Document:

Exhibit 4.3

 

FIELDSTONE MORTGAGE INVESTMENT TRUST, SERIES
2005-2, as Issuer

 

FIELDSTONE MORTGAGE INVESTMENT CORPORATION,
as Depositor

 

WELLS FARGO BANK, N.A., as Trust
Administrator and Master Servicer

 

FIELDSTONE SERVICING CORP., as Servicer

 

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as
Subservicer

 

FIELDSTONE INVESTMENT CORPORATION, as Seller

 

and

 

HSBC BANK USA, NATIONAL ASSOCIATION, as
Indenture Trustee

 

 

TRANSFER AND SERVICING AGREEMENT

 

Dated as of July 1, 2005

 

 

FIELDSTONE MORTGAGE INVESTMENT TRUST, SERIES
2005-2

MORTGAGE-BACKED NOTES

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS

  
	
   

  	
   

  
	
  Section 1.01.

  	
  Definitions

  	
   

  
	
  Section 1.02.

  	
  Calculations With Respect to the Mortgage
  Loans

  	
   

  
	
  Section 1.03.

  	
  Calculations With Respect to Accrued
  Interest

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  	
   

  
	
  CONVEYANCE OF MORTGAGE LOANS

  
	
   

  	
   

  
	
  Section 2.01.

  	
  Creation and Declaration of Trust Estate;
  Conveyance of Initial Mortgage Loans

  	
   

  
	
  Section 2.02.

  	
  Acceptance of Trust Estate; Review of
  Documentation

  	
   

  
	
  Section 2.03.

  	
  Grant
  Clause

  	
   

  
	
  Section 2.04.

  	
  Subsequent Transfers

  	
   

  
	
  Section 2.05.

  	
  Option to Contribute Derivative Instrument

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES

  
	
   

  	
   

  
	
  Section 3.01.

  	
  Representations and Warranties of the
  Depositor and the Seller

  	
   

  
	
  Section 3.02.

  	
  Discovery of Breach

  	
   

  
	
  Section 3.03.

  	
  Repurchase, Purchase or Substitution of
  Mortgage Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  	
   

  
	
  ADMINISTRATION
  AND SERVICING OF THE MORTGAGE LOANS BY THE SERVICER

  
	
   

  	
   

  
	
  Section 4.01.

  	
  Seller’s Engagement of Servicer to Perform
  Servicing Responsibilities

  	
   

  
	
  Section 4.02.

  	
  Servicing of the Mortgage Loans

  	
   

  
	
  Section 4.03.

  	
  Payments To the Master Servicer

  	
   

  
	
  Section 4.04.

  	
  General Servicing Procedures

  	
   

  
	
  Section 4.05.

  	
  Representations, Warranties and Agreements

  	
   

  
	
  Section 4.06.

  	
  The Servicer and the Subservicer

  	
   

  
	
  Section 4.07.

  	
  Termination for Cause

  	
   

  
	
  Section 4.08.

  	
  Successor to Servicer and Subservicer,
  Miscellaneous Provisions

  	
   

  
	
  Section 4.09.

  	
  Miscellaneous Servicing Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  	
   

  	
   

  
	
  ADMINISTRATION AND MASTER SERVICING OF
  MORTGAGE LOANS BY THE MASTER SERVICER AND THE TRUST ADMINISTRATOR

  
	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
  Duties of the Master Servicer;
  Representations and Warranties

  	
   

  

 

i

 

	
  Section 5.02.

  	
  Master Servicer Fidelity Bond and Master
  Servicer Errors and Omissions Insurance Policy

  	
   

  
	
  Section 5.03.

  	
  Master Servicer’s Financial Statements and
  Related Information

  	
   

  
	
  Section 5.04.

  	
  Power to Act; Procedures

  	
   

  
	
  Section 5.05.

  	
  Enforcement of Servicer’s and Master Servicer’s
  Obligations

  	
   

  
	
  Section 5.06.

  	
  [Reserved]

  	
   

  
	
  Section 5.07.

  	
  Collection Account

  	
   

  
	
  Section 5.08.

  	
  Application of Funds in the Collection
  Account

  	
   

  
	
  Section 5.09.

  	
  Reports to Indenture Trustee and
  Noteholders

  	
   

  
	
  Section 5.10.

  	
  Termination of Servicer or Subservicer;
  Successor Servicers

  	
   

  
	
  Section 5.11.

  	
  Master Servicer Liable for Enforcement

  	
   

  
	
  Section 5.12.

  	
  Assumption of Master Servicing by Indenture
  Trustee

  	
   

  
	
  Section 5.13.

  	
  [Reserved]

  	
   

  
	
  Section 5.14.

  	
  Release of Mortgage Files

  	
   

  
	
  Section 5.15.

  	
  Documents, Records and Funds in Possession
  of Master Servicer To Be Held for Indenture Trustee

  	
   

  
	
  Section 5.16.

  	
  Opinion

  	
   

  
	
  Section 5.17.

  	
  [Reserved]

  	
   

  
	
  Section 5.18.

  	
  [Reserved]

  	
   

  
	
  Section 5.19.

  	
  [Reserved]

  	
   

  
	
  Section 5.20.

  	
  Indenture Trustee To Retain Possession of
  Certain Insurance Policies and Documents

  	
   

  
	
  Section 5.21.

  	
  Compensation to the Master Servicer

  	
   

  
	
  Section 5.22.

  	
  [Reserved]

  	
   

  
	
  Section 5.23.

  	
  Reports to the Indenture Trustee

  	
   

  
	
  Section 5.24.

  	
  Annual Officer’s Certificate as to
  Compliance

  	
   

  
	
  Section 5.25.

  	
  Annual Independent Accountants’ Servicing
  Report

  	
   

  
	
  Section 5.26.

  	
  Merger or Consolidation

  	
   

  
	
  Section 5.27.

  	
  Resignation of Master Servicer

  	
   

  
	
  Section 5.28.

  	
  Assignment or Delegation of Duties by the
  Master Servicer

  	
   

  
	
  Section 5.29.

  	
  Limitation on Liability of the Master
  Servicer and Others

  	
   

  
	
  Section 5.30.

  	
  Indemnification; Third-Party Claims

  	
   

  
	
  Section 5.31.

  	
  Alternative
  Index

  	
   

  
	
  Section 5.32.

  	
  Transfer of Servicing

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  	
   

  	
   

  
	
  DEPOSITS AND PAYMENTS TO HOLDERS

  
	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  The Collection Account

  	
   

  
	
  Section 6.02.

  	
  Payments from the Collection Account

  	
   

  
	
  Section 6.03.

  	
  Net Swap Payments and Net Swap Receipts

  	
   

  
	
  Section 6.04.

  	
  Control of the Trust Account and Deferred
  Interest

  	
   

  
	
  Section 6.05.

  	
  Advances by Master Servicer and Servicer

  	
   

  
	
  Section 6.06.

  	
  Pre-Funding Account

  	
   

  
	
  Section 6.07.

  	
  Establishment of Basis Risk Reserve
  Account; The Corridor Contract

  	
   

  

 

ii

 

	
  ARTICLE VII

  
	
   

  	
   

  	
   

  
	
  ADMINISTRATION OF THE AGREEMENTS

  
	
   

  	
   

  
	
  Section 7.01.

  	
  Duties of the Trust Administrator

  	
   

  
	
  Section 7.02.

  	
  Duties of the Trust Administrator With
  Respect to the Indenture, the Trust Agreement and this Agreement

  	
   

  
	
  Section 7.03.

  	
  Records

  	
   

  
	
  Section 7.04.

  	
  Compensation

  	
   

  
	
  Section 7.05.

  	
  Additional Information to be Furnished to
  the Issuer

  	
   

  
	
  Section 7.06.

  	
  Independence of the Trust Administrator

  	
   

  
	
  Section 7.07.

  	
  No
  Joint Venture

  	
   

  
	
  Section 7.08.

  	
  Other Activities of Trust Administrator and
  the Depositor

  	
   

  
	
  Section 7.09.

  	
  Resignation and Removal of Trust
  Administrator

  	
   

  
	
  Section 7.10.

  	
  Action upon Termination, Resignation or
  Removal of the Trust Administrator

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  	
   

  
	
  MASTER SERVICER EVENTS OF DEFAULT

  
	
   

  	
   

  
	
  Section 8.01.

  	
  Master Servicer Events of Default;
  Indenture Trustee To Act; Appointment of Successor

  	
   

  
	
  Section 8.02.

  	
  Additional Remedies of Indenture Trustee
  Upon Event of Default

  	
   

  
	
  Section 8.03.

  	
  Waiver of Defaults

  	
   

  
	
  Section 8.04.

  	
  Notification to Holders

  	
   

  
	
  Section 8.05.

  	
  Directions by Noteholders and Duties of
  Indenture Trustee During Master Servicer Event of Default

  	
   

  
	
  Section 8.06.

  	
  Action Upon Certain Failures of the Master
  Servicer and Upon Master Servicer Event of Default

  	
   

  
	
  Section 8.07.

  	
  Preparation of Reports

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
   

  	
   

  	
   

  
	
  TERMINATION

  
	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
  Termination

  	
   

  
	
  Section 9.02.

  	
  Termination Prior to Maturity Date; and
  Optional Redemption

  	
   

  
	
  Section 9.03.

  	
  Certain Notices upon Final Payment

  	
   

  
	
  Section 9.04.

  	
  Beneficiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS PROVISIONS

  
	
   

  	
   

  
	
  Section 10.01.

  	
  Binding Nature of Agreement; Assignment

  	
   

  
	
  Section 10.02.

  	
  Entire
  Agreement

  	
   

  
	
  Section 10.03.

  	
  Amendment

  	
   

  
	
  Section 10.04.

  	
  Acts of Noteholders

  	
   

  
	
  Section 10.05.

  	
  Recordation of Agreement

  	
   

  
	
  Section 10.06.

  	
  Governing
  Law

  	
   

  

 

iii

 

	
  Section 10.07.

  	
  Notices

  	
   

  
	
  Section 10.08.

  	
  Severability of Provisions

  	
   

  
	
  Section 10.09.

  	
  Indulgences; No Waivers

  	
   

  
	
  Section 10.10.

  	
  Headings Not To Affect Interpretation

  	
   

  
	
  Section 10.11.

  	
  Benefits of Agreement

  	
   

  
	
  Section 10.12.

  	
  Special Notices to the Rating Agencies

  	
   

  
	
  Section 10.13.

  	
  Counterparts

  	
   

  
	
  Section 10.14.

  	
  Execution by the Issuer

  	
   

  

 

iv

 

ATTACHMENTS

 

	
  Exhibit A-1

  	
  Form of Initial
  Certification

  	
   

  
	
  Exhibit A-2

  	
  Form of Interim
  Certification

  	
   

  
	
  Exhibit A-3

  	
  Form of Final
  Certification

  	
   

  
	
  Exhibit A-4

  	
  Form of Endorsement

  	
   

  
	
  Exhibit B-1

  	
  Form of Swap Agreement

  	
   

  
	
  Exhibit B-2

  	
  Form of Corridor Contract

  	
   

  
	
  Exhibit C

  	
  Form of Lost Note
  Affidavit

  	
   

  
	
  Exhibit D

  	
  Custodial Agreement

  	
   

  
	
  Exhibit E

  	
  Custodial Account
  Letter Agreement

  	
   

  
	
  Exhibit F

  	
  Escrow Account Letter
  Agreement

  	
   

  
	
  Exhibit G-1

  	
  Form of Monthly
  Remittance Advice

  	
   

  
	
  Exhibit G-2

  	
  Standard
  Layout For Monthly Defaulted Loan Report

  	
   

  
	
  Exhibit G-3

  	
  Form 332 Realized
  Loss Report

  	
   

  
	
  Exhibit H

  	
  JPM Form of
  Sarbanes Back-up Certification

  	
   

  
	
  Exhibit I

  	
  Form of
  Subsequent Transfer Agreement

  	
   

  
	
  Exhibit J

  	
  Subsequent Mortgage
  Loan Criteria

  	
   

  
	
  Exhibit K

  	
  Fannie Mae Guide
  Announcement 95-19

  	
   

  
	
  Schedule A

  	
  Mortgage Loan Schedule

  	
   

  

 

v

 

This TRANSFER
AND SERVICING AGREEMENT, dated as of July 1, 2005 (the “Agreement” or the “Transfer
and Servicing Agreement”), is by and among FIELDSTONE MORTGAGE INVESTMENT
TRUST, SERIES 2005-2, a Delaware statutory trust, as issuer (the “Issuer”),
FIELDSTONE MORTGAGE INVESTMENT CORPORATION, a Maryland corporation, as
depositor (the “Depositor”), HSBC BANK USA, NATIONAL ASSOCIATION, as indenture
trustee (the “Indenture Trustee”), WELLS FARGO BANK, N.A., as trust
administrator (the “Trust Administrator”) and master servicer (the “Master
Servicer”), FIELDSTONE SERVICING CORP., as servicer (the “Servicer”), JPMORGAN
CHASE BANK, NATIONAL ASSOCIATION, as subservicer (the “Subservicer”) and
FIELDSTONE INVESTMENT CORPORATION, as seller (the “Seller”).

 

PRELIMINARY STATEMENT

 

WHEREAS, the
Depositor has acquired all of the rights, title and interest of the Seller and
the Transferor in certain conventional, adjustable rate, residential mortgage
loans identified in Schedule A hereto (the “Mortgage Loans”) on a
servicing-retained basis from the Seller and the Transferor pursuant to the
Mortgage Loan Purchase Agreement, and at the Closing Date is the owner of the
Mortgage Loans and the other property being conveyed by it to the Issuer
hereunder for inclusion in the Trust Estate;

 

WHEREAS, the Depositor
has duly authorized the execution and delivery of this Agreement to provide for
the conveyance to the Issuer of the Mortgage Loans and the other property
constituting the Trust Estate;

 

WHEREAS, on
the Closing Date, the Depositor will acquire the Notes from the Issuer as
consideration for its transfer to the Issuer of the Mortgage Loans and the
other property constituting the Trust Estate;

 

WHEREAS,
pursuant to the Indenture, the Issuer will pledge the Mortgage Loans and the
other property constituting the Trust Estate to the Indenture Trustee as
security for the Notes and each Swap Agreement;

 

WHEREAS, the
Seller desires that the Servicer service the Mortgage Loans upon such transfer
to the Issuer pursuant to this Agreement, and the Servicer has agreed to do so;

 

WHEREAS, the
Servicer, the Subservicer, the Indenture Trustee, the Master Servicer and the
Trust Administrator have agreed pursuant to this Agreement that the Subservicer
shall service the Mortgage Loans beginning on the Closing Date pursuant to this
Agreement but that the Servicer will have ultimate responsibility for the
servicing of the Mortgage Loans;

 

WHEREAS, the
Master Servicer shall be obligated under this Agreement, among other things, to
supervise the servicing of the Mortgage Loans on behalf of the Indenture
Trustee, and shall have the right, under certain circumstances, to terminate
the rights and obligations of the Servicer and the Subservicer under this
Agreement upon the occurrence and continuance of a Servicing Event of Default
as provided herein;

 

WHEREAS, the
parties hereto acknowledge and agree that, at the direction of the Depositor,
each of the Seller and the Transferor will assign all of its rights with
respect to the

 

 

Mortgage Loans (other than the servicing rights) to the Indenture
Trustee, and that each reference herein to the Seller or the Transferor is
intended, unless otherwise specified, to mean the Seller , or the Transferor or
the Indenture Trustee, as assignee of the Seller.

 

WHEREAS, the
Issuer has entered into certain agreements in connection with the issuance of
the Notes, including (i) the Depository Agreement and (ii) the
Indenture (the Depository Agreement, the Indenture and the Trust Agreement
being hereinafter referred to collectively as the “Related Agreements”);

 

WHEREAS,
pursuant to the Related Agreements, the Issuer is required to perform certain
duties in connection with (a) the Notes and the collateral therefor
pledged pursuant to the Indenture (the “Collateral”) and (b) the undivided
subordinate beneficial ownership interest in the Issuer represented by the
Ownership Certificate;

 

WHEREAS, the
Issuer desires to have the Trust Administrator perform certain of the duties of
the Issuer referred to in the preceding clause, and to provide such additional
services consistent with the terms of this Agreement and the Related Agreements
as the Issuer or the Owner Trustee may from time to time reasonably request;
and

 

WHEREAS, the
Trust Administrator has the capacity to provide the services required hereby and
is willing to perform such services for the Issuer or the Owner Trustee on the
terms set forth herein.

 

NOW,
THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:

 

The following
table sets forth (or describes) the Class designation, Interest Rate,
initial Class Principal Amount (or Class Notional Amount) and minimum
denomination for each Class of Notes issued pursuant to the Indenture.

 

	
  Class

  Designation

  	
   

  	
  Interest Rate

  	
   

  	
  Initial

  Security Principal

  Amount or

  Security Notional

  Amount

  	
   

  	
  Minimum

  Denominations

  	
   

  
	
  Class 1-A1

  	
   

  	
  (1)

  	
   

  	
  $

  	
  267,522,000

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  Class 1-A2

  	
   

  	
  (2)

  	
   

  	
  $

  	
  66,880,000

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  Class 2-A1

  	
   

  	
  (3)

  	
   

  	
  $

  	
  196,414,000

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  Class 2-A2

  	
   

  	
  (4)

  	
   

  	
  $

  	
  189,876,000

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  Class 2-A3

  	
   

  	
  (5)

  	
   

  	
  $

  	
  24,608,000

  	
   

  	
   

  	
   

  
	
  Class A-IO

  	
   

  	
  4.000%

  	
   

  	
  (16)

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Class M1

  	
   

  	
  (6)

  	
   

  	
  $

  	
  36,250,000

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  Class M2

  	
   

  	
  (7)

  	
   

  	
  $

  	
  33,350,000

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  Class M3

  	
   

  	
  (8)

  	
   

  	
  $

  	
  21,750,000

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  Class M4

  	
   

  	
  (9)

  	
   

  	
  $

  	
  16,433,000

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  Class M5

  	
   

  	
  (10)

  	
   

  	
  $

  	
  16,433,000

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  Class M6

  	
   

  	
  (11)

  	
   

  	
  $

  	
  14,983,000

  	
   

  	
  $

  	
  100,000

  	
   

  

 

2

 

	
  Class M7

  	
   

  	
  (12)

  	
   

  	
  $

  	
  15,466,000

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  Class M8

  	
   

  	
  (13)

  	
   

  	
  $

  	
  11,116,000

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  Class M9

  	
   

  	
  (14)

  	
   

  	
  $

  	
  11,116,000

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  Class M10

  	
   

  	
  (15)

  	
   

  	
  $

  	
  36,250,000

  	
   

  	
  $

  	
  100,000

  	
   

  

 

	
  (1)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class 1-A1 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 0.250% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided,
  that the per annum rate calculated pursuant to clause (i) above with
  respect to the Class 1-A1 Notes will be equal to LIBOR plus 0.500% per
  annum beginning on the Stepup Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (2)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class 1-A2 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 0.300% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate
  calculated pursuant to clause (i) above with respect to the Class 1-A2
  Notes will be equal to LIBOR plus 0.600% per annum beginning on the Stepup
  Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (3)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class 2-A1 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 0.120% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate
  calculated pursuant to clause (i) above with respect to the Class 2-A1
  Notes will be equal to LIBOR plus 0.240% per annum beginning on the Stepup
  Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (4)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class 2-A2 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 0.240% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate
  calculated pursuant to clause (i) above with respect to the Class 2-A2
  Notes will be equal to LIBOR plus 0.480% per annum beginning on the Stepup
  Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (5)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class 2-A3 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 0.370% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate
  calculated pursuant to clause (i) above with respect to the Class 2-A3
  Notes will be equal to LIBOR plus 0.740% per annum beginning on the Stepup
  Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (6)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class M1 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 0.460% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate
  calculated pursuant to clause (i) above with respect to the Class M1
  Notes will be equal to LIBOR plus 0.690% per annum beginning on the Stepup
  Date and each Payment Date thereafter.

  

 

3

 

	
  (7)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class M2 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 0.490% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate calculated
  pursuant to clause (i) above with respect to the Class M2 Notes
  will be equal to LIBOR plus 0.735% per annum beginning on the Stepup Date and
  each Payment Date thereafter.

  
	
   

  	
   

  
	
  (8)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class M3 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 0.520% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate
  calculated pursuant to clause (i) above with respect to the Class M3
  Notes will be equal to LIBOR plus 0.780% per annum beginning on the Stepup
  Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (9)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class M4 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 0.620% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate
  calculated pursuant to clause (i) above with respect to the Class M4
  Notes will be equal to LIBOR plus 0.930% per annum beginning on the Stepup
  Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (10)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class M5 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 0.640% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate
  calculated pursuant to clause (i) above with respect to the Class M5
  Notes will be equal to LIBOR plus 0.960% per annum beginning on the Stepup
  Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (11)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class M6 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 0.720% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate
  calculated pursuant to clause (i) above with respect to the Class M6
  Notes will be equal to LIBOR plus 1.080% per annum beginning on the Stepup
  Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (12)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class M7 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 1.250% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate
  calculated pursuant to clause (i) above with respect to the Class M7
  Notes will be equal to LIBOR plus 1.875% per annum beginning on the Stepup
  Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (13)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class M8 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 1.350% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate
  calculated pursuant to clause (i) above with respect to

  

 

4

 

	
   

  	
  the Class M8 Notes will be equal to LIBOR plus 2.025% per annum
  beginning on the Stepup Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (14)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class M9 Notes is the per annum rate equal to
  the least of (i) LIBOR plus 1.850% per annum, (ii) the Available
  Funds Rate and (iii) the Fixed Rate Cap for such Payment Date; provided, that the per annum rate
  calculated pursuant to clause (i) above with respect to the Class M9
  Notes will be equal to LIBOR plus 2.775% per annum beginning on the Stepup
  Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (15)

  	
  The Interest Rate with respect to any Payment Date (and the related
  Accrual Period) for the Class M10 Notes is the per annum rate equal to
  the least of (i) 5.000% and (ii) the Available Funds Rate for such
  Payment Date; provided, that
  the per annum rate set forth in clause (i) above will increase to 5.500%
  beginning on the Stepup Date and each Payment Date thereafter.

  
	
   

  	
   

  
	
  (16)

  	
  The Class A-IO Notes are interest-only notes; they will not be
  entitled to payments of principal and will accrue interest on the Class A-IO
  Class Notional Amount. Interest will not be payable on the Class A-IO
  Notes after the Payment Date in January 2006.

  

 

5

 

ARTICLE I

DEFINITIONS

 

Section 1.01.                             Definitions.  The following words and phrases, unless the
context otherwise requires, shall have the following meanings:

 

A-IO(1) Component:  The component of the Class A-IO Notes
relating to Group 1.

 

A-IO(2) Component:  The component of the Class A-IO Notes
relating to Group 2.

 

Accounts.  Any or all of the Custodial Accounts, Escrow
Accounts, Collection Account, the Basis Risk Reserve Account, the Pre-Funding
Account and any other accounts created or maintained by the Trust
Administrator, the Servicer or the Subservicer pursuant to this Agreement.

 

Accountant:  A Person engaged in the practice of
accounting who (except when this Agreement provides that an Accountant must be
Independent) may be employed by or affiliated with the Depositor or an
Affiliate of the Depositor.

 

Accrual Period:  With respect to any Payment Date and any Class of
Notes (other than the Class A-IO and the Class M10 Notes), the period
beginning on the Payment Date in the calendar month immediately preceding the
month in which the related Payment Date occurs (or, in the case of the first
Payment Date, beginning on the Closing Date) and ending on the day immediately
preceding the related Payment Date, and in the case of the Class A-IO  and the Class M10 Notes, the calendar
month preceding the month in which such Payment Date occurs.

 

Addition
Notice:  The
notice given pursuant to Section 2.04 with respect to the transfer of
Subsequent Mortgage Loans to the Trust pursuant to such Section.

 

Advance:  With respect to each Servicer Remittance Date
and each Mortgage Loan, an amount equal to the Scheduled Payment (with the
interest portion of such Scheduled Payment adjusted to the Net Mortgage Rate)
that was due on the Mortgage Loan on the Due Date in the related Due Period,
and that (i) was delinquent at the close of business on the related
Determination Date and (ii) was not the subject of a previous Monthly
Advance, but only to the extent that such amount is expected, in the reasonable
judgment of the Servicer, the Subservicer or Master Servicer, as applicable, to
be recoverable from collections or other recoveries in respect of such Mortgage
Loan.

 

Affiliate:  With respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person.  For the purposes of
this definition, “control” when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.

 

Aggregate
Expense Rate: 
With respect to any Mortgage Loan, the sum of the applicable Servicing
Administration Fee Rate and the applicable Master Servicing Fee Rate.

 

6

 

Aggregate
Collateral Balance: 
As of any date of determination (other than the Closing Date), an amount
equal to the Aggregate Loan Balance plus the amount, if any, then on deposit in
the Pre-Funding Account exclusive of investment income.  As of the Closing Date, an amount equal to
the sum of the Aggregate Loan Balance as of the Initial Cut-off Date and the
amount on deposit in the Pre-Funding Account as of the Closing Date.

 

Aggregate Loan
Balance:  As of
any date of determination, an amount equal to the aggregate of the Stated
Principal Balances of the Mortgage Loans as of such date.

 

Aggregate
Overcollateralization Release Amount:  With respect to any Payment Date, the lesser
of (x) the sum of the Principal Funds of each Mortgage Group for such Payment
Date and (y) the amount, if any, by which (1) the Overcollateralization
Amount for such Payment Date (calculated for this purpose on the basis of the
assumption that 100% of the aggregate of the Principal Funds of both Mortgage
Groups for such date is applied on such Payment Date in reduction of the
aggregate of the Note Principal Amounts of the related Notes) exceeds (2) the
Targeted Overcollateralization Amount for such Payment Date.

 

Agreement:  This Agreement and all amendments and
supplements hereto.

 

Ancillary
Income:  All
income derived from the Mortgage Loans, excluding Servicing Administration Fees
and Master Servicing Fees attributable to the Mortgage Loans and other amounts
treated as payment proceeds of the Mortgage Loans, including but not limited
to, late charges, fees received with respect to checks or bank drafts returned
by the related bank for non-sufficient funds, assumption fees, optional
insurance administrative fees, Prepayment Premiums and all other incidental
fees and charges.

 

Appraised
Value:  With
respect to any Mortgage Loan, the amount set forth in an appraisal made in
connection with the origination of such Mortgage Loan as the value of the
related Mortgaged Property.

 

Assignment of
Mortgage:  An
assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the assignment of the Mortgage
to the Indenture Trustee for the benefit of Noteholders and the Swap
Counterparty, which assignment, notice of transfer or equivalent instrument may
be in the form of one or more blanket assignments covering the Mortgage Loans
secured by Mortgaged Properties located in the same jurisdiction, if permitted
by law; provided, however, that
neither the Issuer nor the Indenture Trustee shall be responsible for
determining whether any such assignment is in recordable form.

 

Authorized
Officer:  Any
Person who may execute an Officer’s Certificate on behalf of the Issuer.

 

Available
Funds Rate: 
With respect to any Payment Date and for any Class of Notes (other
than the Class A-IO Notes), a per annum rate equal to the quotient of (a) the
excess, if any, of (1) the sum of (A) Interest Funds for Group 1 and (B) Interest
Funds for Group 2, over (2) until the January 2006 Payment Date only,
Current Interest on the Class A-IO Notes for such Payment Date, divided by
(b) the product of (i) the sum of the Class Principal Amounts of
the Class 1-A1, Class 1-A2, Class 2-A1, Class 2-A2, Class 2-A3,
Class M1, Class M2, Class M3,

 

7

 

Class M4, Class M5, Class M6, Class M7, Class M9
and Class M10 Notes before taking into account any payments of principal
on such Payment Date, and (ii) a fraction, the numerator of which is the
actual number of days in the related Accrual Period (or, in the case of the Class M10
Notes, the numerator of which is 30), and the denominator of which is 360.

 

Available
Funds Shortfall: 
With respect to any Class of Notes, other than the Class A-IO
Notes, and any Payment Date, the sum of (a) the excess, if any, of (i) the
amount that would have been the Current Interest for such Class had the
Interest Rate for such Class been determined without regard to the
Available Funds Rate over (ii) the actual amount of Current Interest for
such Class, plus (b) any excess described in clause (a) above and
interest described in clause (c) below for any prior Payment Date that
remains unpaid, plus (c) interest accrued during the Accrual Period
related to such Payment Date on the amount described in clause (b) above
at the Interest Rate applicable to such Class, determined without regard to the
Available Funds Rate.

 

Bankruptcy:  As to any Person, the making of an assignment
for the benefit of creditors, the filing of a voluntary petition in bankruptcy,
adjudication as a bankrupt or insolvent, the entry of an order for relief in a
bankruptcy or insolvency proceeding, the seeking of reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief, or seeking, consenting to or acquiescing in the appointment of a
trustee, receiver or liquidator, dissolution, or termination, as the case may
be, of such Person pursuant to the provisions of either the United States
Bankruptcy Code of 1986, as amended, or any other similar state laws.

 

Bankruptcy
Code:  The
United States Bankruptcy Code of 1986, as amended.

 

Basis Risk
Reserve Account: A separate account established and
maintained by the Trust Administrator for the benefit of the Noteholders
pursuant to Section 6.07.

 

Benefit Plan
Opinion: An Opinion of Counsel satisfactory to the
Owner Trustee and the Certificate Registrar to the effect that any proposed
transfer of Certificates will not (i) cause the assets of the Trust Estate
to be regarded as plan assets for purposes of the Plan Asset Regulations or (ii) give
rise to any fiduciary duty on the part of the Depositor or the Indenture
Trustee.

 

Book-Entry
Notes:  As
defined in the Indenture.

 

Business Day:  Any day other than (i) a Saturday or a
Sunday or (ii) a day on which banking institutions in New York, New York
or, if other than New York, the city in which the Corporate Trust Office of the
Indenture Trustee is located, or the States of Arizona, California, Delaware,
Maryland or Minnesota are authorized or obligated by law or executive order to
be closed.

 

Calculation
Period End Date 
With respect to the Swap Agreement, the 25th  calendar day of each month commencing in August 2005,
regardless of whether such day is a Business Day.

 

Certificate
Registrar:  As
defined in the Trust Agreement, the initial Certificate Registrar shall be the
Trust Administrator.

 

Certificate:  The Ownership Certificate.

 

8

 

Certificateholder:  Any registered holder of the Ownership
Certificate.

 

Civil Relief
Act:  The
Servicemembers Civil Relief Act, as such may be amended from time to time, and
any similar state laws.

 

Class:  All Notes bearing the same class designation.

 

Class 1-A2
Trigger Event: 
A Class 1-A2 Trigger Event shall have occurred with respect to any
Payment Date prior to the 37th Payment Date if the quotient
(expressed as a percentage) of (a) the aggregate Realized Losses incurred
from the Initial Cut-off Date through the last day of the calendar month
preceding such Payment Date divided by (b) the Aggregate Collateral
Balance as of the Closing Date exceeds 3.400%.

 

Class A
Notes: 
Collectively, the Class 1-A1, Class 1-A2, Class 2-A1, Class 2-A2,
Class 2-A3 and Class A-IO Notes.

 

Class M
Notes: 
Collectively, the Class M1, Class M2, Class M3, Class M4,
Class M5, Class M6, Class M7, Class M8, Class M9 and Class M10
Notes.

 

Class Notional
Amount:  With
respect to the Class A-IO Notes, will be equal to the sum of the A-IO(1) Component
and the A-IO(2) Component.

 

Class Principal
Amount:  With
respect to each Class of Notes (other than the Class A-IO Notes), the
aggregate of the Note Principal Amounts of all Notes of such Class at the
date of determination.

 

Clearing
Agency:  An
organization registered as a “clearing agency” pursuant to Section 17A of
the Exchange Act, as amended.  As of the
Closing Date, the Clearing Agency shall be The Depository Trust Company.

 

Closing Date:  August 4, 2005.

 

Code:  The Internal Revenue Code of 1986, as
amended, and as it may be further amended from time to time, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.

 

Collateral:  As defined in the Indenture.

 

Collection
Account:  A
separate account established and maintained by the Trust Administrator pursuant
to Section 5.07.

 

Compensating Interest
Payment:  With
respect to any Payment Date, an amount equal to the lesser of (x) the aggregate
Prepayment Interest Shortfall Amount with respect to such Payment Date and (y)
the Servicing Administration Fee payable to the Servicer, with respect to the
Servicer, or the portion of the Servicing Administration Fee payable to the
Subservicer, with respect to the Subservicer, or, to the extent provided in Section 5.21,
the aggregate Master Servicing Fee payable to the Master Servicer, with respect
to the Master Servicer, each in respect of such Payment Date.

 

9

 

Component
Notional Amount: 
With respect to any Payment Date, the sum of the notional amount of the
A-IO(1) Component and A-IO(2) Component, as set forth below:

 

	
  Payment Date

  	
   

  	
  A-IO(1)

  Component

  Notional

  Amount

  	
   

  	
  A-IO(2)

  Component

  Notional

  Amount

  	
   

  
	
  August 25,
  2005

  	
   

  	
  $

  	
  195,176,000

  	
   

  	
  $

  	
  239,824,000

  	
   

  
	
  September 25,
  2005

  	
   

  	
  $

  	
  130,118,000

  	
   

  	
  $

  	
  159,883,000

  	
   

  
	
  October 25,
  2005

  	
   

  	
  $

  	
  130,118,000

  	
   

  	
  $

  	
  159,883,000

  	
   

  
	
  November 25,
  2005

  	
   

  	
  $

  	
  130,118,000

  	
   

  	
  $

  	
  159,883,000

  	
   

  
	
  December 25,
  2005

  	
   

  	
  $

  	
  130,118,000

  	
   

  	
  $

  	
  159,883,000

  	
   

  
	
  January 25,
  2006

  	
   

  	
  $

  	
  130,118,000

  	
   

  	
  $

  	
  159,883,000

  	
   

  
	
  February 25,
  2006 and thereafter

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  

 

Condemnation
Proceeds:  All
awards of settlements in respect of a Mortgaged Property, whether permanent or
temporary, partial or entire, by exercise of the power of eminent domain or
condemnation, to the extent not required to be released to a Mortgagor in
accordance with the terms of the related Mortgage Loan documents.

 

Control:  The meaning specified in Section 8-106
of the New York UCC.

 

Conventional
Loan:  A
Mortgage Loan that is not insured by the United States Federal Housing
Administration or guaranteed by the United States Department of Veterans
Affairs.

 

Corporate
Trust Office: 
With respect to (i) the Trust Administrator, the principal
corporate trust office of the Trust Administrator at which, at any particular
time, its corporate trust business shall be administered, which office at the
date of execution of this Agreement for purposes of transfers and exchanges and
for presentment and surrender of the Notes and for payment thereof is located
at Wells Fargo Bank, N.A., Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479, Attention:  Corporate
Trust Group (Fieldstone 2005-2), and for all other purposes is located at Wells
Fargo Bank, N.A., P.O. Box 98, Columbia, Maryland 21046, Attention:
Corporate Trust Group (FIELDSTONE 2005-2) (or for overnight deliveries, at 9062
Old Annapolis Road, Columbia, Maryland 21045, Attention: Corporate Trust Group
(FIELDSTONE 2005-2)); (ii) the Certificate Registrar, the principal office
of the Certificate Registrar at which at any particular time its corporate
trust business shall be administered, which office at the date of execution of
this Agreement is located at the Corporate Trust Office of the Trust Administrator, or at such other address
as the Certificate Registrar may designate from time to time by notice to the
Noteholder, the Trust and the Swap Counterparty, or the principal corporate
trust office of any successor Certificate Registrar at the address designated
by such successor Certificate Registrar by notice to the Noteholders, the Trust
and the Swap Counterparty; and (iii) the Indenture Trustee, the principal
office of the Indenture Trustee at which at any particular time its corporate
trust business shall be administered, which office at the date of execution of
this Agreement is located at 452 Fifth Avenue, New York, New York 10018,
Attention: Corporate Trust, or at such
other address as the Indenture Trustee may designate from time to time by
notice to the Noteholders, the Trust and the Swap Counterparty, or the
principal corporate trust office of any successor Indenture Trustee at the
address

 

10

 

designated by such successor Indenture Trustee by notice to the
Noteholders, the Trust and the Swap Counterparty.

 

Corridor
Contract: The interest rate corridor contract, dated August 4,
2005, by and between the Corridor Counterparty and the Trust.

 

Corridor
Counterparty: Swiss Re Financial Products Corporation.

 

Corridor
Payment Date: With respect to the Corridor Contract,
the Business Day immediately prior to each Payment Date commencing in August 2007
and ending with the Payment Date in July 2008.

 

Corridor
Receipt: With respect to any Corridor Payment Date,
any amount received by the Trust from the Corridor Counterparty under the
Corridor Contract.

 

Current
Interest:  With
respect to any Class of Notes (other than the Class A-IO Notes) or
any Component of the Class A-IO Notes and any Payment Date, will equal the
aggregate amount of interest accrued at the applicable Interest Rate during the
related Accrual Period on the Class Principal Amount of such Class or
Component Notional Amount of such component immediately prior to such Payment
Date, provided, however, that for any Class of Class M
Notes and for any Payment Date, Current Interest shall be reduced by the amount
specified in clause (a) of the definition of Deferred Interest, if any,
for such Class and Payment Date. 
With respect to the Class A-IO Notes and any Payment Date, the
aggregate Current Interest on the components of such Class for such
Payment Date.

 

Custodial
Account:  The
separate custodial account (other than an Escrow Account) established and
maintained by the Servicer pursuant to Section 4.02(d) of this
Agreement.

 

Custodial
Agreement:  The
custodial agreement relating to the custody of certain of the Mortgage Loans,
substantially in the form attached as Exhibit D hereto, between the
Custodian, the Issuer and the Indenture Trustee, as acknowledged by the Seller,
the Depositor, the Master Servicer, the Trust Administrator, the Servicer and
the Subservicer, dated as of July 1, 2005.

 

Custodian:  The custodian appointed by the Indenture
Trustee pursuant to the Custodial Agreement, and any successor thereto.  The initial Custodian is Wells Fargo Bank,
N.A..

 

Cut-off Date:  With respect to the Initial Mortgage Loans,
the Initial Cut-off Date, and with respect to the Subsequent Mortgage Loans,
the Subsequent Cut-off Date.

 

Cut-off Date
Balance:  With
respect to the Initial Mortgage Loans, the Aggregate Loan Balance as of the
Initial Cut-off Date.

 

Debt Service
Reduction:  With
respect to any Mortgage Loan, a reduction of the Scheduled Payment that the
related Mortgagor is obligated to pay on any Due Date as a result of any
proceeding under Bankruptcy law or any similar proceeding.

 

Deferred
Interest:  For
any Class of Class M Notes and any Payment Date, the sum of(a) the
aggregate amount of interest accrued at the applicable Interest Rate
(determined without

 

11

 

regard to the Available Funds Rate) during the related Accrual Period
on the Principal Deficiency Amount for the Class, (b) any amounts due
pursuant to clause (a) and interest described in clause (c) below for
such Class for prior Payment Dates that remain unpaid and (c) interest
accrued during the Accrual Period related to such Payment Date on the amount in
clause (b) at the Interest Rate applicable to such Class determined
without regard to the Available Funds Rate.

 

Definitive
Note:  A Note of
any Class issued in definitive, fully registered, certificated form.

 

Deleted
Mortgage Loan: 
A Mortgage Loan that is repurchased from the Trust Estate pursuant to
the terms hereof or as to which one or more Qualifying Substitute Mortgage
Loans are substituted therefor.

 

Depositor:  Fieldstone Mortgage Investment Corporation, a
Maryland corporation having its principal place of business in Columbia,
Maryland, or its successors in interest.

 

Depository
Agreement:  The
agreement dated August 4, 2005, among the Issuer, the Indenture Trustee
and The Depository Trust Company, as the initial Clearing Agency, relating to
the Book-Entry Notes.

 

Determination
Date:  With
respect to each Payment Date, the 15th day of the month in which such Payment
Date occurs, or, if such 15th day is not a Business Day, the next succeeding
Business Day.

 

Due Date:  The day of the calendar month on which the
Scheduled Payment is due on a Mortgage Loan, exclusive of any days of
grace.  Pursuant to Section 4.02(d),
with respect to any Mortgage Loans for which payment from the Mortgagor is due
on a day other than the first day of the month, such Mortgage Loans will be
treated as if the Scheduled Payment is due on the first day of the immediately
succeeding month.

 

Due Period:  With respect to any Payment Date and Mortgage
Loan, the period commencing on the second day of the month immediately
preceding the month in which such Payment Date occurs and ending on the first
day of the month in which such Payment Date occurs.

 

Eligible
Account:  Either
(i) an account or accounts maintained with a federal or state chartered
depository institution or trust company that complies with the definition of
Eligible Institution or (ii) an account or accounts the deposits in which
are insured by the FDIC to the limits established by such corporation, provided
that any such deposits not so insured shall be maintained in an account at a
depository institution or trust company whose commercial paper or other short
term debt obligations (or, in the case of a depository institution or trust
company which is the principal subsidiary of a holding company, the commercial
paper or other short term debt or deposit obligations of such holding company
or depository institution, as the case may be) have been rated by each Rating
Agency in its highest short-term rating category, or (iii) a segregated
trust account or accounts (which shall be a “special deposit account”)
maintained with the Indenture Trustee, the Trust Administrator or any other
federal or state chartered

 

12

 

depository institution or trust company, acting in its fiduciary
capacity, in a manner acceptable to the Indenture Trustee and the Rating
Agencies.  Eligible Accounts may bear
interest.

 

Eligible
Institution: 
Any of the following:

 

(i)                                     An
institution whose:

 

(1)                                  commercial paper,
short-term debt obligations, or other short-term deposits are rated at least “A-1+”
or long-term unsecured debt obligations are rated at least “Aa-” by S&P (or
assigned comparable ratings by the other Rating Agencies), if the amounts on
deposit are to be held in the account for no more than 365 days; or

 

(2)                                  commercial paper,
short-term debt obligations, demand deposits, or other short-term deposits are
rated at least “A-2” by S&P (or assigned comparable ratings by the other
Rating Agencies), if the amounts on deposit are to be held in the account for
no more than 30 days and are not intended to be used as credit
enhancement.  Upon the loss of the
required rating set forth in this clause (ii), the accounts shall be
transferred immediately to accounts which have the required rating.  Furthermore, commingling by the Servicer is
acceptable at the A-2 rating level if the Servicer is a bank, thrift or
depository and provided the Servicer has the capability to immediately
segregate funds and commence remittance to an Eligible Deposit Account upon a
downgrade; or

 

(ii)                                  the
corporate trust department of a federal depositor institution or
state-chartered depositor institution subject to regulations regarding
fiduciary funds on deposit similar to Title 12 of the U.S. Code of Federal
Regulation Section 9.10(b), which, in either case, has corporate trust
powers and is acting in its fiduciary capacity.

 

Eligible
Investments: 
Any one or more of the following obligations or securities:

 

(i)                                     direct
obligations of, and obligations fully guaranteed as to timely payment of
principal and interest 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 (“Direct
Obligations”);

 

(iii)                               federal
funds, or demand and time deposits in, certificates of deposits of, or bankers’
acceptances issued by, any depository institution or trust company (including
U.S. subsidiaries of foreign depositories and the Indenture Trustee or any agent
of the Indenture Trustee, acting in its respective commercial capacity)
incorporated or organized under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal or state
banking authorities, so long as at the time of investment or the contractual
commitment providing for such investment the commercial paper or other
short-term debt obligations of such depository institution or trust company
(or, in the case of a depository institution or trust company which is the
principal subsidiary of a holding company, the commercial paper or other
short-term debt or deposit obligations of such holding company or deposit
institution, as the case may be) have been rated by each Rating Agency in its
highest short-term rating category or one of its two highest long-term rating
categories;

 

13

 

(iv)                              repurchase
agreements collateralized by Direct Obligations or securities guaranteed by
GNMA, Fannie Mae or FHLMC with any registered broker/dealer subject to Notes
Investors’ Protection Corporation jurisdiction or any commercial bank insured
by the FDIC, if such broker/dealer or bank has an uninsured, unsecured and
unguaranteed obligation rated by each Rating Agency in its highest short-term
rating category;

 

(v)                                 securities
bearing interest or sold at a discount issued by any corporation incorporated
under the laws of the United States of America or any state thereof which have
a credit rating from each Rating Agency, at the time of investment or the
contractual commitment providing for such investment, at least equal to one of
the two highest long-term credit rating categories of each Rating Agency; provided, however, that securities issued
by any particular corporation will not be Eligible Investments to the extent
that investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held as part of the Trust Estate to
exceed 20% of the sum of the Aggregate Loan Balance and the aggregate principal
amount of all Eligible Investments in the Collection Account; provided, further, that such securities
will not be Eligible Investments if they are published as being under review
with negative implications from any Rating Agency;

 

(vi)                              commercial
paper (including both non-interest-bearing discount obligations and
interest-bearing obligations payable on demand or on a specified date not more
than 180 days after the date of issuance thereof) rated by each Rating Agency
in its highest short-term rating category;

 

(vii)                           a
Qualified GIC;

 

(viii)                        certificates
or receipts representing direct ownership interests in future interest or
principal payments on obligations of the United States of America or its
agencies or instrumentalities (which obligations are backed by the full faith
and credit of the United States of America) held by a custodian in safekeeping
on behalf of the holders of such receipts; and

 

(ix)                                any
other demand, money market, common trust fund or time deposit or obligation, or
interest-bearing or other security or investment (including those managed or
advised by the Indenture Trustee, the Master Servicer, the Trust Administrator,
or any Affiliate thereof), (A) rated in the highest rating category by
each Rating Agency or (B) that would not adversely affect the then current
rating assigned by each Rating Agency of any of the Notes.  Such investments in this subsection (viii) may
include money market mutual funds or common Trust Estates, including any fund
for which Wells Fargo Bank, N.A. (the “Bank”) in its capacity other than as the
Master Servicer, the Trust Administrator or an affiliate thereof serves as an
investment advisor, administrator, shareholder servicing agent, and/or
custodian or subcustodian, notwithstanding that (x) the Bank, the Indenture
Trustee, the Master Servicer or any affiliate thereof charges and collects fees
and expenses from such funds for services rendered, (y) the Bank, the Indenture
Trustee, the Trust Administrator, the Master Servicer or any affiliate thereof
charges and collects fees and expenses for services rendered pursuant to this
Agreement, and (z) services performed for such funds and pursuant to this
Agreement may converge at any time.  The
Indenture Trustee specifically authorizes the Bank or an affiliate thereof to
charge and collect from the Indenture Trustee such fees as are collected from
all investors in such funds for services rendered to such funds (but not to
exceed investment earnings thereon);

 

14

 

provided, however, that no such instrument
shall be an Eligible Investment if such instrument evidences either (i) a
right to receive only interest payments with respect to the obligations
underlying such instrument, or (ii) both principal and interest payments
derived from obligations underlying such instrument and the principal and
interest payments with respect to such instrument provide a yield to maturity
of greater than 120% of the yield to maturity at par of such underlying
obligations, provided that any such investment will be a “permitted investment”
within the meaning of Section 860G(a)(5) of the Code.

