with its
responsibilities
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under Section 3.03, shall not permit the
Servicer to) knowingly or intentionally
take any action, or fail to take (or fail
to cause to be taken) any action
reasonably within its control and the scope
of duties more specifically set
forth herein, that, under the REMIC
Provisions, if taken or not taken, as the
case may be, would cause any REMIC
hereunder to fail to qualify as a REMIC or
result in the imposition of a tax upon the
Trust Fund (including but not limited
to the tax on prohibited transactions as
defined in Section 860F(a)(2) of the
Code and the tax on contributions to a
REMIC set forth in Section 860G(d) of the
Code) unless the Master Servicer has
received an Opinion of Counsel (but not at
the expense of the Master Servicer) to the
effect that the contemplated action
will not cause any REMIC hereunder to fail
to qualify as a REMIC or result in
the imposition of a tax upon any REMIC
hereunder. The Trustee shall furnish the
Master Servicer, upon written request from
a Servicing Officer, with any powers
of attorney empowering the Master Servicer
or the Servicer to execute and
deliver instruments of satisfaction or
cancellation, or of partial or full
release or discharge, and to foreclose upon
or otherwise liquidate Mortgaged
Property, and to appear in, prosecute or
defend any court action relating to the
Mortgage Loans or the Mortgaged Property,
in accordance with the Countrywide
Servicing Agreement and this Agreement, and
the Trustee shall execute and
deliver such other documents as the Master
Servicer may request, to enable the
Master Servicer to master service and
administer the Mortgage Loans and carry
out its duties hereunder, in each case in
accordance with Accepted Master
Servicing Practices (and the Trustee shall
have no liability for misuse of any
such powers of attorney by the Master
Servicer or the Servicer). If the Master
Servicer or the Trustee has been advised
that it is likely that the laws of the
state in which action is to be taken
prohibit such action if taken in the name
of the Trustee or that the Trustee would be
adversely affected under the "doing
business" or tax laws of such state if such
action is taken in its name, then
the Master Servicer shall join with the
Trustee in the appointment of a
co-trustee pursuant to Section 9.11 hereof.
In the performance of its duties
hereunder, the Master Servicer shall be an
independent contractor and shall not,
except in those instances where it is
taking action in the name of the Trustee,
be deemed to be the agent of the
Trustee.
The Trustee shall execute and deliver to the Servicer any court
pleadings, requests for trustee's sale or
other documents necessary or desirable
or relating to (i) the foreclosure or
trustee's sale with respect to a Mortgaged
Property; (ii) any legal action brought to
obtain judgment against any Mortgagor
on the related Mortgage Note or related
Mortgage; (iii) obtaining a deficiency
judgment against the related Mortgagor; or
(iv) enforcing any other rights or
remedies provided by a Mortgage Note or
related Mortgage or otherwise available
at law or equity.
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Section 3.06. Due-on-Sale Clauses; Assumption Agreements(a) . To
the
extent provided in the Countrywide
Servicing Agreement, to the extent Mortgage
Loans contain enforceable due-on-sale
clauses, the Master Servicer shall cause
the Servicer to enforce such clauses in
accordance with the Countrywide
Servicing Agreement. If applicable law
prohibits the enforcement of a
due-on-sale clause or such clause is
otherwise not enforced in accordance with
the Countrywide Servicing Agreement, and,
as a consequence, a Mortgage Loan is
assumed, the original Mortgagor may be
released from liability in accordance
with the Countrywide Servicing
Agreement.
Section 3.07. Release of Mortgage Files.
(a) Upon becoming
aware of the payment in full of any Mortgage
Loan, or the receipt by the Servicer of a
notification that payment in full has
been escrowed in a manner customary for
such purposes for payment to
Certificateholders on the next Distribution
Date, the Servicer will (and if the
Servicer does not, then the Master Servicer
may), if required under the
Countrywide Servicing Agreement, promptly
furnish to the Custodian, on behalf of
the Trustee, two copies of a certification
substantially in the form of Exhibit
D hereto signed by a Servicing Officer or
in a mutually agreeable electronic
format which will, in lieu of a signature
on its face, originate from a
Servicing Officer (which certification
shall include a statement to the effect
that all amounts received in connection
with such payment that are required to
be deposited in the Protected Account
maintained by the Servicer pursuant to
Section 4.01 or by the Servicer pursuant to
the Countrywide Servicing Agreement
have been or will be so deposited) and
shall request that the Custodian, on
behalf of the Trustee, deliver to the
Servicer the related Mortgage File. Upon
receipt of such certification and request,
the Custodian, on behalf of the
Trustee, shall promptly release the related
Mortgage File to the Servicer, and
the Trustee and Custodian shall have no
further responsibility with regard to
such Mortgage File. Upon any such payment
in full, the Servicer is authorized to
give, as agent for the Trustee, as the
mortgagee under the Mortgage that secured
the Mortgage Loan, an instrument of
satisfaction (or assignment of mortgage
without recourse) regarding the Mortgaged
Property subject to the Mortgage,
which instrument of satisfaction or
assignment, as the case may be, shall be
delivered to the Person or Persons entitled
thereto against receipt therefor of
such payment, it being understood and
agreed that no expenses incurred in
connection with such instrument of
satisfaction or assignment, as the case may
be, shall be chargeable to the Protected
Account.
(b) From time to time
and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in
accordance with the Countrywide
Servicing Agreement, the Trustee shall
execute such documents as shall be
prepared and furnished to the Trustee by
the Servicer or the Master Servicer (in
form reasonably acceptable to the Trustee)
and as are necessary to the
prosecution of any such proceedings. The
Custodian, on behalf of the Trustee,
shall, upon the request of the Servicer or
the Master Servicer, and delivery to
the Custodian, on behalf of the Trustee, of
two copies of a Request for Release
signed by a Servicing Officer substantially
in the form of Exhibit D (or in a
mutually agreeable electronic format which
will, in lieu of a signature on its
face, originate from a Servicing Officer),
release the related Mortgage File
held in its possession or control to the
Servicer or the Master Servicer, as
applicable. Such trust receipt shall
obligate the Servicer or the Master
Servicer to return the Mortgage File to the
Custodian on behalf of the Trustee
when the need therefor by the Servicer or
the Master Servicer no longer exists,
unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a
certificate
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of a Servicing Officer similar to that
hereinabove specified, the Mortgage File
shall be released by the Custodian, on
behalf of the Trustee, to the Servicer or
the Master Servicer.
(c) The Master
Servicer hereby covenants that it shall not alter
the codes referenced in Section 4(c) of the
Mortgage Loan Purchase Agreement
with respect to any Mortgage Loan during
the term of this Agreement, unless and
until such Mortgage Loan is repurchased in
accordance with the terms of this
Agreement.
Section 3.08. Documents, Records and Funds in Possession of
Master
Servicer To Be Held for Trustee.