 

Entitlement
Holder:  The
meaning specified in Section 8-102(a)(7) of the New York UCC.

 

Entitlement
Order:  The
meaning specified in Section 8-102(a)(8) of the New York UCC (i.e., generally, orders directing the
transfer or redemption of any Financial Asset).

 

Environmental
Problem Property: 
A Mortgaged Property or REO Property that is in violation of any
environmental law, rule or regulation.

 

ERISA:  The Employee Retirement Income Security Act
of 1974, as amended.

 

Errors and
Omissions Insurance: 
Errors and Omissions Insurance to be maintained by the Servicer in
accordance with Section 4.02(m).

 

Errors and
Omission Insurance Policy:  Any Errors and Omission Insurance policy
required to be obtained by the Servicer satisfying the requirements of this
Agreement.

 

Escrow Account:  The separate escrow account (other than a
Custodial Account) established and maintained by the Servicer pursuant to Section 4.02(f) of
this Agreement.

 

Escrow
Payments:  With
respect to any Mortgage Loan, the amounts constituting ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, mortgage insurance
premiums, fire and hazard insurance premiums, condominium charges, and any
other payments required to be escrowed by the Mortgagor with the mortgagee
pursuant to the Mortgage or any other document.

 

Event of
Default:  A
Servicer Event of Default or a Subservicer Event of Default.

 

Excess Funding
Amount:  The
amount remaining on deposit in the Pre-Funding Account at the end of the
Pre-Funding Period, exclusive of investment income.

 

Exchange Act:  The Securities Exchange Act of 1934, as
amended.

 

Fannie Mae or
FNMA:  Fannie
Mae, a federally chartered and privately owned corporation organized and
existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.

 

FDIC:  The Federal Deposit Insurance Corporation or
any successor thereto.

 

FIC:  Fieldstone Investment Corporation.

 

15

 

Fidelity Bond:  Any fidelity bond to be maintained by the
Servicer in accordance with Section 4.02(m).

 

Financial
Asset:  The
meaning specified in Section 8-102(a) of the New York UCC.

 

Fitch:
Fitch Ratings, or any successor in interest.

 

Fixed Rate Cap:  With respect to a Payment Date, the per annum
rate equal to 12.250%.

 

FMC:  Fieldstone Mortgage Company.

 

Freddie Mac or
FHLMC:  The
Federal Home Loan Mortgage Corporation, a corporate instrumentality of the
United States created and existing under Title III of the Emergency Home
Finance Act of 1970, as amended, or any successor thereto.

 

FSC:  Fieldstone Servicing Corp.

 

GNMA:  The Government National Mortgage Association,
a wholly owned corporate instrumentality of the United States within HUD.

 

Group 1:  The portion of the Mortgage Pool identified
as Group 1.

 

Group 1
Monthly Excess Interest:  With respect to a Payment Date, means any
Interest Funds for Group 1 remaining after application pursuant to subclauses (i) through
(xiv) of Section 6.02(b).

 

Group 1
Percentage: 
With respect to Group 1 and any Payment Date, the fraction, expressed as
a percentage, the numerator of which is the Group Balance for Group 1 for such
date and the denominator of which is the Aggregate Collateral Balance for such
date.

 

Group 2:  The portion of the Mortgage Pool identified
as Group 2.

 

Group 2
Monthly Excess Interest:  With respect to a Payment Date, means any
Interest Funds for Group 2 remaining after application pursuant to subclauses (i) through
(xiv) of Section 6.02(c).

 

Group 2
Percentage: 
With respect to Group 2 and any Payment Date, the fraction, expressed as
a percentage, the numerator of which is the Group Balance for Group 2 for such
date and the denominator of which is the Aggregate Collateral Balance for such
date.

 

Group Balance:  With respect to each Mortgage Group and any
Payment Date, the aggregate of the Stated Principal Balances of the Mortgage
Loans in such Mortgage Group.

 

Guidelines:  As defined in Section 4.02(t).

 

Holder
or Noteholder:  The registered
holder of any Note or Ownership Certificate as recorded on the books of the
Note Registrar or the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this Agreement,
any Note registered in the name of the Depositor, the Master Servicer, the
Servicer, the Subservicer, the

 

16

 

Trust Administrator or the Indenture Trustee or any Affiliate thereof
(unless any such Person owns 100% of a Class) shall be deemed not to be
outstanding in determining whether the requisite percentage necessary to effect
any such consent has been obtained, except that, in determining whether the
Indenture Trustee shall be protected in relying upon any such consent, only
Notes and an Ownership Certificate which a Responsible Officer of the Indenture
Trustee knows to be so held shall be disregarded.  The Indenture Trustee may request and
conclusively rely on certifications by the Depositor in determining whether any
Note, or Ownership Certificate are registered to an Affiliate of the Depositor.

 

HUD:  The United States Department of Housing and
Urban Development, or any successor thereto.

 

Indenture:  The Indenture dated as of July 1, 2005,
among the Issuer, the Trust Administrator and the Indenture Trustee, as such
may be amended or supplemented from time to time.

 

Indenture
Events of Default: 
As defined in Section 5.01 of the Indenture.

 

Indenture
Trustee:  HSBC
Bank USA, National Association, not in its individual capacity but solely as
Indenture Trustee, or any successor in interest.

 

Independent:  When used with respect to any Accountants, a
Person who is “independent” within the meaning of Rule 2-01(b) of the
Securities and Exchange Commission’s Regulation S-X.  When used with respect to any other Person, a
Person who (a) is in fact independent of another specified Person and any
Affiliate of such other Person, (b) does not have any material direct
financial interest in such other Person or any Affiliate of such other Person,
and (c) is not connected with such other Person or any Affiliate of such
other Person as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions.

 

Index:  The index specified in the related Mortgage
Note for calculation of the Mortgage Rate thereof.

 

Initial
Cut-off Date:  July 1,
2005.

 

Initial
Mortgage Loans: 
The Mortgage Loans included in the Trust as of the Closing Date.

 

Initial
Mortgage Loan Schedule:  The schedule of Initial Mortgage Loans
included in the Trust as of the Closing Date.

 

Insurance
Policy:  Any
primary mortgage insurance policy, any standard hazard insurance policy, flood
insurance policy, earthquake insurance policy or title insurance policy
relating to the Mortgage Loans or the Mortgaged Properties, to be in effect as
of the Closing Date or thereafter during the term of this Agreement.

 

Insurance
Proceeds:  With
respect to each Mortgage Loan, proceeds of insurance policies insuring the
Mortgage Loan or the related Mortgaged Property, if applicable, including the

 

17

 

proceeds of any hazard or flood insurance policy reduced by expenses
incurred by the Servicer or the Subservicer in connection with procuring such
proceeds, applied to the restoration and repair of the related Mortgaged
Property or to be paid to the related Mortgagor pursuant to the Mortgage Note
or applicable state law.

 

Interest Funds:  With respect to each Mortgage Group and any
Payment Date, (a) the sum of, without duplication, (1) all interest
collected (other than the interest portion of Payaheads and Prepayment
Premiums) or advanced in respect of Scheduled Payments on the Mortgage Loans in
such Mortgage Group during the related Due Period by the Servicer, the
Subservicer, the Master Servicer or the Indenture Trustee (solely in its
capacity as successor Master Servicer), minus,
(x) to the extent provided under Sections 4.02(e)(3) and (4) and
Sections 5.08(i) and (ii) herein, previously unreimbursed Advances
and Nonrecoverable Advances due to the Servicer, the Subservicer, the Master
Servicer or the Indenture Trustee (solely in its capacity as successor master
servicer) to the extent allocable to interest and the allocable portion of
previously unreimbursed Servicing Advances with respect to the Mortgage Loans
in such Mortgage Group, (y) the Servicing Administration Fee and Master
Servicing Fee with respect to such Mortgage Loans in such Mortgage Group and
(z) any fees and expenses of any Custodian with respect to the Mortgage Loans
in such Mortgage Group to the extent not paid by the Seller or its Affiliates, (2) any
Compensating Interest Payments or payments in respect of Prepayment Interest
Shortfalls paid by the Master Servicer pursuant to Section 5.21 with
respect to the related Prepayment Period with respect to the Mortgage Loans in
such Mortgage Group, (3) the portion of any Purchase Price or Substitution
Amount paid with respect to the Mortgage Loans in such Mortgage Group during
the related Prepayment Period allocable to interest, and (4) all Net
Liquidation Proceeds, Insurance Proceeds and any other recoveries collected
with respect to the Mortgage Loans in such Mortgage Group during the related
Prepayment Period, to the extent allocable to interest, as reduced by (b) such
Mortgage Group’s pro rata share
of:  (i) the Owner Trustee Fee, (ii) any
costs, expenses or liabilities reimbursable or otherwise due to the Master
Servicer, Servicer, the Subservicer, the Indenture Trustee, any Custodian, the
Owner Trustee or the Trust Administrator to the extent provided in this
Agreement, the Trust Agreement, the Indenture and any Custodial Agreement and (iii) any
Net Swap Payment.

 

Interest
Margin:  For
each Class of Notes (other than the Class A-IO Notes), for any
Payment Date prior to the Stepup Date, the following per annum rate:  Class 1-A1, 0.250%; Class 1-A2,
0.300%; Class 2-A1, 0.120%; Class 2-A2, 0.240%; Class 2-A3,
0.370%; Class M1, 0.460%; Class M2, 0.490%; Class M3, 0.520%; Class M4,
0.620%; Class M5, 0.640%; Class M6, 0.720%; Class M7, 1.250%; Class M8,
1.350%; and Class M9, 1.850%; and on any Payment Date following the Stepup
Date:  Class 1-A1, 0.500%; Class 1-A2,
0.600%; Class 2-A1, 0.240%; Class 2-A2, 0.480%; Class 2-A3,
0.740%; Class M1, 0.690%; Class M2, 0.735%; Class M3, 0.780%; Class M4,
0.930%; Class M5, 0.960%; Class M6, 1.080%; Class M7, 1.875%; Class M8,
2.025%; and Class M9, 2.775%.

 

Interest-only
Notes:  The Class A-IO
Notes.

 

Interest Rate:  With respect to (a) each Class of
Notes (other than the Class A-IO and the Class M10 Notes) on any
Payment Date, the least of (1) LIBOR plus the Interest Margin for such
Class, (2) the Available Funds Rate and (3) the Fixed Rate Cap, (b) the
Class A-IO Notes, a per annum rate of 4.000% and (c) the Class M10
Notes, the lesser of (1) a per annum rate of 5.000%

 

18

 

and (2) the Available Funds Rate, provided that the per annum rate
in clause (c) (1) above will increase to 5.500% beginning on the
Stepup Date and each Payment Date thereafter.

 

Intervening
Assignments: 
The original intervening assignments of the Mortgage, notices of
transfer or equivalent instrument.

 

Issuer:  The Delaware statutory trust known as the “Fieldstone
Mortgage Investment Trust, Series 2005-2.”

 

Issuer Order
or Issuer Request:  A written
order or request signed in the name of the Issuer by any one of its Authorized
Officers and delivered to the Indenture Trustee.

 

LIBOR:  (a)  With respect to the first Accrual
Period, the per annum rate of 3.540%. 
With respect to each subsequent Accrual Period, a per annum rate
determined on the LIBOR Determination Date in the following manner by the Trust
Administrator on the basis of the “Interest Settlement Rate” set by the British
Bankers’ Association (the “BBA”) for one-month United States dollar deposits,
as such rates appear on the Telerate Page 3750, as of 11:00 a.m.
(London time) on such LIBOR Determination Date.

 

(b)                                 If on such a LIBOR Determination
Date, the BBA’s Interest Settlement Rate does not appear on the Telerate Page 3750
as of 11:00 a.m. (London time), or if the Telerate Page 3750 is not
available on such date, the Trust Administrator will determine such rate on the
basis of the offered rates of the Reference Banks for one-month United States
dollar deposits, as such rates appear on the Reuters Screen LIBO Page, as of
11:00 a.m. (London time) on such LIBOR Determination Date.

 

(c)                                  If LIBOR is determined under
clause (b) above, on each LIBOR Determination Date, LIBOR for the related
Accrual Period for the Notes will be established by the Trust Administrator as
follows:

 

(1)                                  If on such LIBOR
Determination Date two or more Reference Banks provide such offered quotations,
LIBOR for the related Accrual Period for the Notes shall be the arithmetic mean
of such offered quotations (rounded upwards if necessary to the nearest whole
multiple of 0.03125%).

 

(2)                                  If on such LIBOR
Determination Date fewer than two Reference Banks provide such offered
quotations, LIBOR for the related Accrual Period shall be the higher of (x)
LIBOR as determined on the previous LIBOR Determination Date and (y) the
Reserve Interest Rate.

 

(d)                                 The establishment of LIBOR by
the Trust Administrator and the Trust Administrator’s subsequent calculation of
the Interest Rate applicable to the LIBOR Notes for the relevant Accrual
Period, in the absence of manifest error, will be final and binding.

 

LIBOR Business
Day:  Any day on
which banks in London, England and The City of New York are open and conducting
transactions in foreign currency and exchange.

 

19

 

 

LIBOR
Determination Date: 
The second LIBOR Business Day immediately preceding the commencement of
each Accrual Period for any LIBOR Notes.

 

LIBOR Note:  Any Class 1-A1, Class 1-A2, Class 2-A1,
Class 2-A2, Class 2-A3, Class M1, Class M2, Class M3, Class M4,
Class M5, Class M6, Class M7, Class M8 or Class M9
Note.

 

Liquidated
Mortgage Loan: 
Any defaulted Mortgage Loan as to which the Master Servicer, the
Servicer or the Subservicer, as applicable, has determined that all amounts
that it expects to recover from or on account of such Mortgage Loan have been
recovered.

 

Liquidation
Expenses: 
Expenses that are incurred by the Master Servicer, the Servicer or the
Subservicer, as applicable, in connection with the liquidation of any defaulted
Mortgage Loan and are not recoverable under the applicable primary mortgage
insurance policy, if any, including, without limitation, foreclosure and
rehabilitation expenses, legal expenses and unreimbursed amounts, if any,
expended pursuant to Sections , 4.18 or 4.23.

 

Liquidation
Proceeds:  Cash
received in connection with the liquidation of a defaulted Mortgage Loan,
whether through the sale or assignment of such Mortgage Loan, trustee’s sale,
foreclosure sale, payment in full, discounted payoff or otherwise, or the sale
of the related REO Property, if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.

 

M1 Principal
Deficiency Amount: 
With respect to any Payment Date, the lesser of (a) the excess, if
any, of (1) the Total Principal Deficiency Amount over (2) the sum of
(i) the M2 Principal Deficiency Amount, (ii) the M3 Principal
Deficiency Amount, (iii) the M4 Principal Deficiency Amount, (iv) the
M5 Principal Deficiency Amount, (v) the M6 Principal Deficiency Amount, (vi) the
M7 Principal Deficiency Amount, (vii) the M8 Principal Deficiency Amount, (viii) the
M9 Principal Deficiency Amount and (ix) the M10 Principal Deficiency
Amount, in each case for that Payment Date and (b) the Class Principal
Amount of the Class M1 Notes immediately prior to such Payment Date.

 

M1 Principal
Payment Amount: 
With respect to any Payment Date on or after the Stepdown Date and as
long as a Trigger Event is not in effect with respect to such Payment Date, the
excess of (x) the sum of (i) the aggregate Class Principal Amount of
the Senior Principal Notes, in each case after giving effect to payments on
such Payment Date and (ii) the Class Principal Amount of the Class M1
Notes immediately prior to such Payment Date over (y) the M1 Target Amount.

 

M1 Target
Amount:  With respect
to any Payment Date, an amount equal to the lesser of (a) the product of (i) 61.700%
and (ii) the Aggregate Collateral Balance for such Payment Date determined
as of the last day of the related Due Period and (b) the excess of (i) the
Aggregate Collateral Balance for such Payment Date determined as of the last
day of the related Due Period over (ii) 0.500% of the Aggregate Collateral
Balance as of the Closing Date.

 

M2 Principal
Deficiency Amount: 
With respect to any Payment Date, the lesser of (a) the excess, if
any, of (1) the Total Principal Deficiency Amount over (2) the sum of
(i) the M3 Principal Deficiency Amount, (ii) the M4 Principal
Deficiency Amount, (iii) the M5 Principal Deficiency Amount, (iv) the
M6 Principal Deficiency Amount , (v) the M7 Principal Deficiency

 

20

 

Amount, (vi) the M8 Principal Deficiency Amount, (vii) the M9
Principal Deficiency Amount and (viii) the M10 Principal Deficiency
Amount, in each case for that Payment Date and (b) the Class Principal
Amount of the Class M2 Notes immediately prior to such Payment Date.

 

M2 Principal
Payment Amount: 
With respect to any Payment Date on or after the Stepdown Date and as
long as a Trigger Event is not in effect with respect to such Payment Date, the
excess of (x) the sum of (i) the aggregate Class Principal Amount of
the Senior Principal Notes and the Class M1 Notes, in each case after
giving effect to payments on such Payment Date and (ii) the Class Principal
Amount of the Class M2 Notes immediately prior to such Payment Date over
(y) the M2 Target Amount.

 

M2 Target
Amount:  With
respect to any Payment Date, an amount equal to the lesser of (a) the
product of (i) 68.600% and (ii) the Aggregate Collateral Balance for
such Payment Date determined as of the last day of the related Due Period and (b) the
excess of (i) the Aggregate Collateral Balance for such Payment Date
determined as of the last day of the related Due Period over (ii) 0.500%
of the Aggregate Collateral Balance as of the Closing Date.

 

M3 Principal
Deficiency Amount: 
With respect to any Payment Date, the lesser of (a) the excess, if
any, of (1) the Total Principal Deficiency Amount over (2) the sum of
(i) the M4 Principal Deficiency Amount, (ii) the M5 Principal Deficiency
Amount, (iii) the M6 Principal Deficiency Amount, (iv) the M7
Principal Deficiency Amount, (v) the M8 Principal Deficiency Amount, (vi) the
M9 Principal Deficiency Amount and (vii) the M10 Principal Deficiency
Amount, in each case for that Payment Date and (b) the Class Principal
Amount of the Class M3 Notes immediately prior to such Payment Date.

 

M3 Principal
Payment Amount: 
With respect to any Payment Date on or after the Stepdown Date and as
long as a Trigger Event is not in effect with respect to such Payment Date, the
excess of(x) the sum of (i) the aggregate Class Principal Amount of
the Senior Principal Notes and the Class M1 and Class M2 Notes, in
each case after giving effect to payments on such Payment Date and (ii) the
Class Principal Amount of the Class M3 Notes immediately prior to
such Payment Date over (y) the M3 Target Amount.

 

M3 Target
Amount:  With
respect to any Payment Date, an amount equal to the lesser of (a) the
product of (i) 73.100% and (ii) the Aggregate Collateral Balance for
such Payment Date determined as of the last day of the related Due Period and (b) the
excess of (i) the Aggregate Collateral Balance for such Payment Date
determined as of the last day of the related Due Period over (ii) 0.500%
of the Aggregate Collateral Balance as of the Closing Date.

 

M4 Principal
Deficiency Amount: 
With respect to any Payment Date, the lesser of (a) the excess, if
any, of (1) the Total Principal Deficiency Amount over (2) the sum of
(i) the M5 Principal Deficiency Amount, (ii) the M6 Principal
Deficiency Amount,  (iii) the M7
Principal Deficiency Amount, (iv) the M8 Principal Deficiency Amount, (v) the
M9 Principal Deficiency Amount and (vi) the M10 Principal Deficiency
Amount, in each case for that Payment Date and (b) the Class Principal
Amount of the Class M4 Notes immediately prior to such Payment Date.

 

M4 Principal
Payment Amount: 
With respect to any Payment Date on or after the Stepdown Date and as
long as a Trigger Event is not in effect with respect to such Payment Date,

 

21

 

the excess of (x) the sum of (i) the aggregate Class Principal
Amount of the Senior Principal Notes and the Class M1, Class M2 and Class M3
Notes, in each case after giving effect to payments on such Payment Date and (ii) the
Class Principal Amount of the Class M4 Notes immediately prior to
such Payment Date over (y) the M4 Target Amount.

 

M4 Target
Amount:  With
respect to any Payment Date, an amount equal to the lesser of (a) the
product of (i) 76.500% and (ii) the Aggregate Collateral Balance for
such Payment Date determined as of the last day of the related Due Period and (b) the
excess of (i) the Aggregate Collateral Balance for such Payment Date
determined as of the last day of the related Due Period over (ii) 0.500%
of the Aggregate Collateral Balance as of the Closing Date.

 

M5 Principal
Deficiency Amount: 
With respect to any Payment Date, the lesser of (a) the excess, if
any, of (1) the Total Principal Deficiency Amount over (2) the sum of
(i) the M6 Principal Deficiency Amount (ii) the M7 Principal
Deficiency Amount, (iii) the M8 Principal Deficiency Amount, (iv) the
M9 Principal Deficiency Amount and (v) the M10 Principal Deficiency
Amount, in each case for that Payment Date and (b) the Class Principal
Amount of the Class M5 Notes immediately prior to such Payment Date.

 

M5 Principal
Payment Amount: 
With respect to any Payment Date on or after the Stepdown Date and as
long as a Trigger Event is not in effect with respect to such Payment Date, the
excess of (x) the sum of (i) the aggregate Class Principal Amount of
the Senior Principal Notes and the Class M1, Class M2, Class M3
and Class M4 Notes, in each case after giving effect to payments on such
Payment Date and (ii) the Class Principal Amount of the Class M5
Notes immediately prior to such Payment Date over (y) the M5 Target Amount.

 

M5 Target
Amount:  With
respect to any Payment Date, an amount equal to the lesser of (a) the
product of(i) 79.900% and (ii) the Aggregate Collateral Balance for
such Payment Date determined as of the last day of the related Due Period and (b) the
excess of (i) the Aggregate Collateral Balance for such Payment Date
determined as of the last day of the related Due Period over (ii) 0.500%
of the Aggregate Collateral Balance as of the Closing Date.

 

M6 Principal
Deficiency Amount: 
With respect to any Payment Date, the lesser of (a) the excess, if
any, of (1) the Total Principal Deficiency Amount over (2) the sum of
(i) the M7 Principal Deficiency Amount, (ii) the M8 Principal
Deficiency Amount, (iii) the M9 Principal Deficiency Amount and (iv) the
M10 Principal Deficiency Amount, in each case for that Payment Date and (b) the
Class Principal Amount of the Class M6 Notes immediately prior to
such Payment Date.

 

M6 Principal
Payment Amount: 
With respect to any Payment Date on or after the Stepdown Date and as
long as a Trigger Event is not in effect with respect to such Payment Date, the
excess of (x) the sum of (i) the aggregate Class Principal Amount of
the Senior Principal Notes and the Class M1, Class M2, Class M3,
Class M4 and Class M5 Notes, in each case after giving effect to
payments on such Payment Date and (ii) the Class Principal Amount of
the Class M6 Notes immediately prior to such Payment Date over (y) the M6
Target Amount.

 

M6 Target
Amount:  With
respect to any Payment Date, an amount equal to the lesser of (a) the
product of (i) 83.000% and (ii) the Aggregate Collateral Balance for
such Payment Date

 

22

 

determined as of the last day of the related Due Period and (b) the
excess of (i) the Aggregate Collateral Balance for such Payment Date
determined as of the last day of the related Due Period over (ii) 0.500%
of the Aggregate Collateral Balance as of the Closing Date.

 

M7 Principal
Deficiency Amount: 
With respect to any Payment Date, the lesser of (a) the excess, if
any, of (1) the Total Principal Deficiency Amount over (2) the sum of
(i) the M8 Principal Deficiency Amount, (ii) the M9 Principal
Deficiency Amount and (iii) the M10 Principal Deficiency Amount, in each
case for that Payment Date and (b) the Class Principal Amount of the Class M7
Notes immediately prior to such Payment Date.

 

M7 Principal
Payment Amount: 
With respect to any Payment Date on or after the Stepdown Date and as
long as a Trigger Event is not in effect with respect to such Payment Date, the
excess of (x) the sum of(i) the aggregate Class Principal Amount of
the Senior Principal Notes and the Class M1, Class M2, Class M3,
Class M4, Class M5 and Class M6 Notes, in each case after giving
effect to payments on such Payment Date and (ii) the Class Principal
Amount of the Class M7 Notes immediately prior to such Payment Date over
(y) the M7 Target Amount.

 

M7 Target
Amount:  With
respect to any Payment Date, an amount equal to the lesser of (a) the
product of (i) 86.200% and (ii) the Aggregate Collateral Balance for
such Payment Date determined as of the last day of the related Due Period and (b) the
excess of (i) the Aggregate Collateral Balance for such Payment Date
determined as of the last day of the related Due Period over (ii) 0.500%
of the Aggregate Collateral Balance as of the Closing Date.

 

M8 Principal
Deficiency Amount: 
With respect to any Payment Date, the lesser of (a) the excess, if
any, of (1) the Total Principal Deficiency Amount over (2) the sum of
(i) the M9 Principal Deficiency Amount and (ii) the M10 Principal
Deficiency Amount, in each case for that Payment Date and (b) the Class Principal
Amount of the Class M8 Notes immediately prior to such Payment Date.

 

M8 Principal
Payment Amount: 
With respect to any Payment Date on or after the Stepdown Date and as
long as a Trigger Event is not in effect with respect to such Payment Date, the
excess of (x) the sum of (i) the aggregate Class Principal Amount of
the Senior Principal Notes and the Class M1, Class M2, Class M3,
Class M4, Class M5, Class M6 and Class M7 Notes, in each
case after giving effect to payments on such Payment Date and (ii) the Class Principal
Amount of the Class M8 Notes immediately prior to such Payment Date over
(y) the M8 Target Amount.

 

M8 Target
Amount:  With
respect to any Payment Date, an amount equal to the lesser of (a) the
product of (i) 88.500% and (ii) the Aggregate Collateral Balance for
such Payment Date determined as of the last day of the related Due Period and (b) the
excess of (i) the Aggregate Collateral Balance for such Payment Date
determined as of the last day of the related Due Period over (ii) 0.500%
of the Aggregate Collateral Balance as of the Closing Date.

 

M9 Principal
Deficiency Amount: 
With respect to any Payment Date, the lesser of (a) the excess, if
any, of (1) the Total Principal Deficiency Amount over (2) the M10
Principal Deficiency Amount for that Payment Date and (b) the Class Principal
Amount of the Class M9 Notes immediately prior to such Payment Date.

 

23

 

M9 Principal
Payment Amount: 
With respect to any Payment Date on or after the Stepdown Date and as
long as a Trigger Event is not in effect with respect to such Payment Date, the
excess of (x) the sum of (i) the aggregate Class Principal Amount of
the Senior Principal Notes and the Class M1, Class M2, Class M3,
Class M4, Class M5, Class M6, Class M7 and Class M8
Notes, in each case after giving effect to payments on such Payment Date and (ii) the
Class Principal Amount of the Class M9 Notes immediately prior to
such Payment Date over (y) the M9 Target Amount.

 

M9 Target
Amount:  With
respect to any Payment Date, an amount equal to the lesser of (a) the
product of (i) 90.800% and (ii) the Aggregate Collateral Balance for
such Payment Date determined as of the last day of the related Due Period and (b) the
excess of (i) the Aggregate Collateral Balance for such Payment Date
determined as of the last day of the related Due Period over (ii) 0.500%
of the Aggregate Collateral Balance as of the Closing Date.

 

M10 Principal
Deficiency Amount: 
With respect to any Payment Date, the lesser of (a) the Total
Principal Deficiency Amount for that Payment Date and (b) the Class Principal
Amount of the Class M10 Notes immediately prior to such Payment Date.

 

M10 Principal
Payment Amount: 
With respect to any Payment Date on or after the Stepdown Date and as
long as a Trigger Event is not in effect with respect to such Payment Date, the
excess of (x) the sum of (i) the aggregate Class Principal Amount of
the Senior Principal Notes and the Class M1, Class M2, Class M3,
Class M4, Class M5, Class M6, Class M7, Class M8 and Class M9
Notes, in each case after giving effect to payments on such Payment Date and (ii) the
Class Principal Amount of the Class M10 Notes immediately prior to
such Payment Date over (y) the M10 Target Amount.

 

M10 Target
Amount:  With
respect to any Payment Date, an amount equal to the lesser of (a) the
product of (i) 98.300% and (ii) the Aggregate Collateral Balance for
such Payment Date determined as of the last day of the related Due Period and (b) the
excess of (i) the Aggregate Collateral Balance for such Payment Date
determined as of the last day of the related Due Period over (ii) 0.50% of
the Aggregate Collateral Balance as of the Closing Date.

 

Majority
Noteholders: 
Until such time as the sum of the Class Principal Amounts of all
Classes of Notes has been reduced to zero, the holder or holders of in excess
of 50% of the aggregate Class Principal Amount of all Classes of Notes
(accordingly, the holder of the Ownership Certificate shall be excluded from
any rights or actions of the Majority Noteholders during such period); and
thereafter, the holder of the Ownership Certificate.

 

Master
Servicer:  Wells
Fargo Bank, N.A., or any successor in interest, or if any successor master
servicer shall be appointed as herein provided, then such successor master
servicer.

 

Master
Servicer Event of Default:  Any one of the conditions or circumstances enumerated in Section 8.01(a).

 

Master
Servicing Fee: 
As to any Payment Date, an amount equal to the product of (i) one-twelfth
of the Master Servicing Fee Rate and (ii) the Aggregate Collateral Balance
as of the first day of the related Due Period.

 

24

 

Master
Servicing Fee Rate: 
With respect to each Mortgage Loan, 0.0020% per annum.

 

Material
Defect:  With
respect to any Mortgage Loan, as defined in Section 2.02(c) hereof.

 

Maturity Date:  With respect to any Class of Notes,
other than the Class A-IO Notes, the Payment Date in December 2035.  With respect to the Class A-IO Note, the
Payment Date in January 2006.

 

MERS:  Mortgage Electronic Registration Systems, Inc.,
a Delaware corporation, or any successor in interest thereto.

 

MERS Mortgage
Loan:  Any
Mortgage Loan as to which the related Mortgage, or an Assignment of Mortgage,
has been or will be recorded in the name of MERS, as nominee for the holder
from time to time of the Mortgage Note.

 

Monthly Excess
Cashflow:  For
any Payment Date, the sum of the Group 1 Monthly Excess Interest and the Group
2 Monthly Excess Interest for any Payment Date and the Aggregate
Overcollateralization Release Amount for such Payment Date.

 

Moody’s:  Moody’s Investors Service, Inc., or any
successor in interest.

 

Mortgage:  A mortgage, deed of trust or other instrument
encumbering a fee simple interest in real property securing a Mortgage Note,
together with improvements thereto.

 

Mortgage File:  The mortgage documents listed in Section 2.01(b) pertaining
to a particular Mortgage Loan required to be delivered to the Indenture Trustee
pursuant to this Agreement.

 

Mortgage Group:  Any of Group 1 or Group 2.

 

Mortgage Impairment
Insurance Policy: 
A mortgage impairment or blanket hazard insurance policy to be
maintained by the Servicer in accordance with Section 5.02(l).

 

Mortgage Index:  The Six-Month LIBOR Index and the Treasury
Mortgage Index, as specified for any Mortgage Loan in the Mortgage Loan
Schedule.

 

Mortgage Loan:  A mortgage loan that is conveyed to the
Issuer pursuant to this Agreement on the Closing Date, with respect to the
Initial Mortgage Loans, and on each Subsequent Transfer Date, with respect to
the Subsequent Mortgage Loans, which mortgage loan includes, without
limitation, the mortgage loan documents, the Scheduled Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
any related REO Property, REO Disposition Proceeds, and all other rights,
benefits, proceeds and obligations arising from or in connection with such
mortgage loan.  The Initial Mortgage
Loans subject to this Agreement are
identified on the Initial Mortgage Loan Schedule annexed hereto as Schedule A
and have an aggregate Stated Principal Balance as of the Initial Cut-off Date
of $725,098,837.  The Subsequent Mortgage Loans subject to this
Agreement will be identified on

 

25

 

each Subsequent Mortgage Loan Schedule to be annexed hereto as Schedule A
on each Subsequent Transfer Date.

 

Mortgage Loan
Purchase Agreement: 
The mortgage loan purchase agreement dated as of July 1, 2005, for
the sale of the Mortgage Loans by each of the Seller and the Transferor to the
Depositor.

 

Mortgage Loan
Remittance Rate: 
With respect to each Mortgage Loan, the Mortgage Rate minus the
Servicing Administration Fee Rate.

 

Mortgage Loan
Schedule:  Each
Initial Mortgage Loan Schedule and any Subsequent Mortgage Loan Schedule attached
hereto as Schedule A, which shall identify each Mortgage Loan, as such schedule may
be amended from time to time to reflect the addition of Mortgage Loans to, or
the deletion of Mortgage Loans from, the Trust Estate.  Such schedule shall set forth, among
other things, the following information with respect to each Mortgage
Loan:  (i) the Mortgage Loan
identifying number; (ii) the Mortgagor’s name; (iii) the street
address of the Mortgaged Property including the city, state and zip code; (iv) the
original principal balance of the Mortgage Loan; (v) the Mortgage Rate at
origination; (vi) the Mortgage Index; (vii) the first Mortgage Rate
adjustment date; (viii) the monthly payment of principal and interest at
origination; (ix) the Servicing Administration Fee Rate; (x) the Master
Servicer Fee Rate and (xi) whether such Mortgage Loan is subject to a
Prepayment Premium for voluntary prepayments by the Mortgagor, the term during
which such Prepayment Premiums are imposed and the method of calculation of the
Prepayment Premium.  The Servicer shall
be responsible for providing the Indenture Trustee and the Master Servicer with
all amendments to the Mortgage Loan Schedule.

 

Mortgage Note:  The note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage under a Mortgage Loan.

 

Mortgage Pool:  The aggregate of all the Mortgage Loans.

 

Mortgage Rate:  As to any Mortgage Loan, the per annum rate
at which interest accrues on such Mortgage Loan, as determined under the
related Mortgage Note as reduced by the applications of the Civil Relief Act.

 

Mortgaged
Property:  The
fee simple interest in real property, together with improvements thereto
including any exterior improvements to be completed within 120 days of
disbursement of the related Mortgage Loan proceeds.

 

Mortgagor:  The obligor on a Mortgage Note.

 

Net
Liquidation Proceeds: 
With respect to any Liquidated Mortgage Loan, the related Liquidation
Proceeds received and retained in connection with the liquidation of such
Mortgage Loan net of(i) Liquidation Expenses and (ii) any related
unreimbursed Advances and Servicing Advances, if any.

 

Net Mortgage
Rate:  With
respect to any Mortgage Loan, the Mortgage Rate thereof reduced by the
Aggregate Expense Rate for such Mortgage Loan.

 

26

 

Net Swap
Payment:  With
respect to the second Business Day prior to any Calculation Period End Date,
the amount paid by the Trust under the Swap Agreement to the Swap Counterparty
in excess of the amounts received by the Trust from the Swap Counterparty, as
calculated by the Swap Counterparty and reported to the Trust Administrator.

 

Net Swap
Receipt:  With
respect to the second Business Day prior to any Calculation Period End Date,
the amount received by the Trust under the Swap Agreement from the Swap
Counterparty in excess of the amount paid by the Trust to the Swap
Counterparty, as calculated by the Swap Counterparty and reported to the Trust
Administrator.

 

New York UCC:  The Uniform Commercial Code as in effect in
the State of New York.

 

Non-MERS
Mortgage Loan: 
Any Mortgage Loan other than a MERS Mortgage Loan.

 

Nonrecoverable
Advance:  Any
Servicing Advance or Monthly Advance previously made or proposed to be made in
respect of a Mortgage Loan by the Servicer or the Master Servicer as successor
servicer which, in the reasonable discretion of the Servicer will not or, in
the case of a proposed Servicing Advance or Monthly Advance, would not,
ultimately be recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO
Disposition Proceeds or otherwise.  The
determination by the Servicer that all or a portion of a Servicing Advance or
Monthly Advance would be a Nonrecoverable Advance shall be evidenced by an
Officer’s Certificate delivered to the Master Servicer setting forth such
determination and a reasonable explanation thereof.

 

Note:  As defined in the Indenture.

 

Note Principal
Amount:  With
respect to any Note (other than a Class A-IO Note), the initial principal
amount thereof on the Closing Date, less the amount of all principal payments
previously paid with respect to such Note.

 

Note Register
and Note Registrar:  As defined in
the Indenture.

 

Notional
Amount:  With
respect to any Notional Note and any Payment Date, such Note’s Percentage
Interest of the Class Notional Amount of the applicable Class of
Notes for such Payment Date.

 

Notional Note:  Any Class A-IO Note.

 

Offering
Document:  The
Prospectus.

 

Officer’s
Certificate:  A
certificate signed by the Chairman of the Board, any Vice Chairman, the
President, any Senior Vice President, any Vice President or any Assistant Vice
President of a Person.

 

Operative
Agreements:  The
Trust Agreement, the Certificate of Trust of the Issuer, this Agreement, the
Mortgage Loan Purchase Agreement, the Indenture, the Custodial Agreement and
each other document contemplated by any of the foregoing to which the
Depositor, the

 

27

 

Seller, the Master Servicer, the Servicer, the Subservicer, the Owner
Trustee, the Trust Administrator, the Indenture Trustee or the Issuer is a
party.

 

Opinion of
Counsel:  A
written opinion of counsel, reasonably acceptable in form and substance to the Seller, the Trust Administrator, the Swap Counterparty,
the Indenture Trustee  and/or the Master
Servicer, as applicable (each such opinion letter to include such Swap
Counterparty as an addressee thereof), and who may be in-house or outside counsel to the Seller, the Servicer,
the Subservicer, the Depositor, the Master Servicer, the Trust Administrator or
the Indenture Trustee but which must be Independent outside counsel with
respect to any such opinion of counsel concerning federal income tax or ERISA
matters.

 

Original
Loan-to-Value Ratio: 
With respect to any Mortgage Loan, the ratio of the principal balance of
such Mortgage Loan at origination, or such other date as is specified, to the
Original Value of the related Mortgaged Property.

 

Original Value:  The lesser of (a) the Appraised Value of
a Mortgaged Property at the time the related Mortgage Loan was originated and (b) if
the Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price paid for the Mortgaged Property by the Mortgagor
at the time the related Mortgage Loan was originated.

 

Overcollateralization
Amount:  With
respect to any Payment Date will be equal to the amount, if any, by which (x)
the Aggregate Collateral Balance for such Payment Date exceeds (y) the
aggregate Class Principal Amount of the Notes (other than the Class A-IO
Notes), in each case after giving effect to payments on such Payment Date.

 

Overcollateralization
Deficiency Amount: 
With respect to any Payment Date, the excess, if any, of the Targeted
Overcollateralization Amount for that Payment Date over the
Overcollateralization Amount for that Payment Date.

 

Ownership
Certificate:  An
equity certificate representing a 100% undivided beneficial ownership interest
in the Trust, substantially in the form attached as part of Exhibit A to
the Trust Agreement.

 

Ownership
Certificate Holder: 
The holder of the Ownership Certificate.

 

Owner Trustee:  U.S. Bank Trust National Association, a
Delaware banking corporation, and any successor in interest, not in its individual
capacity, but solely as owner trustee under the Trust Agreement.

 

Owner Trustee
Fee:  The annual
fee of $3,000, payable to the Owner Trustee pursuant to the Fee Letter
Agreement specified in Section 7.03 of the Trust Agreement on a monthly
basis on each Payment Date during the term of this Agreement; provided that the
Owner Trustee Fee for the first year shall be payable on the Closing Date by
the Seller.

 

Payahead:  With respect to any Mortgage Loan and any Due
Date therefor, any Scheduled Payment received by the Servicer during any Due
Period in addition to the Scheduled Payment due on such Due Date, intended by
the related Mortgagor to be applied on a subsequent Due Date or Due Dates.

 

28

 

Paying Agent:
 As defined in the Indenture.  The initial Paying Agent shall be the Trust
Administrator.

 

Payment Date:  The 25th day of each month or, if such 25th
day is not a Business Day, the next succeeding Business Day, commencing in  August 2005.

 

Percentage
Interest:  With
respect to any Note and the Ownership Certificate, the Percentage Interest
evidenced thereby shall equal (i) with respect to the Ownership
Certificate, the Percentage Interest on the face of such certificate or (ii) with
respect to any Note (other than the Class A-IO Notes), the initial Note
Principal Amount thereof, divided by the initial Class Principal Amount of
all Notes of the same Class.  With
respect to any Class A-IO Note, the Percentage Interest evidenced thereby
shall equal the initial Notional Amount of such Class as set forth on the
face thereof divided by the initial Class Notional Amount thereof.

 

Person:  Any individual, corporation, partnership,
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.

 

Plan:  An employee benefit plan or other retirement
arrangement which is subject to Section 406 of ERISA and/or Section 4975
of the Code or any entity whose underlying assets include such plan’s or
arrangement’s assets by reason of their investment in the entity.

 

Plan Asset
Regulations: 
The Department of Labor regulations set forth in 29 C.F.R. 2510.3-101.

 

Pool 1
Subaccount:  A subaccount of the
Pre-Funding Account that contains funds to be used to purchase Subsequent
Mortgage Loans for Group 1.

 

Pool 2
Subaccount:  A subaccount of the
Pre-Funding Account that contains funds to be used to purchase Subsequent
Mortgage Loans for Group 2.

 

Pre-Funding
Account:  The
account established by the Trust Administrator for the benefit of Noteholders,
which consists of the Pool 1 Subaccount and the Pool 2 Subaccount,  into which the Seller is required to deposit
or cause to be deposited an amount equal to $108,456, 874.15 and $133,111,288.78,
respectively, on the Closing Date.

 

Pre-Funding
Period:  The
period from Closing Date through and including October 24, 2005, during
which the Seller or the Transferor may transfer Subsequent Mortgage Loans to
the Trust.

 

Prepayment
Interest Excess Amount:  For any Servicer Remittance Date and any
Principal Prepayment in full (including any liquidation) received during the
portion of the related Prepayment Period occurring from and including the first
day through the fifteenth day of the calendar month in which such Servicer
Remittance Date occurs, an amount equal to interest (to the extent received)
due in connection with such Principal Prepayment.

 

Prepayment
Interest Shortfall Amount:  With respect to any Payment Date and (x) any
Principal Prepayment in part during the preceding calendar month or (y) any
Principal

 

29

 

Prepayment in full from the sixteenth day of the preceding calendar
month through the end of such calendar month, the amount, if any, by which one
month’s interest at the Net Mortgage Rate for such Mortgage Loan on the amount
of such Principal Prepayment exceeds the amount of interest received from such
Mortgagor in respect of such Principal Prepayment.

 

Prepayment
Period:  With
respect to any Payment Date and any Principal Prepayment other than  Principal Prepayment in part by a Mortgagor,
the period beginning from and including the sixteenth day of the month
preceding the month in which such Payment Date occurs to and including the fifteenth
day of the month in which such Payment Date occurs.  With respect to any Payment Date and any
Principal Prepayment in part by a Mortgagor, the calendar month immediately
preceding the month in which such Payment Date occurs.

 

Prepayment
Premiums:  Any
prepayment fees and penalties to be paid by the Mortgagor on a Mortgage Loan in
the case of a full or partial voluntary prepayment of such Mortgage Loan during
the related Prepayment Period.

 

Prime Rate:  The prime rate of the United States money
center commercial banks as published in The Wall Street Journal,
Northeast Edition.

 

Principal
Deficiency Amount: 
Any of the M1 Principal Deficiency Amount, the M2 Principal Deficiency
Amount, the M3 Principal Deficiency Amount, the M4 Principal Deficiency Amount,
the M5 Principal Deficiency Amount, the M6 Principal Deficiency Amount, the M7
Principal Deficiency Amount, the M8 Principal Deficiency Amount, the M9
Principal Deficiency Amount or the M10 Principal Deficiency Amount, as
applicable.

 

Principal
Funds:  With
respect to any Payment Date and for each Mortgage Group, (a) the sum of (i) all
principal collected (other than the principal portion of Payaheads) or advanced
in respect of Scheduled Payments on the Mortgage Loans in such Mortgage Group
during the related Due Period whether by the Servicer, the Master Servicer or
the Indenture Trustee (less unreimbursed Advances and Nonrecoverable Advances
due to the Master Servicer, the Servicer, the Subservicer or the Indenture
Trustee, solely in its capacity as successor Master Servicer, with respect to
such Mortgage Group) and any unreimbursed Servicing Advances, in each case, to
the extent allocable to principal and to the extent provided under Sections
4.02(e)(3) and (4) and Sections 5.08(i) and (ii)), (ii) all
Principal Prepayments in full or in part received during the related Prepayment
Period on the Mortgage Loans in such Mortgage Group, (iii) the Stated
Principal Balance of each Mortgage Loan in such Mortgage Group that was
purchased from the Trust Estate, during the related Prepayment Period, (iv) the
portion of any Substitution Amount paid with respect to any Deleted Mortgage
Loan relating to a Mortgage Loan in such Mortgage Group during the related
Prepayment Period allocable to principal, (v) all Net Liquidation
Proceeds, Insurance Proceeds, REO Disposition Proceeds and other Recoveries
collected with respect to such Mortgage Loans in such Mortgage Group during the
related Prepayment Period, to the extent allocable to principal, as reduced by (b) such Mortgage Group’s
pro rata share of:  other costs, expenses or liabilities
reimbursable to the Indenture Trustee, the Owner Trustee, the Custodian, the
Trust Administrator, the Master Servicer and the Servicer to the extent
provided in this Agreement, the Trust Agreement, the Indenture and the
Custodial Agreement and to the extent not reimbursed from Interest Funds, or
otherwise and (vi) with respect to the October 2005 Payment Date, the
amount remaining in such Mortgage Group’s Subaccount of the Pre-Funding

 

30

 

Account at the end of the Pre-Funding Period in respect of that
Mortgage Group, exclusive of investment income.

 

Principal
Payment Amount: 
With respect to each Mortgage Group and for any Payment Date, an amount
equal to the Principal Funds for such Mortgage Group for such date minus the
Aggregate Overcollateralization Release Amount attributable to such Mortgage
Group, if any, and such Payment Date.

 

Principal
Prepayment:  Any
payment or other recovery of principal on a Mortgage Loan including any payment
or other recovery of principal in connection with the repurchase of a Mortgage
Loan by the Seller, the Servicer or any other Person received in advance of
such Mortgage Loan’s scheduled Due Date.

 

Proceeding:  Any suit in equity, action at law or other
judicial or administrative proceeding.

 

Property
Changes:  As
defined in Section 4.02(i).

 

Prospectus:  The prospectus supplement dated July 29,
2005, together with the accompanying prospectus dated July 1, 2005 and the
supplement to the prospectus supplement dated August 1, 2005,  relating to the Class 1-A1, Class 1-A2,
Class 2-A1, Class 2-A2, Class 2-A3,
Class A-IO, Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6, Class M7, Class M8, Class M9 and Class M10
Notes.

 

Purchase Price:  With respect to the purchase of a Mortgage
Loan or related REO Property pursuant to this Agreement, an amount equal to the
sum of (a) 100% of the unpaid principal balance of such Mortgage Loan, (b) accrued
interest thereon at the applicable Mortgage Rate, from the date as to which
interest was last paid to (but not including) the Due Date in the Due Period
during which such Mortgage Loan or REO Property is being so purchased; (c) the
fair market value of the REO Property and all other property being purchased; (d) .any
unreimbursed Servicing Advances with respect to such Mortgage Loan; and (e) any
costs and damages incurred by the Trust Estate associated with any violation of
applicable federal, state or local anti-predatory or anti-abusive lending laws
with respect to the related Mortgage Loan. 
The Master Servicer and the Servicer shall be reimbursed from the
Purchase Price for any Mortgage Loan or related REO Property for any Advances
made or other amounts advanced with respect to such Mortgage Loan that are
reimbursable to the Master Servicer or the Servicer under this Agreement,
together with any accrued and unpaid Servicing Administration Fee and Master
Servicing Fee with respect to such Mortgage Loan.

 

Qualified GIC:
 A guaranteed investment contract or
surety bond providing for the investment of funds in the Collection Account and
insuring a minimum, fixed or floating rate of return on investments of such
funds, which contract or surety bond shall:

 

(i)                                     be an obligation
of an insurance company or other corporation whose long-term debt is rated by
each Rating Agency in one of its two highest rating categories or, if such
insurance company has no long term debt, whose claims paying ability is rated
by each Rating Agency in one of its two highest rating categories, and whose
short-term debt is rated by each Rating Agency in its highest rating category;

 

31

 

(ii)                                  provide that the
Indenture Trustee may exercise all of the rights under such contract or surety
bond without the necessity of taking any action by any other Person;

 

(iii)                               provide that if at any
time the then current credit standing of the obligor under such guaranteed
investment contract is such that continued investment pursuant to such contract
of funds would result in a downgrading of any rating of the Notes, the
Indenture Trustee shall terminate such contract without penalty and be entitled
to the return of all funds previously invested thereunder, together with accrued
interest thereon at the interest rate provided under such contract to the date
of delivery of such funds to the Indenture Trustee;

 

(iv)                              provide that the
Indenture Trustee’s interest therein shall be transferable to any successor
trustee hereunder; and

 

(v)                                 provide that the funds
reinvested thereunder and accrued interest thereon be returnable to the
Collection Account not later than the Business Day prior to any Payment Date.

 

Qualified
Insurer:  An
insurance company duly qualified as such under the laws of the states in which
the related Mortgaged Properties are located, duly authorized and licensed in
such states to transact the applicable insurance business and to write the
insurance provided and whose claims paying ability is rated by each Rating Agency
in its highest rating category or whose selection as an insurer will not
adversely affect the rating of the Notes.

 

Qualified REIT
Subsidiary:  A
direct or indirect 100% owned subsidiary of a REIT that satisfies the
requirements of Section 856(i) of the Code.

 

Qualifying
Substitute Mortgage Loan:  In the case of a Mortgage Loan substituted
for a Deleted Mortgage Loan pursuant to the terms of this Agreement, a Mortgage
Loan that, on the date of such substitution, (i) has an outstanding Stated
Principal Balance (or in the case of a substitution of more than one mortgage
loan for a Deleted Mortgage Loan, an aggregate Stated Principal Balance), after
application of all Scheduled Payments due during or prior to the month of
substitution, not in excess of, and not more than 5% less than, the outstanding
Stated Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) has a Mortgage
Rate not less than, and not more than 0.50% higher than, the Mortgage Rate on
the Deleted Mortgage Loan, (iii) if applicable, has a maximum Mortgage
Rate not less than the maximum Mortgage Rate on the Deleted Mortgage Loan, (iv) has
a minimum Mortgage Rate not less than the minimum Mortgage Rate of the Deleted
Mortgage Loan, (v) has a gross margin equal to or greater than the gross
margin of the Deleted Mortgage Loan, (vi) has a next adjustment date not
later than the next adjustment date on the Deleted Mortgage Loan, (vii) has
the same Due Date as the Deleted Mortgage Loan, (viii) has a remaining
stated term to maturity not longer than 18 months and not more than 18 months
shorter than the remaining stated term to maturity of the related Deleted
Mortgage Loan, (ix) is current as of the date of substitution, (x) has a
Loan-to-Value Ratio as of the date of substitution equal to or lower than the
Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (xi) has been
underwritten by the Seller in accordance with the same underwriting criteria
and

 

32

 

guidelines as the Deleted Mortgage Loan, (xii) has a risk grading
determined by the Seller at least equal to the risk grading assigned on the
Deleted Mortgage Loan, (xiii) is secured by the same property type as the
Deleted Mortgage Loan, (xiv) conforms to each representation and warranty
applicable to the Deleted Mortgage Loan made in the Mortgage Loan Purchase
Agreement, (xv) has the same first lien position as the Deleted Mortgage Loan,
(xvi) is covered by a primary mortgage insurance policy if the Deleted Mortgage
Loan was so covered, (xvii) contains provisions covering the payment of
Prepayment Premium by the Mortgager for early prepayment of the Mortgage Loan
at least as favorable to the Trust as the Deleted Mortgage Loan, (xviii) has a
maturity date not later than the maturity date of the latest maturing Mortgage
Loan in the Mortgage Pool as of the Closing Date, (xix) has the same Mortgage
Index as the Deleted Mortgage Loan, (xx) if originated on or after November 27,
2003, is not a “high cost” loan subject to the New Jersey Home Ownership
Security Act of 2003 and (xxi) if originated on or after January 1, 2004
is not a “high-cost” loan subject to the New Mexico Home Loan Protection
Act.  In the event that one or more
mortgage loans are substituted for one or more Deleted Mortgage Loans, the
amounts described in clause (i) hereof shall be determined on the basis of
aggregate Stated Principal Balances, the Mortgage Rates described in clause (ii) hereof
shall be determined on the basis of weighted average Mortgage Rates, the risk
gradings described in clause (xii) hereof shall be satisfied as to each such
mortgage loan, the terms described in clause (viii) hereof shall be
determined on the basis of weighted average remaining term to maturity, the
Loan-to-Value Ratios described in clause (x) hereof shall be satisfied as to
each such mortgage loan and, except to the extent otherwise provided in this
sentence, the representations and warranties described in clause (xiv) hereof
must be satisfied as to each Qualified Substitute Mortgage Loan or in the
aggregate, as the case may be.

 

Rating Agency:  Each of Moody’s, S&P and Fitch.

 

Realized Loss:  With respect to each Liquidated Mortgage
Loan, an amount equal to (i) the unpaid principal balance of such Mortgage
Loan as of the date of liquidation, minus (ii) Liquidation Proceeds
received, to the extent allocable to principal, net of amounts that are
reimbursable therefrom to the Master Servicer or the Servicer with respect to
such Mortgage Loan (other than Advances of principal) including Liquidation
Expenses.  In determining whether a
Realized Loss is a Realized Loss of principal, Liquidation Proceeds shall be
allocated, first, to payment of Liquidation Expenses, then to accrued unpaid
interest and finally to reduce the principal balance of the Mortgage Loan.

 

Record Date:  With respect to each Payment Date and each Class of
Notes (other than the Class A-IO and Class M10 Notes), the Business
Day prior to the related Payment Date, and with respect to the Class A-IO
and Class M10 Notes, and any Class of Definitive Notes, the last
Business Day of the month immediately preceding the month in which the Payment
Date occurs (or, in the case of the first Payment Date, the Closing Date).

 

Recovery:  With respect to any Liquidated Mortgage Loan,
an amount received in respect of principal on such Mortgage Loan which has
previously been allocated as a Realized Loss to a Class or Classes of
Notes net of reimbursable expenses.

 

Redemption Date:  The first Payment Date on which the Servicer
is permitted to exercise its right to purchase the assets of the Trust pursuant
to Section 9.02 hereof.

 

33

 

Redemption
Price:  The sum
of (a) 100% of the aggregate outstanding principal balance of the Mortgage
Loans, plus accrued interest thereon at the applicable Mortgage Rate, (b) the
fair market value of all other property being purchased, (c) any
unreimbursed Servicing Advances, (d) the amount of any swap breakage costs
resulting from the termination of the Swap Agreement as a result of redemption
(as reported to the Trust Administrator by the Swap Counterparty), (e) any
Available Funds Shortfalls, (f) all other amounts to be paid or reimbursed
to the Master Servicer, the Trust Administrator, the Indenture Trustee, the
Owner Trustee and the Custodian and (g) an amount equal to the required
payment to the Holders of the Class A-IO Notes of (i) any Current
Interest due (after taking into account payments made on such date from
Interest Funds for Group 1 and Group 2) on the Class A-IO Notes and (ii) the
present value, as of the date of such termination, of the remaining payments
scheduled to be made on the Class A-IO Notes (such present value to be
based on a discount rate that will approximate the expected yield to maturity
of the Class A-IO Notes).

 

Reference
Banks:  Leading
banks selected by the Trust Administrator and engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (1) with an
established place of business in London, (2) whose quotations appear on
the Reuters Screen LIBO Page on the Determination Date in question, (3) which
have been designated as such by the Trust Administrator and (4) not
controlling, controlled by, or under common control with, the Depositor, the
Indenture Trustee, the Trust Administrator, the Master Servicer, the Servicer,
the Seller or any successor servicer.

 

REIT:  A real estate investment trust within the
meaning of section 856 of the Code.

 

Related Senior
Principal Payment Amount:  With respect to each Mortgage Group and for
any Payment Date, an amount equal to the lesser of (x) the aggregate Class Principal
Amounts of the Class 1-A1 and Class 1-A2 Notes (with respect to Group
1) or of the Class 2-A1, Class 2-A2 and Class 2-A3 Notes (with
respect to Group 2) immediately prior to that Payment Date and (y) the product
of (a) the Senior Principal Payment Amount and (b) the related Senior
Proportionate Percentage in each case for such date.

 

Relevant UCC:  The Uniform Commercial Code as in effect in
the applicable jurisdiction.

 

REO
Disposition: 
The final sale by the Servicer or the Subservicer of any REO Property.

 

REO
Disposition Proceeds: 
All amounts received with respect to an REO Disposition pursuant to Section 4.02(p).

 

REO Property:  A Mortgaged Property acquired by the Servicer
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.

 

Representing
Party:  Each of
the Servicer and the Subservicer making the representations and warranties
under Sections 4.05(a) and 4.05(b), respectively.

 

Required Loss
Percentage: 
With respect to any Payment Date, the applicable percentage for such
Payment Date as set forth in the following table:

 

34

 

	
  Payment
  Date

  	
   

  	
  Required Loss Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  August 2008 to July 2009

  	
   

  	
  3.400% with respect to August 2008,
  plus an additional 1/12th of 1.35% for each month thereafter

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  August 2009 to July 2010

  	
   

  	
  4.750% with respect to August 2009,
  plus an additional 1/12th of 1.00% for each month thereafter

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  August 2010 to July 2011

  	
   

  	
  5.750% with respect to August 2010,
  plus an additional 1/12th of 0.25% for each month thereafter

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  August 2011 and thereafter

  	
   

  	
  6.000%

  	
   

  

 

Reserve Interest
Rate:  The rate
per annum that the Trust Administrator determines to be either (1) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
0.03125%) of the one-month United States dollar lending rates which New York
City banks selected by the Trust Administrator are quoting on the relevant
Interest Determination Date to the principal London offices of leading banks in
the London interbank market or, (2) in the event that the Trust
Administrator can determine no such arithmetic mean, the lowest one-month
United States dollar lending rate which New York City banks selected by the
Trust Administrator are quoting on such Determination Date to leading European
banks.

 

Responsible
Officer:  Any
Vice President, any Assistant Vice President, any Assistant Secretary, any
Assistant Treasurer, any Corporate Trust officer or any other officer of the
Indenture Trustee or the Trust Administrator, as applicable, customarily
performing functions similar to those performed by any of the above-designated
officers and, in each case, having direct responsibility for the administration
of the Operative Agreements and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer’s
knowledge of and familiarity with the particular subject.

 

Reuters Screen
LIBO Page:  The
display designated as page ”LIBO” on the Reuters Monitor Money Rates
Service (or such other page as may replace the LIBO page on that
service for the purpose of displaying London interbank offered rates of major
banks).

 

S&P:  Standard & Poor’s Ratings Services,
a division of The McGraw-Hill Companies, Inc., or any successor in
interest.

 

Sarbanes
Certifying Party: 
Any person who provides a certification pursuant to the Sarbanes-Oxley
Act of 2002 on behalf of the Trust.

 

Scheduled
Payment:  Each
scheduled payment of principal and interest (or of interest only, if
applicable) to be paid by the Mortgagor on a Mortgage Loan, as reduced (except
where otherwise specified herein) by the amount of any related Debt Service
Reduction or pursuant to the Civil Relief Act (excluding all amounts of
principal and interest that were due on or before the Cut-off Date whenever
received) and, in the case of an REO Property, an amount equivalent to the
Scheduled Payment that would have been due on the related Mortgage Loan if such
Mortgage Loan had remained in existence.

 

35

 

Securities
Intermediary: 
The Person acting as Securities Intermediary under this Agreement (which
is Wells Fargo Bank, N.A.), its successor in interest, and any successor
Securities Intermediary appointed pursuant to Section 6.04.

 

Security
Entitlement: 
The meaning specified in Section 8-102(a)(17) of the New York UCC.

 

Seller:  FIC.

 

Senior
Enhancement Percentage:  With respect to a Payment Date on or after
the Stepdown Date, the quotient of (a) the Aggregate Collateral Balance,
less the aggregate Class Principal Amount of the Senior Principal Notes
outstanding as of such Payment Date, prior to giving effect to payments to be
made on such Payment Date, divided by (b) the Aggregate Collateral
Balance.

 

Senior Note:  Any Class 1-A1, Class 1-A2, Class 2-A1,
Class 2-A2, Class 2-A3 or Class A-IO Note.

 

Senior
Principal Note: 
Any Class 1-A1, Class 1-A2, Class 2-A1, Class 2-A2
or Class 2-A3 Note.

 

Senior
Principal Payment Amount:  With respect to the  Senior Principal Notes and any Payment Date
on or after the Stepdown Date and as long as a Trigger Event is not in effect,
with respect to such Payment Date, an amount equal to the lesser of (x) the
Principal Payment Amount for both Mortgage Groups and (y) the amount, if any,
by which (A) the aggregate Class Principal Amounts of the Senior
Principal Notes immediately prior to that Payment Date exceeds (B) the
Senior Target Amount.

 

Senior
Priorities:  The
priority of payments to the Class A Notes described in clauses (i)(1)(B) and
(C) and (i)(2)(B) and (C), as applicable, in Section 6.02(d) herein
for the related Mortgage Group.

 

Senior
Proportionate Percentage:  With respect to Group 1 and any Payment Date,
the fraction, expressed as a percentage, the numerator of which is the
Principal Funds for Group 1 for such Payment Date and the denominator of which
is the aggregate of the Principal Funds for Group 1 and Group 2 for such
date.  With respect to Group 2 and any
Payment Date, the fraction, expressed as a percentage, the numerator of which
is the Principal Funds for Group 2 for such Payment Date and the denominator of
which is the aggregate of the Principal Funds for Group 1 and Group 2 for such
date.

 

Senior Target
Amount:  With
respect to any Payment Date, an amount equal to the lesser of (a) the
product of (i) approximately 54.200% and (ii) the Aggregate
Collateral Balance for such Payment Date determined as of the last day of the
related Due Period and (b) the amount, if any, by which (i) the
Aggregate Collateral Balance for such Payment Date determined as of the last
day of the related Due Period exceeds (ii) approximately 0.500% of the
Aggregate Collateral Balance as of the Closing Date.

 

36

 

Servicer:  FSC or its successor in interest or assigns
or any successor to the Servicer under this Agreement as herein provided.

 

Servicer Event
of Default:  Any
one of the conditions or circumstances enumerated in Section 4.07 with
respect to the Servicer.

 

Servicer
Remittance Date: 
The day in each calendar month on which the Servicer is required to
remit payments to the Collection Account, which is the 20th day of
each calendar month (or, if such day is not a Business Day, the next Business
Day), commencing in August 2005.

 

Servicing
Administration Fee: 
As to any Payment Date and each Mortgage Loan, an amount equal to the
product of (a) one-twelfth of the Servicing Administration Fee Rate and (b) the
outstanding principal balance of such Mortgage Loan as of the first day of the
related Due Period.

 

Servicing
Administration Fee Rate:  With respect to each Mortgage Loan, 0.50% per
annum.

 

Servicing
Advances:  All
customary, reasonable and necessary “out of pocket” costs and expenses other
than Advances (including reasonable attorneys’ fees and disbursements) incurred
in the performance by the Servicer of its servicing obligations, including, but
not limited to, the cost of (a) the preservation, inspection, restoration
and protection of the Mortgaged Property, (b) any enforcement or
administrative or judicial proceedings, including foreclosures, (c) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage, (d) taxes, assessments, water
rates, sewer rents and other charges which are or may become a lien upon the
Mortgaged Property and fire and hazard insurance coverage and (e) any
losses sustained by the Servicer with respect to the liquidation of the
Mortgaged Property.  Notwithstanding
anything to the contrary herein, in the event the Servicer determines in its
reasonable judgment that a Servicing Advance is a Nonrecoverable Advance, the
Servicer shall be under no obligation to make such Servicing Advance.

 

Servicing File:  The items pertaining to a particular Mortgage
Loan including, but not limited to, the computer files, data disks, books,
records, data tapes, notes, and all additional documents generated as a result
of or utilized in originating and/or servicing each Mortgage Loan, which are
held in trust for the Indenture Trustee by the Servicer initially, and
beginning on or about July 1, 2005, by the Subservicer.

 

Servicing
Officer:  Any officer
of the Servicer or the Subservicer involved in or responsible for, the
administration and servicing of the Mortgage Loans whose name appears on a list
of servicing officers furnished by the Servicer and the Subservicer to the
Master Servicer upon request, as such list may from time to time be amended.

 

Servicing
Standard:  The
servicing and administration of the Mortgage Loans for which the Servicer or
the Subservicer is responsible hereunder (a) in the same manner in which,
and with the same care, skill, prudence and diligence with which, the Servicer
or the Subservicer, as applicable, generally services and administers similar
mortgage loans with similar mortgagors (i) for other third parties, giving
due consideration to customary and usual standards of practice of

 

37

 

prudent institutional residential mortgage lenders servicing their own
loans or (ii) held in the Servicer’s or the Subservicer’s own portfolio,
as applicable, whichever standard is higher, (b) with a view to the
maximization of the recovery on such Mortgage Loans on a net present value
basis and the best interests of the Trust or any Person to which the Mortgage
Loans may be transferred by the Trust, (c) without regard to (i) any
relationship that the Servicer or the Subservicer or any affiliate thereof may
have with the related Mortgagor or any other party to the transactions; (ii) the
right of the Servicer or the Subservicer to receive compensation or other fees
for its services rendered pursuant to this Agreement; (iii) the obligation
of the Servicer or the Subservicer to make Servicing Advances; (iv) the
ownership, servicing or management by the Servicer or the Subservicer or any
affiliate thereof for others of any other mortgage loans or mortgaged
properties; and (v) any debt the Servicer or any affiliate of the Servicer
or the Subservicer has extended to any mortgagor or any affiliate of such
mortgagor, and (d) in accordance with the applicable state, local and
federal laws, rules and regulations.

 

Stated
Principal Balance: 
With respect to any Payment Date, either (a) in the case of any
Mortgage Loan, the principal balance of such Mortgage Loan at the close of
business on the  Cut-off Date after
giving effect to principal payments due on or before the Cut-off Date, whether
or not received, less an amount equal to principal payments due after the
Cut-off Date and on or before the Due Date in the related Due Period, whether
or not received from the Mortgagor or advanced by the Servicer or the Master
Servicer, and all amounts allocable to unscheduled principal payments
(including Principal Prepayments, Liquidation Proceeds, Insurance Proceeds and
condemnation proceeds, in each case to the extent identified and applied prior
to or during the related Prepayment Period), provided that the Stated Principal
Balance of any Liquidated Mortgage Loan shall be zero and (b) in the case
of any REO Property, the Stated Principal Balance of the related Mortgage Loan
on the Due Date immediately preceding the date of acquisition of such REO
Property by or on behalf of the Indenture Trustee (reduced by any amount
applied as a reduction of principal on the related Mortgage Loan).

 

Stepdown Date:  The later to occur of (1) the Payment
Date in August 2008 or (2) the first Payment Date on which the
aggregate Class Principal Amount of the Class A Notes (other than the
Class A-IO Notes) (after giving effect to payments of the Principal Funds
for such Payment Date) is less than or equal to 54.200% of the Aggregate Collateral
Balance as of the end of the immediately preceding Due Period.

 

Stepup Date:  The first Payment Date after the Payment Date
on which the Aggregate Collateral Balance at the beginning of the Due Period
related to that Payment Date is less than 10% of the Aggregate Collateral
Balance as of the Closing Date.

 

Subaccount:
Any of the Pool 1 Subaccount or the Pool 2 Subaccount.

 

Subordinate
Note:  Any Class M1,
Class M2, Class M3, Class M4, Class M5, Class M6, Class M7,
Class M8, Class M9 or Class M10 Note.

 

Subsequent
Cut-off Date: 
With respect to any Subsequent Mortgage Loan, the date specified in the
related Subsequent Transfer Agreement.

 

38

 

Subsequent
Mortgage Loans: 
The Mortgage Loans transferred to the Trust during the Pre-Funding
Period.

 

Subsequent
Transfer Agreement: 
A Subsequent Transfer Agreement entered into between the Seller,  the Transferor (if applicable),  the Issuer, the Depositor, the Indenture
Trustee and the Trust Administrator, substantially in the form attached as Exhibit I.

 

Subservicer:  JPMorgan Chase Bank, National Association or
any successor in interest.

 

Subservicer
Event of Default: 
Any one of the conditions or circumstances enumerated in Section 4.07
with respect to the Subservicer.

 

Substitution
Amount:  The
amount, if any, by which the Stated Principal Balance of a Deleted Mortgage
Loan exceeds the Stated Principal Balance of the related Qualifying Substitute
Mortgage Loan, or aggregate Stated Principal Balance, if applicable, plus
unpaid interest thereon, any related unpaid Advances or Servicing Advances or
unpaid Servicing Administration Fees or unpaid Master Servicing Fees and the
amount of any costs and damages incurred by the Trust Fund associated with a
violation of any applicable federal, state or local predatory or abusive
lending law in connection with the origination of such Deleted Mortgage Loan.

 

Swap Agreement:  The swap agreement dated August 4, 2005,
by and between the Swap Counterparty and the Issuer, including the ISDA Master
Agreement dated as of August 4, 2005 between the Swap Counterparty and the
Issuer, the schedule thereto and the related confirmation (Ref.: AA7NE),
substantially in the form of Exhibit B hereto.

 

Swap
Counterparty: 
Morgan Stanley Capital Services Inc.

 

Targeted
Overcollateralization Amount:  With respect to any Payment Date prior to the
Stepdown Date, an amount equal to 0.850% of the Aggregate Collateral Balance as
of the Closing Date, and with respect to any Payment Date on or after the
Stepdown Date, an amount equal to the lesser of (x) 0.850% of the Aggregate
Collateral Balance as of the Closing Date and (y) 1.700% of the Aggregate
Collateral Balance as of the end of the related Due Period, subject to a floor
equal to 0.500% of the Aggregate Collateral Balance as of the Closing Date;
provided, however, that on any Payment Date with respect to which a Trigger
Event has occurred and is continuing, the Targeted Overcollateralization Amount
will be an amount equal to the Targeted Overcollateralization Amount for the
Payment Date immediately preceding such Payment Date.

 

Telerate Page 3750:  The display currently so designated as “Page 3750”
on the Moneyline Telerate Service (or such other page selected by the
Master Servicer as may replace Page 3750 on that service for the purpose
of displaying daily comparable rates on prices).

 

Title
Insurance Policy: 
A title insurance policy maintained with respect to a Mortgage Loan.

 

Total
Remittance Amount: 
With respect to any Payment Date, the sum of (i) the Interest Funds
for both Mortgage Groups for such Payment Date and (ii) the Principal
Funds for both Mortgage Groups for such Payment Date.

 

39

 

Total
Principal Deficiency Amount:  With respect to any Payment Date, the excess,
if any, of the aggregate Class Principal Amount of the Notes immediately
prior to such Payment Date over the sum of the Aggregate Collateral Balance and
any Recoveries, each as of the last day of the related Due Period.

 

Transferor:
Fieldstone Investment Funding, a Delaware limited liability company and
wholly-owned subsidiary of the Seller, which transferred certain of the
Mortgage Loans to the Depositor in accordance with the terms of the Mortgage
Loan Purchase Agreement.

 

Trigger Event:  A Trigger Event shall have occurred with
respect to any Payment Date on or after the Stepdown Date, if (a) the
quotient of (1) the aggregate Stated Principal Balance of all Mortgage
Loans 60 or more days delinquent, measured on a rolling three-month basis
(including Mortgage Loans in foreclosure, REO Properties and Mortgage Loans
with respect to which the applicable mortgagor is in bankruptcy) divided by (2) the
Aggregate Collateral Balance as of the preceding Servicer Remittance Date,
equals or exceeds the product of (i) 34.750% and (ii) the Senior
Enhancement Percentage, (b) the quotient (expressed as a percentage) of (1) the
aggregate Realized Losses incurred from the Initial Cut-off Date through the
last day of the calendar month preceding such Payment Date divided by (2) the
Aggregate Collateral Balance as of the Closing Date exceeds the Required Loss
Percentage or (c) a Principal Deficiency Amount exists for such Payment
Date.

 

Trust or Trust
Fund:  The
Issuer.

 

Trust Account
Property:  The Trust
Account, all amounts and investments held from time to time in the Trust
Account (whether in the form of deposit accounts, physical property, book-entry
securities, uncertificated securities, securities entitlements, investment
property or otherwise) and all proceeds of the foregoing.

 

Trust Account:  The Collection Account.

 

Trust
Agreement:  The
trust agreement dated as of July 26, 2005, between the Depositor and the
Owner Trustee, as amended and restated on 
August 4, 2005, among the Depositor, the Trust Administrator and
the Owner Trustee, as such may be amended or supplemented from time to time.

 

Trust Estate:  The assets of the Issuer and pledged by the
Issuer to the Indenture Trustee under the Indenture, which assets consist of
all accounts, accounts receivable, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts, certificates of
deposit, goods, notes, drafts, letters of credit, advices of credit, investment
property, uncertificated securities and rights to payment of any and every kind
consisting of, arising from or relating to any of the following:  (a) the Mortgage Loans listed in the
Mortgage Loan Schedule, and principal due and payable after the Cut-off Date,
but not including interest and principal due and payable on any Mortgage Loans
on or before the Cut-off Date, together with the Mortgage Files relating to
such Mortgage Loans; (b) any Insurance Proceeds, REO Property, Liquidation
Proceeds, REO Disposition Proceeds and other recoveries (in each case, subject
to clause (a) above), (c) the Collection Account, any Custodial
Account, any Escrow Account, the Pre-Funding Account, the Basis Risk Reserve
Account and all amounts deposited therein

 

40

 

pursuant to the applicable provisions of this Agreement, (d) any
Insurance Policies, (e) the rights of the Depositor under the Mortgage
Loan Purchase Agreement, (f) all income, revenues, issues, products,
revisions, substitutions, replacements, profits, rents and all cash and
non-cash proceeds of the foregoing and (g) the rights of the Trust under
the Swap Agreement and the Corridor Contract.

 

UCC:  The Uniform Commercial Code as enacted in the
relevant jurisdiction.

 

Underwriters:  Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Bear Stearns & Co. Inc., Credit Suisse First
Boston LLC and Lehman Brothers Inc.

 

Voting
Interests:  The
portion of the voting rights of all the Notes that is allocated to any Note for
purposes of the voting provisions of this Agreement.  At all times during the term of this
Agreement, 98% of all voting rights will be allocated among the holders of the
Notes (other than the Class A-IO Notes) as provided below.  The portion of such voting rights allocated
to such Notes will be based on the fraction, expressed as a percentage, the
numerator of which is the aggregate Class Principal
Amount then outstanding and the denominator of which is the aggregate
outstanding principal balance of the Notes. 
At all times during the term of the Indenture and this Agreement, the
holders of the Class A-IO Notes and the Ownership Certificate will each be
allocated 1% of the voting rights for so long as the related Class remains
outstanding.  After the Payment Date in February 2006,
the voting rights allocable to the Class A-IO Notes shall transfer to the
Ownership Certificate and thereafter, the Ownership Certificate shall be
allocated 2% of the voting rights.  The
voting rights allocation to any Class of Notes or the Ownership
Certificate will be allocated among all holders of each such Class or
Certificate in proportion to the outstanding Class Principal Amount or Class Notional
Amount of such Notes or Percentage Interest of the Ownership Certificate.

 

Section 1.02.                             Calculations With Respect to the
Mortgage Loans.  Calculations required to be made pursuant to
this Agreement with respect to any Mortgage Loan in the Trust Estate shall
be made based upon current information as to the terms of the Mortgage Loans
and reports of payments received from the Mortgagor on such Mortgage Loans
provided by the Servicer or the Subservicer to the Master Servicer.  Payments to be made by the Trust
Administrator shall be based on information provided by the Master Servicer.  The Trust Administrator shall not be required
to recompute, verify or recalculate the information supplied to it by the
Master Servicer, the Servicer or the Subservicer.

 

Section 1.03.                             Calculations With Respect to
Accrued Interest.  Accrued interest, if any, on any LIBOR Note
shall be calculated based upon a 360-day year and the actual number of days in
each Accrual Period.  Accrued interest,
if any, on any Class A-IO Notes or Class M10 Notes shall be
calculated based upon a 360-day year consisting of twelve 30-day months.

 

ARTICLE II

CONVEYANCE OF MORTGAGE LOANS

 

Section 2.01.                             Creation and Declaration of
Trust Estate; Conveyance of Initial Mortgage Loans.

 

41

 

(a)                                  Mortgage Loans.  As of the Closing Date, in consideration of
the Issuer’s delivery of the Notes to the Depositor or its designee, and
concurrently with the execution and delivery of this Agreement, the Depositor
does hereby transfer, assign, set over, deposit with and otherwise convey to
the Issuer, without recourse, subject to Section 3.01, in trust, all the
right, title and interest of the Depositor in and to the Initial Mortgage
Loans.  Such conveyance includes, without
limitation, the right to all payments of principal and interest received on or
with respect to the Initial Mortgage Loans on and after the Initial Cut-off
Date (other than payments of principal and interest due on or before such
date), and all such payments due after such date but received prior to such
date and intended by the related Mortgagors to be applied after such date together
with all of the Depositor’s right, title and interest in any REO Property and
the proceeds thereof, the Depositor’s rights under any Insurance Policies
related to the Mortgage Loans, the Depositor’s security interest in any
collateral pledged to secure the Mortgage Loans, including the Mortgaged
Properties and any proceeds of the foregoing, to have and to hold, in trust;
and the Indenture Trustee declares that, subject to the review provided for in Section 2.02,
it has received and shall hold the Trust Estate, as Indenture Trustee, in
trust, for the benefit and use of the Noteholders and the Swap Counterparty and
for the purposes and subject to the terms and conditions set forth in this
Agreement, and, concurrently with such receipt, the Issuer has issued and
delivered the Notes to or upon the order of the Depositor, in exchange for the
Mortgage Loans and the other property of the Trust Estate.

 

Concurrently
with the execution and delivery of this Agreement, the Depositor does hereby
assign to the Issuer all of its rights and interest under the Mortgage Loan
Purchase Agreement but without delegation of any of its obligations
thereunder.  The Issuer hereby accepts
such assignment, and shall be entitled to exercise all the rights of the
Depositor under the Mortgage Loan Purchase Agreement as if, for such purpose,
it were the Depositor.  Upon the issuance
of the Notes, ownership in the Trust Estate shall be vested in the Issuer,
subject to the lien created by the Indenture in favor of the Indenture Trustee,
for the benefit of the Noteholders and the Swap Counterparty.  The Issuer hereby accepts such assignment and
shall be entitled to exercise all rights of the Depositor under the Mortgage
Loan Purchase Agreement as if, for such purpose, it were the Depositor.  The foregoing sale, transfer, assignment,
set-over, deposit and conveyance does not and is not intended to result in
creation or assumption by the Indenture Trustee of any obligation of the
Depositor, the Seller, or any other Person in connection with the Mortgage
Loans or any other agreement or instrument relating thereto except as
specifically set forth herein.

 

It is agreed
and understood by the Depositor, the Issuer and the Indenture Trustee that it
is not intended that any Mortgage Loan to be included in the Trust Fund be (i) a
“High-Cost Home Loan” as defined in the New Jersey Home Ownership Act effective
November 27, 2003, (ii) a “High-Cost Home Loan” as defined in the New
Mexico Home Loan Protection Act effective January 1, 2004, (iii) a “High-Cost
Home Mortgage Loan” as defined in the Massachusetts Predatory Home Loan
Practices Act effective November 7, 2004 and (iv) a “High Cost Home
Loan” as defined in the Indiana Home Loan Practices Act effective January 1,
2005.

 

(b)                                 In connection with such transfer
and assignment, the Depositor does hereby deliver to, and deposit with, or
cause to be delivered to and deposited with, the Indenture Trustee, and/or the
Custodian acting on the Indenture Trustee’s behalf, the following documents

 

42

 

or instruments with respect to each Initial Mortgage Loan (each a “Mortgage
File”) so transferred and assigned:

 

(i)                                     the
original Mortgage Note, endorsed either (A) in blank or (B) in the
form of the Form of Endorsement set forth in Exhibit A-4 hereto (or Exhibit B-6
to the Custodial Agreement), or with respect to any lost Mortgage Note, an
original Lost Note Affidavit, in the form set forth in Exhibit C hereto
(or Exhibit B-5 to the Custodial Agreement), stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy of the
related Mortgage Note;

 

(ii)                                  the
original of any guarantee executed in connection with the Mortgage Note
assigned to the Indenture Trustee;

 

(iii)                               the
original Mortgage with evidence of recording thereon, and the original recorded
power of attorney, if the Mortgage was executed pursuant to a power of
attorney, with evidence of recording thereon or, if such Mortgage or power of
attorney has been submitted for recording but has not been returned from the
applicable public recording office, has been lost or is not otherwise
available, a copy of such Mortgage or power of attorney, as the case may be,
certified by an Officer’s Certificate of the Seller to be a true and complete
copy of the original submitted for recording, together with a written Opinion
of Counsel acceptable to the Indenture Trustee and the Depositor that an
original recorded Mortgage is not required to enforce the Indenture Trustee’s
interest in the Mortgage Loan;

 

(iv)                              with
respect to each Non-MERS Mortgage Loan, an original Assignment of Mortgage, in
form and substance acceptable for recording. 
The Mortgage shall be assigned either (A) in blank, without
recourse, or (B) to “HSBC Bank USA, National Association,” as Indenture
Trustee of the Fieldstone Mortgage Investment Trust, Series 2005-2”,
without recourse or (C) to the order of the Indenture Trustee;

 

(v)                                 an
original copy of any intervening assignment of Mortgage showing a complete
chain of assignments or, in the case of an intervening assignment that has been
lost, a written Opinion of Counsel for the Seller acceptable to the Indenture
Trustee that such original intervening assignment is not required to enforce
the Indenture Trustee’s interest in the Mortgage Loans;

 

(vi)                              the
original or a certified copy of lender’s title insurance policy (or, in lieu
thereof, a commitment to issue such title insurance policy, with an original or
a certified copy of such title insurance policy to follow as soon after the
Closing Date as reasonably practicable);

 

(vii)                           the
original or copies of each assumption, modification, written assurance or
substitution agreement, if any, or as to any such agreement which cannot be
delivered prior to the Closing Date because of a delay caused by the public
recording office where such assumption, modification or substitution agreement
has been delivered for recordation, a photocopy of such assumption,
modification or substitution agreement, pending delivery of the original
thereof, together with an Officer’s Certificate of the Seller certifying that
the copy of such assumption, modification or substitution agreement delivered
to the Custodian is a true

 

43

 

copy and that the original of such agreement has been forwarded to the
public recording office; and

 

(viii)                        the
original of any security agreement or equivalent instrument executed in
connection with the Mortgage or as to any security agreement or equivalent
instrument that cannot be delivered on or prior to the Closing Date because of
a delay caused by the public recording office where such document has been
delivered for recordation, a photocopy of such document, pending delivery of
the original thereof, together with an Officer’s Certificate of the Seller
certifying that the copy of such security agreement, chattel mortgage or their
equivalent delivered to the Custodian is a true copy and that the original of
such document has been forwarded to the public recording office.

 

The Depositor
and the Seller acknowledge and agree that the form of endorsement attached
hereto as Exhibit A-4 is intended to effect the transfer to the Indenture
Trustee, for the benefit
of the Noteholders and the Swap Counterparty, of the Mortgage Notes and the
Mortgages.

 

(c)                                  MERS is the record owner of all
of the Initial Mortgage Loans.  The
Seller shall, or shall cause the Servicer or the Subservicer, at the expense of
the Seller, to take such actions as are necessary to cause the Indenture
Trustee to be clearly identified as the owner of each such Mortgage Loan on the
records of MERS for purposes of the system of recording transfers of beneficial
ownership of mortgages maintained by MERS. 
With respect to each Cooperative Loan, the Seller shall, or at its
expense, shall cause the Servicer or the Subservicer to, take such actions as
are necessary under applicable law in order to perfect the interest of the
Indenture Trustee in the related Mortgaged Property.  Assignments of Mortgage with respect to each
Non- MERS Mortgage Loan shall be recorded; provided, however, that such
Assignments need not be recorded if, on or prior to the Closing Date, the
Seller delivers an Opinion of Counsel (which must be Independent counsel)
acceptable to the Indenture Trustee and the Rating Agencies, to the effect that
recording in such states is not required to protect the Indenture Trustee’s
interest in the related Non-MERS Mortgage Loans; provided, further, that
notwithstanding the delivery of any Opinion of Counsel, the Servicer shall
submit each Assignment of Mortgage for recording upon the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Mortgagor under the
related Mortgage.  Subject to the
preceding sentence, as soon as practicable after the Closing Date (but in no
event more than three months thereafter except to the extent delays are caused
by the applicable recording office), the Servicer, at the expense of the Seller
shall cause to be properly recorded in each public recording office where the
related Mortgages are recorded each Assignment of Mortgage referred to in subsection (b)(iv) above
with respect to each Non-MERS Mortgage Loan.

 

(d)                                 In instances where a Title
Insurance Policy is required to be delivered to the Indenture Trustee or the
Custodian on behalf of the Indenture Trustee under clause (b)(vii) above
and is not so delivered, the Seller will provide a copy of such Title Insurance
Policy to the Indenture Trustee, or to the Custodian on behalf of the Indenture
Trustee, as promptly as practicable after the execution and delivery hereof,
but in any case within 180 days of the Closing Date.

 

44

 

(e)                                  For Initial Mortgage Loans (if
any) that 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,
herewith delivers to the Indenture Trustee, or to the Custodian on behalf of
the Indenture Trustee, an Officer’s Certificate of the Seller which shall
include a statement to the effect that all amounts received in connection with
such prepayment that are required to be deposited in the Collection Account
pursuant to Section 5.07 have been so deposited.  All original documents that are not delivered
to the Indenture Trustee or the Custodian on behalf of the Indenture Trustee
shall be held by the Servicer or the Subservicer in trust for the benefit of
the Indenture Trustee and the Noteholders and the Swap Counterparty.

 

Section 2.02.                             Acceptance of Trust Estate;
Review of Documentation.

 

(a)                                  Subject to the provisions of Section 2.01,
the Issuer acknowledges receipt of the assets transferred by the Depositor of
the assets included in the Trust Estate and has directed that the documents
referred to in Section 2.01 and all other assets included in the definition
of “Trust Estate” be delivered to the Indenture Trustee (or the Custodian) on
its behalf.

 

The Indenture
Trustee, by execution and delivery hereof, acknowledges receipt by it or by the
applicable Custodian on its behalf of the Mortgage Files pertaining to the
Mortgage Loans listed on the Mortgage Loan Schedule, subject to review thereof
by the Indenture Trustee, or by the Custodian on behalf of the Indenture
Trustee, under this Section 2.02. 
The Indenture Trustee, or the Custodian on behalf of the Indenture
Trustee, will execute and deliver to the Depositor, the Master Servicer, the
Servicer, the Subservicer (and the Indenture Trustee if delivered by the
Custodian) on the Closing Date an Initial Certification in the form annexed
hereto as Exhibit A-1 (or in the form annexed to the Custodial Agreement
as Exhibit A-1, as applicable).

 

(b)                                 Within 45 days after the Closing
Date, the Indenture Trustee or the Custodian on behalf of the Indenture
Trustee, will, for the benefit of Noteholders and the Swap Counterparty, review
each Mortgage File to ascertain that all required documents set forth in Section 2.01
have been received and appear on their face to contain the requisite signatures
by or on behalf of the respective parties thereto, and shall deliver to the
Depositor, the Master Servicer, the Servicer and the Subservicer (and the
Indenture Trustee if delivered by the Custodian) an Interim Certification in
the form annexed hereto as Exhibit A-2 (or in the form annexed to the
Custodial Agreement as Exhibit A-2, as applicable) to the effect that, as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan prepaid in full or any specifically identified in such
certification as not covered by such certification), (i) all of the applicable
documents specified in Section 2.01(b) are in its possession and (ii) such
documents have been reviewed by it and appear to relate to such Mortgage
Loan.  The Indenture Trustee, or the
Custodian on behalf of the Indenture Trustee, shall determine whether such
documents are executed and endorsed, but shall be under no duty or obligation
to inspect, review or examine any such documents, instruments, certificates or
other papers to determine that the same are valid, binding, legally effective,
properly endorsed, genuine, enforceable or appropriate for the represented
purpose or that they have actually been recorded or are in recordable form or
that they are other than what they purport to be on their face.  Neither the Indenture Trustee nor the Custodian
shall have any responsibility for verifying the genuineness or the legal
effectiveness of or authority for any signatures of or on behalf of any party
or endorser.

 

45

 

 

(c)                                  If, in the course of the review
described in paragraph (b) above or paragraph (d) below, the
Indenture Trustee or the Custodian discovers any document or documents
constituting a part of a Mortgage File that is missing, does not appear regular
on its face (i.e., is mutilated, damaged, defaced, torn or otherwise physically
altered) or appears to be unrelated to the Mortgage Loans identified in the
Mortgage Loan Schedule, as applicable (each, a “Material Defect”), the
Indenture Trustee, or the Custodian on behalf of the Indenture Trustee,
discovering such Material Defect shall identify the Mortgage Loan to which such
Material Defect relates in the Interim Certification delivered to the Depositor
and the Master Servicer.  Within 90 days
of its receipt of such notice, the Seller shall be required to cure such
Material Defect (and, in such event, the Seller shall provide the Indenture
Trustee with an Officer’s Certificate confirming that such cure has been
effected).  If the Seller does not so
cure such Material Defect, if a loss has been incurred with respect to such
Mortgage Loan that would, if such Mortgage Loan were not purchased from the
Trust Estate, constitute a Realized Loss, and such loss is attributable to the
failure of the Seller to cure such Material Defect, the Seller shall repurchase
the related Mortgage Loan from the Trust Estate at the Purchase Price.  A loss shall be deemed to be attributable to
the failure of the Seller to cure a Material Defect if, as determined by the
Seller, upon mutual agreement with the Indenture Trustee each acting in good
faith, absent such Material Defect, such loss would not have been
incurred.  The Seller may, in lieu of
repurchasing a Mortgage Loan pursuant to this Section 2.02, substitute for
such Mortgage Loan a Qualifying Substitute Mortgage Loan subject to the
provisions of Section 3.03.  The
failure of the Indenture Trustee or the Custodian to deliver the Interim
Certification within 45 days after the Closing Date shall not affect or relieve
the Seller of its obligation to repurchase any Mortgage Loan pursuant to this Section 2.02
or any other Section of this Agreement requiring the repurchase of
Mortgage Loans from the Trust Estate.

 

(d)                                 Within 180 days following the
Closing Date, the Indenture Trustee, or the Custodian, shall deliver to the
Depositor, the Master Servicer, the Servicer and the Subservicer (and the
Indenture Trustee if delivered by the Custodian) a Final Certification
substantially in the form attached as Exhibit A-3 (or in the form annexed
to the Custodial Agreement as Exhibit A-3, as applicable) evidencing the
completeness of the Mortgage Files in its possession or control, with any
exceptions noted thereto.

 

(e)                                  Nothing in this Agreement shall
be construed to constitute an assumption by the Trust Estate, the Indenture
Trustee, the Custodian or the Noteholders of any unsatisfied duty, claim or
other liability on any Mortgage Loan or to any Mortgagor.

 

(f)                                    Notwithstanding anything to the
contrary contained herein, each of the parties hereto acknowledges that the
Custodian shall perform the applicable review of the Mortgage Loans and
respective certifications thereof as provided in the Custodial Agreement.

 

(g)                                 Upon execution of this
Agreement, the Depositor hereby delivers to the Indenture Trustee and the
Indenture Trustee acknowledges a receipt of the Mortgage Loan Purchase
Agreement.

 

46

 

Section 2.03.                             Grant Clause.

 

(a)                                  It is intended that the
conveyance by the Depositor to the Issuer of the Mortgage Loans, as provided
for in Section 2.01 be construed as a sale by the Depositor to the Issuer
of the Mortgage Loans and other assets in the Trust Estate for the benefit of
the Noteholders and the Swap Counterparty. 
Further, it is not intended that any such conveyance be deemed to be a
pledge of the Mortgage Loans by the Depositor to the Issuer to secure a debt or
other obligation of the Depositor. 
However, in the event that the Mortgage Loans are held to be property of
the Depositor or if for any reason this Agreement is held or deemed to create a
security interest in the Mortgage Loans and other assets in the Trust Estate,
then it is intended that (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the New York UCC
(or the Relevant UCC if not the New York UCC); (b) the conveyances
provided for in Section 2.01 shall be deemed to be (1) a grant by the
Depositor to the Issuer of a security interest in all of the Depositor’s right
(including the power to convey title thereto), title and interest, whether now
owned or hereafter acquired, in and to (A) the Mortgage Loans, including
the Mortgage Notes, the Mortgages, any related insurance policies and all other
documents in the related Mortgage Files, (B) all amounts payable pursuant
to the Mortgage Loans in accordance with the terms thereof and (C) any and
all general intangibles consisting of, arising from or relating to any of the
foregoing, and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including
without limitation all Liquidation Proceeds, all Insurance Proceeds, all
amounts from time to time held or invested in the Collection Account, whether
in the form of cash, instruments, securities or other property and (2) an
assignment by the Depositor to the Issuer of any security interest in any and
all of the Depositor’s right (including the power to convey title thereto),
title and interest, whether now owned or hereafter acquired, in and to the
property described in the foregoing clauses (1)(A) through (C); (c) the
possession by the Indenture Trustee or any other agent of the Issuer of
Mortgage Notes, and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be “possession
by the secured party,” or possession by a purchaser or a person designated by
such secured party, for purposes of perfecting the security interest pursuant
to the New York UCC and any other Relevant UCC (including, without limitation, Section 9-313,
8-313 or 8-321 thereof); and (d) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts
or confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Issuer for the purpose of perfecting such security interest
under applicable law.