(a) The Master
Servicer shall transmit and the Servicer (to the
extent required by the Countrywide
Servicing Agreement) shall transmit to the
Trustee or Custodian such documents and
instruments coming into the
possession of the Master Servicer or the
Servicer from time to time as are
required by the terms hereof, or in the
case of the Servicer, the Countrywide
Servicing Agreement, to be delivered to the
Trustee or Custodian. Any funds
received by the Master Servicer or by the
Servicer in respect of any Mortgage
Loan or which otherwise are collected by
the Master Servicer or by the Servicer
as Liquidation Proceeds or Insurance
Proceeds in respect of any Mortgage Loan
shall be held for the benefit of the
Trustee and the Certificateholders subject
to the Master Servicer's right to retain
the Master Servicing Compensation and
other amounts provided in this Agreement,
and to the right of the Servicer to
retain its Servicing Fee and other amounts
as provided in the Countrywide
Servicing Agreement. The Master Servicer
shall, and (to the extent provided in
the Countrywide Servicing Agreement) shall
cause the Servicer to, provide access
to information and documentation regarding
the Mortgage Loans to the Trustee,
the Securities Administrator and their
respective agents and accountants at any
time upon reasonable request and during
normal business hours, and to
Certificateholders that are savings and
loan associations, banks or insurance
companies, the Office of Thrift
Supervision, the FDIC and the supervisory agents
and examiners of such Office and
Corporation or examiners of any other federal
or state banking or insurance regulatory
authority if so required by applicable
regulations of the Office of Thrift
Supervision or other regulatory authority,
such access to be afforded without charge
but only upon reasonable request in
writing and during normal business hours at
the offices of the Master Servicer
designated by it. In fulfilling such a
request the Master Servicer shall not be
responsible for determining the sufficiency
of such information.
(b) All Mortgage Files
and funds collected or held by, or
under the control of, the Master Servicer
in respect of any Mortgage Loans,
whether from the collection of principal
and interest payments or from
Liquidation Proceeds or Insurance Proceeds,
shall be held by the Master Servicer
for and on behalf of the Trustee and the
Certificateholders and shall be and
remain the sole and exclusive property of
the Trustee; provided, however, that
the Master Servicer and the Servicer shall
be entitled to setoff against, and
deduct from, any such funds any amounts
that are properly due and payable to the
Master Servicer or the Servicer under this
Agreement or the Countrywide
Servicing Agreement.
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Section 3.09. Standard Hazard Insurance and Flood Insurance
Policies.
(a) For each Mortgage
Loan, the Master Servicer shall enforce
any obligation of the Servicer under the
Countrywide Servicing Agreement to
maintain or cause to be maintained standard
fire and casualty insurance and,
where applicable, flood insurance, all in
accordance with the provisions of the
Countrywide Servicing Agreement. It is
understood and agreed that such insurance
shall be with insurers meeting the
eligibility requirements set forth in the
Countrywide Servicing Agreement and that no
earthquake or other additional
insurance is to be required of any
Mortgagor or to be maintained on property
acquired in respect of a defaulted Mortgage
Loan, other than pursuant to such
applicable laws and regulations as shall at
any time be in force and as shall
require such additional insurance.
(b) Pursuant to
Section 4.01, any amounts collected by the
Servicer or the Master Servicer under any
insurance policies (other than
amounts to be applied to the restoration or
repair of the property subject to
the related Mortgage or released to the
Mortgagor in accordance with the
Countrywide Servicing Agreement) shall be
deposited into the Distribution
Account, subject to withdrawal pursuant to
Section 4.03. Any cost incurred by
the Master Servicer or the Servicer in
maintaining any such insurance (if the
Mortgagor defaults in its obligation to do
so) shall be added to the amount
owing under the Mortgage Loan where the
terms of the Mortgage Loan so permit;
provided, however, that the addition of any
such cost shall not be taken into
account for purposes of calculating the
distributions to be made to
Certificateholders and shall be recoverable
by the Master Servicer or the
Servicer pursuant to Sections 4.01 and
4.03.
Section 3.10. Presentment of Claims and Collection of Proceeds(a) .
The
Master Servicer shall (to the extent
provided in the Countrywide Servicing
Agreement) cause the Servicer to prepare
and present on behalf of the Trustee
and the Certificateholders all claims under
the Insurance Policies and take such
actions (including the negotiation,
settlement, compromise or enforcement of the
insured's claim) as shall be necessary to
realize recovery under such policies.
Any proceeds disbursed to the Master
Servicer (or disbursed to the Servicer and
remitted to the Master Servicer) in respect
of such policies, bonds or contracts
shall be promptly deposited in the
Distribution Account upon receipt, except
that any amounts realized that are to be
applied to the repair or restoration of
the related Mortgaged Property as a
condition precedent to the presentation of
claims on the related Mortgage Loan to the
insurer under any applicable
Insurance Policy need not be so deposited
(or remitted).
Section 3.11. Maintenance of the Primary Mortgage Insurance
Policies.
(a) The Master
Servicer shall not take, or permit the Servicer
(to the extent such action is prohibited
under the Countrywide Servicing
Agreement) to take, any action that would
result in noncoverage under any
applicable Primary Mortgage Insurance
Policy of any loss which, but for the
actions of such Master Servicer or the
Servicer, would have been covered
thereunder. The Master Servicer shall use
its best reasonable efforts to cause
the Servicer (to the extent required under
the Countrywide Servicing Agreement)
to keep in force and effect (to the extent
that the Mortgage Loan requires the
Mortgagor to maintain such insurance)
primary mortgage insurance applicable to
each Mortgage Loan in accordance with the
provisions of this Agreement and the
Countrywide Servicing Agreement, as
applicable. The Master Servicer shall
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not, and shall not permit the Servicer (to
the extent required under the
Countrywide Servicing Agreement) to, cancel
or refuse to renew any such Primary
Mortgage Insurance Policy that is in effect
at the date of the initial issuance
of the Mortgage Note and is required to be
kept in force hereunder except in
accordance with the provisions of this
Agreement and the Countrywide Servicing
Agreement, as applicable.
(b) The Master
Servicer agrees to present, or to cause the
Servicer (to the extent required under the
Countrywide Servicing Agreement)
to present, on behalf of the Trustee and
the Certificateholders, claims to the
insurer under any Primary Mortgage
Insurance Policies and, in this regard, to
take such reasonable action as shall be
necessary to permit recovery under any
Primary Mortgage Insurance Policies
respecting defaulted Mortgage Loans. Any
amounts collected by the Master Servicer or
the Servicer under any Primary
Mortgage Insurance Policies shall be
deposited in the Distribution Account,
subject to withdrawal pursuant to Section
4.03.
Section 3.12. Trustee to Retain Possession of Certain Insurance
Policies and Documents. The Trustee (or the
Custodian, as directed by the
Trustee), shall retain possession and
custody of the originals (to the extent
available) of any Primary Mortgage
Insurance Policies, or certificate of
insurance, if applicable, and any
certificates of renewal as to the foregoing as
may be issued from time to time as
contemplated by this Agreement. Until all
amounts distributable in respect of the
Certificates have been distributed in
full and the Master Servicer otherwise has
fulfilled its obligations under this
Agreement, the Trustee (or its Custodian,
if any, as directed by the Trustee)
shall also retain possession and custody of
each Mortgage File in accordance
with and subject to the terms and
conditions of this Agreement. The Master
Servicer shall promptly deliver or cause to
be delivered to the Trustee (or the
Custodian, as directed by the Trustee),
upon the execution or receipt thereof
the originals of any Primary Mortgage
Insurance Policies, any certificates of
renewal, and such other documents or
instruments that constitute portions of the
Mortgage File that come into the possession
of the Master Servicer from time to
time.
Section 3.13. Realization Upon Defaulted Mortgage Loans.
The Master
Servicer shall cause the Servicer (to the
extent required under the Countrywide
Servicing Agreement) to foreclose upon,
repossess or otherwise comparably
convert the ownership of Mortgaged
Properties securing such of the Mortgage
Loans as come into and continue in default
and as to which no satisfactory
arrangements can be made for collection of
delinquent payments, all in
accordance with the Countrywide Servicing
Agreement.
Section 3.14. Compensation for the Servicer and the Master
Servicer(a)
. The Master Servicer will be entitled to
all income and gain realized from any
investment of funds in the Distribution
Account from the Servicer Remittance
Date in each calendar month to the related
Distribution Date (the "Master
Servicing Compensation"). Servicing
compensation in the form of assumption fees,
if any, late payment charges, as collected,
if any, or otherwise (including any
prepayment premium or penalty) shall be
retained by the Servicer and shall not
be deposited in the Protected Account. The
Master Servicer will be entitled to
retain, as additional compensation, any
interest remitted by the Servicer in
connection with a Principal Prepayment in
full or otherwise in excess of amounts
required to be remitted to the Distribution
Account. The Master Servicer shall
be required to pay all expenses incurred by
it in connection with its
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activities hereunder and shall not be
entitled to reimbursement therefor except
as provided in this Agreement.
Section 3.15. REO Property.
(a) In the event the
Trust Fund acquires ownership of any
REO Property in respect of any related
Mortgage Loan, the deed or certificate of
sale shall be issued to the Trustee, or to
its nominee, on behalf of the related
Certificateholders. The Master Servicer
shall, to the extent provided in the
Countrywide Servicing Agreement, cause the
Servicer to sell any REO Property as
expeditiously as possible and in accordance
with the provisions of this
Agreement and the Countrywide Servicing
Agreement, as applicable. Pursuant to
its efforts to sell such REO Property, the
Master Servicer shall cause the
Servicer to protect and conserve such REO
Property in the manner and to the
extent required by the Countrywide
Servicing Agreement, in accordance with the
REMIC Provisions and in a manner that does
not result in a tax on "net income
from foreclosure property" or cause such
REO Property to fail to qualify as
"foreclosure property" within the meaning
of Section 860G(a)(8) of the Code.
(b) The Master
Servicer shall, to the extent required by the
Countrywide Servicing Agreement, cause the
Servicer to deposit all funds
collected and received in connection with
the operation of any REO Property in
the Protected Account.
(c) The Master
Servicer and the Servicer, upon the final
disposition of any REO Property, shall be
entitled to reimbursement for any
related unreimbursed Monthly Advances and
other unreimbursed advances as well as
any unpaid Servicing Fees from Liquidation
Proceeds received in connection with
the final disposition of such REO Property;
provided, that any such unreimbursed
Monthly Advances as well as any unpaid
Servicing Fees may be reimbursed or paid,
as the case may be, prior to final
disposition, out of any net rental income or
other net amounts derived from such REO
Property.
(d) To the extent
provided in the Countrywide Servicing
Agreement, the Liquidation Proceeds from
the final disposition of the REO
Property, net of any payment to the Master
Servicer and the Servicer as provided
above, shall be deposited in the Protected
Account on or prior to the
Determination Date in the month following
receipt thereof and be remitted by
wire transfer in immediately available
funds to the Master Servicer for deposit
into the Distribution Account on the next
succeeding Servicer Remittance Date.
Section 3.16. Annual Officer's Certificate as to Compliance.
(a) The Master
Servicer shall deliver to the Trustee and
the Rating Agencies on or before March 1 of
each year, commencing on March 1,
2006, an Officer's Certificate, certifying
that with respect to the year ending
December 31 of the prior year: (i) such
Servicing Officer has reviewed the
activities of such Master Servicer during
the preceding calendar year or portion
thereof and its performance under this
Agreement, (ii) to the best of such
Servicing Officer's knowledge, based on
such review, such Master Servicer has
performed and fulfilled its duties,
responsibilities and obligations under this
Agreement in all material respects
throughout such year, or, if there has been a
default in the fulfillment of any such
duties, responsibilities or obligations,
specifying each such default known to such
Servicing Officer and the nature and
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status thereof, and (iii) nothing has come
to the attention of such Servicing
Officer to lead such Servicing Officer to
believe that the Servicer has failed
to perform any of its duties,
responsibilities and obligations under the
Countrywide Servicing Agreement in all
material respects throughout such year,
or, if there has been a material default in
the performance or fulfillment of
any such duties, responsibilities or
obligations, specifying each such default
known to such Servicing Officer and the
nature and status thereof.
(b) Copies of such
statements shall be provided to any
Certificateholder upon request, by the
Master Servicer or by the Trustee at the
Master Servicer's expense if the Master
Servicer failed to provide such copies
(unless (i) the Master Servicer shall have
failed to provide the Trustee with
such statement or (ii) the Trustee shall be
unaware of the Master Servicer's
failure to provide such statement).
Section 3.17. Annual Independent Accountant's Servicing Report(a) .
If
the Master Servicer has, during the course
of any fiscal year, directly serviced
any of the Mortgage Loans, then the Master
Servicer at its expense shall cause a
nationally recognized firm of independent
certified public accountants to
furnish a statement to the Trustee, the
Rating Agencies and the Depositor on or
before March 1 of each year, commencing on
March 1, 2006, to the effect that,
with respect to the most recently ended
fiscal year, such firm has examined
certain records and documents relating to
the Master Servicer's performance of
its servicing obligations under this
Agreement and pooling and servicing and
trust agreements in material respects
similar to this Agreement and to each
other and that, on the basis of such
examination conducted substantially in
compliance with the Audit Program for
Mortgages Serviced for Freddie Mac or the
Uniform Single Attestation Program for
Mortgage Bankers, such firm is of the
opinion that the Master Servicer's
activities have been conducted in compliance
with this Agreement, or that such
examination has disclosed no material items of
noncompliance except for (i) such
exceptions as such firm believes to be
immaterial, (ii) such other exceptions as
are set forth in such statement and
(iii) such exceptions that the Uniform
Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages
Serviced by Freddie Mac requires it
to report. Copies of such statements shall
be provided by the Master Servicer to
any Certificateholder upon request, or by
the Trustee at the expense of the
Master Servicer if the Master Servicer
shall fail to provide such copies. If
such report discloses exceptions that are
material, the Master Servicer shall
advise the Trustee whether such exceptions
have been or are susceptible of cure,
and will take prompt action to do so.