 

(b)                                 The Depositor and, at the
Depositor’s direction, the Issuer shall, to the extent consistent with this
Agreement, take such reasonable actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage Loans
and the other property of the Trust Estate, such security interest would be
deemed to be a perfected security interest of first priority under applicable
law and will be maintained as such throughout the term of this Agreement.  Without limiting the generality of the
foregoing, the Depositor shall prepare and file any UCC financing statements
that are necessary to perfect the Indenture Trustee’s security interest in or
lien on the Mortgage Loans, as evidenced by an Officer’s Certificate of the
Depositor, and furnish a copy of each such filed financing statement to the
Trust Administrator.  The Trust
Administrator shall prepare and file, at the expense of the Issuer, all filings
necessary to maintain the effectiveness of any original filings necessary under
the Relevant UCC to perfect the Indenture Trustee’s security interest in or
lien on the Mortgage Loans, including without limitation (x) continuation
statements, and (y) to the extent that a Responsible Officer of the

 

47

 

Trust Administrator has received written notice of such change or
transfer, such other statements as may be occasioned by (1) any change of
name of the Seller, the Depositor or the Issuer, (2) any change of
location of the place of business or the chief executive office of the Seller or
the Depositor or (3) any transfer of any interest of the Seller or the
Depositor in any Mortgage Loan.

 

Neither the
Depositor nor the Issuer shall organize under the law of any jurisdiction other
than the State under which each is organized as of the Closing Date (whether
changing its jurisdiction of organization or organizing under an additional
jurisdiction) without giving 30 days prior written notice of such action to its
immediate and mediate transferee, including the Indenture Trustee.  Before effecting such change, each of the
Depositor or the Issuer proposing to change its jurisdiction of organization
shall prepare and file in the appropriate filing office any financing
statements or other statements necessary to continue the perfection of the interests
of its immediate and mediate transferees, including the Indenture Trustee, in
the Mortgage Loans.  In connection with
the transactions contemplated by this Agreement and the Indenture, each of the
Depositor and the Issuer authorizes its immediate or mediate transferee,
including the Indenture Trustee, to file in any filing office any initial
financing statements, any amendments to financing statements, any continuation
statements, or any other statements or filings described in this Section 2.03(b).

 

(c)                                  The Depositor shall not take any
action inconsistent with the sale by the Depositor of all of its right, title
and interest in and to the Trust Estate and shall indicate or shall cause to be
indicated in its records and records held on its behalf that ownership of each
Mortgage Loan and the other property of the Issuer is held by the Issuer.  In addition, the Depositor shall respond to
any inquiries from third parties with respect to ownership of a Mortgage Loan or
any other property of the Trust Estate by stating that it is not the owner of
such Mortgage Loan and that ownership of such Mortgage Loan or other property
of the Trust Estate is held by the Issuer on behalf of the Noteholders and the
Swap Counterparty.

 

Section 2.04.                             Subsequent Transfers.

 

(a)                                  Subject to the satisfaction of
the conditions set forth in paragraph (b) below and pursuant to the terms
of each Subsequent Transfer Agreement, in consideration of the Trust
Administrator’s delivery, on behalf of the Trust, on the related Subsequent
Transfer Date to or upon the order of the Seller of the purchase price
therefor, (i) the Seller or the Transferor (if applicable) shall on any
Subsequent Transfer Date sell, transfer, assign, set over and otherwise convey
without recourse to the Depositor and (ii) the Depositor shall sell,
transfer, assign, set over and otherwise convey without recourse to the Trust,
all right, title and interest of the Seller or the Transferor (if applicable)
and the Depositor, as applicable, in and to each Subsequent Mortgage Loan
transferred pursuant to such Subsequent Transfer Agreement, including (i) the
related Stated Principal Balance as of the Subsequent Cut-Off Date after giving
effect to payments of principal due on or before the Subsequent Cut-Off Date; (ii) all
collections in respect of interest and principal received after the Subsequent
Cut-Off Date (other than principal and interest due on or before such
Subsequent Cut-off Date); (iii) property which secured such Subsequent
Mortgage Loan and which has been acquired by foreclosure or deed in lieu of
foreclosure; (iv) its interest in any insurance policies in respect of
such Subsequent Mortgage Loan; and (v) all proceeds of any of the
foregoing.  The transfers by the Seller
or the Transferor (if applicable) to the Depositor and by the Depositor to the
Trust of the Subsequent Mortgage

 

48

 

Loans set forth on the Subsequent Mortgage Loan Schedule attached
thereto shall be absolute and shall be intended by the Seller or the Transferor
(if applicable), the Depositor and all parties hereto, other than for federal
income tax purposes, to be treated as a sale by the Seller or the Transferor
(if applicable) to the Depositor and as a sale by the Depositor to the Trust.  The parties hereto intend that for federal
income tax purposes the transfer of Subsequent Mortgage Loans will be
characterized as described in Section 8.7 of the Mortgage Loan Purchase
Agreement.  If the assignment and
transfer of the Mortgage Loans and the other property specified in this Section 2.04
from the Seller or the Transferor (if applicable) to the Depositor and by the
Depositor to the Trust pursuant to this Agreement and each Subsequent Transfer
Agreement is held or deemed not to be a sale or is held or deemed to be a
pledge of security for a loan, each of the Seller or the Transferor (if
applicable) and the Depositor intend that the rights and obligations of the
parties shall be established pursuant to the terms of this Agreement and that,
in such event, (i) the Seller or the Transferor (if applicable) shall be
deemed to have granted and does hereby grant to the Depositor and the Depositor
shall be deemed to have granted and does hereby grant to the Trust as of such
Subsequent Transfer Date a first priority security interest in the entire
right, title and interest of the Seller or the Transferor (if applicable) and
of the Depositor in and to the Subsequent Mortgage Loans and all other property
conveyed to the Trust pursuant to this Section 2.04 and all proceeds
thereof and (ii) this Agreement shall constitute a security agreement
under applicable law.  The purchase price
shall be one hundred Percent (100%) of the aggregate Stated Principal Balance
of the Subsequent Mortgage Loans as of the Subsequent Cut-Off Date.  On or before each Subsequent Transfer Date,
the Seller or the Transferor (if applicable) shall deliver to, and deposit with
the Indenture Trustee or the Custodian on behalf of the Indenture Trustee, the
related documents with respect to each Subsequent Mortgage Loan transferred on
such Subsequent Transfer Date, and the related Subsequent Mortgage Loan Schedule in
computer readable format with respect to such Subsequent Mortgage Loans.

 

(b)                                 The Seller or the Transferor (if
applicable) shall transfer and deliver to the Indenture Trustee or the
Custodian on behalf of the Indenture Trustee the Subsequent Mortgage Loans and
the other property and rights related thereto described in paragraph (a) of
this Section 2.04 only upon the satisfaction of each of the following
conditions on or prior to the applicable Subsequent Transfer Date:

 

(i)                                     The
Seller or the Transferor (if applicable) shall have provided the Servicer, the
Indenture Trustee, the Depositor, the Trust Administrator, the Master Servicer,
the Subservicer and the Rating Agencies with an Addition Notice, which notice
shall be given not less than two Business Days prior to the applicable
Subsequent Transfer Date and shall designate the Subsequent Mortgage Loans to
be sold to the Trust and the aggregate Stated Principal Balance of such
Mortgage Loans and the Rating Agencies shall have informed the Seller, the
Transferor (if applicable),  the
Depositor, the Indenture Trustee, the Trust Administrator, the Master Servicer,
the Servicer or the Subservicer prior to the applicable Subsequent Transfer
Date that the inclusion of such Subsequent Mortgage Loans will not result in
the downgrade or withdrawal of the ratings assigned to the Notes;

 

(ii)                                  The
Seller or the Transferor (if applicable) shall have delivered to the Indenture
Trustee, the Depositor, the Trust Administrator, the Master Servicer, the
Subservicer

 

49

 

and the Servicer a duly executed Subsequent Transfer Agreement in
substantially the form of Exhibit I;

 

(iii)                               The
Seller or the Transferor (if applicable) shall have delivered to the Trust
Administrator for deposit in the Collection Account all principal collected and
interest collected to the extent accrued and due after the Subsequent Cut-off
Date;

 

(iv)                              As
of each Subsequent Transfer Date, the Seller or the Transferor (if
applicable)  was not insolvent, the
Seller or the Transferor (if applicable) will not be made insolvent by such
transfer and the Seller or the Transferor (if applicable) is not aware of any
pending insolvency;

 

(v)                                 Such
addition will not result in a material adverse tax consequence to any
Noteholder;

 

(vi)                              The
Pre-Funding Period shall not have terminated;

 

(vii)                           The
Seller or the Transferor (if applicable) shall have provided the Indenture
Trustee, the Trust Administrator, the Depositor and the Rating Agencies with an
Opinion of Counsel relating to the sale (i.e., “True Sale Opinion”) of the
Subsequent Mortgage Loans from the Seller or the Transferor (if applicable) to
the Depositor and the enforceability of the Subsequent Transfer Agreement with
respect to the Seller and the Depositor, which matters may be covered in the
opinions delivered on the Closing Date;

 

(viii)                        The
Depositor shall have provided the Indenture Trustee, the Trust Administrator
and the Rating Agencies with an Opinion of Counsel relating to the sale (i.e., “True
Sale Opinion”) of the Subsequent Mortgage Loans from the Depositor to the
Trust, the enforceability of the Subsequent Transfer Agreement with respect to
the Depositor and to the effect that the transfer of such Subsequent Mortgage
Loans will not adversely affect the tax status of the Notes, which matters may
be covered in the opinions delivered on the Closing Date;

 

(ix)                                The
aggregate Stated Principal Balance of Subsequent Mortgage Loans does not exceed
the amount deposited in the Pre-Funding Account as of the Closing Date;

 

(x)                                   The
conditions specified in Exhibit J hereto shall be met; and

 

(xi)                                On
the last Subsequent Transfer Date, the Indenture Trustee and the Trust
Administrator shall have received an accountant’s letter confirming that the
characteristics of the Mortgage Loans (including the Subsequent Mortgage
Loans), satisfy the parameters set forth in Exhibit J hereto.

 

(c)                                  Each party hereto shall comply with
their respective obligations set forth in Sections 2.01, 2.02, 3.01, 3.02 and
3.03 with respect to the Subsequent Mortgage Loans delivered on each Subsequent
Transfer Date.  References in such
Sections to the Initial Mortgage Loans or Mortgage Loans shall be deemed to
refer to the Subsequent Mortgage Loans and references to the Initial Cut-Off
Date or the Closing Date, as applicable, shall be deemed to refer to the
applicable related Subsequent Cut-Off Date or Subsequent Transfer Date,
respectively,

 

50

 

except that references to 360 days after the Closing Date shall remain
unchanged as shall representations made with specific reference to the Initial
Mortgage Loans.

 

Section 2.05.                             Option to Contribute Derivative
Instrument.

 

At any time on
or after the Closing Date, the Seller shall have the right to contribute to,
and deposit into, the Trust a derivative contract or comparable instrument (a “Derivative
Instrument”).  The Derivative Instrument
may have a notional amount in excess of the sum of the beneficial interests in
the Trust.  Any such instrument shall
constitute a fully prepaid agreement. 
The Trust Administrator shall have no tax reporting duties with respect
to any such Derivative Instrument.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Section 3.01.                             Representations and Warranties
of the Depositor and the Seller.

 

(a)                                  The Depositor hereby represents
and warrants to the Issuer, the Indenture Trustee for the benefit of
Noteholders and the Swap Counterparty, the Trust Administrator, the Master
Servicer, the Servicer and the Subservicer as of the Closing Date or such other
date as is specified, that:

 

(i)                                     This
Agreement constitutes a legal, valid and binding obligation of the Depositor,
enforceable against the Depositor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors’ rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity);

 

(ii)                                  Immediately
prior to the transfer by the Depositor to the Trust Estate of each Mortgage
Loan, the Depositor had good and equitable title to each Initial Mortgage Loan
(insofar as such title was conveyed to it by the Seller) subject to no prior
lien, claim, participation interest, mortgage, security interest, pledge,
charge or other encumbrance or other interest of any nature;

 

(iii)                               As
of the Closing Date, the Depositor has transferred all right, title and
interest in the Initial Mortgage Loans to the Trust Estate;

 

(iv)                              The
Depositor has not transferred the Initial Mortgage Loans to the Trust Estate
with any intent to hinder, delay or defraud any of its creditors;

 

(v)                                 The
Depositor has been duly organized and is validly existing as a corporation in
good standing under the laws of Delaware, with full power and authority to own
its assets and conduct its business as presently being conducted; and

 

(b)                                 The Seller hereby represents and
warrants to the Issuer, the Indenture Trustee for the benefit of Noteholders
and the Swap Counterparty, the Trust Administrator, the Master

 

51

 

Servicer, the Subservicer and the Depositor as of the Closing Date or
such other date as is specified, that:

 

(i)                                     the
Seller is a Maryland corporation, duly organized validly existing and in good
standing under the laws of the State of Maryland, and has the corporate power
to own its assets and to transact the business in which it is currently
engaged.  The Seller is duly qualified to
do business as a foreign corporation and is in good standing in each jurisdiction
in which the character of the business transacted by it or any properties owned
or leased by it requires such qualification and in which the failure so to
qualify would have a material adverse effect on the business, properties,
assets, or condition (financial or other) of the Seller;

 

(ii)                                  the
Seller has the corporate power and authority to make, execute, deliver and
perform this Agreement and all of the transactions contemplated under the
Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement.  When executed and delivered, this Agreement
will constitute the legal, valid and binding obligation of the Seller
enforceable in accordance with its terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally and by the availability of equitable
remedies;

 

(iii)                               the
Seller is not required to obtain the consent of any other party or any consent,
license, approval or authorization from, or registration or declaration with,
any governmental authority, bureau or agency in connection with the execution,
delivery, performance, validity or enforceability of this Agreement, except for
such consent, license, approval or authorization, or registration or
declaration, as shall have been obtained or filed, as the case may be, prior to
the Closing Date;

 

(iv)                              the
execution, delivery and performance of this Agreement by the Seller will not
violate any provision of any existing law or regulation or any order or decree
of any court applicable to the Seller or any provision of the articles of
incorporation or bylaws of the Seller, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Seller is a party
or by which the Seller may be bound;

 

(v)                                 no
litigation or administrative proceeding of or before any court, tribunal or
governmental body is currently pending, or to the knowledge of the Seller
threatened, against the Seller or any of its properties or with respect to this
Agreement which in the opinion of the Seller has a reasonable likelihood of
resulting in a material adverse effect on the transactions contemplated by this
Agreement; and

 

(vi)                              the
Seller has been organized in conformity with the requirements for qualification
as a REIT and currently qualifies as a REIT; the Seller has filed an election
to be treated as a REIT for federal income tax purposes; and the Seller has
operated in a manner and will continue to operate in a manner that will enable
it to continue to maintain its current qualification as a REIT.

 

(c)                                  The Seller hereby represents and
warrants to the Issuer, the Indenture Trustee for the benefit of Noteholders
and the Swap Counterparty, the Trust Administrator, the Master Servicer, the
Subservicer and the Depositor as of the Closing Date or such other date as is

 

52

 

specified, with respect to the Mortgage Loans, the representations and
warranties set forth in Section 3.2 of the Mortgage Loan Purchase
Agreement.

 

(d)                                 To the extent that any fact,
condition or event with respect to a Mortgage Loan constitutes a breach of a
representation or warranty of the Seller under subsection (c) above
or the Mortgage Loan Purchase Agreement, the only right or remedy of the
Indenture Trustee or any Certificateholder hereunder shall be their rights to
enforce the obligations of the Seller under any applicable representation or
warranty made by it.  The Indenture
Trustee acknowledges that the Depositor shall have no obligation or liability
with respect to any breach of any representation or warranty with respect to
the Mortgage Loans (except as set forth in Section 3.01(a)(ii)) under any
circumstances.

 

Section 3.02.                             Discovery of Breach.  It is understood and agreed that the
representations and warranties (i) of the Depositor set forth in Section ,
(ii) of the Seller set forth in Section 4.05 and 3.01(b) and (iii) of
the Servicer and the Subservicer pursuant to Section 4.05 of this
Agreement, shall each survive delivery of the Mortgage Files and the Assignment
of Mortgage of each Mortgage Loan to the Indenture Trustee and shall continue
throughout the term of this Agreement. 
With respect to the representations and warranties which are made to the
best of the Seller’s knowledge, if it is discovered by the Depositor, the
Seller, the Trust Administrator, the Indenture Trustee, the Master Servicer,
the Underwriters, the Servicer or the Subservicer that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the Mortgage Loans or the interests of the
Noteholders or the Indenture Trustee therein, notwithstanding such Seller’s
lack of knowledge with respect to the substance of such representation or warranty,
remedies for breach will apply to such inaccuracy.  Any breach of the representation and warranty
set forth in clauses (xxi), (xxxiv), (lxxii), (lxxiv), (lxxv), (lxxvi),
(lxxxv), (lxxxvi), (lxxxvii) and (lxxxviii) of Section 3.2 of the Mortgage
Loan Purchase Agreement shall be deemed to materially and adversely affect the
interest of the Trust in that Mortgage Loan, notwithstanding the Seller’s lack
of knowledge with respect to the substance of such representation and
warranty.  Upon discovery by any of the
Depositor, the Master Servicer, the Trust Administrator or the Indenture
Trustee of a breach of any of such representations and warranties made by the
Seller that adversely and materially affects the value of the related Mortgage
Loan, the party discovering such breach shall give prompt written notice to the
other parties.  Within 60 days of the
discovery by the Seller of a breach of any representation or warranty given to
the Indenture Trustee by the Seller or the Seller’s receipt of written notice
of such a breach, the Seller shall either (a) cure such breach in all
material respects, (b) repurchase such Mortgage Loan or any property
acquired in respect thereof from the Indenture Trustee at the Purchase Price or
(c) substitute a Qualifying Substitute Mortgage Loan for the affected
Mortgage Loan.

 

Section 3.03.                             Repurchase, Purchase or
Substitution of Mortgage Loans.

 

(a)                                  With respect to any Mortgage
Loan repurchased by the Seller pursuant to Section 3.02(b) of this
Agreement, or any Mortgage Loan purchased by the Servicer pursuant to Section 4.02(b) of
this Agreement,  the principal portion of
the funds in respect of such repurchase or purchase of a Mortgage Loan will be
considered a Principal Prepayment and the Purchase Price shall be deposited in the
Collection Account.  Upon receipt by the
Trust Administrator of the full amount of the Purchase Price for a Deleted
Mortgage Loan, or upon receipt of notification from

 

53

 

the Custodian that it had received the Mortgage File for a Qualifying
Substitute Mortgage Loan substituted for a Deleted Mortgage Loan (and any
applicable Substitution Amount), the Indenture Trustee shall release or cause
to be released and reassign to the Depositor, the Seller or the Servicer, as
applicable, the related Mortgage File for the Deleted Mortgage Loan and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranty, as shall be necessary to vest in
such party or its designee or assignee title to any Deleted Mortgage Loan
released pursuant hereto, free and clear of all security interests, liens and
other encumbrances created by this Agreement and the Indenture, which
instruments shall be prepared by the Servicer or the Subservicer and the
Indenture Trustee shall have no further responsibility with respect to the
Mortgage File relating to such Deleted Mortgage Loan.

 

(b)                                 With respect to each Qualifying
Substitute Mortgage Loan to be delivered to the Indenture Trustee (or its
custodian) in exchange for a Deleted Mortgage Loan:  (i) the Depositor , the Seller, or the
Servicer, as applicable, must deliver to the Indenture Trustee (or a Custodian)
the Mortgage File for the Qualifying Substitute Mortgage Loan containing the
documents set forth in Section 2.01(b) along with a written
certification certifying as to the delivery of such Mortgage File and
containing the granting language set forth in Section 2.01(a); and (ii) the
Seller and the Depositor will be deemed to have made, with respect to such
Qualifying Substitute Mortgage Loan, each of the representations and warranties
made by it with respect to the related Deleted Mortgage Loan.  As soon as practicable after the delivery of
any Qualifying Substitute Mortgage Loan hereunder, the Indenture Trustee, at
the expense of the Depositor and at the direction and with the cooperation of
the Servicer shall (i) with respect to a Qualifying Substitute Mortgage
Loan that is a Non-MERS Mortgage Loan, cause the Assignment of Mortgage to be
recorded by the Servicer if required pursuant to Section 2.01(c), or (ii) with
respect to a Qualifying Substitute Mortgage Loan that is a MERS Mortgage Loan,
cause to be taken such actions as are necessary to cause the Indenture Trustee
(on behalf of the Issuer) to be clearly identified as the owner of each such
Mortgage Loan on the records of MERS if required pursuant to Section 2.01(c).

 

ARTICLE IV

ADMINISTRATION AND SERVICING OF
THE

MORTGAGE LOANS BY THE SERVICER

 

Section 4.01.                             Seller’s Engagement of Servicer
to Perform Servicing Responsibilities.

 

(a)                                  Contract for Servicing;
Possession of Servicing Files.  The Seller, as the owner of the servicing
rights, by execution and delivery of this Agreement, does hereby contract with
the Servicer and the Subservicer, each subject to the terms of this Agreement,
for the servicing of the Mortgage Loans for the benefit of the Issuer and the
Indenture Trustee.  The Servicer or
Subservicer shall maintain a Servicing File with respect to each Mortgage Loan in
order to service such Mortgage Loans pursuant to this Agreement and each
Servicing File delivered to the Servicer or Subservicer shall be held in trust
by the Servicer or Subservicer for the benefit of the Issuer and the Indenture
Trustee; provided, however, that neither the
Servicer nor the Subservicer shall have any liability for any Servicing Files
(or portions thereof) not delivered by the Seller.  The Servicer’s or Subservicer’s possession of
any portion of the Mortgage Loan documents shall

 

54

 

be at the will of the Indenture Trustee for the sole purpose of
facilitating servicing of the related Mortgage Loan pursuant to this Agreement,
and such retention and possession by the Servicer or Subservicer shall be in a
custodial capacity only.  The ownership
of each Mortgage Note, Mortgage, and the contents of the Servicing File shall
be vested in the Indenture Trustee and the ownership of all records and
documents with respect to the related Mortgage Loan prepared by or which come
into the possession of the Servicer or Subservicer shall immediately vest in
the Indenture Trustee and shall be retained and maintained, in trust, by the
Servicer or Subservicer at the will of the Indenture Trustee in such custodial
capacity only.  The Servicing File
retained by the Servicer or Subservicer pursuant to this Agreement shall be
identified in accordance with the Servicer’s or Subservicer’s file tracking
system to reflect the ownership of the related Mortgage Loan by the Indenture
Trustee.  The Servicer or Subservicer
shall release from its custody the contents of any Servicing File retained by
it only in accordance with this Agreement.

 

(b)                                 Books and Records.  All rights arising out of the Mortgage Loans
shall be vested in the Indenture Trustee, subject to the Servicer’s and the
Subservicer’s rights to service and administer the Mortgage Loans hereunder in
accordance with the terms of this Agreement. 
All funds received on or in connection with a Mortgage Loan, other than the
Master Servicing Fee, the Servicing Administration Fee and other compensation
and reimbursement to which the Servicer, the Subservicer and the Master
Servicer are entitled as set forth herein, including but not limited to
Sections 4.04 and 4.21 below, shall be received and held by them in trust for
the benefit of the Indenture Trustee pursuant to the terms of this Agreement.

 

The Servicer
or the Subservicer, as applicable, shall forward to the Custodian original
documents evidencing an assumption, modification, consolidation or extension of
any Mortgage Loan entered into in accordance with Section 3.01 within one
week of their execution; provided, however, that the
Servicer or Subservicer shall provide the Custodian with a Servicer or
Subservicer certified true copy of any such document submitted for recordation
within one week of its execution, and shall provide the original of any
document submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within 120 days of its submission for recordation.

 

Section 4.02.                             Servicing of the Mortgage Loans.

 

(a)                                  Servicer and Subservicer to
Service.  The Servicer shall service and administer the
Mortgage Loans from and after the Closing Date and, except where prior consent
or approval of the Master Servicer is required under this Agreement, shall have
full power and authority, acting alone, to do any and all things in connection
with such servicing and administration which the Servicer may deem necessary or
desirable, consistent with the terms of this Agreement and with Servicing
Standards.  The Servicer hereby delegates
to the Subservicer such power and authority, but only to the extent provided in
this Section 4.02(a).  The Subservicer,
in turn, shall be permitted to delegate any and all such power and authority to
subservice the Mortgage Loans to its affiliate, Chase Home Finance LLC,  but only to the extent provided in this Section 4.02(a) and
provided that, notwithstanding anything to the contrary contained herein, the
Subservicer shall remain responsible hereunder for all obligations of the
Subservicer hereunder irrespective of any delegation to Chase Home Finance LLC,
as fully as if such acts and omissions were those of the Subservicer.  Beginning on the Closing Date, the
Subservicer shall perform all of the obligations of the Servicer under this
Agreement relating to the servicing of the Mortgage Loans,

 

55

 

on behalf of the Servicer.  All
references to the “Servicer” in this Agreement relating to a servicing right or
a servicing obligation in respect of the Mortgage Loans shall mean the “Subservicer”
beginning on the Closing Date, except in the case where this Agreement expressly
states that FSC, in its capacity as Servicer, shall retain such right or
perform such obligation.  Notwithstanding
any of the provisions of this Agreement referring to actions taken through the
Subservicer, the Servicer shall not be relieved of any of its obligations
hereunder with respect to the servicing of the Mortgage Loans and the Servicer
shall remain responsible hereunder for all acts and omissions of the
Subservicer as fully as if such acts and omissions were those of the Servicer.  However, FSC, in its capacity as Servicer
hereunder, shall not directly service any Mortgage Loan unless and until FSC
has obtained all necessary licenses and approvals in each jurisdiction as may
be necessary for FSC to directly service such Mortgage Loans; provided,
however, that FSC shall promptly obtain all such licenses and approvals if
required to directly service any Mortgage Loans pursuant to the terms of this
Agreement.

 

Consistent
with the terms of this Agreement, the Servicer may waive, modify or vary any term
of any Mortgage Loan or consent to the postponement of strict compliance with
any such term or in any manner grant indulgence to any Mortgagor if in the
Servicer’s reasonable and prudent determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Issuer, the Indenture Trustee and the Noteholders; provided,
however, that unless the Servicer has obtained the prior written
consent of the Master Servicer, the Servicer shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Rate, defer or
forgive the payment of principal or interest, reduce or increase the
outstanding principal balance (except for actual payments of principal) or
change the final maturity date on such Mortgage Loan.  In the event of any such modification which
permits the deferral of interest or principal payments on any Mortgage Loan,
the Servicer shall, on the Business Day immediately preceding the Servicer
Remittance Date in any month in which any such principal or interest payment
has been deferred, make an Advance in accordance with Section 4.03(c) in
an amount equal to the difference between (a) such month’s principal and
one month’s interest at the Mortgage Loan Remittance Rate on the unpaid
principal balance of such Mortgage Loan and (b) the amount paid by the
Mortgagor.  The Servicer shall be
entitled to reimbursement for such advances to the same extent as for all other
Advances made pursuant to Section 4.03. 
Without limiting the generality of the foregoing, the Servicer shall
continue, and is hereby authorized and empowered, to execute and deliver on
behalf of itself, the Issuer and the Indenture Trustee, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties.  The
Indenture Trustee shall execute and deliver to the Servicer powers of attorney
and other documents, furnished to it by the Servicer and reasonably
satisfactory to the Indenture Trustee, necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties under this
Agreement; provided that the Indenture Trustee
shall not be liable for the actions of the Servicer under any such powers of
attorney.  Promptly after the execution
of any assumption, modification, consolidation or extension of any Mortgage
Loan, the Servicer shall forward to the Master Servicer copies of any documents
evidencing such assumption, modification, consolidation or extension.

 

In servicing
and administering the Mortgage Loans, the Servicer shall adhere to the
Servicing Standard.

 

56

 

(b)                                 Delinquent and Defaulted
Mortgage Loans; FSC Discretion.  FSC, in its
capacity as Servicer, may, at any time either (i) purchase any delinquent
Mortgage Loan in consideration of the Purchase Price of such Mortgage Loan or (ii) substitute
a defaulted Mortgage Loan with a Qualifying Substitute Mortgage Loan.  Any purchase or substitution effected by FSC
in reliance on this Section 4.02(b) shall be performed in accordance
with the terms specified in Section 3.03 hereof.

 

In addition,
in connection with its management of the liquidation of defaulted Mortgage
Loans, FSC, in its capacity as Servicer, will have sole discretion, subject to
the terms of this Agreement, to sell defaulted Mortgage Loans; provided, however, that FSC shall not take
any action that is inconsistent with or prejudices the interest of the
Noteholders in any Mortgage Loan or the rights and interest of the Depositor,
the Indenture Trustee, the Master Servicer, the Trust Administrator and the
Noteholders under this Agreement.

 

(c)                                  Collection and Liquidation of
Mortgage Loans.  Continuously from the Closing Date, until the
date each Mortgage Loan ceases to be subject to this Agreement, the Servicer
shall proceed diligently to collect all payments due under each of the Mortgage
Loans when the same shall become due and payable and shall take special care in
ascertaining and estimating Escrow Payments and all other charges that will
become due and payable with respect to the Mortgage Loans and each related
Mortgaged Property, to the end that the installments payable by the Mortgagors
will be sufficient to pay such charges as and when they become due and payable.

 

The Servicer
shall use its best efforts, consistent with the Servicing Standard to foreclose
upon or otherwise comparably convert the ownership of such Mortgaged Properties
as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to Section 3.01.  The Servicer shall use its best efforts to
realize upon defaulted Mortgage Loans in such a manner as will maximize the
receipt of principal and interest by the Trust, taking into account, among
other things, the timing of foreclosure proceedings.  The foregoing is subject to the provisions
that, in any case in which Mortgaged Property shall have suffered damage, the
Servicer shall not be required to expend its own funds toward the restoration
of such property unless it shall determine in its discretion (i) that such
restoration will increase the proceeds of liquidation of the related Mortgage
Loan to the Issuer and the Indenture Trustee after reimbursement to itself for
such expenses, and (ii) that such expenses will be recoverable by the
Servicer through Insurance Proceeds or Liquidation Proceeds from the related
Mortgaged Property.  In the event that
any payment due under any Mortgage Loan and not otherwise postponed, deferred
or waived pursuant to Section 4.02 is not paid when the same becomes due
and payable, or in the event the Mortgagor fails to perform any other covenant
or obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as (1) shall
be consistent with Servicing Standards and (2) the Servicer shall
determine prudently to be in the best interest of the Issuer, the Indenture
Trustee and the Noteholders.  In the
event that any payment due under any Mortgage Loan is not otherwise postponed,
deferred or waived pursuant to Section 4.02(a) and remains delinquent
for a period of 105 days or any other default continues for a period of 105
days beyond the expiration of any grace or cure period, the Servicer shall
commence foreclosure proceedings.  The
Servicer shall notify the Master Servicer in writing of the commencement of
foreclosure proceedings on a monthly basis no later than the fifth Business Day
of each month

 

57

 

(which notification may be included within the monthly reports
submitted to the Master Servicer under Section 4.03(b) this
Agreement).  In such connection, the
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings; provided, however, that it shall be entitled to
reimbursement thereof from the related Mortgaged Property, as contemplated in
Sections 4.02(e) and 4.02(p).

 

Notwithstanding
the generality of the preceding paragraph, the Servicer shall take such actions
generally in accordance with the Servicer’s established default timeline and in
accordance with Servicing Standards with respect to each Mortgage Loan and
Mortgagor for which there is a delinquency until such time as the related
Mortgagor is current with all payments due under the Mortgage Loan.

 

(d)                                 Establishment of and Deposits to
Custodial Account.

 

(i)                                     The
Servicer shall segregate and hold all funds collected and received pursuant to
the Mortgage Loans separate and apart from any of its own funds and general
assets and shall initially establish and maintain one or more Custodial
Accounts, in the form of time deposit or demand accounts, each of which
accounts shall be titled “Fieldstone Servicing Corp. (or JPMorgan Chase Bank,
National Association, as Subservicer) in trust for HSBC Bank USA, National
Association, as Indenture Trustee, for the Fieldstone Mortgage Investment
Trust, Series 2005-2 Mortgage-Backed Notes” and referred to herein as a “Custodial
Account.”  Each Custodial Account shall
be an Eligible Account.  Any funds
deposited in the Custodial Account may be invested in Eligible Investments
subject to the provisions of Section 4.02(j) hereof.  Funds deposited in the Custodial Account may
be drawn on by the Servicer in accordance with Section 4.02(e) hereof.  The creation of any Custodial Account shall
be evidenced by a letter agreement in the form of Exhibit E hereto.  A copy of such certification or letter agreement
shall be furnished to the Indenture Trustee, the Master Servicer and, upon
request, to any subsequent owner of the Mortgage Loans.

 

(ii)                                  The
Servicer shall deposit in the Custodial Account on a daily basis, but not more
than two (2) Business Days after receipt by the Servicer and retain
therein, the following collections received by the Servicer and payments made
by the Servicer after the related Cut-off Date (other than scheduled payments
of principal and interest due on or before the related Cut-off Date), as
applicable:

 

(A)                              all payments on account of principal on the
Mortgage Loans, including all Principal Prepayments;

 

(B)                                all payments on account
of interest on the Mortgage Loans adjusted to the Mortgage Loan Remittance
Rate;

 

(C)                                all Liquidation Proceeds
(net of Liquidation Expenses);

 

(D)                               all Insurance
Proceeds including amounts required to be deposited pursuant to Section 4.02(k)
(other than proceeds to be held in the Escrow Account and applied to the
restoration and repair of the Mortgaged Property or released to the Mortgagor
in accordance with the related Mortgage Loan documents and Servicing
Standards);

 

58

 

(E)                                 all Condemnation
Proceeds that are not applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the related Mortgage
Loan documents and Servicing Standards;

 

(F)                                 with respect to each
Principal Prepayment in full or in part, the Prepayment Interest Shortfall Amount, if any,
for the month of payment.  Such deposit
shall be made from the Servicer’s own funds, without reimbursement therefore,
up to a maximum amount per month in the aggregate of the Servicing
Administration Fee, actually received for such month for the Mortgage Loans;

 

(G)                                all Advances
made by the Servicer pursuant to Section 4.03(c);

 

(H)                               any amounts received
from the Seller, the Depositor or any other person giving representations and
warranties with respect to the Mortgage Loans, in connection with the
repurchase of any Mortgage Loan;

 

(I)                                    any amounts
required to be deposited by the Servicer pursuant to Section 4.03(k) in connection with the
deductible clause in any blanket hazard insurance policy;

 

(J)                                   any amounts
received with respect to or related to any REO Property or REO Disposition
Proceeds pursuant to Section 4.02(p); and

 

(K)                               any other amounts
required to be deposited in the Custodial Account pursuant to this Agreement.

 

The foregoing
requirements for deposit into the Custodial Account shall be exclusive, it
being understood and agreed that, without limiting the generality of the
foregoing, payments in the nature of the Servicing Administration Fee,
Prepayment Interest Excess Amounts and Ancillary Income need not be deposited
by the Servicer into the Custodial Account. 
Any interest paid on funds deposited in the Custodial Account by the
depository institution maintaining such account shall accrue to the benefit of
the Servicer and the Servicer shall be entitled to retain and withdraw such
interest from the Custodial Account pursuant to Section 3.04.  Additionally, any other benefit derived from
the Custodial Account associated with the receipt, disbursement and
accumulation of principal, interest, taxes, hazard insurance, mortgage
insurance, etc. shall accrue to the Servicer.

 

(e)                                  Permitted Withdrawals from
Custodial Account.

 

The Servicer
shall, from time to time, withdraw funds from the Custodial Account for the
following purposes:

 

(1)                                  to make payments to
the Master Servicer in the amounts and in the manner provided for in Section 4.03(a);

 

(2)                                  in the event the
Servicer has elected not to retain the Servicing Administration Fee out of any
Mortgagor payments on account of interest or other recovery of interest with
respect to a particular Mortgage Loan (including late

 

59

 

collections of interest on such Mortgage Loan, or interest portions of
Insurance Proceeds, Liquidation Proceeds or Condemnation Proceeds) prior to the
deposit of such Mortgagor payment or recovery into the Custodial Account, to
pay to itself the related Servicing Administration Fee from all such Mortgagor
payments on account of interest or other such recovery for interest with
respect to that Mortgage Loan;

 

(3)                                  to reimburse itself
for unreimbursed Advances and Servicing Advances, the Servicer’s right to
reimburse itself pursuant to this subclause (3) with respect to any
Mortgage Loan being limited to related Liquidation Proceeds (net of Liquidation
Expenses), Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds
and other amounts received in respect of the related REO Property, and such
other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to such Mortgage Loan, it being understood that, in the case
of any such reimbursement, the Servicer’s right thereto shall be prior to the
rights of the Noteholders;

 

(4)                                  to reimburse itself
for any previously unreimbursed Advances or Servicing Advances that it
determines are Nonrecoverable Advances, it being understood, in the case of
each such reimbursement, that the Servicer’s right thereto shall be prior to
the rights of the Noteholders;

 

(5)                                  to pay itself
investment earnings on funds deposited in the Custodial Account;

 

(6)                                  to transfer funds to
another Eligible Account in accordance with Section 4.02(j) hereof;

 

(7)                                  to invest funds in
certain Eligible Investments in accordance with Section 4.02(d)(i) and
Section 4.02(i) hereof;

 

(8)                                  to withdraw funds
deposited in error;

 

(9)                                  to clear and
terminate the Custodial Account upon the termination of this Agreement; and

 

(10)                            to pay itself any
Prepayment Interest Excess Amount.

 

(f)                                    Establishment of and Deposits to
Escrow Account.  The Servicer shall segregate and hold all
funds collected and received pursuant to a Mortgage Loan constituting Escrow
Payments separate and apart from any of its own funds and general assets and
shall establish and maintain one or more Escrow Accounts, in the form of time
deposit or demand accounts, titled “Fieldstone Servicing Corp. (or JPMorgan Chase
Bank, National Association, as Subservicer) in trust for HSBC Bank USA,
National Association, as Indenture Trustee, for the Fieldstone Mortgage
Investment Trust, Series 2005-2.”  The Escrow Accounts shall be established with
an Eligible Institution in a manner that shall provide maximum available
insurance thereunder.  Nothing herein
shall require the Servicer to compel a Mortgagor to establish an Escrow Account
in violation of applicable law.  Funds
deposited in the Escrow Account may be drawn on by the

 

60

 

Servicer in accordance with Section 4.02(g).  The creation of any Escrow Account shall be
evidenced by a letter agreement in the form of Exhibit F hereto.  A copy of such certification or letter
agreement shall be furnished to the Master Servicer.

 

The Servicer
shall deposit in the Escrow Account or Accounts on a daily basis, and retain
therein:

 

(i)                                     all
Escrow Payments collected on account of the Mortgage Loans, for the purpose of
effecting timely payment of any such items as required under the terms of this
Agreement; and

 

(ii)                                  all
amounts representing Insurance Proceeds or Condemnation Proceeds which are to
be applied to the restoration or repair of any Mortgaged Property.

 

The Servicer
shall make withdrawals from the Escrow Account only to effect such payments as
are required under this Agreement, as set forth in Section 4.02(g).  The Servicer shall be entitled to retain any
interest earnings paid on funds deposited in the Escrow Account by the depository
institution, other than interest on escrowed funds required by law to be paid
to the Mortgagor.  To the extent required
by law, the Servicer shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account may be non-interest bearing or the
interest earnings paid thereon are insufficient for such purposes.

 

(g)                                 Permitted Withdrawals from
Escrow Account.  Withdrawals from the Escrow Account or
Accounts may be made by the Servicer only:

 

(i)                                     to
effect timely payments of ground rents, taxes, assessments, water rates,
mortgage insurance premiums, condominium charges, fire and hazard insurance
premiums or other items constituting Escrow Payments for the related Mortgage;

 

(ii)                                  to
reimburse the Servicer for any Servicing Advance of an Escrow Payment made by
the Servicer with respect to a related Mortgage Loan, but only from amounts
received on the related Mortgage Loan which represent late collections of
Escrow Payments thereunder;

 

(iii)                               to
refund to any Mortgagor any funds found to be in excess of the amounts required
to be escrowed under the terms of the related Mortgage Loan;

 

(iv)                              to
the extent permitted by applicable law, for transfer to the Custodial Account
and application to reduce the principal balance of the Mortgage Loan in
accordance with the terms of the related Mortgage and Mortgage Note;

 

(v)                                 for
application to restoration or repair of the Mortgaged Property in accordance
with Section 4.02(o);

 

(vi)                              to
pay to the Servicer, or any Mortgagor to the extent required by law, any
interest paid on the funds deposited in the Escrow Account; and

 

61

 

(vii)                           to
clear and terminate the Escrow Account on the termination of this Agreement.

 

The Servicer
will be responsible for the administration of the Escrow Accounts and will be
obligated to make Servicing Advances to the Escrow Account in respect of its
obligations under this , reimbursable from the Escrow Accounts or Custodial
Account to the extent not collected from the related Mortgagor, anything to the
contrary notwithstanding, when and as necessary to avoid the lapse of insurance
coverage on the Mortgaged Property, or which the Servicer knows, or in
servicing the Mortgage Loans in accordance with Servicing Standards should
know, is necessary to avoid the loss of the Mortgaged Property due to a tax
sale or the foreclosure as a result of a tax lien.  If any such payment has not been made and the
Servicer receives notice of a tax lien with respect to the Mortgage being
imposed, the Servicer will advance or cause to be advanced funds necessary to
discharge such lien on the Mortgaged Property in order to prevent loss of title
to the Mortgaged Property.

 

(h)                                 Notification of Adjustments.  With respect to each Mortgage Loan, the
Servicer shall adjust the Mortgage Rate on the related interest rate adjustment
date and shall adjust the Scheduled Payment on the related mortgage payment
adjustment date, if applicable, in compliance with the requirements of
applicable law and the related Mortgage and Mortgage Note.  The Servicer shall execute and deliver any
and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Rate and Scheduled Payment
adjustments.  The Servicer shall
promptly, upon written request therefor, deliver to the Master Servicer such
notifications and any additional applicable data regarding such adjustments and
the methods used to calculate and implement such adjustments.  Upon the discovery by the Servicer or the
receipt of notice from the Master Servicer that the Servicer has failed to
adjust a Mortgage Rate or Scheduled Payment in accordance with the terms of the
related Mortgage Note, the Servicer shall immediately deposit in the Custodial
Account from its own funds the amount of any interest loss or deferral caused
the Seller thereby.

 

(i)                                     Payment of Taxes, Insurance and
Other Charges.

 

(i)                                     With
respect to each Mortgage Loan which provides for Escrow Payments, the Servicer
shall maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates, sewer rents, and other charges which are or may
become a lien upon the Mortgaged Property and the status of fire and hazard
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) (“Property Charges”)
and shall effect payment thereof prior to the applicable penalty or termination
date, employing for such purpose deposits of the Mortgagor in the Escrow
Account which shall have been estimated and accumulated by the Servicer in
amounts sufficient for such purposes, as allowed under the terms of the
Mortgage.  The Servicer shall effect
timely payment of all such charges irrespective of each Mortgagor’s faithful
performance in the payment of the same or the making of the Escrow Payments.

 

(ii)                                  To
the extent that a Mortgage does not provide for Escrow Payments, the Servicer
shall make Servicing Advances from its own funds to effect payment of all
Property Charges upon receipt of notice of any failure to pay on the part of
the Mortgagor, or at such other time as the Servicer determines to be in the
best interest of the Trust; provided, that in any
event

 

62

 

the Servicer shall pay such charges on or before any date by which
payment is necessary to preserve the lien status of the Mortgage.  The Servicer shall pay any late fee or
penalty which is payable due to any delay in payment of any Property Charge and
necessary to avoid a lien on or loss on Mortgage Property.

 

(j)                                     Protection of Accounts.  The Servicer may transfer the Custodial
Account or the Escrow Account to a different Eligible Institution from time to
time.  Such transfer shall be made only
upon obtaining the consent of the Master Servicer, which consent shall not be
withheld unreasonably, and the Servicer shall give notice to the Master
Servicer, the Indenture Trustee and the Swap Counterparty of any change in the
location of the Custodial Account.

 

The Servicer
shall bear any expenses, losses or damages sustained by the Master Servicer or
the Indenture Trustee if the Custodial Account and/or the Escrow Account are
not Eligible Accounts.

 

Amounts on
deposit in the Custodial Account and the Pre-Funding Account may be invested at
the option of the Servicer and the Seller, respectively, but only in Eligible
Investments.  Any such Eligible
Investment with respect to the Custodial Account shall mature no later than two
(2) Business Days prior to the Servicer Remittance Date in each month; provided, however, that if such Eligible Investment is an obligation of an
Eligible Institution (other than the Servicer) that maintains the Custodial
Account, then such Eligible Investment may mature on the related Servicer
Remittance Date.  Any such Eligible
Investment shall be made in the name of the Servicer (with respect to the
Custodial Account) and the Seller (with respect to the Pre-Funding Account) in
trust for the benefit of the Indenture Trustee. 
All income on or gain realized from any such Eligible Investment shall
be for the benefit of the Servicer (with respect to the Custodial Account) and
the Seller (with respect to the Pre-Funding Account) and may be withdrawn at
any time by the Servicer (with respect to the Custodial Account) and the Seller
(with respect to the Pre-Funding Account). 
Any losses incurred in respect of any such investment shall be deposited
in the Custodial Account by the Servicer (with respect to the Custodial
Account) and the Seller (with respect to the Pre-Funding Account) out of its
own funds immediately as realized.  If,
at any time, the amount on deposit in the Custodial Account or the Pre-Funding
Account exceeds the amount of the applicable FDIC insurance, such excess above
the amount of the applicable FDIC insurance shall be invested in Eligible
Investments.