Section 3.18. Reports Filed with Securities and Exchange
Commission.
(a)
Within 15 days after
each Distribution Date, the Securities
Administrator shall, in accordance with
industry standards, file with the
Commission via the Electronic Data
Gathering and Retrieval System ("EDGAR"), a
Form 8-K (or other comparable form
containing the same or comparable
information, or other information mutually
agreed upon) with a copy of the
statement to the Certificateholders for
such Distribution Date as an exhibit
thereto. Prior to January 30 in any year,
the Securities Administrator shall, in
accordance with industry standards and only
if instructed by the Depositor, file
a Form 15 Suspension Notice with respect to
the Trust Fund, if applicable. Prior
to (i) March 15, 2006 and (ii) unless and
until a Form 15 Suspension Notice
shall have been filed, prior to March 15 of
each year thereafter, the Master
Servicer shall provide the Securities
Administrator with a Master Servicer
Certification, together
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with a copy of the annual independent
accountant's servicing report and annual
statement of compliance of the Servicer, in
each case, required to be delivered
pursuant to the Countrywide Servicing
Agreement, and, if applicable, the annual
statement of compliance and the annual
independent accountant's servicing report
to be delivered by the Master Servicer
pursuant to Sections 3.16 and 3.17. Prior
to (i) March 31, 2006, or such earlier
filing date as may be required by the
Commission, and (ii) unless and until a
Form 15 Suspension Notice shall have
been filed, March 31 of each year
thereafter, or such earlier filing date as may
be required by the Commission, the
Securities Administrator shall prepare and
file a Form 10-K, in substance conforming
to industry standards, with respect to
the Trust. Such Form 10-K shall include the
Master Servicer Certification and
other documentation provided by the Master
Servicer pursuant to the second
preceding sentence. The Depositor hereby
grants to the Securities Administrator
a limited power of attorney to execute and
file each such document on behalf of
the Depositor. Such power of attorney shall
continue until either the earlier of
(i) receipt by the Securities Administrator
from the Depositor of written
termination of such power of attorney and
(ii) the termination of the Trust
Fund. The Depositor agrees to promptly
furnish to the Securities Administrator,
from time to time upon request, such
further information, reports and financial
statements within its control related to
this Agreement and the Mortgage Loans
as the Securities Administrator reasonably
deems appropriate to prepare and file
all necessary reports with the Commission.
The Securities Administrator shall
have no responsibility to file any items
other than those specified in this
Section 3.18; provided, however, the
Securities Administrator will cooperate
with the Depositor in connection with any
additional filings with respect to the
Trust Fund as the Depositor deems necessary
under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(b) The Master
Servicer shall indemnify and hold harmless
the Depositor, the Trustee and their
respective officers, directors and
Affiliates from and against any losses,
damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and
related costs, judgments and other costs
and expenses arising out of or based upon a
breach of the Master Servicer's
obligations under this Section 3.18 or the
Master Servicer's negligence, bad
faith or willful misconduct in connection
therewith. Fees and expenses incurred
by the Master Servicer in connection with
this Section 3.18 shall not be
reimbursable from the Trust Fund.
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Section 3.19. EMC. On the Closing Date, EMC will receive from
the
Depositor a payment of $5,000.
Section 3.20. UCC. The Depositor shall inform the Trustee in
writing of
any Uniform Commercial Code financing
statements that were filed on the Closing
Date in connection with the Trust with
stamped recorded copies of such financing
statements to be delivered to the Trustee
promptly upon receipt by the
Depositor. The Trustee agrees to monitor
and notify the Depositor if any
continuation statements for such Uniform
Commercial Code financing statements
need to be filed. If directed by the
Depositor in writing, the Trustee will file
any such continuation statements solely at
the expense of the Depositor. The
Depositor shall file any financing
statements or amendments thereto required by
any change in the Uniform Commercial
Code.
Section 3.21. Optional Purchase of Defaulted Mortgage Loans(a) .
With
respect to any Mortgage Loan which as of
the first day of a Fiscal Quarter is
delinquent in payment by 90 days or more or
is an REO Property, EMC shall have
the right to purchase such Mortgage Loan
from the Trust at a price equal to the
Repurchase Price; provided, however, (i)
that such Mortgage Loan is still 90
days or more delinquent or is an REO
Property as of the date of such purchase
and (ii) this purchase option, if not
theretofore exercised, shall terminate on
the date prior to the last day of the
related Fiscal Quarter. This purchase
option, if not exercised, shall not be
thereafter reinstated unless the
delinquency is cured and the Mortgage Loan
thereafter again becomes 90 days or
more delinquent or becomes an REO Property,
in which case the option shall again
become exercisable as of the first day of
the related Fiscal Quarter.
In addition, EMC shall, at its option, purchase any Mortgage Loan
from
the Trust if the first Due Date for such
Mortgage Loan is subsequent to the
Cut-off Date, and the initial Monthly
Payment with respect to such Mortgage Loan
is not made within thirty (30) days of such
Due Date. Such purchase shall be
made at a price equal to the Repurchase
Price.
If at any time EMC remits to the Paying Agent a payment for deposit
in
the Distribution Account covering the
amount of the Repurchase Price for such a
Mortgage Loan, and EMC provides to the
Trustee and the Master Servicer a
certification signed by a Servicing Officer
stating that the amount of such
payment has been deposited in the
Distribution Account, then the Trustee shall
execute the assignment of such Mortgage
Loan at the request of EMC, without
recourse, to EMC which shall succeed to all
the Trustee's right, title and
interest in and to such Mortgage Loan, and
all security and documents relative
thereto. Such assignment shall be an
assignment outright and not for security.
EMC will thereupon own such Mortgage Loan,
and all such security and documents,
free of any further obligation to the
Trustee or the Certificateholders with
respect thereto.
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Article IV
Accounts
Section 4.01. Protected Accounts.