 

(k)                                  Maintenance of Hazard Insurance.  The Servicer shall cause to be maintained for
each Mortgage Loan hazard insurance such that all buildings upon the Mortgaged
Property are insured by a generally acceptable insurer acceptable under
Servicing Standards against loss by fire, hazards of extended coverage and such
other hazards as are customary in the area where the Mortgaged Property is
located, in an amount which is at least equal to the lesser of (i) the
replacement value of the improvements securing such Mortgage Loan and (ii) the
greater of (a) the outstanding principal balance of the Mortgage Loan and (b) an
amount such that the proceeds thereof shall be sufficient to prevent the
Mortgagor or the loss payee from becoming a co-insurer.

 

If upon
origination of the Mortgage Loan the related Mortgaged Property was located in
an area identified in the Federal Register by the Flood Emergency Management
Agency as having special flood hazards (and such flood insurance has been made
available), a flood

 

63

 

insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration shall be in effect with a generally
acceptable insurance carrier acceptable under Servicing Standards in an amount
representing coverage equal to the lesser of (i) the minimum amount
required, under the terms of coverage, to compensate for any damage or loss on
a replacement cost basis (or the unpaid balance of the mortgage if replacement
cost coverage is not available for the type of building insured) and (ii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended.  If
at any time during the term of the Mortgage Loan, the Servicer determines in
accordance with applicable law and pursuant to Servicing Standards that a
Mortgaged Property is located in a special flood hazard area and is not covered
by flood insurance or is covered in an amount less than the amount required by
the Flood Disaster Protection Act of 1973, as amended, the Servicer shall
notify the related Mortgagor that the Mortgagor must obtain such flood
insurance coverage, and if said Mortgagor fails to obtain the required flood
insurance coverage within thirty (30) days after such notification, the
Servicer shall immediately force place the required flood insurance on the
Mortgagor’s behalf.

 

The Servicer
shall cause to be maintained on each Mortgaged Property such other or
additional insurance as may be required pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance, or pursuant to the requirements of any private mortgage
guaranty insurer, or as may be required to conform with Servicing Standards.

 

In the event
that the Master Servicer or the Servicer shall determine that the Mortgaged
Property should be insured against loss or damage by hazards and risks not
covered by the insurance required to be maintained by the Mortgagor pursuant to
the terms of the Mortgage, the Servicer shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor’s attention the desirability of protection of the Mortgaged Property.

 

All policies
required hereunder shall name the Servicer as loss payee and shall be endorsed
with standard or union mortgagee clauses, without contribution, which shall
provide for at least 30 days prior written notice of any cancellation,
reduction in amount or material change in coverage.

 

The Servicer
shall not interfere with the Mortgagor’s freedom of choice in selecting either
his insurance carrier or agent; provided, however, that the
Servicer shall not accept any such insurance policies from insurance companies
unless such companies are generally acceptable under Servicing Standards.  The Servicer shall determine that such
policies provide sufficient risk coverage and amounts, that they insure the
property owner, and that they properly describe the property address.  The Servicer shall furnish to the Mortgagor a
formal notice of expiration of any such insurance in sufficient time for the
Mortgagor to arrange for renewal coverage by the expiration date.

 

Pursuant to Section 4.02(d),
any amounts collected by the Servicer under any such policies (other than
amounts to be deposited in the Escrow Account and applied to the restoration or
repair of the related Mortgaged Property, or property acquired in liquidation
of the Mortgage Loan, or to be released to the Mortgagor, in accordance with
the Servicer’s normal servicing 

 

64

 

procedures) shall be deposited in the Custodial Account subject to
withdrawal pursuant to Section 4.02(e).

 

Notwithstanding
anything set forth in the preceding paragraph, the Servicer agrees to indemnify
the Indenture Trustee, the Issuer, the Noteholders and the Master Servicer for
any claims, losses, damages, penalties, fines, forfeitures, legal fees and
related costs, judgments and any other costs, fees and expenses that any such
indemnified party may sustain in any way related to the failure of the
Mortgagor (or the Servicer) to maintain hazard or flood insurance with respect
to the related Mortgaged Property which complies with the requirements of this
section.

 

(l)                                     Maintenance of Mortgage
Impairment Insurance.  In the event that the Servicer shall obtain
and maintain a blanket policy insuring against losses arising from fire and
hazards covered under extended coverage on all of the Mortgage Loans, then, to
the extent such policy provides coverage in an amount equal to the amount
required pursuant to Section 4.02(k) and otherwise complies with all other
requirements of Section 4.02(k), it shall conclusively be deemed to have
satisfied its obligations as set forth in Section 4.02(k).  Any amounts collected by the Servicer under
any such policy relating to a Mortgage Loan shall be deposited in the Custodial
Account subject to withdrawal pursuant to Section 4.02(e).  Such policy may contain a deductible clause,
in which case, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with Section 4.02(k), and
there shall have been a loss which would have been covered by such policy, the
Servicer shall deposit in the Custodial Account at the time of such loss the
amount not otherwise payable under the blanket policy because of such
deductible clause, such amount to deposited from the Servicer’s funds, without
reimbursement therefor.  Upon request of
the Master Servicer or the Indenture Trustee, the Servicer shall cause to be
delivered to such person a certified true copy of such policy and a statement
from the insurer thereunder that such policy shall in no event be terminated or
materially modified without 30 days’ prior written notice to the Master
Servicer and the Indenture Trustee.

 

(m)                               Maintenance of Fidelity Bond and
Errors and Omissions Insurance.  The Servicer shall
maintain with responsible companies, at its own expense, a blanket Fidelity
Bond and an Errors and Omissions Insurance Policy, with broad coverage on all
officers, employees or other persons acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Mortgage
Loans (“Servicer Employees”).  Any
such Fidelity Bond and Errors and Omissions Insurance Policy shall be in the
form of the Mortgage Banker’s Blanket Bond and shall protect and insure the
Servicer against losses, including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such Servicer Employees.  Such Fidelity Bond and Errors and Omissions
Insurance Policy also shall protect and insure the Servicer against losses in
connection with the release or satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby.  No provision of this Section 4.02(m)
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Servicer from its duties and obligations as set forth
in this Agreement.  The minimum coverage
under any such bond and insurance policy shall be at least equal to the
coverage amounts which are acceptable for the Servicer as determined by Fannie
Mae and Freddie Mac.  Upon the request of
the Master Servicer or the Indenture Trustee, the Servicer shall cause to be
delivered to such party a certified true copy of such fidelity bond and
insurance

 

65

 

policy and a statement from the surety and the insurer that such
fidelity bond and insurance policy shall in no event be terminated or
materially modified without 30 days’ prior written notice to the Master
Servicer and the Indenture Trustee.

 

(n)                                 Inspections.  The Servicer shall inspect the Mortgaged
Property as often as deemed necessary by the Servicer to assure itself that the
value of the Mortgaged Property is being preserved.  In addition, the Servicer shall inspect the
Mortgaged Property and/or take such other actions as may be necessary or appropriate
in accordance with Servicing Standards or as may be required by the primary
mortgage guaranty insurer.  The Servicer
shall keep a written report of each such inspection.

 

(o)                                 Restoration of Mortgaged
Property.  The Servicer need not obtain the approval of
the Master Servicer or the Indenture Trustee prior to releasing any Insurance
Proceeds or Condemnation Proceeds to the Mortgagor to be applied to the
restoration or repair of the Mortgaged Property if such release is in
accordance with Servicing Standards.  At
a minimum, the Servicer shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation
Proceeds:

 

(i)                                     the
Servicer shall receive satisfactory independent verification of completion of
repairs and issuance of any required approvals with respect thereto;

 

(ii)                                  the
Servicer shall take all steps necessary to preserve the priority of the lien of
the Mortgage, including, but not limited to requiring waivers with respect to
mechanics’ and materialmen’s liens; and

 

(iii)                               pending
repairs or restoration, the Servicer shall place the Insurance Proceeds or
Condemnation Proceeds in the Escrow Account.

 

(p)                                 Title, Management and
Disposition of REO Property.  In the event that title to any Mortgaged
Property is acquired in foreclosure or by deed in lieu of foreclosure, the deed
or certificate of sale shall be taken in the name of the Indenture Trustee or
its nominee in trust for the benefit of the Noteholders and the Swap
Counterparty, or in the event the Indenture Trustee is not authorized or permitted
to hold title to real property in the state where the REO Property is located,
or would be adversely affected under the “doing business” or tax laws of such
state by so holding title, the deed or certificate of sale shall be taken in
the name of such Person or Persons as shall be consistent with an Opinion of
Counsel obtained by the Servicer (with a copy delivered to the Indenture
Trustee) from any attorney duly licensed to practice law in the state where the
REO Property is located.  The Person or
Persons holding such title other than the Indenture Trustee shall acknowledge
in writing that such title is being held as nominee for the Indenture Trustee.

 

The Servicer
shall manage, conserve, protect and operate each REO Property for the Indenture
Trustee solely for the purpose of its prompt disposition and sale.  The Servicer, either itself or through an
agent selected by the Servicer, shall manage, conserve, protect and operate the
REO Property in the same manner that it manages, conserves, protects and operates
other foreclosed property for its own account, and in the same manner that
similar property in the same locality as the REO Property is managed.  The Servicer shall attempt to sell the same
(and may

 

66

 

temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the
Servicer deems to be in the best interest of the Issuer, the Indenture Trustee
and the Noteholders.

 

If the Servicer
hereafter becomes aware that a Mortgaged Property is an Environmental Problem
Property, the Servicer will notify the Master Servicer of the existence of the
Environmental Problem Property. 
Additionally, the Servicer shall set forth in such notice a description
of such problem, a recommendation to the Master Servicer relating to the
proposed action regarding the Environmental Problem Property, and the Servicer
shall carry out the recommendation set forth in such notice.  Notwithstanding the foregoing, the Servicer
shall obtain the Master Servicer’s prior written consent to any expenditures
proposed to remediate Environmental Problem Properties or to defend any claims
associated with Environmental Problem Properties if such expenses, in the
aggregate, are expected to exceed $100,000. 
Failure to provide written notice of disapproval of the expenditure
within five (5) Business Days of receipt of such request for prepaid
expenditures shall be deemed an approval of such expenditure.  If the Servicer has received reliable
instructions to the effect that a Property is an Environmental Problem Property
(e.g., Servicer obtains a broker’s price opinion which reveals the potential
for such problem), the Servicer will not accept a deed-in-lieu of foreclosure
upon any such Property without first obtaining a preliminary environmental
investigation for the Property.

 

The Servicer
shall also maintain on each REO Property fire and hazard insurance with
extended coverage in amount which is at least equal to the maximum insurable
value of the improvements which are a part of such property and, to the extent
required and available under the Flood Disaster Protection Act of 1973, as
amended, flood insurance in the amount required above.

 

The proceeds
of sale of the REO Property shall be promptly deposited in the Custodial
Account.  As soon as practical thereafter
the expenses of such sale shall be paid and the Servicer shall reimburse itself
for any related unreimbursed Servicing Advances, unpaid Servicing
Administration Fees and unreimbursed advances made pursuant to this Section or
Section 4.03.

 

The Servicer
shall make Servicing Advances of all funds necessary for the proper operation,
management and maintenance of the REO Property, including the cost of
maintaining any hazard insurance pursuant to Section 4.02(k), such
advances to be reimbursed from the disposition or liquidation proceeds of the
REO Property.  The Servicer shall make
monthly remittances on each Servicer Remittance Date to the Master Servicer of
the net cash flow from the REO Property (which shall equal the revenues from
such REO Property net of the expenses described in this Section 4.02(p)
and of any reserves reasonably required from time to time to be maintained to
satisfy anticipated liabilities for such expenses).

 

(q)                                 Real Estate Owned Reports.  Together with the statement furnished
pursuant to Section 4.03(b), the Servicer shall furnish to the Master
Servicer on or before the 10th calendar day in each month a statement with
respect to any REO Property covering the operation of such REO Property for the previous month and
the Servicer’s efforts in connection with the sale of such REO Property and any
rental of such REO Property incidental to the sale thereof for the

 

67

 

previous month.  That statement
shall be accompanied by such other information as the Master Servicer shall
reasonably request.

 

(r)                                    Liquidation Reports.  Upon the foreclosure sale of any Mortgaged
Property or the acquisition thereof by the Indenture Trustee pursuant to a deed
in lieu of foreclosure, the Servicer shall submit to the Indenture Trustee and
the Master Servicer a monthly liquidation report with respect to such Mortgaged
Property.

 

(s)                                  Reports of Foreclosures and
Abandonments of Mortgaged Property.  Following the
foreclosure sale or abandonment of any Mortgaged Property, the Servicer shall
report such foreclosure or abandonment as required pursuant to Section 6050J
of the Code.

 

(t)                                    Prepayment Premiums.  All Prepayment Premiums collected shall be
payable to the Servicer, or any successor servicer, as Ancillary Income and
shall not be available to make payments to the Noteholders or the Swap
Counterparty hereunder.

 

(u)                                 Compliance with Safeguarding
Customer Information Requirements.  The Servicer has
implemented and will maintain security measures designed to meet the objectives
of the Interagency Guidelines Establishing Standards for Safeguarding Customer
Information published in final form on February 1, 2001, 66 Fed. Reg.
8616, and the rules promulgated thereunder, as amended from time to time
(the “Guidelines”).

 

(v)                                 Presentment of Claims and
Collection of Proceeds.  The Servicer shall prepare and present on
behalf of the Indenture Trustee and the Noteholders all claims under the Insurance
Policies with respect to the Mortgage Loans, 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 Servicer in
respect of such policies or bonds shall be promptly deposited in the Custodial
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
requisite 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 4.03.                             Payments To the Master Servicer.

 

(a)                                  Remittances.  On each Servicer Remittance Date, the
Servicer shall remit on a scheduled/scheduled basis by wire transfer of
immediately available funds to the Master Servicer (a) all amounts
deposited in the Custodial Account as of the close of business on the last day
of the related Due Period (net of charges against or withdrawals from the
Custodial Account pursuant to Section 4.02(e)), plus (b) all
Advances, if any, which the Servicer is obligated to make pursuant to Section 4.03(c),
minus (c) any amounts attributable to Principal Prepayments, Liquidation
Proceeds, Insurance Proceeds, Condemnation Proceeds or REO Disposition Proceeds
received after the applicable Prepayment Period, which amounts shall be
remitted on the following Servicer Remittance Date, together with any
additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 4.02(d)(ii)(G) and
Section 4.04(c), and minus (d) any
amounts attributable to Scheduled Payments collected but due on a Due Date or
Due Dates subsequent to the first day of

 

68

 

the month in which such Servicer Remittance Date occurs, which amounts
shall be remitted on the Servicer Remittance Date next succeeding the Due Date
related to such Scheduled Payment.

 

With respect
to any remittance received by the Master Servicer after the Servicer Remittance
Date on which such remittance was due, the Servicer shall pay to the Master
Servicer interest on any such late remittance at an annual rate equal to the
Prime Rate, adjusted as of the date of each change, plus three percentage
points, but in no event greater than the maximum amount permitted by applicable
law.  Such interest shall be deposited in
the Custodial Account by the Servicer on the date such late remittance is made
and shall cover the period commencing with the day following such Servicer
Remittance Date and ending with the Business Day on which such remittance is
made, both inclusive.  Such interest
shall be remitted on the next succeeding Servicer Remittance Date.  The payment by the Servicer of any such
interest shall not be deemed an extension of time for payment or a waiver of
any Event of Default by the Servicer.

 

All
remittances required to be made to the Master Servicer shall be made to the
following wire account or to such other account as may be specified by the
Master Servicer from time to time:

 

Wells Fargo
Bank, N.A.

San Francisco,
CA

ABA#:  121-000-248

Account Name: Corporate Trust Clearing

Account Number:  3970771416

For further credit to:  17180700, Fieldstone 2005-2

 

(b)                                 Statements to Master Servicer
and Trust Administrator.  On the 10th day of each calendar
month (or, if such 10th day is not a Business Day, then on the next
succeeding Business Day), the Servicer shall furnish to the Master Servicer (i) a
monthly remittance advice in the format set forth in Exhibit G-1 hereto, a
monthly defaulted loan report in the format set forth in Exhibit G-2
hereto and a realized loss report in the format set forth in Exhibit G-3
hereto (or in such other format mutually agreed to between the Servicer and the
Master Servicer) relating to the period ending on the last day of the preceding
calendar month and (ii) all such information required pursuant to clause (i) above
on a magnetic tape or other similar media reasonably acceptable to the Master
Servicer.  No later than three Business
Days after the fifteenth day of each calendar month, the Servicer shall furnish
to the Master Servicer a monthly report containing such information regarding
prepayments of Mortgage Loans during the applicable Prepayment Period and in a
format as mutually agreed to between the Servicer and the Master Servicer.

 

Such monthly
remittance advice shall also be accompanied by a supplemental report provided
to the Master Servicer and the Seller which includes on an aggregate basis for
the previous calendar month (i) the amount of any insurance claims filed, (ii) the
amount of any claim payments made and (iii) the amount of claims denied or
curtailed.  The Master Servicer will convert
such data into a format acceptable to the Trust Administrator and provide
monthly reports to the Trust Administrator pursuant to the Trust Agreement.

 

69

 

In addition,
not more than 75 days after the end of each calendar year, commencing December 31,
2005, the Servicer shall provide (as such information becomes reasonably
available to the Servicer) to the Master Servicer and the Trust Administrator
such information concerning the Mortgage Loans and annual remittances to the
Master Servicer therefrom as is necessary for the Trust Administrator to
prepare the reports required by Section 5.09(c).  Such obligation of the Servicer shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Servicer to the Master Servicer and the
Trust Administrator pursuant to any requirements of the Code as from time to
time are in force.  The Servicer shall
also provide to the Trust Administrator such information as may be requested by
it and required for the completion of any tax reporting responsibility of the
Trust Administrator within such reasonable time frame as shall enable the Trust
Administrator to timely file each Schedule Q (or other applicable tax
report or return) required to be filed by it.

 

(c)                                  Advances by Servicer.  On the Business Day immediately preceding
each Servicer Remittance Date, the Servicer shall deposit in the Custodial
Account from its own funds or from amounts held for future payment, or a
combination of both, an amount equal to all Scheduled Payments (with interest
adjusted to the Mortgage Loan Remittance Rate) which were due on the Mortgage
Loans during the applicable Due Period and which were delinquent at the close
of business on the immediately preceding Determination Date.  Any amounts held for future payment and so
used shall be replaced by the Servicer by deposit in the Custodial Account on
or before any future Servicer Remittance Date if funds in the Custodial Account
on such Servicer Remittance Date shall be less than remittances to the Master
Servicer required to be made on such Servicer Remittance Date.  The Servicer shall keep appropriate records
of such amounts and will provide such records to the Master Servicer upon
request.

 

The Servicer’s
obligation to make such Advances as to any Mortgage Loan will continue through
the last Scheduled Payment due prior to the payment in full of the Mortgage
Loan, or through the last Remittance Date prior to the Remittance Date for the
payment of all Liquidation Proceeds and other payments or recoveries (including
Insurance Proceeds and Condemnation Proceeds) with respect to the related
Mortgage Loan.

 

Notwithstanding
the foregoing, if the Subservicer fails to make any Advance required to be made
by this Section 4.03 with respect to any Remittance Date, then the
Servicer shall be obligated to make such Advance, subject to its determination
of the recoverability of such Advance.

 

(d)                                 Due Dates Other Than the First
of the Month.  Mortgage Loans having Due Dates other than
the first day of a month shall be accounted for as described in this Section 4.03(d).  Any Scheduled Payment due on a day other than
the first day of each month shall be considered due on the first day of the
month following the month in which that payment is due as if such payment were
due on the first day of that month.  For
example, a Scheduled Payment due on August 15 shall be considered to be
due on September 1.  Any Scheduled
Payment due and collected on a Mortgage Loan after the Cut-off Date shall be
deposited in the Custodial Account.  For
Mortgage Loans with Due Dates on the first day of a month, deposits to the
Custodial Account begin with the Scheduled Payment due on the first of the
month following the Cut-off Date.

 

70

 

 

(e)                                  Credit Reporting.  For each Mortgage Loan, in accordance with
its current servicing practices, the Servicer will accurately and fully report
its underlying borrower credit files to each of the following credit
repositories or their successors:  Equifax
Credit Information Services, Inc., Trans Union, LLC and Experian
Information Solution, Inc., on a monthly basis in a timely manner.  In addition, with respect to any Mortgage
Loan serviced for a Fannie Mae pool, the Servicer shall transmit full credit reporting
data to each of such credit repositories in accordance with Fannie Mae Guide
Announcement 95-19 (November 11, 1995), a copy of which is attached hereto
as Exhibit K, reporting each of the following statuses, each month with
respect to a Mortgage Loan in a Fannie Mae pool:  New origination, current, delinquent (30-60-90-days,
etc), foreclosed or charged off.

 

Section 4.04.                             General Servicing Procedures.

 

(a)                                  Transfers of Mortgaged Property.  The Servicer shall use its best efforts to
enforce any “due-on-sale” provision contained in any Mortgage or Mortgage Note
and to deny assumption by the person to whom the Mortgaged Property has been or
is about to be sold whether by absolute conveyance or by contract of sale, and
whether or not the Mortgagor remains liable on the Mortgage and the Mortgage
Note.  When the Mortgaged Property has
been conveyed by the Mortgagor, the Servicer shall, to the extent it has
knowledge of such conveyance, exercise its rights to accelerate the maturity of
such Mortgage Loan under the “due-on-sale” clause applicable thereto; provided, however, that the Servicer shall not exercise such rights if
prohibited by law from doing so.

 

If the
Servicer reasonably believes it is unable under applicable law to enforce such “due-on-sale”
clause, the Servicer shall enter into (i) an assumption and modification
agreement with the person to whom such property has been conveyed pursuant to
which such person becomes liable under the Mortgage Note and the original
Mortgagor remains liable thereon or (ii) in the event the Servicer is
unable under applicable law to require that the original Mortgagor remain
liable under the Mortgage Note and the Servicer has the prior consent of the
primary mortgage guaranty insurer, a substitution of liability agreement with
the seller of the Mortgaged Property pursuant to which the original Mortgagor
is released from liability and the buyer of the Mortgaged Property is
substituted as Mortgagor and becomes liable under the Mortgage Note.  In connection with any such assumption,
neither the Mortgage Rate borne by the related Mortgage Note, the timing of
principal or interest payments on the Mortgage Loan, the term of the Mortgage
Loan nor the outstanding principal amount of the Mortgage Loan shall be
changed.

 

To the extent
that any Mortgage Loan is assumable, the Servicer shall inquire diligently into
the creditworthiness of the proposed transferee, and shall use the underwriting
criteria for approving the credit of the proposed transferee which are used by
the Servicer, its affiliates or Fannie Mae with respect to underwriting
mortgage loans of the same type as the Mortgage Loans.  If the credit of the proposed transferee does
not meet such underwriting criteria, the Servicer diligently shall, to the
extent permitted by the Mortgage or the Mortgage Note and by applicable law,
accelerate the maturity of the Mortgage Loan.

 

(b)                                 Satisfaction of Mortgages and
Release of Mortgage Files.  Upon the payment in full of any Mortgage
Loan, or the receipt by the Servicer of a notification that payment in full
will be escrowed in a manner customary for such purposes, the Servicer shall
notify the Master

 

71

 

Servicer in the monthly remittance advice as provided in Section 4.03(b),
and may request the release of any Mortgage Loan Documents from the Custodian
in accordance with the Custodial Agreement.

 

If the
Servicer satisfies or releases a Mortgage without first having obtained payment
in full of the indebtedness secured by the Mortgage or should the Servicer
otherwise prejudice any rights the Seller, the Indenture Trustee or the Issuer
may have under the mortgage instruments, the Servicer shall deposit into the
Custodial Account the entire outstanding principal balance, plus all accrued
interest on such Mortgage Loan, on the day preceding the Servicer Remittance
Date in the month following the date of such release.  The Servicer shall maintain the Fidelity Bond
and Errors and Omissions Insurance Policy as provided for in Section 4.02(m)
insuring the Servicer against any loss it may sustain with respect to any
Mortgage Loan not satisfied in accordance with the procedures set forth herein.

 

(c)                                  Servicing Compensation.  As consideration for servicing the Mortgage
Loans subject to this Agreement, the Servicer and the Subservicer shall be paid
in the aggregate the relevant Servicing Administration Fee for each Mortgage
Loan remaining subject to this Agreement during any month or part thereof.  Such Servicing Administration Fee shall be
payable monthly and retained by the Servicer or the Subservicer, as
applicable.  Additional servicing
compensation in the form of Ancillary Income shall be retained by the
Subservicer only and is not required to be deposited in the Custodial
Account.  The obligation of the Issuer to
pay the Servicing Administration Fee is limited to, and the Servicing
Administration Fee is payable from, the interest portion (including recoveries
with respect to interest from Liquidation Proceeds) of such Scheduled Payment
collected by the Servicer, or as otherwise provided in Section 4.02(e)(2).

 

Each of the
Servicer and the Subservicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement thereof except as specifically provided for herein.

 

The Servicing
Administration Fee payable to or retained by the Servicer or the Subservicer,
as applicable, with respect to any Due Period shall be reduced by the
Prepayment Interest Shortfall Amount for the related Prepayment Period required
to be deposited in the Custodial Account and remitted to the Master Servicer on
the related Servicer Remittance Date. 
The Servicer and the Subservicer shall be obligated to remit to the
Master Servicer on each Servicer Remittance Date the Prepayment Interest
Shortfall Amount, only up to an amount equal to in the aggregate the Servicing
Administration Fee the Servicer and the Subservicer are entitled to receive for
such Due Period.

 

(d)                                 Annual Audit Report.  The Subservicer shall, at its own expense,
cause a firm of independent public accountants (who may also render other
services to the Subservicer), which is a member of the American Institute of
Certified Public Accountants, to furnish, as soon as practicable in each year
beginning with 2006, but in no event later than March 15 of each calendar
year, to the Seller, the Master Servicer, the Indenture Trustee and the
Sarbanes Certifying Party (i) year-end audited (if available) financial
statements of the Subservicer and (ii) a statement to the effect that such
firm has examined certain documents and records for the preceding fiscal year
(or during the period from the date of commencement of such Subservicer’s

 

72

 

duties hereunder until the end of such preceding fiscal year in the
case of the first such certificate) and that, on the basis of such examination
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers, such firm is of the opinion that the Subservicer’s
overall servicing operations have been conducted in compliance with the Uniform
Single Attestation Program for Mortgage Bankers except for such exceptions
that, in the opinion of such firm, the Uniform Single Attestation Program for
Mortgage Bankers requires it to report, in which case such exceptions shall be
set forth in such statement.

 

(e)                                  Annual Compliance Certifications.

 

(i)                                     No
later than March 15 of each calendar year, commencing with the year 2006,
the Subservicer shall, at its own expense, deliver to the Seller, the Master
Servicer, the Indenture Trustee, the Trust Administrator and the Servicer a
servicer’s certificate stating, as to each signer thereof, that (i) a
review of the activities of the Subservicer during such preceding fiscal year
and of performance under this Agreement has been made under such officers’
supervision, and (ii) to the best of such officers’ knowledge, based on
such review, the Subservicer has fulfilled all its obligations under this
Agreement for such year, or, if there has been a default in the fulfillment of
all such obligations, specifying each such default known to such officers and
the nature and status thereof including the steps being taken by the
Subservicer to remedy such default.

 

(ii)                                  For
so long as a certificate under the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”),
is required to be given on behalf of the Issuer, no later than March 15 of
each calendar year, commencing with the year 2006, or at any other time that the Master Servicer provides a
certification pursuant to Sarbanes-Oxley and upon thirty (30) days written
request of such parties, an officer of the Subservicer shall execute and
deliver an Officer’s Certificate to the Depositor, the Master Servicer, the
Trust Administrator and the Servicer for the benefit of the Issuer and the
Sarbanes Certifying Party and its officers, directors and affiliates, in the
form of Exhibit H hereto.

 

(iii)                               The
Subservicer shall indemnify and hold harmless the Issuer, the Depositor, the
Indenture Trustee, the Owner Trustee, the Trust Administrator, the Servicer and
the Master Servicer and their respective officers, directors, agents and
affiliates from and against any losses, damages, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments and other costs and expenses
arising out of or based upon a breach by the Subservicer or any of its
officers, directors, agents or affiliates of its obligations under this Section 4.04(e) for
the negligence, fraud, bad faith or willful misconduct of the Subservicer in
connection therewith.  If the
indemnification provided for herein is unavailable or insufficient to hold
harmless any of the foregoing parties, then the Subservicer agrees that it
shall contribute to the amount paid or payable by the Master Servicer as a
result of the losses, claims, damages or liabilities of the Master Servicer in
such proportion as is appropriate to reflect the relative fault of the Master
Servicer on the one hand and the Subservicer on the other in connection with a
breach of the Subservicer’s obligations under this Section 4.04(e) or
the Subservicer’s negligence, fraud, bad faith or willful misconduct in
connection therewith.

 

(iv)                              In
addition, the Servicer shall provide the certifications and reports specified
in this Section 4.04(e) (with the exception of the certification
required by Section 4.04(e)(ii))

 

73

 

to the Persons specified therein within the time period specified
therein.  The Servicer hereby agrees to
indemnify the Master Servicer and the other Persons specified in Section 4.04(e)(iii) to
the same extent as though such provisions referred to the Servicer rather than
the Subservicer.

 

(f)                                    Inspection.  The Servicer shall provide the Indenture
Trustee and the Master Servicer, upon five (5) Business Days’ advance notice, during normal business
hours, access to all records maintained by the Servicer in respect of its
rights and obligations hereunder and access to officers of the Servicer
responsible for such obligations.  Upon
request, the Servicer shall furnish to the Indenture Trustee and the Master
Servicer its most recent publicly available financial statements and such other
information relating to its capacity to perform its obligations under this
Agreement.

 

Section 4.05.                             Representations, Warranties and
Agreements.

 

(a)                                  Representations, Warranties and
Agreements of FSC.  FSC, in its capacity as Servicer, as a
condition to the consummation of the transactions contemplated hereby, hereby
makes the following representations and warranties to the Master Servicer, the
Subservicer, the Swap Counterparty, the Depositor and the Indenture Trustee and
the Trust Administrator, as of the Closing Date:

 

(i)                                     Due
Organization and Authority.  FSC is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation and has all licenses necessary to
carry on its business as now being conducted; FSC has the full corporate power
and authority to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered pursuant to this
Agreement) by FSC and the consummation of the transactions contemplated hereby
have been duly and validly authorized; this Agreement evidences the valid,
binding and enforceable obligation of FSC (except to the extent bankruptcy,
insolvency, reorganization, fraudulent conveyance or similar laws affect the
enforcement of creditor’s rights generally) and all requisite corporate action
has been taken by FSC to make this Agreement valid and binding upon FSC in
accordance with its terms;

 

(ii)                                  Ordinary
Course of Business.  The consummation
of the transactions contemplated by this Agreement are in the ordinary course
of business of FSC;

 

(iii)                               No
Conflicts.  Neither the execution and
delivery of this Agreement, the acquisition of the servicing responsibilities
by FSC or the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement, will (a) conflict
with or result in a breach of any of the terms, conditions or provisions of FSC’s
charter or by-laws or any legal restriction or any agreement or instrument to
which FSC is now a party or by which it is bound, (b) constitute a default
under any of the foregoing, (c) result in an acceleration under any of the
foregoing, (d) result in the violation of any law, rule, regulation,
order, judgment or decree to which FSC or its property is subject or (e) impair
the ability of FSC to act as Servicer hereunder with respect to the Mortgage
Loans, or impair the value of the Mortgage Loans;

 

74

 

(iv)                              Ability
to Perform.  FSC does not believe,
nor does it have any reason or cause to believe, that it cannot perform each
and every covenant contained in this Agreement;

 

(v)                                 No
Litigation Pending.  There is no
action, suit, proceeding or investigation pending or, to FSC’s knowledge,
threatened against FSC which, either in any one instance or in the aggregate,
may result in any material adverse change in the business, operations,
financial condition, properties or assets of FSC, or in any material impairment
of the right or ability of FSC to carry on its business substantially as now
conducted, or in any material liability on the part of FSC, or which would draw
into question the validity of this Agreement or of any action taken or to be
taken in connection with the obligations of FSC contemplated herein, or which
would be likely to impair materially the ability of FSC to perform under the
terms of this Agreement;

 

(vi)                              No
Consent Required.  No consent,
approval, authorization or order of any court or governmental agency or body is
required for the execution, delivery and performance by FSC of or compliance by
FSC with this Agreement, or if required, such approval has been obtained prior
to the Closing Date;

 

(vii)                           No
Default.  FSC is not in default, and
no event or condition exists that after the giving of notice or lapse of time
or both, would constitute an event of default under any material mortgage,
indenture, contract, agreement, judgment, or other undertaking, to which FSC is
a party or which purports to be binding upon it or upon any of its assets,
which default could impair materially the ability of FSC to perform under the
terms of this Agreement;

 

(viii)                        Ability
to Service.  FSC or an affiliate is
an approved seller/servicer of conventional residential mortgage loans for Fannie
Mae and Freddie Mac, with the facilities, procedures and experienced personnel
necessary for the sound servicing of mortgage loans of the same type as the
Mortgage Loans.  FSC or an affiliate is
in good standing to service mortgage loans for either Fannie Mae or Freddie
Mac, and no event has occurred, including but not limited to a change in
insurance coverage, which would make FSC or an affiliate unable to comply with
either Fannie Mae or Freddie Mac eligibility requirements or which would
require notification to either of Fannie Mae or Freddie Mac;

 

(ix)                                No
Untrue Information.  Neither this
Agreement nor any statement, report or other document furnished or to be
furnished pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements contained therein not
misleading; and

 

(x)                                   No
Commissions to Third Parties.  FSC
has not dealt with any broker or agent or anyone else who might be entitled to
a fee or commission in connection with this transaction other than the Seller.

 

(b)                                 Representations, Warranties and
Agreements of the Subservicer.  The Subservicer, as a condition to the
consummation of the transactions contemplated hereby, hereby makes the
following representations and warranties to the Servicer, the Master Servicer,
the Swap Counterparty, the Depositor and the Issuer, the Indenture Trustee and
the Trust Administrator, as of the Closing Date:

 

75

 

(i)                                     Due
Organization and Authority.  The
Subservicer is validly existing and in good standing as a federally chartered
national banking association with full power and authority to transact any
business contemplated by this Agreement and to execute, deliver and comply with
its obligations under the terms of this Agreement, the execution, delivery and
performance of which have been duly authorized by all necessary corporate
action on the part of the Subservicer;

 

(ii)                                  Ordinary
Course of Business.  The consummation
of the transactions contemplated by this Agreement are in the ordinary course
of business of the Subservicer;

 

(iii)                               No
Conflicts.  Neither the execution and
delivery of this Agreement, the acquisition of the servicing responsibilities
by the Subservicer or the transactions contemplated hereby, nor the fulfillment
of or compliance with the terms and conditions of this Agreement, will (a) conflict
with or result in a breach of any of the terms, conditions or provisions of the
Subservicer’s charter or any legal restriction or any agreement or instrument
to which the Subservicer is now a party or by which it is bound, (b) constitute
a material default under any of the foregoing, (c) result in an
acceleration under any of the foregoing, (d) result in the violation of
any law, rule, regulation, order, judgment or decree to which the Subservicer
or its property is subject or (e) impair the ability of the Subservicer to
service the Mortgage Loans, or impair the value of the Mortgage Loans;

 

(iv)                              Ability
to Perform.  The Subservicer does not
believe, nor does it have any reason or cause to believe, that it cannot
perform each and every covenant contained in this Agreement;

 

(v)                                 No
Litigation Pending.  There is no
action, suit, proceeding or investigation pending or, to the Subservicer’s
knowledge, threatened against the Subservicer which, either in any one instance
or in the aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Subservicer, or in
any material impairment of the right or ability of the Subservicer to carry on
its business substantially as now conducted, or in any material liability on
the part of the Subservicer, or which would draw into question the validity of
this Agreement or of any action taken or to be taken in connection with the
obligations of the Subservicer contemplated herein, or which would be likely to
impair materially the ability of the Subservicer to perform under the terms of
this Agreement;

 

(vi)                              No
Consent Required.  No consent,
approval, authorization or order of any court or governmental agency or body is
required for the execution, delivery and performance by the Subservicer of or
compliance by the Subservicer with this Agreement, or if required, such
approval has been obtained prior to the Closing Date;

 

(vii)                           No
Default.  The Subservicer is not in
default, and no event or condition exists that after the giving of notice or
lapse of time or both, would constitute an event of default under any material
mortgage, indenture, contract, agreement, judgment, or other undertaking, to
which the Subservicer is a party or which purports to be binding upon it or
upon any of its assets, which default could impair materially the ability of
the Subservicer to perform under the terms of this Agreement;

 

76

 

(viii)                        Ability
to Service.  The Subservicer is an
approved seller/Subservicer of conventional residential mortgage loans for
Fannie Mae and Freddie Mac, with the facilities, procedures and experienced
personnel necessary for the sound servicing of mortgage loans of the same type
as the Mortgage Loans.  The Subservicer
is in good standing to service mortgage loans for either Fannie Mae or Freddie
Mac, and no event has occurred, including but not limited to a change in
insurance coverage, which would make the Subservicer unable to comply with
either Fannie Mae or Freddie Mac eligibility requirements or which would
require notification to either of Fannie Mae or Freddie Mac; and

 

(ix)                                No
Commissions to Third Parties.  The
Subservicer has not dealt with any broker or agent or anyone else who might be
entitled to a fee or commission in connection with this transaction other than
the Seller.

 

(c)                                  Remedies for Breach of
Representations and Warranties of FSC and the Subservicer.  It is understood and agreed that the
representations and warranties set forth in Sections 4.05(a) and Section 4.05(b) shall
survive the engagement of each Representing Party to perform the servicing
responsibilities as of the Closing Date hereunder and the delivery of the
Servicing Files to the Servicer and the Subservicer, as applicable, and shall
inure to the benefit of the Master Servicer and the Indenture Trustee.  Upon discovery by either the Servicer, the
Subservicer, the Master Servicer or the Indenture Trustee of a breach of any of
the foregoing representations and warranties which materially and adversely
affects the ability of the such Representing Party to perform its duties and
obligations under this Agreement or otherwise materially and adversely affects
the value of the Mortgage Loans, the Mortgaged Property or the priority of the
security interest on such Mortgaged Property or the interests of the Master
Servicer or the Indenture Trustee, the party discovering such breach shall give
prompt written notice to the other parties.

 

Within 60 days
of the earlier of either discovery by or notice to a Representing Party of any
breach of a representation or warranty set forth in Section 4.05(a) or
Section 4.05(b), as applicable, which materially and adversely affects the
ability of such Representing Party to perform its duties and obligations under
this Agreement or otherwise materially and adversely affects the value of the
Mortgage Loans, the Mortgaged Property or the priority of the security interest
on such Mortgaged Property, such Representing Party shall use its best efforts
promptly to cure such breach in all material respects and, if such breach
cannot be cured, such Representing Party shall, at the Indenture Trustee’s or
the Master Servicer’s option, assign its rights and obligations under this
Agreement (or respecting the affected Mortgage Loans) to a successor
servicer.  Such assignment shall be made
in accordance with Sections 4.06(e) and 4.06(f).

 

In addition,
such Representing Party shall indemnify all other parties to this Agreement and
hold each of them harmless against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach of such
Representing Party’s representations and warranties contained in Section 4.05.

 

77

 

Any cause of
action against a Representing Party relating to or arising out of the breach of
any representations and warranties made in Section 4.05(a) or Section 4.05(b),
as applicable, shall accrue upon (i) discovery of such breach by such
Representing Party or notice thereof by the Master Servicer, the Depositor or
the Indenture Trustee to such Representing Party, (ii) failure by the
Representing Party to cure such breach within the applicable cure period, and (iii) demand
upon the Representing Party by the Master Servicer or the Indenture Trustee for
compliance with this Agreement.

 

(d)                                 Additional Indemnification by
FSC.  FSC shall indemnify the Master Servicer, the
Depositor, the Issuer, the Indenture Trustee, the Owner Trustee, and the Trust
Administrator and hold each of them harmless against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and any other costs, fees and expenses
(collectively, the “Liabilities”) that the indemnified party may sustain in any
way related to the failure of FSC to perform its duties and service the
Mortgage Loans in accordance with the terms of this Agreement.  FSC shall immediately notify the Master
Servicer, the Depositor, the Indenture Trustee, the Owner Trustee and the Trust
Administrator if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans that may result in such Liabilities, and FSC
shall assume (with the prior written consent of the indemnified party) the
defense of any such claim and pay all expenses in connection therewith,
including counsel fees, promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or any indemnified party in respect of
such claim and follow any written instructions received from such indemnified
party in connection with such claim.  FSC
shall be reimbursed promptly from the Trust Fund for all amounts advanced by it
pursuant to the preceding sentence except when the claim is in any way related
to FSC’s indemnification pursuant to this Section 4.05(d), or the failure
of FSC to service and administer the Mortgage Loans in accordance with the
terms of this Agreement.

 

(e)                                  Additional Indemnification by
the Subservicer.  The Subservicer shall indemnify the Master
Servicer, the Servicer, the Depositor, the Indenture Trustee, the Owner
Trustee, the Issuer and the Trust Administrator and hold each of them harmless
against any and all claims, losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and any other
costs, fees and expenses (collectively, the “Liabilities”) that the indemnified
party may sustain in any way related to the failure of the Subservicer to
perform its duties and service the Mortgage Loans in accordance with the terms
of this Agreement.  The Subservicer shall
immediately notify the Master Servicer, the Servicer, the Depositor, the
Indenture Trustee, the Owner Trustee and the Trust Administrator if a claim is
made by a third party with respect to this Agreement or the Mortgage Loans that
may result in such Liabilities, and the Subservicer shall assume (with the
prior written consent of the indemnified party) the defense of any such claim
and pay all expenses in connection therewith, including counsel fees, promptly
pay, discharge and satisfy any judgment or decree which may be entered against
it or any indemnified party in respect of such claim and follow any written
instructions received from the such indemnified party in connection with such
claim.  The Subservicer shall be
reimbursed promptly from the Trust Fund for all amounts advanced by it pursuant
to the preceding sentence except when the claim is in any way related to the
Subservicer’s indemnification pursuant to this Section 4.05(e), or the failure of the Subservicer
to service and administer the Mortgage Loans in accordance with the terms of
this Agreement.

 

78

 

Section 4.06.                             The Servicer and the Subservicer.

 

(a)                                  Merger or Consolidation of FSC.  FSC shall keep in full effect its existence,
rights and franchises as a corporation, and shall obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.

 

Any Person
into which FSC may be merged or consolidated, or any corporation resulting from
any merger, conversion or consolidation to which FSC shall be a party, or any
Person succeeding to the business of FSC, shall be the successor of FSC
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding, provided, however, that the
successor or surviving Person shall be an institution (i) having a net
worth of not less than $15,000,000, and (ii) which is a Fannie Mae- and
Freddie Mac-approved servicer in good standing.

 

(b)                                 Limitation on Liability of FSC
and Others.  Neither FSC nor any of the directors,
officers, employees or agents of FSC shall be under any liability to the Master
Servicer, the Depositor, the Issuer, the Indenture Trustee or the Trust
Administrator for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect FSC or any such person against any breach of
warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of any
breach of the terms and conditions of this Agreement.  FSC and any director, officer, employee or
agent of FSC may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.  FSC shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Mortgage Loans in accordance with this
Agreement and which in its opinion may involve it in any expense or liability; provided, however, that FSC may undertake any such action which it may deem
necessary or desirable in respect of this Agreement and the rights and duties
of the parties hereto.  In such event,
FSC shall be entitled to reimbursement from the Trust Fund for the reasonable
legal expenses and costs of such action.

 

(c)                                  Limitation on Resignation and
Assignment by FSC.  This Agreement has been entered into with FSC
in reliance upon the independent status of FSC, and the representations as to
the adequacy of its servicing facilities, plant, personnel, records and
procedures, its integrity, reputation and financial standing, and the
continuance thereof.  Therefore, except
as expressly provided in this Section 4.06(c) and Section 4.02(a),
FSC shall neither assign its rights under this Agreement or the servicing
hereunder nor delegate its duties hereunder or any portion thereof, or sell or
otherwise dispose of all or substantially all of its property or assets
without, in each case, the prior written consent of the Seller, the Indenture
Trustee, the Master Servicer and the Trust Administrator, which consent, in the
case of an assignment of rights or delegation of duties, shall be granted or
withheld in the discretion of the Seller, the Indenture Trustee, the Master
Servicer and the Trust Administrator; provided, that in each
case, there must be delivered to the Seller, the Master Servicer, the Indenture
Trustee and the Trust Administrator a letter from each Rating

 

79

 

Agency to the effect that such transfer of servicing or sale or
disposition of assets will not result in a qualification, withdrawal or
downgrade of the then-current rating of any of the Notes.

 

FSC shall not
resign from the obligations and duties hereby imposed on it except by mutual
consent of FSC and the Master Servicer, or upon the determination that its
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by FSC.  Any
such determination permitting the resignation of FSC shall be evidenced by an
Opinion of Counsel to such effect delivered to the Seller, the Master Servicer
and the Indenture Trustee which Opinion of Counsel shall be in form and
substance reasonably acceptable to each of them.  No such resignation shall become effective
until a successor shall have assumed FSC’s responsibilities and obligations
hereunder in the manner provided in Section 4.08.

 

Without in any
way limiting the generality of this Section 4.06, in the event that FSC
either shall assign this Agreement or the servicing responsibilities hereunder
or delegate its duties hereunder or any portion thereof or sell or otherwise
dispose of all or substantially all of its property or assets, except to the
extent permitted by and in accordance with this Section 4.06 and Section 4.02(a),
without the prior written consent of the Seller, the Master Servicer, the
Indenture Trustee and the Trust Administrator, then such parties shall have the
right to terminate this Agreement upon notice given as set forth in Section 11.07
of the Agreement, without any payment of any penalty or damages and without any
liability whatsoever to FSC or any third party.

 

(d)                                 Merger or Consolidation of the
Subservicer.  The Subservicer shall keep in full effect its
existence, rights and franchises as a national banking association as shall be
necessary to protect the validity and enforceability of this Agreement or any
of the Mortgage Loans and to perform its duties under this Agreement.

 

Any Person
into which the Subservicer may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Subservicer
shall be a party, or any Person succeeding to the business of the Subservicer,
shall be the successor of the Subservicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided,
however, that the
successor or surviving Person shall be a Person that shall be qualified and
approved to service mortgage loans for Fannie Mae or FHLMC and shall have a net
worth of not less than $15,000,000.

 

(e)                                  Limitation on Liability of the
Subservicer and Others.  Neither the Subservicer nor any of the
directors, officers, employees or agents of the Subservicer shall be under any
liability to the Master Servicer, the Depositor, the Issuer, Indenture Trustee
or the Trust Administrator for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Subservicer or any
such person against any breach of warranties or representations made herein, or
failure to perform its obligations in strict compliance with any standard of
care set forth in this Agreement, or any liability which would otherwise be
imposed by reason of any breach of the terms and conditions of this
Agreement.  The Subservicer and any director,
officer, employee or agent of the Subservicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters

 

80

 

arising hereunder.  The
Subservicer shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement and which in its opinion may involve it
in any expense or liability, provided, however, that the Subservicer may undertake
any such action which it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties hereto.  In such event, the Subservicer shall be
entitled to reimbursement from the Trust Fund for the reasonable legal expenses
and costs of such action.

 

(f)                                    Limitation on Resignation and
Assignment by the Subservicer.  This Agreement has been entered into with the
Subservicer in reliance upon the independent status of the Subservicer, and the
representations as to the adequacy of its servicing facilities, plant,
personnel, records and procedures, its integrity, reputation and financial
standing, and the continuance thereof. 
Therefore, except as expressly provided in this Section 4.06(f) and
Section 4.02(a), the Subservicer shall neither assign its rights under
this Agreement or the servicing hereunder nor delegate its duties hereunder or
any portion thereof, without the prior written consent of the Seller, the
Indenture Trustee, the Master Servicer and the Trust Administrator, which
consent, in the case of an assignment of rights or delegation of duties, shall
be granted or withheld in the discretion of the Seller, the Indenture Trustee,
the Master Servicer and the Trust Administrator, and which consent, in the case
of a sale or disposition of all or substantially all of the property or assets
of the Subservicer, shall not be unreasonably withheld by any of them; provided, that in each case, there must be delivered to the
Seller, the Master Servicer, the Indenture Trustee and the Trust Administrator
a letter from each Rating Agency to the effect that such transfer of servicing
or sale or disposition of assets will not result in a qualification, withdrawal
or downgrade of the then-current rating of any of the Notes.

 

The
Subservicer shall not resign from the obligations and duties hereby imposed on
it except by mutual consent of the Subservicer and the Master Servicer, or upon
the determination that its duties hereunder are no longer permissible under applicable
law and such incapacity cannot be cured by the Subservicer.  Any such determination permitting the
resignation of the Subservicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Seller, the Master Servicer and the Indenture
Trustee which Opinion of Counsel shall be in form and substance reasonably
acceptable to each of them.  No such
resignation shall become effective until a successor shall have assumed the
Subservicer’s responsibilities and obligations hereunder in the manner provided
in Section 4.08.

 

Without in any
way limiting the generality of this Section 4.06, in the event that the
Subservicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its
property or assets, except to the extent permitted by and in accordance with
this Section 4.06(f) and Section 4.02(a), without the prior
written consent of the Seller, the Master Servicer, the Indenture Trustee and
the Trust Administrator, then such parties shall have the right to terminate
this Agreement upon notice given as set forth in Section 11.07 of this
Agreement, without any payment of any penalty or damages and without any
liability whatsoever to the Subservicer or any third party.

 

(g)                                 Successor Servicers.  The provisions of Sections 4.06(a), (b), and (c) shall
apply to any successor to FSC as Servicer hereunder other than the Subservicer.

 

81

 

Section 4.07.                             Termination for Cause.

 

Any of the
following occurrences shall constitute an event of default (each, a “Servicer
Event of Default” or “Subservicer Event of Default,” as applicable) on the part
of the Servicer or the Subservicer:

 

(1)                                  any failure by the
Servicer or the Subservicer, as applicable, to remit to the Master Servicer any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of two Business Days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer or the Subservicer, as applicable, and the Swap
Counterparty, by the Master Servicer or the Servicer; or

 

(2)                                  failure by the
Servicer or the Subservicer, as applicable, duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Servicer or the Subservicer, as applicable, set forth in this Agreement which
continues unremedied for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer or the Subservicer, as applicable, and the Swap
Counterparty by the Master Servicer or the Servicer; or

 

(3)                                  failure by the Servicer
or the Subservicer, as applicable, to maintain its license to do business or
service residential mortgage loans in any jurisdiction where the Mortgaged
Properties are located except where the failure to so maintain such license
does not have a material adverse effect on the Servicer’s or the Subservicer’s,
as applicable, ability to service the Mortgage Loans; or

 

(4)                                  a decree or order of
a court or agency or supervisory authority having jurisdiction for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, including bankruptcy, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer or the Subservicer, as
applicable, and such decree or order shall have remained in force undischarged
or unstayed for a period of 60 days; or

 

(5)                                  the Servicer or the
Subservicer, as applicable, shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to the Servicer
or the Subservicer, as applicable, or of or relating to all or substantially
all of its property; or

 

(6)                                  the Servicer or the
Subservicer, as applicable, shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend payment

 

82

 

of its obligations or cease its normal business operations for three
Business Days; or

 

(7)                                  the Servicer or the
Subservicer, as applicable, ceases to meet the qualifications of a Fannie Mae
or Freddie Mac lender/servicer;

 

(8)                                  the Servicer or the
Subservicer, as applicable, attempts to assign the servicing of the Mortgage
Loans or its right to servicing compensation hereunder or the Servicer or the
Subservicer, as applicable, or attempts to assign this Agreement or the
servicing responsibilities hereunder or to delegate its duties hereunder or any
portion thereof in a manner not permitted under this Agreement;

 

(9)                                  if (x) any of the
Rating Agencies reduces or withdraws the rating of any of the Notes due to a
reason attributable to the Subservicer or (y) the Subservicer’s residential
primary servicer rating for servicing of subprime loans issued by any of the
Rating Agencies is reduced below its rating in effect on the Closing Date or
withdrawn; provided that if the Subservicer’s rating by any Rating Agency is
reduced by not more than two levels, the Subservicer shall have 180 days to
cure such default by having the applicable Rating Agency restore the
Subservicer’s rating to its level in effect on the Closing Date; or

 

(10)                            the net worth of the
Servicer or the Subservicer, as applicable, shall be less than $15,000,000; or

 

(11)                            failure by the Servicer or
Subservicer, as applicable, to duly perform, within the required time period,
its obligations under Sections 4.04(e) or 4.04(d) which failure
continues unremedied for a period of 7 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer and the Swap Counterparty,by the Master Servicer or to
the Subservicer by the Servicer, as applicable.

 

In each and
every such case, so long as an Event of Default shall not have been remedied,
in addition to whatsoever rights the Master Servicer, the Indenture Trustee or
the Servicer (in the case of a Subservicer Event of Default) may have at law or
equity to damages, including injunctive relief and specific performance, the
Master Servicer, the Indenture Trustee or the Servicer (in the case of a
Subservicer Event of Default), by notice in writing to the Servicer or the
Subservicer, as applicable, and the Swap Counterparty,  may terminate all the rights and obligations
of the Servicer or the Subservicer, as applicable, under this Agreement and in
and to the servicing contract established hereby and the proceeds thereof.

 

Upon receipt
by the Subservicer of such written notice of termination, all authority and
power of the Subservicer under this Agreement, whether with respect to the
Mortgage Loans or otherwise, shall pass to and be vested in the Servicer, an
Affiliate of the Servicer or a successor Subservicer appointed by the Servicer
with the consent of the Master Servicer and the Indenture Trustee, which
consent shall not be unreasonably withheld, and the Servicer (or the successor
Subservicer) shall be subject to all of the responsibilities, duties and
liabilities relating thereto, including the obligation to make Monthly
Advances, provided however, any assumption of such

 

83

 

duties by the Servicer or an Affiliate of the Servicer pursuant to this
paragraph shall be conditioned upon the receipt by the Master Servicer, the
Seller, the Depositor, the Indenture Trustee and the Trust Administrator of a
letter from each Rating Agency to the effect that such transfer of servicing to
the Servicer or its Affiliate will not result in a qualification, withdrawal or
downgrade of the then-current rating of any of the Notes.  Upon receipt by the Servicer, of such written
termination notice, all authority and power of the Servicer, under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in a successor servicer appointed by the Master Servicer, in
accordance with Section 4.08(a). 
Upon written request from the Master Servicer, the Servicer or the
Subservicer, as applicable, shall prepare, execute and deliver to the successor
servicer or Subservicer any and all documents and other instruments, place in
such successor’s possession all Servicing Files, and do or cause to be done all
other acts or things necessary or appropriate to effect the purposes of such
notice of termination, including but not limited to the transfer and
endorsement or assignment of the Mortgage Loans and related documents, at the
Servicer’s or the Subservicer’s, as applicable, sole expense.  The Servicer or the Subservicer, as
applicable, shall cooperate with the Seller, the Master Servicer, the Indenture
Trustee and such successor in effecting the termination of the Servicer’s or
the Subservicer’s, as applicable, responsibilities and rights hereunder,
including without limitation, the transfer to such successor for administration
by it of all cash amounts which shall at the time be credited by the Servicer
or the Subservicer, as applicable, to the Custodial Account or Escrow Account
or thereafter received with respect to the Mortgage Loans.

 

By a written
notice, the Master Servicer, with the consent of the other parties, may waive
any default by the Servicer or the Subservicer, as applicable, in the
performance of its obligations hereunder and its consequences.  Upon any waiver of a past default, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement.  No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly so waived.

 

The Master
Servicer shall promptly notify the Servicer at any time that the Master Servicer
obtains actual knowledge of the occurrence of a Subservicer Event of Default.

 

Section 4.08.                             Successor to Servicer and
Subservicer, Miscellaneous Provisions.

 

(a)                                  Successor to the Servicer.  Simultaneously with the termination of the
Servicer’s responsibilities and duties under this Agreement pursuant to
Sections 4.05, 4.06, or 4.07, the Master Servicer shall (i) within 90 days
of the Servicer’s notice of such termination, succeed to and assume all of the
Servicer’s responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor having the characteristics set
forth in clauses (i) and (ii) of Section 4.06(d) and which
shall succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement simultaneously with the
termination of the Servicer’s responsibilities, duties and liabilities under
this Agreement.  Any successor to the
Servicer shall be subject to the approval of the Master Servicer, the Indenture
Trustee and the Trust Administrator.  Any
approval of a successor servicer by the Master Servicer, the Indenture Trustee
and the Trust Administrator, shall, if the successor servicer is not at that
time a servicer of other Mortgage Loans for the Trust, be conditioned upon the
receipt by the Master Servicer, the Seller, the Indenture Trustee and the Trust
Administrator of a letter from each Rating Agency to the effect that such
transfer of servicing will not result in a qualification, withdrawal or

 

84

 

downgrade of the then-current rating of any of the Notes.  In connection with such appointment and
assumption, the Master Servicer may make such arrangements for the compensation
of such successor out of payments on Mortgage Loans as it and such successor
shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer under this
Agreement.  In the event that the
Servicer’s duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Servicer shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with
the same degree of diligence and prudence which it is obligated to exercise
under this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor.  The resignation or removal of the Servicer
pursuant to the aforementioned sections shall not become effective until a
successor shall be appointed pursuant to this Section 4.08(a) and
shall in no event relieve the Servicer of the representations and warranties
made pursuant to Sections 4.05 and the remedies available to the Master
Servicer, the Indenture Trustee and the Seller under Sections 4.08(c), 4.05(d) and
4.05(e), it being understood and agreed that the provisions of such Sections
4.08(c), 4.05(d) and 4.05(e) shall be applicable to the Servicer
notwithstanding any such resignation or termination of the Servicer, or the
termination of this Agreement.  Neither
the Master Servicer, in its capacity as successor servicer, nor any other
successor servicer shall be responsible for the lack of information and/or
documents that it cannot otherwise obtain through reasonable efforts.

 

Within a
reasonable period of time, but in no event longer than 30 days of the
appointment of a successor entity, the Servicer shall prepare, execute and
deliver to the successor entity any and all documents and other instruments,
place in such successor’s possession all Servicing Files, and do or cause to be
done all other acts or things necessary or appropriate to effect the purposes
of such notice of termination, including but not limited to the transfer of any
Mortgage Notes and the related documents. 
The Servicer shall cooperate with the Indenture Trustee, the Master
Servicer or the Seller, as applicable, and such successor in effecting the termination
of the Servicer’s responsibilities and rights hereunder and the transfer of
servicing responsibilities to the successor Servicer, including without
limitation, the transfer to such successor for administration by it of all cash
amounts which shall at the time be credited by the Servicer to the Custodial
Account or Escrow Account or thereafter received with respect to the Mortgage
Loans.

 

Any successor
appointed as provided herein shall execute, acknowledge and deliver to the
Indenture Trustee, the Servicer, the Master Servicer, the Trust Administrator
and the Seller an instrument (i) accepting such appointment, wherein the
successor shall make the representations and warranties set forth in Section 4.05(a) and
provide for the same remedies set forth in such Section herein and (ii) an
assumption of the due and punctual performance and observance of each covenant
and condition to be performed and observed by the Servicer under this
Agreement, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this
Agreement.  Any termination or
resignation of the Servicer or termination of this Agreement pursuant to Sections
4.05, 4.06 and 4.07 shall not affect any claims that the Seller, the Master
Servicer, the Indenture Trustee or the Trust Administrator may have against the
Servicer arising out of the Servicer’s actions or failure to act prior to any
such termination or resignation.

 

85

 

The Servicer
shall deliver promptly to the successor servicer the funds in the Custodial
Account and Escrow Account and all Mortgage Loan documents and related
documents and statements held by it hereunder and the Servicer shall account
for all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer.

 

Upon a
successor’s acceptance of appointment as such, it shall notify the Indenture
Trustee, the Trust Administrator, the Seller and Master Servicer and the
Depositor of such appointment.

 

(b)                                 Successor to the Subservicer.  Notwithstanding anything to the contrary in Section 4.08(a),
any successor to the Subservicer (but not the Servicer acting as successor to
the Subservicer, in which case the Servicer shall be governed by Section 4.08(a))
shall be governed by this Section 4.08(b).  Simultaneously with the termination of the
Subservicer’s responsibilities and duties under this Agreement pursuant to
Sections 4.05, 4.06 or 4.07, the Servicer shall (i) within 90 days of the
Subservicer’s notice of such termination, succeed to and assume all of the
Subservicer’s responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor having the characteristics set
forth in clauses (i) and (ii) of Section 4.06(d) and which
shall succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Subservicer under this Agreement simultaneously with the
termination of the Subservicer’s responsibilities, duties and liabilities under
this Agreement.  Any successor to the
Subservicer pursuant to (i) or (ii) above, in either case shall be
subject to the approval of the Master Servicer, the Indenture Trustee and the
Trust Administrator.  Any approval of a
successor Subservicer by the Servicer, the Master Servicer, the Indenture
Trustee and the Trust Administrator, shall, if the successor Subservicer is not
at that time a Subservicer of other Mortgage Loans for the Trust, be
conditioned upon the receipt by the Master Servicer, the Seller, the Indenture
Trustee and the Trust Administrator of a letter from each Rating Agency to the
effect that such transfer of servicing will not result in a qualification,
withdrawal or downgrade of the then-current rating of any of the Notes.  In connection with such appointment and
assumption, the Servicer, as applicable, may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree, provided, however, that
no such compensation shall be in excess of that permitted the Subservicer under
this Agreement.  In the event that the
Subservicer’s duties, responsibilities and liabilities under this Agreement
should be terminated pursuant to the aforementioned sections, the Subservicer
shall discharge such duties and responsibilities during the period from the
date it acquires knowledge of such termination until the effective date thereof
with the same degree of diligence and prudence which it is obligated to
exercise under this Agreement, and shall take no action whatsoever that might
impair or prejudice the rights or financial condition of its successor.  The resignation or removal of the Subservicer
pursuant to the aforementioned sections shall not become effective until a
successor shall be appointed pursuant to this Section 4.08(b) and
shall in no event relieve the Subservicer of the representations and warranties
made pursuant to Sections 4.05 and the remedies available to the Servicer, the
Master Servicer, the Indenture Trustee, the Trust Administrator and the Seller
under Sections 4.05(c), 4.05(d) and 4.05(e), it being understood and
agreed that the provisions of such Sections 4.05(c), 4.05(d) and 4.05(e) shall
be applicable to the Subservicer notwithstanding any such resignation or
termination of the Subservicer, or the termination of this Agreement.  Neither the Servicer, in its capacity as
successor Subservicer, nor

 

86

 

any other successor Subservicer shall be responsible for the lack of
information and/or documents that it cannot otherwise obtain through reasonable
efforts.

 

Within a
reasonable period of time, but in no event longer than 30 days of the
appointment of a successor entity, the Subservicer shall prepare, execute and
deliver to the successor entity any and all documents and other instruments, place
in such successor’s possession all Servicing Files, and do or cause to be done
all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, including but not limited to the transfer of any
Mortgage Notes and the related documents. 
The Subservicer shall cooperate with the Servicer, the Indenture
Trustee, the Master Servicer or the Seller, as applicable, and such successor
in effecting the termination of the Subservicer’s responsibilities and rights
hereunder and the transfer of servicing responsibilities to the successor
Subservicer, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Subservicer to the Custodial Account or Escrow Account or thereafter
received with respect to the Mortgage Loans.

 

Any successor
appointed as provided herein shall execute, acknowledge and deliver to the
Servicer, the Indenture Trustee, the Subservicer, the Master Servicer and the
Seller an instrument (i) accepting such appointment, wherein the successor
shall make the representations and warranties set forth in Section 4.05(a) and
provide for the same remedies set forth in such Section herein and (ii) an
assumption of the due and punctual performance and observance of each covenant
and condition to be performed and observed by the Subservicer under this
Agreement, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Subservicer, with like effect as if originally named as a party to this
Agreement.  Any termination or
resignation of the Subservicer or termination of this Agreement pursuant to
Sections 4.05, 4.06 and 4.07 shall not affect any claims that the Seller, the
Servicer, the Master Servicer, the Trust Administrator or the Indenture Trustee
may have against the Subservicer arising out of the Subservicer’s actions or
failure to act prior to any such termination or resignation.

 

The
Subservicer shall deliver promptly to the successor Subservicer the funds in
the Custodial Account and Escrow Account and all Mortgage Loan documents and
related documents and statements held by it hereunder and the Subservicer shall
account for all funds and shall execute and deliver such instruments and do
such other things as may reasonably be required to more fully and definitively
vest in the successor all such rights, powers, duties, responsibilities,
obligations and liabilities of the Subservicer.

 

Upon a
successor’s acceptance of appointment as such, it shall notify the Indenture
Trustee, the Trust Administrator, the Seller, Master Servicer and the Depositor
of such appointment.

 

(c)                                  Costs.  The Seller shall pay the legal fees and
expenses of its attorneys.  Costs and
expenses incurred in connection with the transfer of the servicing
responsibilities, including fees for delivering Servicing Files, shall be paid
by (i) the terminated or resigning Servicer if such termination or
resignation is a result of an occurrence of a termination event under Sections
4.05(c) or 4.07, and (ii) in all other cases by the Trust.

 

87

 

Section 4.09.                             Miscellaneous Servicing
Provisions.

 

(a)                                  Protection of Confidential
Information.  The Servicer shall keep confidential and
shall not divulge to any party, without the Seller’s prior written consent, any
nonpublic information pertaining to the Mortgage Loans or any borrower
thereunder, except to the extent that it is appropriate for the Servicer to do
so in working with legal counsel, subservicers, special servicers, auditors,
taxing authorities or other governmental agencies.

 

(b)                                 No Personal Solicitation.  For so long as either the Servicer or the
Subservicer services the Mortgage Loans, each covenants that it will not, and
that it will ensure that its affiliates and agents, will not, directly solicit
or provide information for any other party to solicit for prepayment or
refinancing of any of the Mortgage Loans by the related mortgagors.  It is understood that promotions undertaken
by the Servicer and the Subservicer which are directed to the general public at
large, or certain segments thereof, shall not constitute solicitation as that
term is used in this Section 4.09(b).

 

(c)                                  Intention of the Parties.  It is the intention of the Seller, Servicer
and Subservicer that the Seller is conveying, and the Servicer is receiving
only a contract for servicing the Mortgage Loans.  Accordingly, the parties hereby acknowledge
that the Trust remains the sole and absolute owner of the Mortgage Loans (other
than the servicing rights) and all rights related thereto, subject to the lien
of the Indenture.

 

ARTICLE V

ADMINISTRATION AND MASTER
SERVICING OF MORTGAGE LOANS BY THE MASTER SERVICER AND THE TRUST ADMINISTRATOR

 

Section 5.01.                             Duties of the Master Servicer;
Representations and Warranties.

 

(a)                                  For and on behalf of the Issuer,
the Swap Counterparty, the Indenture Trustee and the Noteholders, the Master
Servicer shall master service the Mortgage Loans from and after the Closing
Date in accordance with the provisions of this Article V.  The Master Servicer hereby represents and
warrants to the Depositor, the Issuer, the Swap Counterparty, the Indenture
Trustee, the Trust Administrator, the Servicer and the Subservicer, as of the
Closing Date, that:

 

(i)                                     it
is validly existing and in good standing as a federally chartered national
banking association and as Master Servicer has full power and authority to
transact any and all business contemplated by this Agreement and to execute,
deliver and comply with its obligations under the terms of this Agreement, the
execution, delivery and performance of which have been duly authorized by all
necessary corporate action on the part of the Master Servicer;

 

(ii)                                  the
execution and delivery of this Agreement by the Master Servicer and its
performance and compliance with the terms of this Agreement will not (A) violate
the Master Servicer’s charter or bylaws, (B) violate any law or regulation
or any administrative decree or order to which it is subject or (C) constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material contract,
agreement or other instrument to which the Master Servicer is a party or by
which it is bound or

 

88

 

to which any of its assets are subject, which violation, default or
breach would materially and adversely affect the Master Servicer’s ability to
perform its obligations under this Agreement;

 

(iii)                               this
Agreement constitutes, assuming due authorization, execution and delivery
hereof by the other respective parties hereto, a legal, valid and binding
obligation of the Master Servicer, enforceable against it in accordance with
the terms hereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the enforcement
of creditors’ rights in general, and by general equity principles (regardless
of whether such enforcement is considered in a proceeding in equity or at law);

 

(iv)                              the
Master Servicer is not in default with respect to any order or decree of any
court or any order or regulation of any federal, state, municipal or
governmental agency to the extent that any such default would materially and
adversely affect its performance hereunder;

 

(v)                                 the
Master Servicer is not a party to or bound by any agreement or instrument or
subject to any charter provision, bylaw or any other corporate restriction or
any judgment, order, writ, injunction, decree, law or regulation that may
materially and adversely affect its ability as Master Servicer to perform its
obligations under this Agreement or that requires the consent of any third
person to the execution of this Agreement or the performance by the Master
Servicer of its obligations under this Agreement;

 

(vi)                              no
litigation is pending or, to the best of the Master Servicer’s knowledge,
threatened against the Master Servicer which would prohibit its entering into
this Agreement or performing its obligations under this Agreement;

 

(vii)                           the
Master Servicer, or an affiliate thereof the primary business of which is the
servicing of conventional residential mortgage loans, is a Fannie Mae- or
FHLMC-approved seller/servicer;

 

(viii)                        no
consent, approval, authorization or order of any court or governmental agency
or body is required for the execution, delivery and performance by the Master
Servicer of or compliance by the Master Servicer with this Agreement or the
consummation of the transactions contemplated by this Agreement, except for
such consents, approvals, authorizations and orders (if any) as have been
obtained;

 

(ix)                                the
consummation of the transactions contemplated by this Agreement are in the
ordinary course of business of the Master Servicer;

 

(x)                                   the
Master Servicer has obtained an Errors and Omissions Insurance Policy and a
Fidelity Bond in accordance with Section 5.02 each of which is in full force and effect, and each of which
provides at least such coverage as is required hereunder; and

 

(xi)                                the
information about the Master Servicer under the heading “The Master Servicer”
in the Offering Documents relating to the Master Servicer does not include an
untrue statement of a material fact and does not omit to state a material fact,
with respect to the statements made, necessary in order to make the statements
in light of the circumstances under which they were made not misleading.

 

89

 

(b)                                 It is understood and agreed that
the representations and warranties set forth in this Section 5.01 shall
survive the execution and delivery of this Agreement.  The Master Servicer shall indemnify the
Depositor, the Issuer, the Indenture Trustee, the Owner Trustee, the Trust
Administrator, the Servicer and the Subservicer and hold them harmless against
any loss, damages, penalties, fines, forfeitures, legal fees and related costs,
judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, a breach of
the Master Servicer’s representations and warranties contained in this Section 5.01.  It
is understood and agreed that the enforcement of the obligation of the Master
Servicer set forth in this Section to indemnify the foregoing parties as
provided in this Section constitutes the sole remedy (other than as set
forth in Section 8.01) of such parties respecting a breach of the
foregoing representations and warranties. 
Such indemnification shall survive any termination of the Master
Servicer as Master Servicer hereunder, and any termination of this Agreement.

 

Any cause of
action against the Master Servicer relating to or arising out of the breach of
any representations and warranties made in this Section shall accrue upon
discovery of such breach by the Depositor, the Issuer, the Indenture Trustee,
the Trust Administrator, the Servicer or the Subservicer or notice thereof by
any one of such parties to the other parties. 
Notwithstanding anything in this Agreement to the contrary, the Master
Servicer shall not be liable for special, indirect or consequential losses or
damages of any kind whatsoever (including, but not limited to, lost profits).

 

Section 5.02.                             Master Servicer Fidelity Bond
and Master Servicer Errors and Omissions Insurance Policy.

 

(a)                                  The Master Servicer, at its
expense, shall maintain in effect a Master Servicer Fidelity Bond and a Master
Servicer 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 Master Servicer Errors and Omissions Insurance Policy and the Master
Servicer Fidelity Bond shall be in such form and amount that would be
consistent with coverage customarily maintained by master servicers of mortgage
loans similar to the Mortgage Loans and shall by its terms not be cancelable
without thirty days’ prior written notice to the Indenture Trustee.  The Master Servicer shall provide the
Depositor and the Indenture Trustee, upon request, with a copy of such policy
and fidelity bond.  The Master Servicer
shall (i) require the Servicer to maintain an Errors and Omissions
Insurance Policy and a Servicer Fidelity Bond in accordance with the provisions
of Section 4.02(m) of this Agreement, (ii) cause the Servicer to
provide to the Master Servicer certificates evidencing that such policy and
bond is in effect and to furnish to the Master Servicer any notice of
cancellation, non-renewal or modification of the policy or bond received by it,
as and to the extent provided in Section 4.02(m) of the Agreement, and (iii) furnish
copies of such policies and of the certificates and notices referred to in
clause (ii) to the Indenture Trustee upon request.

 

(b)                                 The Master Servicer shall
promptly report to the Indenture Trustee and the Trust Administrator any
material changes that may occur in the Master Servicer’s Fidelity Bond or the
Master Servicer Errors and Omissions Insurance Policy and shall furnish either
such party, on request, certificates evidencing that such bond and insurance
policy are in full force and effect.

 

90

 

The Master Servicer shall promptly report to the Indenture Trustee and
the Trust Administrator all cases of embezzlement or fraud, if such events
involve funds relating to the Mortgage Loans. 
The total losses, regardless of whether claims are filed with the
applicable insurer or surety, shall be disclosed in such reports together with
the amount of such losses covered by insurance. 
If a bond or insurance claim report is filed with any of such bonding
companies or insurers, the Master Servicer shall promptly furnish a copy of such
report to the Indenture Trustee and the Trust Administrator.  Any amounts relating to the Mortgage Loans
collected by the Master Servicer under any such bond or policy shall be
promptly remitted by the Master Servicer to the Indenture Trustee for deposit
into the Collection Account.  Any amounts
relating to the Mortgage Loans collected by the Servicer under any such bond or
policy shall be remitted to the Master Servicer.

 

Section 5.03.                             Master Servicer’s Financial
Statements and Related Information.  For each year this
Agreement is in effect, the Master Servicer shall deliver to the Trust
Administrator, the Indenture Trustee, each Rating Agency and the Depositor a
copy of its annual unaudited financial statements on or prior to May 31 of
each year, beginning May 31, 2005. 
Such financial statements shall include a balance sheet, income
statement, statement of retained earnings, statement of additional paid-in
capital, statement of changes in financial position and all related notes and
schedules and shall be in comparative form, certified by a nationally
recognized firm of Independent Accountants to the effect that such statements
were examined and prepared in accordance with generally accepted accounting
principles applied on a basis consistent with that of the preceding year.

 

Section 5.04.                             Power to Act; Procedures.

 

(a)                                  The Master Servicer shall master
service the Mortgage Loans, provided that the Master Servicer shall not take,
or knowingly permit the Servicer to take, any action that is inconsistent with
or prejudices the interests of the Issuer, the Indenture Trustee or the
Noteholders in any Mortgage Loan or the rights and interests of the Depositor,
the Issuer, the Indenture Trustee and the Noteholders under this Agreement and
the Indenture.  The Master Servicer shall
represent and protect the interests of the Issuer, the Indenture Trustee and
the Noteholders in the same manner as it protects its own interests in mortgage
loans in its own portfolio in any claim, proceeding or litigation regarding a Mortgage
Loan.  Without limiting the generality of
the foregoing, the Master Servicer in its own name, and the Servicer, to the
extent such authority is delegated to such Servicer under this Agreement, is
hereby authorized and empowered by the Indenture Trustee when the Master
Servicer or such Servicer, as the case may be, believes it appropriate in its
best judgment and in accordance with Servicing Standards, to execute and
deliver, on behalf of itself and the Noteholders, the Trust Administrator, the
Indenture Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect to
the Mortgaged Properties.  The Indenture
Trustee (or the Trust Administrator acting for the Indenture Trustee) shall
furnish the Master Servicer, upon request, 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 appeal, prosecute or defend in any court action relating to the Mortgage
Loans or the Mortgaged Property, in accordance with this Agreement, and the
Indenture Trustee shall execute and deliver such other

 

91

 

documents as the Master Servicer may request, necessary or appropriate
to enable the Master Servicer to master service the Mortgage Loans and carry
out its duties hereunder, and to allow the Servicer to service the Mortgage
Loans in each case in accordance with Servicing Standards (and the Indenture
Trustee or the Trust Administrator 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 Indenture
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 Indenture
Trustee or that the Indenture Trustee would be adversely affected under the “doing
business” or tax laws of such state if such action is taken in its name, then
upon request of the Indenture Trustee, the Master Servicer shall join with the
Indenture Trustee in the appointment of a co-trustee pursuant to Section 6.10
of the Indenture.  In no event shall the
Master Servicer, without the Indenture Trustee’s written consent:  (i) initiate any action, suit or
proceeding solely under the Indenture Trustee’s name without indicating the
Master Servicer’s representative capacity or (ii) take any action with the
intent to cause, and which actually does cause, the Indenture Trustee to be
registered to do business in any state. 
The Master Servicer shall indemnify the Indenture Trustee for any and
all costs, liabilities and expenses incurred by the Indenture Trustee in
connection with the negligent or willful misuse of such powers of attorney by
the Master Servicer.  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 Indenture Trustee, be deemed to be the agent of the Indenture Trustee.

 

(b)                                 In master servicing and
administering the Mortgage Loans, the Master Servicer shall employ procedures
and exercise the same care that it customarily employs and exercises in master
servicing and administering loans for its own account, giving due consideration
to Servicing Standards where such practices do not conflict with this
Agreement.  Consistent with the
foregoing, the Master Servicer may, and may permit the Servicer to, in its
discretion (i) waive any late payment charge and (ii) extend the due
dates for payments due on a Mortgage Note for a period not greater than 120 days; provided,
however, that the maturity of any Mortgage Loan shall not be
extended past the date on which the final payment is due on the latest maturing
Mortgage Loan as of the Cut-off Date.  In
the event of any extension described in clause (ii) above, the Master
Servicer shall make or cause the Servicer to make Advances on the related
Mortgage Loan in accordance with the provisions of Section 4.03 on the
basis of the amortization schedule of such Mortgage Loan without modification
thereof by reason of such extension.

 

Section 5.05.                             Enforcement of Servicer’s and
Master Servicer’s Obligations.

 

(a)                                  The Master Servicer shall not be
required to (i) take any action with respect to the servicing of any
Mortgage Loan that the Servicer is not required to take under this Agreement
and (ii) cause the Servicer to take any action or refrain from taking any
action if this Agreement does not require the Servicer to take such action or
refrain from taking such action.

 

(b)                                 The Master Servicer, for the
benefit of the Issuer, the Swap Counterparty, the Indenture Trustee and the
Noteholders, shall enforce the obligations of the Servicer hereunder, and
shall, in the event that the Servicer fails to perform its obligations in
accordance herewith, terminate the rights and obligations of the Servicer
hereunder and either act as servicer of the related Mortgage Loans or cause
other parties hereto to either assume the obligations of the

 

92

 

Servicer-under this Agreement (or agree to execute and deliver a
successor servicing or sub-servicing agreement with a successor servicer).  Such enforcement, including, without
limitation, the legal prosecution of claims, termination of servicing or
sub-servicing rights and the pursuit of other appropriate remedies, shall be in
such form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans.  The Master
Servicer shall pay the costs of such enforcement at its own expense, and shall
be reimbursed therefor initially (i) from a general recovery resulting
from such enforcement only to the extent, if any, that such recovery exceeds
all amounts due in respect of the related Mortgage Loans, (ii) from a
specific recovery of costs, expenses or attorneys’ fees against the party
against whom such enforcement is directed, and then, (iii) to the extent
that such amounts are insufficient to reimburse the Master Servicer for the
costs of such enforcement, from the Collection Account.

 

Section 5.06.                             [Reserved].

 

Section 5.07.                             Collection Account.

 

(a)                                  On the Closing Date, the Trust
Administrator shall open and shall thereafter maintain a segregated account
held in trust in the name of the Securities Intermediary (the “Collection
Account”), entitled “Collection Account, HSBC Bank USA, National Association,
as Indenture Trustee, in trust for Holders of the Fieldstone Mortgage
Investment Trust, Series 2005-2, Mortgage-Backed Notes.”  The Collection Account shall relate solely to
the Notes issued by the Issuer, and funds deposited in the Collection Account
shall not be commingled with any other monies.

 

(b)                                 The Collection Account shall be
an Eligible Account.  If an existing Collection
Account ceases to be an Eligible Account, the Trust Administrator shall
establish a new Collection Account that is an Eligible Account within 10 days
and transfer all funds and investment property on deposit in such existing
Collection Account into such new Collection Account.

 

(c)                                  The Trust Administrator shall
give to the Master Servicer and the Indenture Trustee prior written notice of
the name and address of the depository institution at which the Collection
Account is maintained and the account number of such Collection Account.  The Trust Administrator shall take such
actions as are necessary to cause the depository institution holding the
Collection Account to hold such account in the name of the Indenture
Trustee.  On each Payment Date, the entire
amount on deposit in the Collection Account relating to the Mortgage Loans
(subject to permitted withdrawals set forth in Section 5.08), other than
amounts not included in Interest Funds or Principal Funds to be paid to
Noteholders for such Payment Date, shall be applied to make the requested
payment of principal and/or interest on each Class of Notes.

 

(d)                                 The Master Servicer shall
deposit or cause to be deposited into the Collection Account, no later than the
Business Day following the Closing Date, any amounts received with respect to
the Mortgage Loans representing Scheduled Payments on the Mortgage Loans due
after the Cut-off Date and unscheduled payments received on or after the
Cut-off Date and on or before the Closing Date. 
Thereafter, the Master Servicer shall deposit or cause to be deposited
in

 

93

 

the Collection Account on the earlier of the applicable Payment Date
and one Business Day following receipt thereof, the following amounts received
or payments made by the Master Servicer (other than in respect of principal of
and interest on the Mortgage Loans due on or before the Cut-off Date):

 

(i)                                     all
remittances from the Custodial Account to the Master Servicer pursuant to Section 4.03;

 

(ii)                                  all
Advances made by the Servicer or the Master Servicer pursuant to Section 6.05
hereof and any payment in respect of Prepayment Interest Shortfalls paid by the
Master Servicer pursuant to Section 5.21 hereof;

 

(iii)                               the
Purchase Price of any Mortgage Loan repurchased by the Depositor or the Seller
during the related Prepayment Period or any other Person and any Substitution
Amount related to any Qualifying Substitute Mortgage Loan; and

 

(iv)                              any
Corridor Receipts, Net Swap Receipts or any swap breakage costs (as reported to
the Trust Administrator by the Swap Counterparty) received by the Trust
Administrator.

 

(e)                                  Funds in the Collection Account
may be invested by the Trust Administrator in Eligible Investments selected by
and at the written direction of the Trust Administrator, which shall mature not
later than one Business Day prior to the next Payment Date (or on the Payment
Date with respect to any Eligible Investment of the Trust Administrator or any
other fund managed or advised by it or any Affiliate) and any such Eligible
Investment shall not be sold or disposed of prior to its maturity.  All such Eligible Investments shall be made
in the name of the Master Servicer in trust for the benefit of the Indenture
Trustee and the Noteholders and the Swap Counterparty.  All income and gain realized from any
Eligible Investment shall be for the benefit of the Master Servicer and shall
be subject to its withdrawal or order from time to time, subject to Section 5.08
and shall not be part of the Trust Estate. 
The amount of any losses incurred in respect of any such investments
shall be deposited in such Collection Account by the Master Servicer out of its
own funds, without any right of reimbursement therefor, immediately as
realized.  The foregoing requirements for
deposit in the Collection Account are exclusive, it being understood and agreed
that, without limiting the generality of the foregoing, payments of interest on
funds in the Collection Account and payments in the nature of late payment
charges, assumption fees and other incidental fees and charges relating to the
Mortgage Loans need not be deposited by the Master Servicer in the Collection
Account and may be retained by the Master Servicer or the Servicer, as
applicable, as additional servicing compensation.  If the Master Servicer deposits in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from such Collection Account.

 

Section 5.08.                             Application of Funds in the
Collection Account.  The Trust Administrator may, from time to
time, make, or cause to be made, withdrawals from the Collection Account for
the following purposes:

 

(i)                                     to
reimburse the Master Servicer or the Servicer, as applicable, for any
previously unreimbursed Advances or Servicing Advances made by any such party,
such right to

 

94

 

reimbursement pursuant to this subclause (i) being limited to
amounts received on or in respect of a particular Mortgage Loan (including, for
this purpose, Liquidation Proceeds and amounts representing Insurance Proceeds
with respect to the property subject to the related Mortgage) which represent
late recoveries (net of the applicable Servicing Administration Fee) of
payments of principal or interest respecting which any such Advance was made,
it being understood, in the case of any such reimbursement, that the Master
Servicer’s or Servicer’s right thereto shall be prior to the rights of the
Noteholders;

 

(ii)                                  to
reimburse the Master Servicer or the Servicer following a final liquidation of
a Mortgage Loan for any previously unreimbursed Advances made by any such party
(A) that such party determines in good faith will not be recoverable from
amounts representing late recoveries of payments of principal or interest
respecting the particular Mortgage Loan as to which such Advance was made or
from Liquidation Proceeds or Insurance Proceeds with respect to such Mortgage
Loan and/or (B) to the extent that such unreimbursed Advances exceed the
related Liquidation Proceeds or Insurance Proceeds, it being understood, in the
case of each such reimbursement, that the Master Servicer’s or Servicer’s right
thereto shall be prior to the rights of the Noteholders;

 

(iii)                               to
reimburse the Master Servicer or the Servicer from Liquidation Proceeds for
Liquidation Expenses and for amounts expended by it pursuant to Section 4.02(o)
in good faith in connection with the restoration of damaged property and, to
the extent that Liquidation Proceeds after such reimbursement exceed the unpaid
principal balance of the related Mortgage Loan, together with accrued and
unpaid interest thereon at the applicable Mortgage Rate less the applicable
Servicing Administration Fee Rate and Master Servicing Fee Rate for such
Mortgage Loan to the Due Date next succeeding the date of its receipt of such
Liquidation Proceeds, to pay to the Master Servicer or the Servicer out of such
excess the amount of any unpaid assumption fees, late payment charges or other
Mortgagor charges on the related Mortgage Loan and to retain any excess
remaining thereafter as additional servicing compensation, it being understood,
in the case of any such reimbursement or payment, that such Master Servicer’s
or Servicer’s right thereto shall be prior to the rights of the Noteholders;

 

(iv)                              to
pay to the Depositor or the Seller or any other Person, as applicable, with
respect to each Mortgage Loan or REO Property acquired in respect thereof that
has been purchased pursuant to this Agreement, all amounts received thereon and
not paid on the date on which the related repurchase was effected, and to pay
to the applicable party any Advances and Servicing Advances to the extent
specified in the definition of Purchase Price;

 

(v)                                 to
the extent not paid by the Servicer, to pay any Insurance Premium with respect
to a Mortgage Loan;

 

(vi)                              to
pay to the Master Servicer income earned on the investment of funds on deposit
in the Collection Account;

 

(vii)                           on each
Payment Date, to make payment to the Noteholders in the amounts and in the
manner provided for in Section 6.02 for the related Payment Date (to the
extent collected by the Master Servicer or the Servicer);

 

95

 

(viii)                        on each
Payment Date,  to the extent not
previously collected and retained by the Servicer, to make payment to the
Servicer, all Prepayment Premiums received during the immediately preceding
Prepayment Period;

 

(ix)                                to
make payment to itself, the Master Servicer, the Servicer, the Subservicer, the
Indenture Trustee, the Custodian, the Owner Trustee and others pursuant to any
provision of this Agreement, the Trust Agreement, the Indenture or the
Custodial Agreement;

 

(x)                                   to
withdraw funds deposited in error in the Collection Account;

 

(xi)                                to
clear and terminate the Collection Account pursuant to Article IX;

 

(xii)                             to
reimburse a successor master servicer (solely in its capacity as successor
master servicer), for any fee or advance occasioned by a termination of the
Master Servicer, and the assumption of such duties by the Indenture Trustee or
a successor master servicer appointed by the Indenture Trustee pursuant to Section 8.01,
in each case to the extent not reimbursed by the terminated Master Servicer, it
being understood, in the case of any such reimbursement or payment, that the
right of the Master Servicer or the Indenture Trustee thereto shall be prior to
the rights of the Noteholders;

 

(xiii)                          to pay
the Swap Counterparty any Net Swap Payments and any swap termination payments
(as reported to the Trust Administrator by the Swap Counterparty) two Business
Days prior to each applicable Payment Date; and

 

(xiv)                         to make
payment to the Owner Trustee, the Owner Trustee Fee for such Payment Date, if
any.

 

In connection
with withdrawals pursuant to subclauses (i), (ii), (iii) and (iv) above,
the Master Servicer’s or the Servicer’s or such other Person’s entitlement
thereto is limited to collections or other recoveries on the related Mortgage
Loan.  The Trust Administrator shall
therefore keep and maintain a separate accounting for each Mortgage Loan for
the purpose of justifying any withdrawal from the Collection Account it
maintains pursuant to such subclauses.

 

Section 5.09.                             Reports to Indenture Trustee and
Noteholders.

 

(a)                                  On each Payment Date, the Trust
Administrator shall make available to the Indenture Trustee and each Noteholder
and the Swap Counterparty, a report setting forth the following information (on
the basis of Mortgage Loan level information obtained from the Servicer or
Subservicer and information provided by the Swap Counterparty):

 

(i)                                     the
aggregate amount of the payment to be made on such Payment Date to the Holders
of each Class of Notes other than any Class of Notional Notes, to the
extent applicable, allocable to principal on the Mortgage Loans, including
Liquidation Proceeds and Insurance Proceeds, stating separately the amount
attributable to scheduled principal payments and unscheduled payments in the
nature of principal;

 

(ii)                                  the
aggregate amount of the payment to be made on such Payment Date to the Holders
of each Class of Notes allocable to interest and the calculation thereof;

 

96

 

 

(iii)                               the
amount, if any, of any payment to the Holder of the Ownership Certificate;

 

(iv)                              (A) the
aggregate amount of any Advances required to be made by or on behalf of the
Servicer (or the Master Servicer) with respect to such Payment Date, (B) the
aggregate amount of such Advances actually made, and (C) the amount, if
any, by which (A) above exceeds (B) above;

 

(v)                                 the
total number of Mortgage Loans, the aggregate Stated Principal Balance of all
the Mortgage Loans as of the close of business on the last day of the related
Due Period, after giving effect to payments allocated to principal reported
under clause (i) above;

 

(vi)                              the Class Principal
Amount (or Class Notional Amount) of each Class of Notes, to the
extent applicable, as of such Payment Date after giving effect to payments
allocated to principal reported under clause (i) above;

 

(vii)                           the
amount of all Prepayment Premiums paid to the Servicer;

 

(viii)                        the amount
of any Realized Losses incurred with respect to the Mortgage Loans (x) in the
applicable Prepayment Period and (y) in the aggregate since the Cut-off Date;

 

(ix)                                the
amount of the Owner Trustee Fee, Master Servicing Fee and Servicing
Administration Fee paid during the Due Period to which such payment relates;

 

(x)                                   the
number and aggregate Stated Principal Balance of Mortgage Loans, as reported to
the Trust Administrator by the Servicer or Subservicer, (a) remaining
outstanding, (b) delinquent 30 to 59
days on a contractual basis, (c) delinquent 60 to 89 days on a
contractual basis, (d) delinquent 90 or more days on a contractual basis, (e) as
to which foreclosure proceedings have been commenced as of the close of
business on the last Business Day of the calendar month immediately preceding
the month in which such Payment Date occurs, (f) in bankruptcy and (g) that
are REO Properties;

 

(xi)                                the
number and aggregate Stated Principal Balance as of the related Determination
Date of any Mortgage Loans with respect to which the related Mortgaged Property
became an REO Property as of the close of business on the last Business Day of
the calendar month immediately preceding the month in which such Payment Date
occurs;

 

(xii)                             with
respect to substitution of Mortgage Loans in the preceding calendar month, the
Stated Principal Balance of each Deleted Mortgage Loan and of each Qualifying
Substitute Mortgage Loan;

 

(xiii)                          whether
a Trigger Event or a Class 1-A2 Trigger Event has occurred;

 

(xiv)                         the
Interest Rate applicable to such Payment Date with respect to each Class of
Notes;

 

(xv)                            the
Interest Funds and the Principal Funds applicable to such Payment Date;

 

97

 

(xvi)                         if
applicable, the amount of any shortfall (i.e., the difference between the
aggregate amounts of principal and interest which Noteholders would have
received if there were sufficient available amounts in the Collection Account
and the amounts actually paid);

 

(xvii)                      the amount
of any Overcollateralization Deficiency after giving effect to the payments
made on such Payment Date;

 

(xviii)                   LIBOR with
respect to such Payment Date;

 

(xix)                           the
Available Funds Shortfall of each Class of Notes (other than the Class A-IO
Notes), if any; and

 

(xx)                              to
the extent such information is provided to the Master Servicer by the Servicer
or the Subservicer, the number of Mortgage Loans with respect to which (a) a
reduction in the Mortgage Rate has occurred or (b) the related Mortgagor’s
obligation to repay interest on a monthly basis has been suspended or reduced
pursuant to the Civil Relief Act or the California Military and Veterans Code,
as amended; and the amount of interest not required to be paid with respect to
any such Mortgage Loans during the related Due Period as a result of such
reductions, in the aggregate and with respect to the Group 1 Mortgage Loans and
the Group 2 Mortgage Loans.