(a) The Master
Servicer shall enforce the obligation of the
Servicer to establish and maintain a
Protected Account in accordance with
the Countrywide Servicing Agreement, with
records to be kept with respect
thereto on a Mortgage Loan by Mortgage Loan
basis, into which Protected Account
shall be deposited, within 48 hours (or as
of such other time specified in the
Countrywide Servicing Agreement) of receipt
thereof, all collections of
principal and interest on any Mortgage Loan
and with respect to any REO Property
received by the Servicer, including
Principal Prepayments, Insurance Proceeds,
Liquidation Proceeds, and advances made
from the Servicer's own funds (less
servicing compensation as permitted by the
Countrywide Servicing Agreement) and
all other amounts to be deposited in the
Protected Account. The Servicer is
hereby authorized to make withdrawals from
and deposits to the Protected Account
for purposes required or permitted by this
Agreement. To the extent provided in
the Countrywide Servicing Agreement, the
Protected Account shall be held in a
Designated Depository Institution and
segregated as a trust account on the books
of such institution in the name of the
Trustee for the benefit of
Certificateholders.
(b) To the extent
provided in the Countrywide Servicing
Agreement, amounts on deposit in the
Protected Account may be invested in
Permitted Investments in the name of the
Trustee for the benefit of
Certificateholders and, except as provided
in the preceding paragraph, not
commingled with any other funds, such
Permitted Investments to mature, or to be
subject to redemption or withdrawal, no
later than the date on which such funds
are required to be withdrawn for deposit in
the Distribution Account, and shall
be held until required for such deposit.
The income earned from Permitted
Investments made pursuant to this Section
4.01 shall be paid to the Servicer
under the Countrywide Servicing Agreement,
and the risk of loss of moneys
required to be distributed to the
Certificateholders resulting from such
investments shall be borne by and be the
risk of the Servicer. The Servicer (to
the extent provided in the Countrywide
Servicing Agreement) shall deposit the
amount of any such loss in the Protected
Account within two Business Days of
receipt of notification of such loss but
not later than the second Business Day
prior to the Distribution Date on which the
moneys so invested are required to
be distributed to the
Certificateholders.
(c) To the extent
provided in the Countrywide Servicing
Agreement and subject to this Article IV,
on or before each Servicer Remittance
Date, the Master Servicer shall (if acting
as a successor servicer to the
Servicer), or shall cause the Servicer to,
withdraw or shall cause to be
withdrawn from the Protected Account, and
shall immediately deposit or cause to
be deposited in the Distribution Account,
amounts representing the following
collections and payments (other than with
respect to principal of or interest on
the Mortgage Loans due on or before the
Cut-off Date) with respect to each
Mortgage Loan serviced by it:
(i) Scheduled Payments on the Mortgage Loans received or any
related portion
thereof advanced by the Servicer pursuant to the
Countrywide
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Servicing Agreement which were due on or before the related Due
Date, net of the amount thereof comprising the related
Servicing
Fee or any fees with respect to any lender-paid primary
mortgage
insurance policy;
(ii) Full Principal Prepayments and any Liquidation Proceeds
received by the Servicer with respect to such Mortgage Loans in
the related Prepayment Period (or, in the case of Subsequent
Recoveries, during the related Due Period), with interest to
the
date of prepayment or liquidation, net of the amount thereof
comprising the related Servicing Fee and Prepayment Charges;
(iii) Partial Principal Prepayments received by the Servicer
for such Mortgage Loans in the related Prepayment Period;
(iv) All funds collected and received in connection with the
operation of any REO Property, and Liquidation Proceeds
received
upon the final disposition of any REO Property (net of any
unreimbursed Monthly Advances, other advances of the Servicer
or
Master Servicer with respect thereto, and unpaid Servicing Fees
with respect thereto); and
(v) Any amount to be used as a Monthly Advance.
(d) Withdrawals may be
made from a Protected Account only to
make remittances as provided in Section
4.01(c); to reimburse the Master
Servicer or the Servicer for Monthly
Advances which have been recovered by
subsequent collection from the related
Mortgagor; to remove amounts deposited in
error; to remove fees, charges or other
such amounts deposited on a temporary
basis; or to clear and terminate the
account at the termination of this
Agreement in accordance with Section 10.01.
As provided in Section 4.01(c),
certain amounts otherwise due to the
Servicer may be retained by the Servicer
and need not be deposited in the
Distribution Account.
Section 4.02. Distribution Account.
(a) The Paying Agent
shall establish and maintain in the
name of the Paying Agent, for the benefit
of the Certificateholders, the
Distribution Account as a segregated trust
account or accounts. On the Closing
Date, the Depositor shall deposit the
Deposit Amount into the Distribution
Account.
(b)
All amounts deposited
to the Distribution Account shall be
held by the Paying Agent in the name of the
Paying Agent in trust for the
benefit of the Certificateholders in
accordance with the terms and provisions
of this Agreement.
(c) The Distribution
Account shall constitute a trust account of
the Trust Fund segregated on the books of
the Paying Agent. The Distribution
Account shall be an Eligible Account. The
Distribution Account and the funds
deposited therein shall not be subject to,
and shall be protected from, all
claims, liens, and encumbrances of any
creditors or depositors of the Trustee,
the Paying Agent, the Securities
Administrator or the Master Servicer
(whether made directly, or indirectly
through a liquidator or receiver of the
Trustee, the Paying Agent, the Securities
Administrator or the Master Servicer).
The amount at any time credited to the
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Distribution Account shall, if invested, be
invested in the name of the Trustee,
in such Permitted Investments selected by
the Master Servicer. All Permitted
Investments shall mature or be subject to
redemption or withdrawal on or before,
and shall be held until, the next
succeeding Distribution Date if the obligor
for such Permitted Investment is the Paying
Agent or, if such obligor is any
other Person, the Business Day preceding
such Distribution Date. All investment
earnings from Permitted Investments in the
Distribution Account from time to
time shall be for the account of the Master
Servicer. The Master Servicer shall
be permitted to withdraw or receive
distribution of any and all investment
earnings from the Distribution Account on
each Distribution Date. If there is
any loss on a Permitted Investment or
demand deposit, the Master Servicer shall
promptly remit the amount of the loss to
the Paying Agent, who shall deposit
such amount in the Distribution Account.
With respect to the Distribution
Account and the funds deposited therein,
the Paying Agent shall take such action
as may be necessary to ensure that the
Certificateholders shall be entitled to
the priorities afforded to such a trust
account (in addition to a claim against
the estate of the Paying Agent) as provided
by 12 U.S.C. ss. 92a(e), and
applicable regulations pursuant thereto, if
applicable, or any applicable
comparable state statute applicable to
state chartered banking corporations.
Section 4.03. Permitted Withdrawals and Transfers from the
Distribution
Account.
(a) The Paying Agent
will, from time to time on demand of
the Master Servicer or the Securities
Administrator, make or cause to be made
such withdrawals or transfers from the
Distribution Account as the Master
Servicer has designated for such transfer
or withdrawal pursuant to the
Countrywide Servicing Agreement or this
Agreement or as the Securities
Administrator has instructed hereunder for
the following purposes:
(i) to reimburse the Master Servicer or the Servicer for any
Monthly Advance of its own funds or any advance of such Master
Servicer's or the Servicer's own funds, the right of the Master
Servicer or the Servicer to reimbursement pursuant to this
subclause (i) being limited to amounts received on a particular
Mortgage Loan (including, for this purpose, the Repurchase
Price
therefor, Insurance Proceeds and Liquidation Proceeds) which
represent late payments or recoveries of the principal of or
interest on such Mortgage Loan respecting which such Monthly
Advance or advance was made;
(ii) to reimburse the Master Servicer or the Servicer from
Insurance Proceeds or Liquidation Proceeds relating to a
particular Mortgage Loan for amounts expended by the Master
Servicer or the Servicer in good faith in connection with the
restoration of the related Mortgaged Property which was damaged
by an Uninsured Cause or in connection with the liquidation of
such Mortgage Loan;
(iii) to reimburse the Master Servicer or the Servicer from
Insurance Proceeds relating to a particular Mortgage Loan for
insured expenses
incurred with respect to such Mortgage Loan and
to reimburse the Master Servicer or the Servicer from
Liquidation
Proceeds from a particular Mortgage Loan for Liquidation
Expenses
incurred with respect to such Mortgage Loan; provided that
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the Master Servicer shall not be entitled to reimbursement for
Liquidation Expenses with respect to a Mortgage Loan to the
extent
that (i) any amounts with respect to such Mortgage Loan
were paid as Excess Liquidation Proceeds pursuant to clause (x)
of this Subsection 4.03(a) to the Master Servicer, and (ii)
such
Liquidation Expenses were not included in the computation of
such
Excess Liquidation Proceeds;
(iv) to pay the Master Servicer or the Servicer, as
appropriate, from Liquidation Proceeds or Insurance Proceeds
received in connection with the liquidation of any Mortgage
Loan,
the amount which the Master Servicer or the Servicer would have
been entitled to receive under subclause (xi) of this
Subsection
4.03(a) as servicing compensation on account of each defaulted
Scheduled Payment on such Mortgage Loan if paid in a timely
manner by the related Mortgagor;
(v) to pay the Servicer from the Repurchase Price for any
Mortgage Loan, the amount which the Servicer would have been
entitled to receive under subclause (xi) of this Subsection
4.03(a) as servicing compensation;
(vi) to reimburse the Master Servicer or the Servicer for
advances of funds, and the right to reimbursement pursuant to
this subclause being limited to amounts received on the related
Mortgage Loan (including, for this purpose, the Repurchase
Price
therefor, Insurance Proceeds and Liquidation Proceeds) which
represent late recoveries of the payments for which such
advances
were made;
(vii) to reimburse the Master Servicer or the Servicer for
any Nonrecoverable Advance that has not been reimbursed
pursuant
to clauses (i) and (vi);
(viii) to pay the Master Servicer as set forth in Section
3.14;
(ix) to reimburse the Master Servicer for expenses, costs
and liabilities incurred by and reimbursable to it pursuant to
Sections 3.03, 7.04(c) and 7.04 (d);
(x) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds to the extent not
retained by the Servicer;
(xi) to reimburse or pay the Servicer any such amounts as
are due thereto under the Countrywide Servicing Agreement and
have not
been retained by or paid to the Servicer, to the extent
provided in the Countrywide Servicing Agreement;
(xii) to reimburse or pay the Trustee, the Securities
Administrator or the Custodian for fees, expenses, costs and
liabilities incurred by and reimbursable or payable to it
pursuant to this Agreement and not otherwise reimbursable or
payable to it;
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(xiii) to remove amounts deposited in error;
(xiv) to clear and terminate the Distribution Account
pursuant to Section 10.01; and
(xv) on the first Distribution Date, to withdraw an amount
equal to the Deposit Amount from the Distribution Account and
distribute such amount to the holders of the Class R-I, Class
R-II and Class R-III Certificates, pro rata, until their
respective Current Principal Amounts have been reduced to zero.
(b) The Master
Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage
Loan basis, for the purpose of
accounting for any reimbursement from the
Distribution Account pursuant to
subclauses (i) through (vii), inclusive,
and (x).
(c) On each
Distribution Date, the Paying Agent shall
distribute the Available Funds to the
extent on deposit in the Distribution
Account to the Holders of the Certificates
(other than the Residual
Certificates) in accordance with
distribution instructions provided to it by the
Securities Administrator no later than two
Business Days prior to such
Distribution Date and determined by the
Securities Administrator in accordance
with Section 6.01.
Section 4.04. Distribution of Senior Carryover Shortfall Amount;
Senior
Carryover Shortfall Reserve Fund.
(a) On the Closing
Date, the Paying Agent shall establish
and maintain, in trust for the benefit of
the holders of the Class A-1
Certificates and the Class A-4
Certificates, a segregated trust account or
sub-account of a trust account, which shall
be titled "Senior Carryover
Shortfall Reserve Fund, Wells Fargo Bank,
N.A., as Paying Agent for the benefit
of holders of Structured Asset Mortgage
Investments II Trust 2005-AR4, Mortgage
Pass-Through Certificates, Series 2005-AR4,
Class A-1 and Class A-4" (the
"Senior Carryover Shortfall Reserve Fund").
The Paying Agent shall, promptly
upon receipt, deposit in the Senior
Carryover Shortfall Reserve Fund an amount
equal to $5,000 to be remitted on the
Closing Date to the Paying Agent by the
Depositor. On each Distribution Date, the
Paying Agent shall transfer from the
Distribution Account to the Senior
Carryover Shortfall Reserve Fund the amounts
specified pursuant to Section 6.01(a)(A).
On each Distribution Date, to the
extent required, the Paying Agent shall
make withdrawals from the Senior
Carryover Shortfall Reserve Fund and use
the amounts in the Senior Carryover
Shortfall Reserve Fund to make
distributions pro rata to the Class A-1
Certificates and the Class A-4
Certificates, in an amount equal to the amount of
any Senior Carryover Shortfall Amount on
such Certificates, pursuant to Section
6.01(a)(C). Any such amounts transferred
shall be treated for federal tax
purposes as amounts distributed by REMIC
III to the Class X-1 Certificateholders
as transferee thereof. For federal tax
return and information reporting
purposes, the rights of the Holders of the
Class A-1 Certificates and the Class
A-4 Certificates to receive such
distributions shall be assigned a value
determined by the Depositor and reported by
it to the Securities Administrator.
(b) The Senior
Carryover Shortfall Reserve Fund shall be
an Eligible Account. Amounts held in
the
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Senior Carryover Shortfall Reserve Fund
from time to time shall continue to
constitute assets of the Trust Fund, but
not of the REMICs, until released from
the Senior Carryover Shortfall Reserve Fund
pursuant to this Section 4.04 and
Section 6.01(a)(C). The Senior Carryover
Shortfall Reserve Fund constitutes an
"outside reserve fund" within the meaning
of Treasury Regulation ss. 1.860G-2(h)
and is not an asset of the REMICs. The
Class X-1 Certificateholders shall be the
owners of the Senior Carryover Shortfall
Reserve Fund, and for all federal tax
purposes, amounts transferred by the REMICs
to the Senior Carryover Shortfall
Reserve Fund shall be treated as amounts
distributed by the REMICs to the Class
X-1 Certificateholders. The Paying Agent
shall keep records that accurately
reflect the funds on deposit in the Senior
Carryover Shortfall Reserve Fund.