 

In the case of
information furnished pursuant to subclauses (i), (ii) and (vi) above,
the amounts shall (except in the case of the report delivered to the holder of
the Ownership Certificate) be expressed as a dollar amount per $1,000 of
original principal amount of Notes.

 

The Trust
Administrator will make such report and additional loan level information (and,
at its option, any additional files containing the same information in an
alternative format) available each month to the Rating Agencies and Noteholders
via the Trust Administrator’s website. 
The Trust Administrator’s website can be accessed at www.ctslink.com.  Assistance
in using the website can be obtained by calling the Trust Administrator’s
customer service desk at (301) 815-6600. 
Such parties that are unable to use the website are entitled to have a
paper copy mailed to them via first class mail by notifying the Trust
Administrator at Wells Fargo Bank, N.A., P.O. Box 98, Columbia, Maryland
21046 (or for overnight deliveries at 9062 Old Annapolis Road, Columbia,
Maryland 21045), and indicating such. 
The Trust Administrator shall have the right to change the way such
statements are distributed in order to make such distribution more convenient
and/or more accessible to the above parties and the Trust Administrator shall
provide timely and adequate notification to all above parties regarding any
such changes.

 

The foregoing
information and reports shall be prepared and determined by the Trust
Administrator based solely on Mortgage Loan data provided to the Trust
Administrator by the Master Servicer (in a format agreed to by the Trust
Administrator and the Master Servicer) no later than 12:00 p.m.(noon)
Eastern Standard Time four Business Days prior to the Payment Date.  In preparing or furnishing the foregoing
information, the Trust Administrator and the Master Servicer shall be entitled
to rely conclusively on the accuracy of the information or data regarding the
Mortgage Loans and the related REO Property that has been provided to the
Master Servicer by the Servicer or the Subservicer, and neither the Trust
Administrator nor the 

 

98

 

Master Servicer shall be obligated to verify, recompute, reconcile or
recalculate any such information or data. 
The Trust Administrator and the Master Servicer shall be entitled to
conclusively rely on the Mortgage Loan data provided to the Master Servicer and
shall have no liability for any errors in such Mortgage Loan data.

 

(b)                                 Upon the reasonable advance
written request of any Noteholder that is a savings and loan, bank or insurance
company, which request, if received by the Indenture Trustee shall be forwarded
promptly to the Trust Administrator, the Trust Administrator shall provide, or
cause to be provided (or, to the extent that such information or documentation
is not required to be provided by the Servicer, shall use reasonable efforts to
obtain such information and documentation from the Servicer, and provide), to
such Noteholder such reports and access to information and documentation
regarding the Mortgage Loans as such Noteholder may reasonably deem necessary
to comply with applicable regulations of the Office of Thrift Supervision or
its successor or other regulatory authorities with respect to an investment in
the Notes; provided, however, that the Trust
Administrator shall be entitled to be reimbursed by such Noteholder for actual
expenses incurred in providing such reports and access.

 

(c)                                  Within 90 days, or such shorter
period as may be required by statute or regulation, after the end of each
calendar year, the Trust Administrator shall have prepared and shall make
available to each Person who at any time during the calendar year was a
Noteholder of record, and make available to Security Owners (identified as such
by the Clearing Agency) in accordance with applicable regulations, a report
summarizing the items provided to the Noteholders pursuant to Section 5.09(a) on
an annual basis as may be required to enable such Holders to prepare their
federal income tax returns; provided, however, that
this Section 5.09(c) shall not be applicable where relevant reports
or summaries are required elsewhere in this Agreement.  Such information shall include the amount of
original issue discount accrued on each Class of Notes and information
regarding the expenses of the Issuer. 
The Trust Administrator shall be deemed to have satisfied such
requirement if it forwards such information in any other format permitted by
the Code.  The Master Servicer shall
provide the Trust Administrator with such information as is necessary for the
Indenture Trustee to prepare such reports.

 

(d)                                 The Trust Administrator shall
furnish any other information that is required by the Code and regulations
thereunder to be made available to Noteholders. 
The Master Servicer shall provide the Trust Administrator with such
information as is necessary for the Trust Administrator to prepare such reports
(and the Trust Administrator may rely solely upon such information).

 

Section 5.10.                             Termination of Servicer or
Subservicer; Successor Servicers.

 

(a)                                  The Master Servicer shall be
entitled to terminate the rights and obligations of the Servicer or
Subservicer, as applicable, upon the occurrence of a Servicer Event of Default
as set forth in Section 4.07; provided, however, that in the event of termination of the
Servicer or of both the Servicer and the Subservicer by the Master Servicer,
the Master Servicer shall provide for the servicing of the Mortgage Loans by a
successor servicer as provided in Section 4.08.

 

99

 

The parties
acknowledge that notwithstanding the preceding sentence, there may be a
transition period, not to exceed 90 days, in order to effect the transfer of
servicing to a successor servicer.  The
Master Servicer shall be entitled to be reimbursed by the Servicer or
Subservicer, as applicable (or by the Trust Estate, if the Servicer or
Subservicer is unable to fulfill its obligations hereunder) for all costs associated
with the transfer of servicing, including without limitation, any costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data, as may be
required by the Master Servicer to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Master Servicer to service the
Mortgage Loans properly and effectively.

 

(b)                                 If the Master Servicer acts as a
successor Servicer, it shall not assume liability for the representations and
warranties of the Servicer that it replaces. 
The Master Servicer shall use reasonable efforts to have the successor
Servicer assume liability for the representations and warranties made by the
terminated Servicer and in the event of any such assumption by the successor
servicer, the Master Servicer may, in the exercise of its business judgment,
release the terminated Servicer from liability for such representations and
warranties.

 

(c)                                  If the Master Servicer acts as a
successor Servicer, it will have no obligation to make an Advance if it
determines in its reasonable judgment that such Advance would constitute a
Nonrecoverable Advance.

 

Section 5.11.                             Master Servicer Liable for
Enforcement.  The Master Servicer shall use commercially
reasonable efforts to ensure that the Mortgage Loans are serviced in accordance
with the provisions of this Agreement and shall use commercially reasonable
efforts to enforce the provisions of Article IV for the benefit of the
Noteholders and the Swap Counterparty. 
The Master Servicer shall be entitled to enter into any agreement with
any Servicer for indemnification of the Master Servicer and nothing contained
in this Agreement shall be deemed to limit or modify such indemnification.  Except as expressly set forth herein, the
Master Servicer shall have no liability for the acts or omissions of either the
Servicer or Subservicer in the performance by such Servicer of its obligations
under Article IV.

 

Section 5.12.                             Assumption of Master Servicing by
Indenture Trustee.

 

(a)                                  In the event the Master Servicer
shall for any reason no longer be the Master Servicer (including by reason of
any Master Servicer Event of Default under Section 8.01 of this
Agreement), the Indenture Trustee shall thereupon assume all of the rights and
obligations of such Master Servicer hereunder. 
The Indenture Trustee, its designee or any successor master servicer
appointed by the Indenture Trustee shall be deemed to have assumed all of the
Master Servicer’s interest herein, except that the Master Servicer shall not
thereby be relieved of any liability or obligations of the Master Servicer
accruing prior to its replacement as Master Servicer, and shall be liable to
the Indenture Trustee, and hereby agrees to indemnify and hold harmless the
Indenture Trustee from and against all costs, damages, expenses and liabilities
(including reasonable attorneys’ fees) incurred by the Indenture Trustee as a
result of such liability or obligations of the Master Servicer and in
connection with the Indenture Trustee’s assumption (but not its performance,
except to the extent that costs or liability of the Indenture Trustee are
created or increased as a result of negligent or wrongful acts or omissions of
the 

 

100

 

Master Servicer prior to its replacement as Master Servicer) of the
Master Servicer’s obligations, duties or responsibilities thereunder.

 

(b)                                 The Master Servicer that has
been terminated shall, upon request of the Indenture Trustee but at the expense
of such Master Servicer, deliver to the assuming party all documents and
records relating to the Mortgage Loans and an accounting of amounts collected
and held by it and otherwise use its best efforts to effect the orderly and
efficient transfer of master servicing to the assuming party.

 

Section 5.13.                             [Reserved].

 

Section 5.14.                             Release of Mortgage Files.

 

(a)                                  Upon (i) becoming aware of
the payment in full of any Mortgage Loan or (ii) the receipt by the Master
Servicer of a notification that payment in full has been or will be escrowed in
a manner customary for such purposes, the Master Servicer will, or will cause
the Servicer to, promptly notify the Indenture Trustee (or the Custodian) by a
certification (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 Collection Account maintained by the Trust Administrator
pursuant to Section 5.07 have been or will be so deposited) of a Servicing
Officer and shall request (on the form attached to the Custodial Agreement) the
Indenture Trustee or the Custodian, to deliver to the Servicer or Subservicer
the related Mortgage File.  Upon receipt
of such certification and request, the Indenture Trustee or the Custodian (with
the consent, and at the direction of the Indenture Trustee), shall promptly
release the related Mortgage File to the Servicer and the Indenture Trustee
shall have no further responsibility with regard to such Mortgage File.  Upon any such payment in full, the Master
Servicer is authorized, and the Servicer is authorized, to give, as agent for
the Indenture 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 Collection Account.

 

(b)                                 From time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan, the
Indenture Trustee shall execute such documents as shall be prepared and
furnished to the Indenture Trustee by the Master Servicer, or by the Servicer,
as applicable, (in form reasonably acceptable to the Indenture Trustee) and as
are necessary to the prosecution of any such proceedings.  The Indenture Trustee or the Custodian,
shall, upon request of the Master Servicer or of the Servicer, as applicable,
and delivery to the Indenture Trustee or the Custodian, of a trust receipt signed
by a Servicing Officer substantially in the form attached to the Custodial
Agreement, release the related Mortgage File held in its possession or control
to the Master Servicer (or the Servicer, as applicable).  Such trust receipt shall obligate the Master
Servicer or the Servicer, as applicable, to return the Mortgage File to the
Indenture Trustee or the Custodian, as applicable, when the need therefor by
the Master Servicer or the Servicer, as applicable, no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a certificate
of a Servicing Officer similar to that hereinabove specified, the trust receipt
shall be 

 

101

 

released by the Indenture Trustee or the Custodian, as applicable, to
the Master Servicer or the Servicer as applicable.

 

Section 5.15.                             Documents, Records and Funds in
Possession of Master Servicer To Be Held for Indenture Trustee.

 

(a)                                  The Master Servicer shall
transmit, or cause the Servicer to transmit, to the Indenture Trustee 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 to be
delivered to the Indenture Trustee or the 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 the Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan shall be held for the
benefit of the Indenture Trustee and the Noteholders and the Swap Counterparty
subject to the Master Servicer’s right to retain or withdraw amounts provided
in this Agreement and to the right of the Servicer to retain its Servicing
Administration Fee and other amounts as provided herein.  The Master Servicer shall, and shall cause
the Servicer to, provide access to information and documentation regarding the
Mortgage Loans to the Indenture Trustee, their respective agents and accountants
at any time upon reasonable request and during normal business hours, and to
Noteholders 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 or the
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 or by the Servicer for and on
behalf of the Indenture Trustee as the Indenture Trustee’s agent and bailee for
purposes of perfecting the Indenture Trustee’s security interest therein as
provided by relevant Uniform Commercial Code or laws; 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 and shall be authorized to remit such funds to the Indenture Trustee
in accordance with this Agreement.

 

(c)                                  The Master Servicer hereby
acknowledges that concurrently with the execution of this Agreement, the
Indenture Trustee shall own or, to the extent that a court of competent
jurisdiction shall deem the conveyance of the Mortgage Loans from either (1) the
Seller to the Depositor or (2) the Transferor to the Depositor not to
constitute a sale, the Indenture Trustee shall have a security interest in the
Mortgage Loans and in all Mortgage Files representing such Mortgage Loans and
in all funds and investment property now or hereafter held by, or under the
control of, the Servicer or the Master Servicer that are collected by the
Servicer or the Master Servicer in connection with the Mortgage Loans, whether
as scheduled installments of principal and interest or as full or partial
prepayments of principal or interest or as Liquidation Proceeds or 

 

102

 

Insurance Proceeds or otherwise, and in all proceeds of the foregoing
and proceeds of proceeds (but excluding any fee or other amounts to which the
Servicer or the Master Servicer is entitled to hereunder); and the Master
Servicer agrees that so long as the Mortgage Loans are assigned to and held by
the Indenture Trustee or the Custodian, all documents or instruments
constituting part of the Mortgage Files, and such funds relating to the
Mortgage Loans which come into the possession or custody of, or which are
subject to the control of, the Master Servicer or the Servicer shall be held by
the Master Servicer or the Servicer for and on behalf of the Indenture Trustee
as the Indenture Trustee’s agent and bailee for purposes of perfecting the
Indenture Trustee’s security interest therein as provided by the applicable
Uniform Commercial Code or other applicable laws.

 

(d)                                 The Master Servicer agrees that
it shall not, and shall not authorize the Servicer to, create, incur or subject
any Mortgage Loans, or any funds that are deposited in any Custodial Account,
Escrow Account or the Collection Account, or any funds that otherwise are or
may become due or payable to the Indenture Trustee, to any claim, lien,
security interest, judgment, levy, writ of attachment or other encumbrance, nor
assert by legal action or otherwise any claim or right of setoff against any
Mortgage Loan or any funds collected on, or in connection with, a Mortgage
Loan.

 

Section 5.16.                             Opinion.  On or before the Closing Date, the Master
Servicer shall cause to be delivered to the Depositor, the Seller, the
Indenture Trustee, the Issuer, the Trust Administrator, the Swap Counterparty,
the Servicer and the Subservicer one or more Opinions of Counsel, dated the
Closing Date, in form and substance reasonably satisfactory to the Depositor
and a representative of the Underwriters, as to the due authorization,
execution and delivery of this Agreement by the Master Servicer and the
enforceability thereof.

 

Section 5.17.                             [Reserved].

 

Section 5.18.                             [Reserved].

 

Section 5.19.                             [Reserved].

 

Section 5.20.                             Indenture Trustee To Retain
Possession of Certain Insurance Policies and Documents.  The Indenture Trustee (or the Custodian on
behalf of the Indenture Trustee) shall retain possession and custody of the
originals of the 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 payable in respect of the
Notes have been paid in full and the Master Servicer otherwise has fulfilled
its obligations under this Agreement, the Indenture Trustee (or the Custodian)
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 the Servicer to deliver to the Indenture Trustee (or the Custodian), upon
the execution or receipt thereof the originals of the primary mortgage insurance
policies and any certificates of renewal thereof, and such other documents or
instruments that constitute portions of the Mortgage File that come into the
possession of the Master Servicer or the Servicer or Subservicer from time to
time.

 

103

 

Section 5.21.                             Compensation to the Master
Servicer.  As compensation for its services hereunder,
the Master Servicer shall be entitled to retain all income and gain realized
from any investment of funds in the Collection Account  pursuant to Section 5.07(e) and the
Master Servicing Fee (together, the “Master Servicing Compensation”).  Notwithstanding the foregoing, the Master
Servicer shall deposit in the Collection Account, on or before the related
Payment Date, an amount equal to the lesser of (i) its master servicing
compensation with respect to such Payment Date and (ii) the amount of any
Compensating Interest Payment required to be paid by the Servicer with respect
to such Payment Date pursuant to this Agreement, but which is not paid by the
Servicer or by the Subservicer on its behalf. 
The Master Servicer shall be required to pay all expenses incurred by it
in connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as provided in this Agreement.

 

Section 5.22.                             [Reserved].

 

Section 5.23.                             Reports to the Indenture Trustee.

 

(a)                                  Not later than 30 days after
each Payment Date, the Trust Administrator shall, upon request, forward to the
Indenture Trustee a statement, deemed to have been certified by a officer of the
Trust Administrator, setting forth the status of the Collection Account
maintained by the Trust Administrator as of the close of business on the
related Payment Date, indicating that all payments required by this Agreement
to be made by the Trust Administrator have been made (or if any required
payment has not been made by the Trust Administrator, specifying the nature and
status thereof) and showing, for the period covered by such statement, the
aggregate of deposits into and withdrawals from the Collection Account
maintained by the Trust Administrator. 
Copies of such statement shall be provided by the Trust Administrator,
upon request, to the Depositor, Attention: 
Contract Finance and any Noteholders (or by the Indenture Trustee at the
Trust Administrator’s expense if the Trust Administrator shall fail to provide
such copies to the Noteholders, unless (i) the Trust Administrator shall
have failed to provide the Indenture Trustee with such statement or (ii) the
Indenture Trustee shall be unaware of the Trust Administrator’s failure to
provide such statement).

 

(b)                                 Not later than two Business Days
following each Payment Date, the Trust Administrator shall deliver to one
Person designated by the Depositor, in a format consistent with other
electronic loan level reporting supplied by the Master Servicer in connection
with similar transactions, “loan level” information with respect to the
Mortgage Loans as of the related Determination Date, to the extent that such
information has been provided to the Master Servicer by the Servicer or
Subservicer or by the Depositor.

 

(c)                                  All information, reports and
statements prepared by the Master Servicer under this Agreement shall be based
on information supplied to the Master Servicer by the Servicer without
independent verification thereof and the Master Servicer shall be entitled to
rely on such information.

 

Section 5.24.                             Annual Officer’s Certificate as
to Compliance.

 

(a)                                  The Master Servicer shall
deliver to the Indenture Trustee no later than five Business Days after the
15th of March of each calendar year, commencing in March 2006, an 

 

104

 

Officer’s Certificate, certifying that with respect to the period
ending on the immediately preceding December 31:  (i) such Servicing Officer has reviewed
the activities of such Master Servicer during the preceding calendar year or
portion thereof and its performance under this Agreement, (ii) to the best
of such Servicing Officer’s knowledge, based on such review, such Master Servicer
has performed and fulfilled its duties, responsibilities and obligations under
this Agreement in all material respects throughout such year, or, if there has
been a default in the fulfillment of any such duties, responsibilities or
obligations, specifying each such default known to such Servicing Officer and
the nature and status thereof, (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 set forth in Article IV hereunder 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, and (iv) the Master Servicer has received from the
Servicer an annual certificate of compliance and a copy of such Servicer’s or
Subservicer’s annual audit report, or, if any such certificate or report has
not been received by the Master Servicer, the Master Servicer is using its best
reasonable efforts to obtain such certificate or report.

 

(b)                                 Copies of such statements shall
be provided to any Noteholder upon request, by the Master Servicer or by the
Indenture 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 Indenture Trustee with such statement or (ii) the
Indenture Trustee shall be unaware of the Master Servicer’s failure to provide
such statement).

 

Section 5.25.                             Annual Independent Accountants’
Servicing Report.  If the Master Servicer (or any of its
Affiliates) has, during the course of any fiscal year, directly serviced, as a
successor Servicer, 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 Indenture Trustee and the
Depositor no later than five Business Days after the fifteenth of March of
each calendar year, commencing in March 2006 to the effect that, with
respect to the most recently ended calendar year, such firm has examined
certain records and documents relating to the Master Servicer’s performance of
its servicing obligations under this Agreement and pooling and servicing and
trust agreements in material respects similar to this Agreement and to each
other and that, on the basis of such examination conducted substantially in compliance
with the audit program for mortgages serviced for FHLMC 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 FHLMC requires
it to report.  Copies of such statements
shall be provided to any Noteholder upon request by the Master Servicer, or by
the Indenture 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 Indenture Trustee whether such exceptions have been
or are susceptible of cure, and will take prompt action to do so.

 

105

 

Section 5.26.                             Merger or Consolidation.  Any Person into which the Master Servicer may
be merged or consolidated, or any Person resulting from any merger, conversion,
other change in form or consolidation to which the Master Servicer shall be a
party, or any Person succeeding to the business of the Master Servicer, shall
be the successor to the Master Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that the successor or
resulting Person to the Master Servicer shall be a Person that shall be
qualified and approved (or that have an Affiliate that is qualified and
approved) to service mortgage loans for Fannie Mae or FHLMC and shall have a
net worth of not less than $15,000,000.

 

Section 5.27.                             Resignation of Master Servicer.  Except as otherwise provided in Sections 5.26
and this Section 5.27 hereof, the Master Servicer shall not resign from
the obligations and duties hereby imposed on it unless it or the Indenture
Trustee determines that the Master Servicer’s duties hereunder are no longer
permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it and cannot be
cured.  Any such determination permitting
the resignation of the Master Servicer shall be evidenced by an Opinion of
Counsel that shall be Independent to such effect delivered to the Indenture
Trustee.  No such resignation shall
become effective until the Indenture Trustee shall have assumed, or a successor
master servicer shall have been appointed by the Indenture Trustee and until
such successor shall have assumed, the Master Servicer’s responsibilities and
obligations under this Agreement.  Notice
of such resignation shall be given promptly by the Master Servicer and the
Depositor to the Indenture Trustee.

 

Section 5.28.                             Assignment or Delegation of Duties
by the Master Servicer.  Except as expressly provided herein, the
Master Servicer shall not assign or transfer any of its rights, benefits or
privileges hereunder to any other Person, or delegate to or subcontract with,
or authorize or appoint any other Person to perform any of the duties,
covenants or obligations to be performed by the Master Servicer hereunder,
unless the Indenture Trustee and the Depositor shall have consented to such
action; provided, however, that
the Master Servicer shall have the right without the prior written consent of
the Indenture Trustee or the Depositor to delegate or assign to or subcontract
with or authorize or appoint an Affiliate of the Master Servicer to perform and
carry out any duties, covenants or obligations to be performed and carried out
by the Master Servicer hereunder.  In no
case, however, shall any such delegation, subcontracting or assignment to an
Affiliate of the Master Servicer relieve the Master Servicer of any liability
hereunder.  Notice of such permitted
assignment shall be given promptly by the Master Servicer to the Depositor and
the Indenture Trustee.  If, pursuant to
any provision hereof, the duties of the Master Servicer are transferred to a
successor master servicer, the entire amount of compensation payable to the
Master Servicer pursuant hereto, including amounts payable to or permitted to
be retained or withdrawn by the Master Servicer pursuant to Section 5.21
hereof, shall thereafter be payable to such successor master servicer.

 

Section 5.29.                             Limitation on Liability of the
Master Servicer and Others.

 

(a)                                  The Master Servicer undertakes
to perform such duties and only such duties as are specifically set forth in
this Agreement.

 

106

 

(b)                                 No provision of this Agreement
shall be construed to relieve the Master Servicer from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that the duties and
obligations of the Master Servicer shall be determined solely by the express
provisions of this Agreement, the Master Servicer shall not be liable except
for the performance of such duties and obligations as are specifically set
forth in this Agreement; no implied covenants or obligations shall be read into
this Agreement against the Master Servicer and, in absence of bad faith on the
part of the Master Servicer, the Master Servicer may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Master Servicer and
conforming to the requirements of this Agreement.

 

(c)                                  Neither the Master Servicer nor
any of the directors, officers, employees or agents of the Master Servicer
shall be under any liability to the Indenture Trustee or the Noteholders for
any action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Master Servicer
or any such person against any liability that would otherwise be imposed by
reason of willful misfeasance, fraud, bad faith or negligence in its
performance of its duties or by reason of reckless disregard for its
obligations and duties under this Agreement. 
The Master Servicer and any director, officer, employee or agent of the
Master Servicer shall be entitled to indemnification by the Trust Estate and
will be held harmless against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Notes other
than any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance of his or its duties hereunder or by
reason of reckless disregard of his or its obligations and duties
hereunder.  The Master Servicer and any
director, officer, employee or agent of the Master Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted
by any Person respecting any matters arising hereunder.  The Master Servicer shall be under no
obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties to master service the Mortgage Loans in accordance
with this Agreement and that in its opinion may involve it in any expenses or
liability; provided, however, that the Master
Servicer may in its sole discretion undertake any such action that it may deem
necessary or desirable in respect to this Agreement and the rights and duties
of the parties hereto and the interests of the Noteholders hereunder.  In such event, the legal expenses and costs
of such action and any liability resulting therefrom shall be expenses, costs
and liabilities of the Issuer and the Master Servicer shall be entitled to be
reimbursed therefor out of the Collection Account it maintains as provided by Section 5.08.

 

Section 5.30.                             Indemnification; Third-Party
Claims.  The Master Servicer agrees to indemnify the
Depositor, the Issuer and the Indenture Trustee, the Owner Trustee, the Swap
Counterparty,  the Servicer and the
Subservicer and hold them harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, liability, fees and expenses that the Depositor, the Issuer, the
Indenture Trustee, the Owner Trustee, the Swap Counterparty, the Servicer or
Subservicer may sustain as a result of the failure of the Master Servicer to
perform its duties and master service the Mortgage Loans in compliance with the
terms of this Agreement.  The Depositor,
the Issuer, the Indenture Trustee, the Owner Trustee, the Servicer and the
Subservicer shall immediately notify the Master Servicer if a claim is made by
a third party with respect to this Agreement, the Mortgage Loans entitling the
Depositor, the Issuer, the Indenture Trustee, the Owner Trustee, the Servicer
or Subservicer 

 

107

 

to indemnification under this Section 5.30, whereupon the Master
Servicer shall assume the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or them in
respect of such claim.

 

Section 5.31.                             Alternative Index.  In the event that the Index for any Mortgage
Loan, as specified in the related Mortgage Note, becomes unavailable for any
reason, the Master Servicer shall select an alternative index in accordance
with the terms of such Mortgage Note or, if such Mortgage Note does not make
provision for the selection of an alternative index in such event, the Master
Servicer shall, subject to applicable law, select an alternative index based on
information comparable to that used in connection with the original Index and,
in either case, such alternative index shall thereafter be the Index for such
Mortgage Loan.

 

Section 5.32.                             Transfer of Servicing.  The Seller agrees that it shall provide
written notice to the Master Servicer and the Indenture Trustee and the Swap
Counterparty thirty days prior to any proposed transfer or assignment by the
Seller of the servicing of the Mortgage Loans other than transfer or assignment
to the Subservicer.  In addition, the
ability of the Seller to transfer or assign the servicing hereunder to a
successor servicer shall be subject to the following conditions:

 

(i)                                     receipt
of written consent of the Master Servicer and Indenture Trustee to such
transfer;

 

(ii)                                  Such
successor servicer must be qualified to service loans for FNMA or FHLMC, and
must be a member in good standing of MERS;

 

(iii)                               Such
successor servicer must satisfy the servicer eligibility standards set forth in
Section 4.06(d);

 

(iv)                              Such
successor servicer must execute and deliver to the Indenture Trustee an
agreement, in form and substance reasonably satisfactory to the Indenture
Trustee, that contains an assumption by such successor servicer of the due and
punctual performance and observance of each covenant and condition to be
performed and observed by the Servicer;

 

(v)                                 If
the successor servicer is not a Servicer of Mortgage Loans at the time of the
transfer, there must be delivered to the Indenture Trustee a letter from each
Rating Agency to the effect that such transfer of servicing will not result in
a qualification, withdrawal or downgrade of the then-current rating of any of
the Notes; and

 

(vi)                              The
Seller shall, at its cost and expense, take such steps, or cause the terminated
Servicer to take such steps, as may be necessary or appropriate to effectuate
and evidence the transfer of the servicing of the Mortgage Loans to such
successor servicer, including, but not limited to, the following:  (A) to the extent required by the terms
of the Mortgage Loans and by applicable federal and state laws and regulations,
the Seller shall cause the prior Servicer to timely mail to each obligor under
a Mortgage Loan any required notices or disclosures describing the transfer of
servicing of the Mortgage Loans to the successor servicer; (B) prior to
the effective date of such transfer of servicing, the Seller shall cause the
prior Servicer to transmit to any related insurer notification of such transfer
of servicing; (C) on or 

 

108

 

prior to the effective date of
such transfer of servicing, the Seller shall cause the prior Servicer to
deliver to the successor servicer all Mortgage Loan Documents and any related
records or materials; (D) on or prior to the effective date of such
transfer of servicing, the Seller shall cause the prior Servicer to transfer to
the successor servicer, or, if such transfer occurs after a Servicer Remittance
Date but before the next succeeding Payment Date, to the Indenture Trustee, all
funds held by the prior Servicer in respect of the Mortgage Loans; (E) on
or prior to the effective date of such transfer of servicing, the Seller shall
cause the prior Servicer to, after the effective date of the transfer of
servicing to the successor servicer, continue to forward to such successor
servicer, within one Business Day of receipt, the amount of any payments or
other recoveries received by the prior Servicer, and to notify the successor
servicer of the source and proper application of each such payment or recovery;
and (F) the Seller shall cause the prior Servicer to, after the effective
date of transfer of servicing to the successor servicer, continue to cooperate
with the successor servicer to facilitate such transfer in such manner and to
such extent as the successor servicer may reasonably request.  Notwithstanding the foregoing, the prior
Servicer shall be obligated to perform the items listed above to the extent
provided in the applicable Servicing Agreement.

 

ARTICLE VI

DEPOSITS AND PAYMENTS TO HOLDERS

 

Section 6.01.                             The Collection Account.

 

(a)                                  The Trust Administrator shall establish
and maintain in the name of the Securities Intermediary the Collection Account
as provided in Section 5.07, which account shall be pledged to the
Indenture Trustee for the benefit of the Noteholders and the Swap Counterparty.

 

(b)                                 The Trust Administrator shall
make withdrawals from the Collection Account only for the purposes set forth in
Section 5.08.

 

Section 6.02.                             Payments from the Collection
Account.

 

(a)                                  On each Payment Date, the
Indenture Trustee (or the Paying Agent on behalf of the Indenture Trustee)
shall withdraw from the Collection Account the Total Remittance Amount (to the
extent such amount is on deposit in the Collection Account) and shall pay such
amount as specified in this Section.  All
allocations and payments made between and with respect to Group 1 and Group 2
in this Section shall be made concurrently.

 

(b)                                 On each Payment Date, the
Indenture Trustee (or the Paying Agent on behalf of the Indenture Trustee)
shall pay the Interest Funds for Group 1 for such date in the following order
of priority in accordance with the report of the Trust Administrator:

 

(i)                                     to
the Swap Counterparty, to the extent not previously paid from the Collection
Account, the Group 1 Percentage of any Net Swap Payment for such Payment Date
and swap termination amounts payable to the Swap Counterparty in the event that
the Trust is a defaulting party or an affected party under the terms of the
Swap Agreement;

 

109

 

(ii)                                  pro rata, to the Class 1-A1 Notes, the Class 1-A2
Notes and the A-IO(1) Component, Current Interest thereon for such Payment
Date;

 

(iii)                               pro rata, to the Class 2-A1 Notes, the Class 2-A2
Notes, the Class 2-A3 Notes and the A-IO(2) Component, Current
Interest thereon (after giving effect to the payment of the Interest Funds for
Group 2) for such Payment Date;

 

(iv)                              to
the Class M1 Notes, Current Interest for such Class for such Payment
Date;

 

(v)                                 to
the Class M2 Notes, Current Interest for such Class for such Payment
Date;

 

(vi)                              to
the Class M3 Notes, Current Interest for such Class for such Payment
Date;

 

(vii)                           to the Class M4
Notes, Current Interest for such Class for such Payment Date;

 

(viii)                        to the Class M5
Notes, Current Interest for such Class for such Payment Date;

 

(ix)                                to
the Class M6 Notes, Current Interest for such Class for such Payment
Date;

 

(x)                                   to
the Class M7 Notes, Current Interest for such Class for such Payment
Date;

 

(xi)                                to
the Class M8 Notes, Current Interest for such Class for such Payment
Date;

 

(xii)                             to
the Class M9 Notes, Current Interest for such Class for such Payment
Date;

 

(xiii)                          to the Class M10
Notes, Current Interest for such Class for such Payment Date;

 

(xiv)                         to the
Indenture Trustee, the Owner Trustee, the Master Servicer, the Trust
Administrator, the Servicer and the Subservicer, previously unreimbursed
extraordinary costs, liabilities and expenses to the extent provided in this
Agreement; and

 

(xv)                            for
application as part of Monthly Excess Cashflow for such Payment Date, as
provided in subsection (e) of this Section, any Group 1 Monthly
Excess Interest for such Payment Date.

 

(c)                                  On each Payment Date, the
Indenture Trustee (or the Paying Agent on behalf of the Indenture Trustee)
shall pay the Interest Funds for Group 2 for such date in the following order
of priority in accordance with the report of the Trust Administrator:

 

110

 

(i)                                     to
the Swap Counterparty, to the extent not previously paid from the Collection
Account, the Group 2 Percentage of any Net Swap Payment for such Payment Date
and swap termination amounts payable to the Swap Counterparty in the event that
the Trust is a defaulting party or an affected party under the terms of the
Swap Agreement;

 

(ii)                                  pro rata, to Class 2-A1 Notes, Class 2-A2 Notes, Class 2-A3
Notes and the A-IO(2) Component, Current Interest thereon for such Payment
Date;

 

(iii)                               pro rata, to the Class 1-A1 Notes, Class 1-A2
Notes and the A-IO(1) Component, Current Interest thereon (after giving
effect to the payment of the Interest Funds for Group 1) for such Payment Date;

 

(iv)                              to
the Class M1 Notes, Current Interest for such Class for such Payment
Date;

 

(v)                                 to
the Class M2 Notes, Current Interest for such Class for such Payment
Date;

 

(vi)                              to
the Class M3 Notes, Current Interest for such Class for such Payment
Date;

 

(vii)                           to the Class M4
Notes, Current Interest for such Class for such Payment Date;

 

(viii)                        to the Class M5
Notes, Current Interest for such Class for such Payment Date;

 

(ix)                                to
the Class M6 Notes, Current Interest for such Class for such Payment
Date;

 

(x)                                   to
the Class M7 Notes, Current Interest for such Class for such Payment
Date;

 

(xi)                                to
the Class M8 Notes, Current Interest for such Class for such Payment
Date;

 

(xii)                             to
the Class M9 Notes, Current Interest for such Class for such Payment
Date;

 

(xiii)                          to the Class M10
Notes, Current Interest for such Class for such Payment Date;

 

(xiv)                         to the
Indenture Trustee, the Owner Trustee, the Master Servicer, the Trust
Administrator, the Servicer and the Subservicer, previously unreimbursed
extraordinary costs, liabilities and expenses to the extent provided in this
Agreement; and

 

111

 

(xv)                            for
application as part of Monthly Excess Cashflow for such Payment Date, as
provided in subsection (e) of this Section, any Group 2 Monthly
Excess Interest for such Payment Date.

 

(d)                                 On each Payment Date, the
Indenture Trustee (or the Paying Agent on behalf of the Indenture Trustee)
shall pay the Principal Funds for such date in accordance with the report of
the Trust Administrator as follows:

 

(i)                                     On
each Payment Date (a) prior to the Stepdown Date or (b) with respect
to which a Trigger Event is in effect, the Indenture Trustee (or the Paying
Agent on behalf of the Indenture Trustee) shall make the following payments to
the extent of funds then in the Collection Account available therefor,
concurrently:

 

(1)                                  For Group 1:  The
Principal Payment Amount for Group 1 will be paid in the following order of
priority:

 

(A)                              to the Swap Counterparty,
to the extent not previously paid from the Collection Account, the Group 1
Percentage of swap termination amounts payable to the Swap Counterparty in the
event that the Trust is a defaulting party or an affected party under the terms
of the Swap Agreement;

 

(B)                                if no Trigger Event or Class 1-A2
Trigger Event has occurred and is continuing, pro rata, to
the Class 1-A1 Notes and Class 1 -A2 Notes, until the respective Class Principal
Amount of such Classes has been reduced to zero, or if a Trigger Event or Class 1-A2
Trigger Event has occurred and is continuing, then sequentially, to the Class 1-A1
Notes, until the Class Principal Amount of such Class has been
reduced to zero, and then to the Class 1-A2 Notes, until the Class Principal
Amount of such Class has been reduced to zero;

 

(C)                                sequentially, to the Class 2-A1,
Class 2-A2 and Class 2-A3 Notes, in that order, after giving  effect to payments pursuant to subsection 6.02(d)(i)(2)(B),
until the Class Principal Amount of each such Class has been reduced
to zero;

 

(D)                               to the Class M1
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(E)                                 to the Class M2
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(F)                                 to the Class M3
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(G)                                to the Class M4
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

112

 

(H)                               to the Class M5
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(I)                                    to the Class M6
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(J)                                   to the Class M7
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(K)                               to the Class M8
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(L)                                 to the Class M9
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(M)                            to the Class M10
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(N)                               to the Swap
Counterparty, to the extent not previously paid, the Group 1 Percentage of swap
termination amounts payable to the Swap Counterparty in the event that the Swap
Counterparty is a defaulting party or the sole affected party under the terms
of the Swap Agreement; and

 

(O)                               for application as part
of Monthly Excess Cashflow for such Payment Date, as provided for in subsection (e) of
this Section, any such Principal Payment Amount for Group 1 remaining after application
pursuant to clauses (A) through (N) above.

 

(2)                                  For Group 2:  The
Principal Payment Amount for Group 2 will be paid in the following order of
priority:

 

(A)                              to the Swap Counterparty,
to the extent not previously paid from the Collection Account, the Group 2
Percentage of swap termination amounts payable to the Swap Counterparty in the
event that the Trust is a defaulting party or an affected party under the terms
of the Swap Agreement;

 

(B)                                sequentially, to the Class 2-A1,
Class 2-A2 and Class 2-A3 Notes, until the Class Principal
Amount of each such Class has been reduced to zero;

 

(C)                                if no Trigger Event or Class 1-A2
Trigger Event has occurred and is continuing, pro rata, to
the Class 1-A1 Notes and Class 1-A2 Notes, after giving effect to
payments pursuant to subsection 6.02(d)(i)(1)(B), until the respective Class Principal
Amount of such Classes has been reduced zero, or if a Trigger Event or Class 1-A2
Trigger Event has occurred and is continuing, then sequentially, to the Class 1-A1
and the Class 1-A2 Notes in that order until the Class Principal
Amount of 

 

113

 

each such Class has been reduced to zero, in each case after
giving effect to payments pursuant to subsection 6.02(d)(i)(1)(B);

 

(D)                               to the Class M1
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(E)                                 to the Class M2
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(F)                                 to the Class M3
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(G)                                to the Class M4
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(H)                               to the Class M5
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(I)                                    to the Class M6
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(J)                                   to the Class M7
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(K)                               to the Class M8
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(L)                                 to the Class M9
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(M)                            to the Class M10
Notes, until the Class Principal Amount of such Class has been
reduced to zero;

 

(N)                               to the Swap Counterparty,
to the extent not previously paid, the Group 2 Percentage of swap termination
amounts payable to the Swap Counterparty in the event that the Swap
Counterparty is a defaulting party or the sole affected party under the terms
of the Swap Agreement; and

 

(O)                               for application as part
of Monthly Excess Cashflow for such Payment Date, as provided for in subsection (e) of
this Section, any such Principal Payment Amount for Group 2 remaining after
application pursuant to clauses (A) through (N) above.

 

(ii)                                  On
each Payment Date (a) on or after the Stepdown Date and (b) with
respect to which a Trigger Event is not in effect, the Indenture Trustee (or
the Paying Agent on behalf of the Indenture Trustee) shall pay the Principal
Payment Amount for such date in the following order of priority:

 

114

 

(1)                                  to the Swap
Counterparty, to the extent not previously paid from the Collection Account,
swap termination amounts payable to the Swap Counterparty in the event that the
Trust is a defaulting party or an affected party under the terms of the Swap
Agreement;

 

(2)                                  (a) so long as
any Class M Note is outstanding, pro rata, to
the Class 1-A1 and Class 1-A2 Notes (from amounts in Group 1 except
as provided below) and, sequentially, to the Class 2-A1, Class 2-A2
and Class 2-A3 Notes (from amounts in Group 2 except as provided below),
in that order, in each case, an amount equal to the lesser of (x) the Principal
Payment Amount for the related Mortgage Group for such Payment Date and (y) the
Related Senior Principal Payment Amount for such Mortgage Group for such
Payment Date, in each case until the Class Principal Amount of each such Class or
Classes has been reduced to zero; provided, however,
to the extent that the Principal Payment Amount for a Mortgage Group exceeds
the Related Senior Principal Payment Amount for such Mortgage Group, such
excess shall be applied to the Class or Classes of Senior Principal Notes
of the other Mortgage Group (with respect to the Class 1-A1 and Class 1-A2
Notes, pro rata, and with respect to the Class 2-A1,
Class 2-A2 and Class 2-A3 Notes, sequentially, in that order), but in
an amount not to exceed the Senior Principal Payment Amount for such Payment
Date (as reduced by any payments pursuant to subclauses (x) and (y) of
this Subsection (2)(a) on such Payment Date; or (b) otherwise to
the Senior Principal Notes (with respect to the Class 1-A1 and Class 1-A2
Notes, pro rata, and with respect to the Class 2-A1,
Class 2-A2 and Class 2-A3 Notes, pro rata), the
Principal Payment Amount for the related Mortgage Group for such Payment Date;

 

(3)                                  to the Class M1
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such Payment
Date over (b) the amount paid to the Senior Principal Notes on such
Payment Date pursuant to clause (2) above, and (y) the M1 Principal
Payment Amount for such Payment Date, until the Class Principal Amount of
such Class has been reduced to zero;

 

(4)                                  to the Class M2
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such
Payment Date over (b) the amount paid to the Senior Principal Notes and
the Class M1 Notes on such Payment Date pursuant to clauses (2) and (3) above,
respectively, and (y) the M2 Principal Payment Amount for such Payment Date,
until the Class Principal Amount of such Class has been reduced to
zero;

 

(5)                                  to the Class M3
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such
Payment Date over (b) the amount paid to the Senior Principal Notes and
the Class M1 and Class M2 Notes on such Payment Date pursuant to clauses
(2), (3) and (4) above, respectively, and (y) the M3 Principal
Payment 

 

115

 

Amount for such Payment Date, until the Class Principal Amount of
such Class has been reduced to zero;

 

(6)                                  to the Class M4
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such
Payment Date over (b) the amount paid to the Senior Principal Notes and
the Class M1, Class M2 and Class M3 Notes on such Payment Date
pursuant to clauses (2), (3), (4) and (5) above, respectively, and (y) the M4 Principal Payment
Amount for such Payment Date, until the Class Principal Amount of each
such Class has been reduced to zero;

 

(7)                                  to the Class M5
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such
Payment Date over (b) the amount paid to the Senior Principal Notes and
the Class M1, Class M2, Class M3 and Class M4 Notes on such
Payment Date pursuant to clauses (2), (3), (4), (5) and (6) above, respectively, and (y) the M5
Principal Payment Amount for such Payment Date, until the Class Principal
Amount of each such Class has been reduced to zero;

 

(8)                                  to the Class M6
Notes, an amount equal to the lesser of (x) the excess of(a) the aggregate
Principal Payment Amounts for each of Group 1 and Group 2 for such Payment Date
over (b) the amount paid to the Senior Principal Notes and the Class M1,
Class M2, Class M3, Class M4 and Class M5 Notes on such
Payment Date pursuant to clauses (2), (3), (4), (5), (6) and (7) above, respectively, and (y) the M6
Principal Payment Amount for such Payment Date, until the Class Principal
Amount of each such Class has been reduced to zero;

 

(9)                                  to the Class M7
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such
Payment Date over (b) the amount paid to the Senior Principal Notes and
the Class M1, Class M2, Class M3, Class M4, Class M5
and Class M6 Notes on such Payment Date pursuant to clauses (2), (3), (4),
(5), (6), (7) and (8) above,
respectively, and (y) the M7 Principal Payment Amount for such Payment Date,
until the Class Principal Amount of each such Class has been reduced
to zero; and

 

(10)                            to the Class M8 Notes,
an amount equal to the lesser of (x) the excess of (a) the aggregate
Principal Payment Amounts for each of Group 1 and Group 2 for such Payment Date
over (b) the amount paid to the Senior Principal Notes and the Class M1,
Class M2, Class M3, Class M4, Class M5, Class M6 and Class M7
Notes on such Payment Date pursuant to clauses (2), (3), (4), (5), (6), (7), (8) and
(9) above, respectively, and (y) the M8 Principal Payment Amount for such
Payment Date, until the Class Principal Amount of each such Class has
been reduced to zero; and

 

(11)                            to the Class M9 Notes,
an amount equal to the lesser of (x) the excess of (a) the aggregate
Principal Payment Amounts for each of Group 1 and 

 

116

 

Group 2 for such Payment Date over (b) the amount paid to the
Senior Principal Notes and the Class M1, Class M2, Class M3, Class M4,
Class M5, Class M6, Class M7 and Class M8 Notes on such
Payment Date pursuant to clauses (2), (3), (4), (5), (6), (7), (8), (9) and
(10) above, respectively, and (y) the M9 Principal Payment Amount for such
Payment Date, until the Class Principal Amount of each such Class has
been reduced to zero; and

 

(12)                            to the Class M10
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such
Payment Date over (b) the amount paid to the Senior Principal Notes and
the Class M1, Class M2, Class M3, Class M4, Class M5, Class M6,
Class M7, Class M8 and Class M9 Notes on such Payment Date
pursuant to clauses (2), (3), (4), (5), (6), (7), (8), (9), (10) and (11)
above, respectively, and (y) the M10 Principal Payment Amount for such Payment
Date, until the Class Principal Amount of each such Class has been
reduced to zero; and

 

(13)                            to the Swap Counterparty,
to the extent not previously paid, swap termination amounts payable to the Swap
Counterparty in the event that the Swap Counterparty is a defaulting party or
the sole affected party under the terms of the Swap Agreement; and

 

(14)                            for application as part of
Monthly Excess Cashflow for such Payment Date, as provided in subsection (e) of
this Section, any Principal Payment Amount remaining after application pursuant
to clauses (1) through (13) above.

 

(e)                                  On each Payment Date, the
Indenture Trustee (or the Paying Agent on behalf of the Indenture Trustee)
shall pay the Monthly Excess Cashflow for such date in accordance with the
report of the Trust Administrator as follows:

 

(i)                                     for
each Payment Date occurring (a) before the Stepdown Date or (b) on or
after the Stepdown Date but for which a Trigger Event is in effect:

 

(a)                                  up
to the Overcollateralization Deficiency Amount for such Payment Date, in the
following order of priority:

 

i.                                          concurrently,
in proportion to the aggregate Class Principal Amounts of each Class of
Senior Principal Notes, after giving effect to previous principal payments on
such Payment Date pursuant to subsections 6.02(d)(i)(1) and 6.02(d)(i)(2),
to the Class 1-A1, Class 1-A2, Class 2-A1, Class 2-A2  and Class 2-A3 Notes (paid in accordance
with the applicable Senior Priorities), until the Class Principal Amount
of each such Class has been reduced to zero;

 

ii.                                       to
the Class M1 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such Class has been reduced to
zero;

 

117

 

iii.                                    to
the Class M2 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such Class has been reduced to
zero;

 

iv.                                   to
the Class M3 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such Class has been reduced to
zero;

 

v.                                      to
the Class M4 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such Class has been reduced to
zero;

 

vi.                                   to
the Class M5 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such Class has been reduced to
zero;

 

vii.                                to
the Class M6 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such Class has been reduced to
zero; and

 

viii.                             to
the Class M7 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such Class has been reduced to
zero;

 

ix.                                     to
the Class M8 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such Class has been reduced to
zero;

 

x.                                        to
the Class M9 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such Class has been reduced to
zero;

 

xi.                                     to
the Class M10 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such Class has been reduced to
zero;

 

(b)                                 to
the extent of any Available Funds Shortfall, to the payment of such amounts to
the Notes (other than the Class A-IO Notes), in the order of priority of
the Classes of Notes as set forth immediately above in proportion  and with respect to the Senior Principal
Notes to their amount of unpaid Available Funds Shortfalls, until each such Class has
received in full all amounts of any Available Funds Shortfall.