(c) The Paying Agent
will invest funds deposited in the
Senior Carryover Shortfall Reserve Fund as
directed by the Class X-1
Certificateholders in writing in Permitted
Investments with a maturity date (i)
no later than the Business Day immediately
preceding the date on which such
funds are required to be withdrawn from the
Senior Carryover Shortfall Reserve
Fund pursuant to this Agreement, if a
Person other than the Paying Agent or an
Affiliate of the Paying Agent manages or
advises such Permitted Investment, or
(ii) no later than the date on which such
funds are required to be withdrawn
from the Senior Carryover Shortfall Reserve
Fund pursuant to this Agreement, if
the Paying Agent or an Affiliate of the
Paying Agent manages or advises such
Permitted Investment. If no written
direction with respect to such Permitted
Investment shall be received by the Paying
Agent from the Class X-1
Certificateholders, then funds in the
Senior Carryover Shortfall Reserve Fund
shall remain uninvested. All income and
gain realized from investment of funds
deposited in the Senior Carryover Shortfall
Reserve Fund shall be for the sole
and exclusive benefit of the Class X-1
Certificateholders and shall be remitted
by the Paying Agent to the Class X-1
Certificateholders no later than the first
Business Day following receipt of such
income and gain by the Paying Agent. The
Class X-1 Certificateholders shall deposit
in the Senior Carryover Shortfall
Reserve Fund the amount of any net loss
incurred in respect of any such
Permitted Investment immediately upon
realization of such loss, without any
right of reimbursement therefor.
Section 4.05. Distribution of Subordinate Carryover Shortfall
Amount;
Subordinate Carryover Shortfall Reserve
Fund.
(a) On the Closing
Date, the Paying Agent shall establish
and maintain in its name, in trust for the
benefit of Class M-1, Class M-2,
Class M-3, Class M-4, Class M-5, Class M-6,
Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5 and Class B-6
Certificates, a segregated trust account or
sub-account of a trust account, which shall
be titled "Subordinate Carryover
Shortfall Reserve Fund, Wells Fargo Bank,
N.A., as Paying Agent for the benefit
of holders of Structured Asset Mortgage
Investments II Trust 2005-AR4, Mortgage
Pass-Through Certificates, Series 2005-AR4,
Class M-1, Class M-2, Class M-3,
Class M-4, Class M-5, Class M-6, Class B-1,
Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6" (the "Subordinate
Carryover Shortfall Reserve Fund").
The Paying Agent shall, promptly upon
receipt, deposit in the Subordinate
Carryover Shortfall Reserve Fund an amount
equal to $5,000 to be remitted on the
Closing Date to the Paying Agent by the
Depositor. On each Distribution Date,
the Paying Agent shall transfer from the
Distribution Account to the Subordinate
Carryover Shortfall Reserve Fund the
amounts specified pursuant to Section
6.01(a)(D). On each Distribution Date, to
the extent required, the Paying Agent
shall make withdrawals from the Subordinate
Carryover Shortfall Reserve Fund and
use the amounts in the Subordinate
Carryover Shortfall Reserve Fund to make
distributions sequentially to the Class
M-1, Class M-2, Class M-3, Class M-4,
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Class M-5, Class M-6, Class B-1, Class B-2,
Class B-3, Class B-4, Class B-5 and
Class B-6 Certificates, in an amount equal
to the amount of any Subordinate
Carryover Shortfall Amount on such
Certificates, pursuant to Section 6.01(a)(D).
Any such amounts transferred shall be
treated for federal tax purposes as
amounts distributed by REMIC III to the
Class M-X Certificateholders as
transferee thereof. For federal tax return
and information reporting purposes,
the rights of the Holders of the Class M-1,
Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class B-1, Class B-2,
Class B-3, Class B-4, Class B-5 and
Class B-6 Certificates to receive such
distributions shall be assigned a value
determined by the Depositor and reported by
it to the Securities Administrator.
(b) The Subordinate
Carryover Shortfall Reserve Fund shall be
an Eligible Account. Amounts held in the
Subordinate Carryover Shortfall Reserve
Fund from time to time shall continue to
constitute assets of the Trust Fund,
but not of the REMICs, until released from
the Subordinate Carryover Shortfall
Reserve Fund pursuant to this Section 4.05
and Section 6.01(a)(D). The
Subordinate Carryover Shortfall Reserve
Fund constitutes an "outside reserve
fund" within the meaning of Treasury
Regulation ss. 1.860G-2(h) and is not an
asset of the REMICs. The Class M-X
Certificateholders shall be the owners of the
Subordinate Carryover Shortfall Reserve
Fund, and for all federal tax purposes,
amounts transferred by the REMICs to the
Subordinate Carryover Shortfall Reserve
Fund shall be treated as amounts
distributed by the REMICs to the Class M-X
Certificateholders. The Paying Agent shall
keep records that accurately reflect
the funds on deposit in the Subordinate
Carryover Shortfall Reserve Fund.
(c) The Paying Agent
will invest funds deposited in the
Subordinate Carryover Shortfall Reserve
Fund as directed by the Class M-X
Certificateholders in writing in Permitted
Investments with a maturity date (i)
no later than the Business Day immediately
preceding the date on which such
funds are required to be withdrawn from the
Subordinate Carryover Shortfall
Reserve Fund pursuant to this Agreement, if
a Person other than the Paying Agent
or an Affiliate of the Paying Agent manages
or advises such Permitted
Investment, or (ii) no later than the date
on which such funds are required to
be withdrawn from the Subordinate Carryover
Shortfall Reserve Fund pursuant to
this Agreement, if the Paying Agent or an
Affiliate of the Paying Agent manages
or advises such Permitted Investment. If no
written direction with respect to
such Permitted Investment shall be received
by the Paying Agent from the Class
M-X Certificateholders, then funds in the
Subordinate Carryover Shortfall
Reserve Fund shall remain uninvested. All
income and gain realized from
investment of funds deposited in the
Subordinate Carryover Shortfall Reserve
Fund shall be for the sole and exclusive
benefit of the Class M-X
Certificateholders and shall be remitted by
the Paying Agent to the Class M-X
Certificateholders no later than the first
Business Day following receipt of
such income and gain by the Paying Agent.
The Class M-X Certificateholders shall
deposit in the Subordinate Carryover
Shortfall Reserve Fund the amount of any
net loss incurred in respect of any such
Permitted Investment immediately upon
realization of such loss, without any right
of reimbursement therefor.
Section 4.06. The Yield Maintenance Account and the Yield
Maintenance
Agreement.
The Trustee is hereby directed to execute the Yield Maintenance
Agreement on behalf of the Trust Fund.
Amounts payable by the Trust Fund on the
Closing Date pursuant to the Yield
Maintenance Agreement shall be paid by the
Seller. The Trustee in its individual
capacity shall
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have no responsibility for any of the
undertakings, agreements or
representations with respect to the Yield
Maintenance Agreement, including,
without limitation, for making any payments
thereunder.
The Paying Agent shall establish and maintain in the name of the
Paying
Agent, for the benefit of the Class A-1
Certificateholders, the Class A-4
Certificateholders, the Class M
Certificateholders and the Class B
Certificateholders, the Yield Maintenance
Account as a segregated trust account.
The Yield Maintenance Account constitutes
an "outside reserve fund" within the
meaning of Treasury Regulation ss.
1.860G-2(h) and is not an asset of the
REMICs. The Class X-1 Certificateholders
shall be the owners of the Yield
Maintenance Account, and for all federal
tax purposes, amounts transferred by
the REMICs to the Yield Maintenance Account
shall be treated as amounts
distributed by the REMICs to the Class X-1
Certificateholders. The Paying Agent
shall keep records that accurately reflect
the funds on deposit in the Yield
Maintenance Account.
The Paying Agent will invest funds deposited in the Yield
Maintenance
Account as directed by the Class X-1
Certificateholders in writing in Permitted
Investments with a maturity date (i) no
later than the Business Day immediately
preceding the date on which such funds are
required to be withdrawn from the
Yield Maintenance Account pursuant to this
Agreement, if a Person other than the
Paying Agent or an Affiliate of the Paying
Agent manages or advises such
Permitted Investment, or (ii) no later than
the date on which such funds are
required to be withdrawn from the Yield
Maintenance Account pursuant to this
Agreement, if the Paying Agent or an
Affiliate of the Paying Agent manages or
advises such Permitted Investment. If no
written direction with respect to such
Permitted Investment shall be received by
the Paying Agent from the Class X-1
Certificateholders, then funds in the Yield
Maintenance Account shall remain
uninvested. All income and gain realized
from investment of funds deposited in
the Yield Maintenance Account shall be for
the sole and exclusive benefit of the
Class X-1 Certificateholders and shall be
remitted by the Paying Agent to the
Class X-1 Certificateholders no later than
the first Business Day following
receipt of such income and gain by the
Paying Agent. The Class X-1
Certificateholders shall deposit in the
Yield Maintenance Account their pro rata
share of the amount of any net loss
incurred in respect of any such Permitted
Investment immediately upon realization of
such loss, without any right of
reimbursement therefor.
Any Yield Maintenance Payments made by the Yield Maintenance
Provider
pursuant to the Yield Maintenance Agreement
with respect to a Distribution Date
shall be deposited by the Paying Agent into
the Yield Maintenance Account and
distributed by the Paying Agent on the
related Distribution Date to the Class
A-1 Certificateholders and the Class A-4
Certificateholders, on a pro rata
basis, and thereafter to the Class M
Certificateholders and the Class B
Certificateholders, sequentially in the
order of their payment priority, in an
amount equal to the lesser of the
respective Class of Certificates' pro rata
share of (1) the amount of such Yield
Maintenance Payment made with respect to
such Distribution Date, and (2) the Accrued
Certificate Interest that the
related Class of Certificates would have
been entitled to receive on such
Distribution Date had the applicable per
annum Pass-Through Rate on such Class
of Certificates been calculated at
One-Month LIBOR for the related Distribution
Date plus the related Margin for the
related Interest Accrual Period, to the
extent that such Accrued Certificate
Interest was not otherwise paid from the
Available Funds on such Distribution Date
to the related Class of Certificates.
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Section 4.07. Class A-1 Supplemental Fund.
(a) No later than the
Closing Date, the Securities Administrator
shall establish and maintain, in trust for
the benefit of the holders of the
Class A-1 Certificates, a segregated trust
account or sub-account of a trust
account, which shall be titled "Class A-1
Supplemental Fund, Wells Fargo Bank,
N.A., as Paying Agent for the benefit of
holders of Structured Asset Mortgage
Investments II Trust 2005-AR4, Mortgage
Pass-Through Certificates, Series
2005-AR4, Class A-1" (the "Class A-1
Supplemental Fund"). The Class A-1
Supplemental Fund shall be an Eligible
Account or a sub-account of an Eligible
Account. On the Closing Date, the Depositor
shall pay to the Securities
Administrator an amount equal to
$400,000.00 which shall be deposited by the
Securities Administrator into the Class A-1
Supplemental Fund. Pursuant to
Section 6.01, on the initial Distribution
Date, amounts on deposit in the Class
A-1 Supplemental Fund will be withdrawn
from the Class A-1 Supplemental Fund and
paid to the Class A-1 Certificates to the
extent that Accrued Certificate
Interest on the Class A-1 Certificates on
the initial Distribution Date is
reduced by application of the related Net
Rate Cap on such initial Distribution
Date. Following the deposit on a
Distribution Date (if and as applicable) into
the Senior Carryover Shortfall Reserve
Fund, from the Available Funds otherwise
payable as interest on the Class X-1
Certificates, of any Senior Carryover
Shortfall Amounts relating to the Class A-1
Certificates and the Class A-4
Certificates and such Distribution Date,
the Class A-1 Supplemental Fund will be
entitled to be replenished on each future
Distribution Date from the Available
Funds otherwise payable as interest on such
Distribution Date to the Class X-1
Certificates, until the Class A-1
Supplemental Fund has been replenished to the
extent of the amount paid from the Class
A-1 Supplemental Fund on the initial
Distribution Date. On each Distribution
Date, all amounts deposited into the
Class A-1 Supplemental Fund as set forth in
the preceding sentence will be
distributed to the Depositor or its
designee. On the Distribution Date on which
the Class A-1 Supplemental Fund has been
replenished in full, all amounts then
on deposit in the Class A-1 Supplemental
Fund will (as set forth in the
preceding sentence) be distributed to the
Depositor or its designee, and
following such distribution the Class I-A
Supplemental Fund will be terminated.
(b) The Securities
Administrator will invest funds deposited in
the Class A-1 Supplemental Fund as directed
by the Depositor or its designee in
writing in Permitted Investments with a
maturity date (i) no later than the
Business Day immediately preceding the date
on which such funds are required to
be withdrawn from the Class A-1
Supplemental Fund pursuant to this Agreement, if
a Person other than the Securities
Administrator or an Affiliate of the
Securities Administrator is the obligor for
such Permitted Investment, or (ii)
no later than the date on which such funds
are required to be withdrawn from the
Class A-1 Supplemental Fund pursuant to
this Agreement, if the Securities
Administrator or an affiliate of the
Securities Administrator