 

(c)                                  to
the Swap Counterparty, to the extent not previously paid, swap termination
amounts payable to the Swap Counterparty in the event that the Swap Counterparty
is a defaulting party or the sole affected party under the terms of the Swap
Agreement;

 

118

 

(d)                                 sequentially,
to the Class M1 Notes, the Class M2 Notes, the Class M3 Notes,
the Class M4 Notes, the Class M5 Notes, the Class M6 Notes, the Class M7
Notes, the Class  M8 Notes, the Class M9 Notes and the Class M10
Notes, in that order, Deferred Interest, if any, for such Class, until each
such Class has received in full its Deferred Interest; and

 

(e)                                  to
the Ownership Certificate, any amount remaining on such date after application
pursuant to clauses (a) through (d) above; or

 

(ii)                                  for
each Payment Date occurring on or after the Stepdown Date and for which a
Trigger Event is not in effect, the Indenture Trustee (or the Paying Agent on
behalf of the Indenture Trustee) shall pay, in accordance with the report of
the Trust Administrator, in the following order of priority:

 

(a)                                  concurrently,
in proportion to the aggregate Class Principal Amounts of each Class of
Senior Principal Notes, after giving effect to previous principal payments on
such Payment Date pursuant to subsections 6.02(d)(ii)(1) and
6.02(d)(ii)(2), to the Class 1-A1, Class 1-A2, Class 2-A1, Class 2-A2
and Class 2-A3 Notes (paid in accordance with the applicable Senior
Priorities), until the aggregate Class Principal Amount of each such
Class, after giving effect to payments on such Payment Date, equals the Senior
Target Amount;

 

(b)                                 to
the Class M1 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-A1, Class 1-A2,
Class 2-A1, Class 2-A2, Class 2-A3 and Class M1 Notes,
after giving effect to payments on such Payment Date, equals the M1 Target
Amount;

 

(c)                                  to
the Class M2 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-A1, Class 1-A2,
Class 2-A1, Class 2-A2, Class 2-A3, Class M1 and Class M2
Notes, after giving effect to payments on such Payment Date, equals the M2
Target Amount;

 

(d)                                 to
the Class M3 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-A1, Class 1-A2,
Class 2-A1, Class 2-A2, Class 2-A3, Class M1, Class M2
and Class M3 Notes, after giving effect to payments on such Payment Date,
equals the M3 Target Amount;

 

(e)                                  to
the Class M4 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-A1, Class 1-A2,
Class 2-A1, Class 2-A2, Class 2-A3, Class M1, Class M2,
Class M3 and Class M4 Notes, after giving effect to payments on such
Payment Date, equals the M4 Target Amount;

 

(f)                                    to
the Class M5 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-A1, Class 1-A2,
Class 2-A1, Class 2-A2, Class 2-A3, Class M1, Class M2,
Class M3, 

 

119

 

Class M4 and Class M5 Notes, after
giving effect to payments on such Payment Date, equals the M5 Target Amount;

 

(g)                                 to
the Class M6 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-A1, Class 1
-A2, Class 2-A1, Class 2-A2, Class 2-A3, Class M1, Class M2,
Class M3, Class M4, Class M5 and Class M6 Notes, after
giving effect to payments on such Payment Date, equals the M6 Target Amount;

 

(h)                                 to
the Class M7 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-A1, Class 1-A2,
Class 2-A1, Class 2-A2, Class 2-A3,Class M1, Class M2,
Class M3, Class M4, Class M5, Class M6 and Class M7
Notes, after giving effect to payments on such Payment Date, equals the M6
Target Amount;

 

(i)                                     to
the Class M8 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Senior Principal Notes
and the Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6, Class M7 and Class M8 Notes, after giving effect to
payments on such Payment Date, equals the M8 Target Amount;

 

(j)                                     to
the Class M9 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Senior Principal Notes
and the Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6, Class M7, Class M8 and Class M9 Notes, after
giving effect to payments on such Payment Date, equals the M9 Target Amount;

 

(k)                                  to
the Class M10 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Senior Principal Notes
and the Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6, Class M7, Class M8, Class M9 and Class M10
Notes, after giving effect to payments on such Payment Date, equals the M10
Target Amount;

 

(l) to the
extent of any Available Funds Shortfall, to the payment of such amounts to the
Notes (other than the Class A-IO Notes), in the order of priority of the
Classes of Notes as set forth immediately above, and with respect to the Senior
Principal Notes, in proportion to their amount of unpaid Available Funds
Shortfalls, until each such Class has received in full all amounts of any
Available Funds Shortfall;

 

(m)                               to
the Swap Counterparty, to the extent not previously paid, swap termination
amounts payable to the Swap Counterparty in the event that the Swap
Counterparty is a defaulting party or the sole affected party under the terms
of the Swap Agreement under the Swap Agreement;

 

(n)                                 sequentially,
to the Class M1 Notes, the Class M2 Notes, the Class M3 Notes,
the Class M4 Notes, the Class M5 Notes, the Class M6 Notes, the Class M7
Notes, the Class M8 Notes, the Class M9 Notes and the Class M10

 

120

 

Notes, in that order, Deferred Interest, if
any, for such Class, until each such Class has received in full its
Deferred Interest; and

 

(o)                                 to
the Ownership Certificate, any amount remaining on such date after application
pursuant to clauses (a) through (n) above.

 

On the
Redemption Date, the Indenture Trustee (or the Paying Agent on behalf of the
Indenture Trustee) shall distribute to each Class of Notes the related
Redemption Price therefor, as set forth in the Indenture.

 

Section 6.03.                             Net Swap Payments and Net Swap
Receipts.

 

(a)                                  On any Payment Date for which
the Trust Administrator receives a Net Swap Receipt, the Indenture Trustee (or
the Paying Agent on behalf of the Indenture Trustee) shall deposit such amounts
in the Basis Risk Reserve Account, and from the Basis Risk Reserve Account,
apply the Group 1 Percentage of such Net Swap Receipt to pay any Available Funds Shortfalls, on the Notes and in the order
and priority described in Section 6.02(e)(i)(b) or (e)(ii)(l), as
applicable, but only after giving effect to Monthly Excess Cashflow available
on such Payment Date.  On any Payment
Date, the Group 1 Percentage of such Net Swap Receipt that are not applied to
the payment of Available Funds Shortfalls in the manner described in the
preceding sentence shall be distributed from the Basis Risk Reserve Account by
the Indenture Trustee (or the Paying Agent on behalf of the Indenture Trustee)
to the holder of the Ownership Certificate.

 

(b)                                 On any Payment Date for which
the Trust Administrator receives a Net Swap Receipt, the Indenture Trustee (or
the Paying Agent on behalf of the Indenture Trustee) shall deposit such amounts
in the Basis Risk Reserve Account, and from the Basis Risk Reserve Account,
apply the Group 2 Percentage of such Net Swap Receipt to pay any Available Funds Shortfalls, on the Notes and in the order
and priority described in Section 6.02(e)(i)(b) or (e)(ii)(l), as
applicable,  but only after giving effect
to Monthly Excess Cashflow available on such Payment Date.  On any Payment Date, the Group 2 Percentage
of such Net Swap Receipt that are not applied to the payment of Available Funds
Shortfalls in the manner described in the preceding sentence shall be distributed
from the Basis Risk Reserve Account by the Indenture Trustee (or the Paying
Agent on behalf of the Indenture Trustee) to the holder of the Ownership
Certificate.

 

Section 6.04.                             Control of the Trust Account and
Deferred Interest.

 

(a)                                  The Depositor, the Issuer and
the Indenture Trustee hereby appoint  the
Trust Administrator as Securities Intermediary with respect to the Trust
Account, and the Issuer has, pursuant to the Indenture, granted to the
Indenture Trustee, for the benefit of the Noteholders and the Swap
Counterparty, a security interest to secure all amounts due Noteholders and the
Swap Counterparty hereunder in and to the Trust Account and the Security
Entitlements to all Financial Assets credited to the Trust Account, including
without limitation all amounts, securities, investments, Financial Assets,
investment property and other property from time to time deposited in or
credited to the Trust Account and all proceeds thereof.  Amounts held from time to time in the Trust
Account will continue to be held by the Securities Intermediary for the 

 

121

 

benefit of the Indenture Trustee, as collateral agent, for the benefit
of the Noteholders and the Swap Counterparty. 
Upon the termination of the Issuer or the discharge of the Indenture,
the Indenture Trustee shall inform the Securities Intermediary and the Swap
Counterparty of such termination.  By
acceptance of their Notes or interests therein, the Noteholders shall be deemed
to have appointed the Trust Administrator as Securities Intermediary.  The Trust Administrator hereby accepts such
appointment as Securities Intermediary.

 

(b)                                 With respect to the Trust
Account Property credited to the Trust Account, the Securities Intermediary
agrees that:

 

(i)                                     with
respect to any Trust Account Property that is held in deposit accounts, each
such deposit account shall be subject to the exclusive custody and control of
the Securities Intermediary, and the Securities Intermediary shall have sole
signature authority with respect thereto;

 

(ii)                                  the
sole assets permitted in the Trust Account shall be those as the Securities
Intermediary agrees to treat as Financial Assets; and

 

(iii)                               any
such Trust Account Property that is, or is treated as, a Financial Asset shall
be physically delivered (accompanied by any required endorsements) to, or
credited to an account in the name of, the Securities Intermediary or other
eligible institution maintaining the Trust Account in accordance with the
Securities Intermediary’s customary procedures such that the Securities
Intermediary or such other institution establishes a Security Entitlement in
favor of the Indenture Trustee with respect thereto over which the Securities
Intermediary or such other institution has Control;

 

(c)                                  The Securities Intermediary
hereby confirms that (A) the Trust Account is an account to which
Financial Assets are or may be credited, and the Securities Intermediary shall,
subject to the terms of this Agreement, treat the Indenture Trustee, as
collateral agent, as entitled to exercise the rights that comprise any
Financial Asset credited to the Trust Account, (B) all Trust Account
Property in respect of the Trust Account will be promptly credited by the
Securities Intermediary to such account, and (C) all securities or other
property underlying any Financial Assets credited to the Trust Account shall be
registered in the name of the Securities Intermediary, endorsed to the
Securities Intermediary or in blank or credited to another securities account
maintained in the name of the Securities Intermediary and in no case will any
Financial Asset credited to the Trust Account be registered in the name of the
Depositor or the Issuer, payable to the order of the Depositor or the Issuer or
specially endorsed to the Depositor or the Issuer, except to the extent the
foregoing have been specially endorsed to the Securities Intermediary or in
blank;

 

(d)                                 The Securities Intermediary
hereby agrees that each item of property (whether investment property,
Financial Asset, security, instrument or cash) credited to the Trust Account
shall be treated as a Financial Asset;

 

(e)                                  If at any time the Securities
Intermediary shall receive an Entitlement Order from the Indenture Trustee
directing transfer or redemption of any Financial Asset relating to the Trust
Account, the Securities Intermediary shall comply with such Entitlement Order
without further 

 

122

 

consent by the Depositor, the Issuer or any other Person.  If at any time the Indenture Trustee or the
Trust Administrator notifies the Securities Intermediary in writing that the
Issuer has been terminated or the Indenture discharged in accordance herewith
and with the Trust Agreement or the Indenture, as applicable, and the security
interest granted pursuant to the Indenture has been released, then thereafter
if the Securities Intermediary shall receive any order from the Depositor or
the Issuer directing transfer or redemption of any Financial Asset relating to
the Trust Account, the Securities Intermediary shall comply with such
Entitlement Order without further consent by the Indenture Trustee or any other
Person;

 

(f)                                    In the event that the Securities
Intermediary has or subsequently obtains by agreement, operation of law or
otherwise a security interest in the Trust Account or any Financial Asset
credited thereto, the Securities Intermediary hereby agrees that such security
interest shall be subordinate to the security interest of the Indenture
Trustee.  The Financial Assets credited
to the Trust Account will not be subject to deduction, set-off, banker’s lien,
or any other right in favor of any Person other than the Indenture Trustee
(except that the Securities Intermediary may set-off (i) all amounts due
to it in respect of its customary fees and expenses for the routine maintenance
and operation of the Trust Account and (ii) the face amount of any checks
which have been credited to the Trust Account but are subsequently returned
unpaid because of uncollected or insufficient funds);

 

(g)                                 There are no other agreements
entered into between the Securities Intermediary in such capacity and the
Depositor or the Issuer with respect to the Trust Account.  In the event of any conflict between this
Agreement (or any provision of this Agreement) and any other agreement now
existing or hereafter entered into, the terms of this Agreement shall prevail;

 

(h)                                 The rights and powers granted
under the Indenture and herein to the Indenture Trustee have been granted in
order to perfect its security interest in the Trust Account and the Security
Entitlements to the Financial Assets credited thereto, and are powers coupled
with an interest and will neither be affected by the bankruptcy of the
Depositor or the Issuer nor by the lapse of time.  The obligations of the Securities
Intermediary hereunder shall continue in effect until the security interest of
the Indenture Trustee in the Trust Account, and in such Security Entitlements,
has been terminated pursuant to the terms of this Agreement and the Indenture
Trustee or the Issuer, as applicable, has notified the Securities Intermediary
of such termination in writing; and

 

(i)                                     Notwithstanding anything else
contained herein, the Depositor and the Issuer agree that the Trust Account
will be established only with the Securities Intermediary or another
institution meeting the requirements of this Section, which by acceptance of
its appointment as Securities Intermediary agrees substantially as
follows:  (1) it will comply with
Entitlement Orders related to the Trust Account issued by the Indenture
Trustee, as collateral agent, without further consent by the Depositor or the
Issuer, without further consent by the Depositor; (2) until termination of
the Issuer or discharge of the Indenture, it will not enter into any other
agreement related to such accounts pursuant to which it agrees to comply with
Entitlement Orders of any Person other than the Indenture Trustee, as
collateral agent; and (3) all assets delivered or credited to it in
connection with such account and all investments thereof will be promptly
credited to the applicable account.

 

123

 

 

(j)                                     Notwithstanding the foregoing,
the Issuer shall have the power, revocable by the Indenture Trustee or by the
Owner Trustee with the consent of the Indenture Trustee, to instruct the
Indenture Trustee, the Trust Administrator and the Master Servicer to make
withdrawals and payments from the Trust Account for the purpose of permitting
the Master Servicer, the Trust Administrator or the Owner Trustee to carry out
its respective duties hereunder or permitting the Indenture Trustee to carry
out its duties under the Indenture.

 

(k)                                  Each of the Depositor and the
Issuer agrees to take or cause to be taken such further actions, to execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments (including, without limitation, any financing
statements under the Relevant UCC or this Agreement) as may be necessary to
perfect the interests created by this Section in favor of the Issuer and
the Indenture Trustee and otherwise fully to effectuate the purposes, terms and
conditions of this Section.  The
Depositor shall:

 

(i)                                     promptly
execute, deliver and file any financing statements, amendments, continuation
statements, assignments, certificates and other documents with respect to such
interests and perform all such other acts as may be necessary in order to
perfect or to maintain the perfection of the Issuer’s and the Indenture Trustee’s
security interest in the Trust Account Property; and

 

(ii)                                  make
the necessary filings of financing statements or amendments thereto within five
days after the occurrence of any of the following:  (1) any change in its corporate name or
any trade name or its jurisdiction of organization; (2) any change in the
location of its chief executive office or principal place of business; and (3) any
merger or consolidation or other change in its identity or corporate structure
and promptly notify the Issuer and the Indenture Trustee of any such filings.

 

(iii)                               Neither
the Depositor nor the Issuer shall organize under the law of any jurisdiction
other than the State under which each is organized as of the Closing Date
(whether changing its jurisdiction of organization or organizing under an
additional jurisdiction) without giving 30 days prior written notice of such
action to its immediate and mediate transferee, including the Indenture
Trustee.  Before effecting such change,
each of the Depositor or the Issuer proposing to change its jurisdiction of
organization shall prepare and file in the appropriate filing office any
financing statements or other statements necessary to continue the perfection
of the interests of its immediate and mediate transferees, including the
Indenture Trustee, in the Trust Account Property.  In connection with the transactions
contemplated by the Operative Agreements relating to the Trust Account
Property, each of the Depositor and the Issuer authorizes its immediate or
mediate transferee, including the Indenture Trustee, to file in any filing
office any initial financing statements, any amendments to financing
statements, any continuation statements, or any other statements or filings
described in this Section 6.04.

 

None of the
Securities Intermediary or any director, officer, employee or agent of the
Securities Intermediary shall be under any liability to the Indenture Trustee or
the Noteholders for any action taken; or not taken, in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Securities Intermediary against any
liability to the Indenture Trustee or the Noteholders which would otherwise be
imposed by reason of the Securities Intermediary’s willful misconduct, fraud,
bad faith or 

 

124

 

negligence in the performance of its obligations or duties hereunder.  The Securities Intermediary and any director,
officer, employee or agent of the Securities Intermediary may rely in good
faith on any document of any kind which, prima facie, is properly executed and
submitted by any Person respecting any matters arising hereunder.  The Securities Intermediary shall be under no
duty to inquire into or investigate the validity, accuracy or content of such
document.  The Issuer shall indemnify the
Securities Intermediary for and hold it harmless against any loss, liability or
expense arising out of or in connection with this Agreement and carrying out
its duties hereunder, including the costs and expenses of defending itself
against any claim of liability, except in those cases where the Securities
Intermediary has been guilty of fraud, bad faith, negligence or willful
misconduct.  The foregoing
indemnification shall survive any termination of this Agreement or the
resignation or removal of the Securities Intermediary.

 

Section 6.05.                             Advances by Master Servicer and Servicer.

 

(a)                                  Subject to Section 4.03(c),
Advances shall be made in respect of each Servicer Remittance Date as provided
herein.  If, on any Determination Date,
the Servicer determines that any Scheduled Payments due during the related Due
Period have not been received, such Servicer shall advance such amount to the
extent provided in Section 4.03(c) hereof.  If any Servicer fails to remit Advances
required to be made under Section 4.03(c) hereof, the Master Servicer
shall itself make, or shall cause the successor Servicer to make, such Advance
on the Servicer Remittance Date immediately following such Determination
Date.  If the Master Servicer determines
that an Advance is required, it shall on the Business Day immediately prior to
the related Payment Date remit to the Trust Administrator from its own funds
(or funds advanced by the applicable Servicer) for deposit in the Collection
Account immediately available funds in an amount equal to such Advance.  The Master Servicer and the Servicer shall be
entitled to be reimbursed from the Collection Account, and the Servicer shall
be entitled to be reimbursed from its respective Custodial Account, for all
Advances made by it as provided in Section 4.02(e).  Notwithstanding anything to the contrary
herein, in the event the Master Servicer determines in its reasonable judgment
that an Advance is a Nonrecoverable Advance, the Master Servicer shall be under
no obligation to make such Advance.

 

(b)                                 In the event that the Master
Servicer or Servicer fails for any reason to make an Advance required to be
made pursuant to this Section 6.05,
the Indenture Trustee, as successor Master Servicer, shall, on or before
the related Payment Date, deposit in the Collection Account an amount equal to
the excess of (a) Advances required to be made by the Master Servicer or
the Servicer that would have been deposited in such Collection Account over (b) the
amount of any Advance made by the Master Servicer or the Servicer with respect
to such Payment Date; provided, however, that
the Indenture Trustee shall be required to make such Advance only if it is not
prohibited by law from doing so and it has determined that such Advance would
be recoverable from amounts to be received with respect to such Mortgage Loan,
including late payments, Liquidation Proceeds, Insurance Proceeds, or
otherwise.  The Indenture Trustee shall
be entitled to be reimbursed from the Collection Account for Advances made by
it pursuant to this Section 6.05 as if it were the Master Servicer.

 

125

 

Section 6.06.                             Pre-Funding
Account.

 

(a)                                  The Trust Administrator has
heretofore established or caused to be established and shall hereafter maintain
or cause to be maintained a separate account denominated the Pre-Funding
Account, which is and shall continue to be an Eligible Account in the name of
the Trust Administrator and shall be designated “Wells Fargo Bank, N.A., as
Trust Administrator of the Fieldstone Mortgage Investment Trust, Series 2005-2
Pre-Funding Account.” Any investment earnings from the Pre-Funding Account will
be paid to the Seller on the first Business Day of the month following each
Payment Date during the Pre-Funding Period; provided, however, that if the
final Subsequent Transfer Date occurs after the Payment Date in a month, on
such Subsequent Transfer Date, the Trust Administrator shall (i) transfer
the Excess Funding Amount from the Pre-Funding Account to the Collection
Account, (ii) transfer any investment earnings to the Seller as soon as
practicable and (iii) close the Pre-Funding Account.  The amount on deposit in the related
Subaccount of the Pre-Funding Account shall be invested in Eligible Investments
at the direction of the Seller in accordance with the provisions of Section 4.02(j).  All investment earnings on funds on deposit
in the Pre-Funding Account will be treated as owned by, and will be taxable to,
the Seller.

 

(b)                                 On the Closing Date, the Seller
will cause to be deposited (1) $108,456,874.15 in the Pool 1 Subaccount
and (2) $133,111,288.78 in the Pool 2 Subaccount, in each case from the
sale of the Notes.

 

(c)                                  On each Subsequent Transfer
Date, (i) the Seller shall instruct the Trust Administrator to withdraw
from the Pre-Funding Account an amount equal to 100% of the aggregate Stated
Principal Balances of the Subsequent Mortgage Loans sold to the Trust on such
Subsequent Transfer Date and (ii) the Trust Administrator shall pay such
amounts to or upon the order of the Seller with respect to such transfer.

 

(d)                                 If at the end of the Pre-Funding
Period amounts still remain in the Pre-Funding Account, the Trust Administrator
shall withdraw such amounts, exclusive of investment income, from the
Pre-Funding Account on the immediately following Payment Date and deposit such
amounts in the Collection Account.

 

(e)                                  Unless closed as provided in Section 6.07(a) above,
the Pre-Funding Account shall be closed at the close of business on the Payment
Date immediately following the end of the Pre-Funding Period.

 

Section 6.07.                             Establishment of Basis Risk Reserve Account; The Corridor Contract.

 

(a)                                  The Trust Administrator shall
establish and maintain an Eligible Account in its name in trust for the benefit
of the Noteholders, the Basis Risk Reserve Account.

 

(b)                                 The Trust Administrator shall
deposit any Corridor Receipts or Net Swap Receipts received in respect of the
Corridor Contract or Swap Agreement, respectively into the Basis Risk Reserve
Account.  Amounts on deposit in the Basis
Risk Reserve Account shall remain uninvested.

 

(c)                                  The Indenture Trustee shall
terminate the Corridor Counterparty upon the occurrence of an event of default
or termination event under the Corridor Contract of which a Responsible Officer
of the Indenture Trustee has actual knowledge. 
In the event that the 

 

126

 

Corridor Contract is canceled or otherwise terminated for any reason
(other than the exhaustion of the interest rate protection provided thereby),
the Trust Administrator shall, at the direction of Noteholders evidencing
Voting Rights not less than 50% of the Notes, and to the extent a replacement
contract is available (from a counterparty designated by the Seller and
acceptable to Noteholders evidencing Voting Rights not less than 50% of the
Notes), execute a replacement contract that the Seller has determined
comparable to such Corridor Contract providing interest rate protection which
is equal to the then-existing protection provided by the Corridor Contract; provided however, that the cost of any
such replacement contract providing the same interest rate protection may be
reduced to a level such that the costs of such replacement contract shall not
exceed the amount of any early termination payment received from the Corridor
Counterparty.

 

(d)                                 Subject to Section 6.07(e) hereof,
on each Payment Date during which the Corridor Contract is in effect, the Trust
Administrator shall withdraw from the Basis Risk Reserve Account any Corridor
Receipts to make payments to the Notes, to the extent of any Available Funds
Shortfalls on such Notes, in the order and priority described in Section 6.02(e)(i)(b) or
(e)(ii)(l).  Any Corridor Receipts that
are not applied to the payment of Available Funds Shortfalls in the manner
described in the preceding sentence shall be paid by the Trust Administrator to
the holder of the Ownership Certificate.

 

(e)                                  To the extent that the Trust
Administrator receives both Net Swap Receipts and Corridor Receipts and in
respect of the Swap Agreement and the Corridor Contract, respectively, for
distribution on any Payment Date, the Trust Administrator shall apply any Net
Swap Receipts pursuant to Section 6.03 for the payment of any Available
Funds Shortfalls before any Corridor Receipts are so applied.

 

ARTICLE VII

ADMINISTRATION OF THE AGREEMENTS

 

Section 7.01.                             Duties of the Trust
Administrator.

 

(a)                                  The Trust Administrator agrees
to perform all of the duties of the Issuer under the Depository Agreement.  In addition to its duties performed under the
Depository Agreement, the Trust Administrator shall take all appropriate action
that is the duty of the Issuer to take with respect to the following matters
under the Trust Agreement, this Agreement and the Indenture:

 

(i)                                     the
duty to cause the Note Register to be kept if the Issuer assumes the duties of
Note Registrar, and to give the Indenture Trustee notice of any appointment of
a new Note Registrar and the location, or change in location, of the Note
Register (Section 2.04 of the Indenture);

 

(ii)                                  the
duty to cause the Certificate Register to be kept if the Issuer assumes the
duties of Certificate Registrar, and to give the Owner Trustee notice of any
appointment of a new Certificate Registrar and the location, or change in
location, of the Certificate Register (Section 3.03 of the Trust
Agreement);

 

127

 

(iii)                               causing
the preparation of the Notes for execution by the Owner Trustee upon the
registration of any transfer or exchange of the Notes (Sections 2.04 and 2.05
of the Indenture);

 

(iv)                              causing
the preparation of Definitive Notes in accordance with the instructions of any
Clearing Agency, the duty to attempt to locate a qualified successor to the
Clearing Agency, if necessary, and the preparation of written notice to the
Indenture Trustee of termination of the book-entry system through the Clearing
Agency (Section 2.12 of the Indenture);

 

(v)                                 the
maintenance of an office for registration of transfer or exchange of Notes (Section 3.02
of the Indenture);

 

(vi)                              the
maintenance of an office for registration of transfer or exchange of the
Ownership Certificate (Section 3.03 of the Trust Agreement);

 

(vii)                           the
calculation of accrual of original issue discount and the amortization of
premium on the Notes (Section 3.03(v) of the Indenture);

 

(viii)                        upon
written notice or actual knowledge thereof, the notification to the Indenture
Trustee and each Rating Agency of a Servicer Event of Default or a Master
Servicer Event of Default under this Agreement (Section 3.07(d) of
the Indenture);

 

(ix)                                upon
written notice or actual knowledge thereof, the delivery of notice to the
Indenture Trustee and each Rating Agency of each Indenture Event of Default
under the Indenture (Section 3.19 of the Indenture);

 

(x)                                   the
furnishing of the Indenture Trustee with the names and addresses of Holders of
Notes during any period when the Indenture Trustee is not the Note Registrar (Section 7.01
of the Indenture);

 

(xi)                                causing
the preparation of any financing statements and continuation statements
necessary to protect the Collateral (Section 3.05 of the Indenture);

 

(xii)                             the
preparation (but not the execution) of the annual Officer’s Certificate
regarding the Issuer’s compliance with the terms of the Indenture (Section 3.09
of the Indenture);

 

(xiii)                          the
delivery of notice to the Indenture Trustee and each Rating Agency of each
Indenture Event of Default under the Indenture (Section 3.19);

 

(xiv)                         causing
the preparation of an Officer’s Certificate and the obtaining of the Opinion of
Counsel (which shall not be at the expense of the Trust Administrator) with
respect to any request by the Issuer to the Indenture Trustee to take any
action under the Indenture (Sections 4.01 and 11.01 of the Indenture);

 

(xv)                            the
compliance with any directive of the Indenture Trustee with respect to the sale
of the Collateral in a commercially reasonable manner if an Indenture Event of
Default shall have occurred and be continuing under the Indenture (Section 5.04
of the Indenture);

 

128

 

(xvi)                         causing
the preparation of an Issuer Request and Officer’s Certificate (and executing
the same on behalf of the Issuer) and the obtaining of an Opinion of Counsel
(which shall not be at the expense of the Trust Administrator), if necessary,
for the release of the Collateral, as defined in the Indenture (Section 8.03
of the Indenture);

 

(xvii)                      the mailing
to the Noteholders of notices with respect to their consent to any supplemental
indentures (Sections 9.01, 9.02, 9.03 and 9.06 of the Indenture); and

 

(xviii)                   any other
duties expressly required to be performed by the Trust Administrator under the
Indenture or the Trust Agreement.

 

Notwithstanding
the foregoing, the Seller shall undertake the duties of the Issuer under the
Indenture to cause the preparation of Issuer Orders (and execute the same on
behalf of the Issuer), and to obtain Opinions of Counsel with respect to the
execution of supplemental indentures and, if necessary, to mail to the
Noteholders notices with respect to their consent to such supplemental
indentures (Sections 9.01, 9.02, 9.03 and 9.06 of the Indenture).

 

(b)                                 The Issuer will indemnify the
Owner Trustee and the Trust Administrator, and their respective agents for, and
hold them harmless against, any losses, liability or expense incurred without
gross negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the transactions contemplated by the
Trust Agreement, this Agreement, the Corridor Contract or the Swap Agreement,
including the reasonable costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of any of
their powers or duties under the Trust Agreement, the Indenture or this
Agreement.

 

(c)                                  Subject to the penultimate
paragraph of this Section 7.01, and in accordance with the directions of
the Owner Trustee, the Trust Administrator shall perform or supervise the
performance of such other activities in connection with the Collateral
(including the Operative Agreements) as are not covered by any of the foregoing
provisions and as are expressly requested in writing by the Owner Trustee and
are reasonably within the capability of the Trust Administrator.

 

(d)                                 In carrying out the foregoing
duties or any of its other obligations under this Agreement, the Trust
Administrator may enter into transactions with or otherwise deal with any of
its Affiliates; provided, however, that the terms
of any such transactions or dealings shall be in accordance with any directions
received from the Issuer and shall be, in the Trust Administrator’s opinion, no
less favorable to the Issuer than would be available from unaffiliated parties.

 

In carrying
out the foregoing duties or any of its other obligations under this Agreement,
the Trust Administrator shall be subject to the same standard of care and have
the same rights, indemnifications and immunities as the Indenture Trustee under
the Indenture, including, without limitation, the right to reimbursement and
indemnification on behalf of the Issuer from funds in the Collection Account
for all losses, costs and expenses of any kind or nature (including without
limitation attorneys’ fees and disbursements) incurred by the Trust
Administrator (including without limitation in its various capacities as Paying
Agent, Certificate Paying Agent, Certificate 

 

129

 

Registrar and Note Registrar) in connection with the performance of its
duties hereunder or under any other Operative Agreement.

 

The Trust
Administrator in its capacity as the Certificate Registrar, and upon a request
received from the Owner Trustee, shall promptly notify the Certificateholders
of (i) any change in the Corporate Trust Office of the Owner Trustee, (ii) any
amendment to the Trust Agreement requiring notice be given to the Certificateholders
and (iii) any other notice required to be given to the Certificateholders
by the Owner Trustee under the Trust Agreement.

 

Section 7.02.                             Duties of the Trust
Administrator With Respect to the Indenture, the Trust Agreement and this
Agreement.

 

(a)                                  The Trust Administrator shall
take all appropriate action that is the duty of the Indenture Trustee to take
with respect to the following matters under the Indenture, the Trust Agreement
and this Agreement:

 

(i)                                     the
duties of an authenticating agent for authentication of the Notes (Sections
2.01, 2.02 and 2.11 of the Indenture);

 

(ii)                                  the
duties of Note Registrar to be kept (Sections 2.03, 2.04, 2.05 and 2.07 of the
Indenture);

 

(iii)                               to
provide notices and instructions to the Clearing Agency (Section 2.10 of
the Indenture);

 

(iv)                              the
duties of Paying Agent (Sections 3.03, 4.01, 4.02 and 5.02 of the Indenture);
and

 

(v)                                 the
duties of agent or attorney-in-fact for the purposes of filing financing and
continuation statements for the Issuer (Section 3.05 of the
Indenture).

 

(b)                                 The Issuer will indemnify the
Owner Trustee and the Trust Administrator, and their respective agents for, and
hold them harmless against, any losses, liability or expense incurred without
gross negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the transactions contemplated by the
Trust Agreement or this Agreement, including the reasonable costs and expenses
of defending themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties under the Trust
Agreement, the Indenture or this Agreement.

 

Section 7.03.                             Records.  The Trust Administrator shall maintain
appropriate books of account and records relating to services performed
hereunder, which books of account and records shall be accessible for
inspection by the Issuer and the Depositor at any time during normal business
hours.

 

Section 7.04.                             Compensation.  The Trust Administrator will perform the
duties and provide the services called for under Section 7.01 and 7.02
above for such compensation as shall be agreed upon between the Trust
Administrator and the Master Servicer.

 

130

 

Section 7.05.                             Additional Information to be
Furnished to the Issuer.  The Depositor shall furnish to the Issuer
from time to time such additional information regarding the Collateral as the
Issuer shall reasonably request.

 

Section 7.06.                             Independence of the Trust
Administrator.  For all purposes of this Agreement, the Trust
Administrator shall be an independent contractor and shall not be subject to
the supervision of the Issuer or the Owner Trustee with respect to the manner
in which it accomplishes the performance of its obligations hereunder.  Unless expressly authorized by the Issuer,
the Trust Administrator shall have no authority to act for or represent the
Issuer or the Owner Trustee in any way and shall not otherwise be deemed an
agent of the Issuer or the Owner Trustee.

 

Section 7.07.                             No Joint Venture.  Nothing contained in this Agreement (i) shall
constitute the Trust Administrator or the Depositor, respectively, and either
of the Issuer or the Owner Trustee, as members of any partnership, joint
venture, association, syndicate, unincorporated business or other separate
entity, (ii) shall be construed to impose any liability as such on any of
them or (iii) shall be deemed to confer on any of them any express,
implied or apparent authority to incur any obligation or liability on behalf of
the others.

 

Section 7.08.                             Other Activities of Trust
Administrator and the Depositor.  Nothing herein
shall prevent the Trust Administrator, the Depositor or their respective
Affiliates from engaging in other businesses or, in its sole discretion, from
acting in a similar capacity as an Trust Administrator for any other person or
entity even though such person or entity may engage in business activities
similar to those of the Issuer or the Owner Trustee.

 

Section 7.09.                             Resignation and Removal of Trust
Administrator.

 

(a)                                  Subject to Section 7.09(d) hereof,
the Trust Administrator may resign its duties hereunder by providing the Issuer
with at least 60 days’ prior written notice.

 

(b)                                 Subject to Section 7.09(d) hereof,
the Issuer may remove the Trust Administrator without cause by providing the
Trust Administrator with at least 60 days’ prior written notice.

 

(c)                                  Subject to Section 7.09(d) hereof,
the Issuer may remove the Trust Administrator immediately upon written notice
of termination from the Issuer to the Trust Administrator if any of the
following events shall occur:

 

(i)                                     the
Trust Administrator shall default in the performance of any of its duties under
this Agreement and, after notice of such default, shall not cure such default
within ten days (or, if such default cannot be cured in such time, shall not
give within ten days such assurance of cure as shall be reasonably satisfactory
to the Issuer); or

 

(ii)                                  a
court having jurisdiction in the premises shall (x) enter a decree or order for
relief, which decree or order shall not have been vacated within 60 days, in
respect of the Trust Administrator in any involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or (y)
appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for the Trust Administrator or any substantial 

 

131

 

part of its property, or (z)
order the winding-up or liquidation of the Trust Administrator’s affairs; or

 

(iii)                               the
Trust Administrator shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator or similar official for the Trust
Administrator or any substantial part of its property, shall consent to the
taking of possession by any such official of any substantial part of its
property, shall make any general assignment for the benefit of creditors or
shall fail generally to pay its debts as they become due.

 

The Trust
Administrator agrees that if any of the events specified in clauses (ii) or
(iii) of this Section 7.09(c) shall occur, it shall give written
notice thereof to the Issuer and the Indenture Trustee within seven days after
the occurrence of such event.

 

(d)                                 No resignation or removal of the
Trust Administrator pursuant to this Section shall be effective until (i) a
successor Trust Administrator shall have been appointed by the Issuer in
accordance with the Trust Agreement and (ii) such successor Trust
Administrator shall have agreed in writing to be bound by the terms of this
Agreement in the same manner as the Trust Administrator is bound
hereunder.  If a successor Trust
Administrator does not take office within 60 days after the retiring Trust
Administrator resigns or is removed, the resigning or removed Trust
Administrator or the Issuer may petition any court of competent jurisdiction
for the appointment of a successor Trust Administrator.

 

(e)                                  The appointment of any successor
Trust Administrator shall be effective only after receipt of a letter from each
Rating Agency to the effect that such proposed appointment will not cause a
reduction or withdrawal of the then current ratings of the Notes.

 

(f)                                    Subject to Sections 7.09(d) and
7.09(e) above, the Trust Administrator acknowledges that upon the
appointment of a successor Master Servicer pursuant to Section 8.01, the
Trust Administrator shall immediately resign and such successor Master Servicer
shall automatically become the Trust Administrator under this Agreement.  Any such successor Master Servicer shall be
required to agree to assume the duties of the Trust Administrator under the
terms and conditions of this Agreement and the other Operative Agreements in
its acceptance of appointment as successor Master Servicer.

 

Section 7.10.                             Action upon Termination,
Resignation or Removal of the Trust Administrator.  Promptly upon the effective date of
termination of this Agreement or the resignation or removal of the Trust
Administrator pursuant to Section 7.09 hereof, the Trust Administrator
shall be entitled to be paid all reimbursable expenses, including any
reasonable out-of-pocket attorneys’ fees, accruing to it to the date of such
termination, resignation or removal.  The
Trust Administrator shall forthwith upon such termination pursuant to Section 7.09
deliver to the successor Trust Administrator all property and documents of or
relating to the Collateral then in the custody of the Trust Administrator, or
if this Agreement has been terminated, to the Depositor.  In the event of the resignation or removal of
the Trust Administrator pursuant to Section 7.09, the Trust Administrator
shall cooperate with the Issuer 

 

132

 

and take all reasonable steps requested to assist the Issuer in making
an orderly transfer of the duties of the Trust Administrator.

 

ARTICLE VIII

MASTER SERVICER EVENTS OF DEFAULT

 

Section 8.01.                             Master Servicer Events of
Default; Indenture Trustee To Act; Appointment of Successor.

 

(a)                                  The occurrence of any one or
more of the following events shall constitute a “Master Servicer Event of
Default”:

 

(i)                                     Any
failure by the Master Servicer to furnish to the Trust Administrator the
Mortgage Loan data sufficient to prepare the reports described in Section 5.09(a) which
continues unremedied for a period of one (1) Business Day after the date upon
which written notice of such failure shall have been given to such Master
Servicer by the Indenture Trustee or the Trust Administrator or to such Master
Servicer and the Indenture Trustee by the Holders of not less than 25% of
the Class Principal Amount (or Class Notional Amount) of each Class of
Notes affected thereby; or

 

(ii)                                  Any
failure on the part of the Master Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Master Servicer contained in this Agreement which continues unremedied for a
period of 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Master Servicer
by the Indenture Trustee or the Trust Administrator or to the Master Servicer
and the Indenture Trustee by the Majority Noteholders; or

 

(iii)                               A
decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer, and such decree or order shall
have remained in force undischarged or unstayed for a period of 60 days or any
Rating Agency reduces or withdraws or threatens to reduce or withdraw the
rating of the Notes because of the financial condition or loan servicing
capability of such Master Servicer; or

 

(iv)                              The
Master Servicer shall consent to the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities, voluntary liquidation or similar proceedings of or relating to
the Master Servicer or of or relating to all or substantially all of its
property; or

 

(v)                                 The
Master Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations; or

 

133

 

(vi)                              The
Master Servicer shall be dissolved, or shall dispose of all or substantially
all of its assets, or consolidate with or merge into another entity or shall
permit another entity to consolidate or merge into it, such that the resulting
entity does not meet the criteria for a successor servicer as specified in Section 5.26
hereof; or

 

(vii)                           If a
representation or warranty set forth in Section 5.01 hereof shall prove to
be incorrect as of the time made in any respect that materially and adversely
affects the interests of the Noteholders, and the circumstance or condition in
respect of which such representation or warranty was incorrect shall not have
been eliminated or cured within 30 days after the date on which written notice
of such incorrect representation or warranty shall have been given to the
Master Servicer by the Indenture Trustee or the Trust Administrator, or to the
Master Servicer and the Indenture Trustee by the Majority Noteholders; or

 

(viii)                        A sale or
pledge of any of the rights of the Master Servicer hereunder or an assignment
of this Agreement by the Master Servicer or a delegation of the rights or
duties of the Master Servicer hereunder shall have occurred in any manner not
otherwise permitted hereunder and without the prior written consent of the
Indenture Trustee and the Majority Noteholders; or

 

(ix)                                The
Master Servicer has notice or actual knowledge that the Servicer at any time is
not either an FNMA- or FHLMC- approved Seller/Servicer, and the Master Servicer
has not terminated the rights and obligations of such Servicer under this
Agreement and replaced the Servicer with an FNMA- or FHLMC-approved servicer
within 60 days of the date the Master Servicer receives such notice or acquires
such actual knowledge; or

 

(x)                                   Any
failure of the Master Servicer to remit to the Trust Administrator any Advance
required to be made to the Trust Administrator for the benefit of Noteholders
under the terms of this Agreement, which failure continues unremedied as of the
close of business on the Business Day prior to a Payment Date.

 

If a Master
Servicer Event of Default described in clauses (i) through (ix) of
this Section 8.01 shall occur, then, in each and every case, subject to
applicable law, so long as any such Master Servicer Event of Default shall not
have been remedied within any period of time prescribed by this Section 8.01,
the Indenture Trustee, by notice in writing to the Master Servicer may, and
shall, if so directed by the Majority Noteholders, terminate all of the rights
and obligations of the Master Servicer hereunder and in and to the Mortgage
Loans and the proceeds thereof.  If a
Master Servicer Event of Default described in clause (x) of this Section 8.01
shall occur, then, in each and every case, subject to applicable law, so long
as such Master Servicer Event of Default shall not have been remedied within
the time period prescribed by clause (x) of this Section 8.01, the
Indenture Trustee, by notice in writing to the Master Servicer, shall promptly
terminate all of the rights and obligations of the Master Servicer hereunder
and in and to the Mortgage Loans and the proceeds thereof.  On or after the receipt by the Master
Servicer of such written notice, all authority and power of the Master
Servicer, and only in its capacity as Master Servicer under this Agreement,
whether with respect to the Mortgage Loans or otherwise, shall pass to and be
vested in the Indenture Trustee pursuant to and under the terms of this
Agreement; and the Indenture Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the defaulting Master Servicer as
attorney-in-fact or otherwise, any and all 

 

134

 

documents and other instruments, and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents or otherwise.  The defaulting Master Servicer agrees to
cooperate with the Indenture Trustee in effecting the termination of the defaulting
Master Servicer’s responsibilities and rights hereunder as Master Servicer
including, without limitation, notifying the Servicers of the assignment of the
master servicing function and providing the Indenture Trustee or its designee
all documents and records in electronic or other form reasonably requested by
it to enable the Indenture Trustee or its designee to assume the defaulting
Master Servicer’s functions hereunder and the transfer to the Indenture Trustee
for administration by it of all amounts which shall at the time be or should have
been deposited by the defaulting Master Servicer in the Collection Account
maintained by such defaulting Master Servicer and any other account or fund
maintained with respect to the Notes or thereafter received with respect to the
Mortgage Loans.  The Master Servicer
being terminated shall bear all reasonable out-of-pocket costs of a master
servicing transfer, including but not limited to those of the Indenture
Trustee, legal fees and expenses, accounting and financial consulting fees and
expenses, and costs of amending the Agreement, if necessary.

 

The Indenture
Trustee shall be entitled to be reimbursed from the Master Servicer (or by the
Trust Estate, if the Master Servicer is unable to fulfill its obligations
hereunder) for all costs associated with the transfer of servicing from the
predecessor Master Servicer, including, without limitation, any costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Indenture Trustee to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Indenture Trustee to master service
the Mortgage Loans properly and effectively. 
If the terminated Master Servicer does not pay such reimbursement within
thirty (30) days of its receipt of an invoice therefore, such reimbursement
shall be an expense of the Trust Estate and the Indenture Trustee shall be
entitled to withdraw such reimbursement from amounts on deposit in the
Collection Account pursuant to Section 5.07(c); provided that the terminated
Master Servicer shall reimburse the Trust Estate for any such expense incurred
by the Trust Estate; and provided, further, that
the Indenture Trustee shall decide whether and to what extent it is in the best
interest of the Noteholders to pursue any remedy against any party obligated to
make such reimbursement.

 

Notwithstanding
the termination of its activities as Master Servicer, each terminated Master
Servicer shall continue to be entitled to reimbursement to the extent provided
in Section 5.08 to the extent such reimbursement relates to the period
prior to such Master Servicer’s termination.

 

If any Master
Servicer Event of Default shall occur, of which a Responsible Officer of the
Indenture Trustee has actual knowledge, the Indenture Trustee shall promptly
notify each Rating Agency of the nature and extent of such Master Servicer
Event of Default.  The Trust
Administrator or the Master Servicer shall immediately give written notice to
the Indenture Trustee upon the Master Servicer’s failure to remit Advances on
the date specified herein.

 

(b)                                 On and after the time the Master
Servicer receives a notice of termination from the Indenture Trustee pursuant
to Section 8.01(a) or the Indenture Trustee receives the resignation
of the Master Servicer evidenced by an Opinion of Counsel pursuant to Section 5.27,

 

135

 

the Indenture Trustee, unless another master servicer shall have been
appointed, shall be the successor in all respects to the Master Servicer in its
capacity as such under this Agreement and the transactions set forth or
provided for herein and shall have all the rights and powers and be subject to
all the responsibilities, duties and liabilities relating thereto and arising
thereafter placed on the Master Servicer hereunder, including the obligation to
make Advances; provided, however, that any
failure to perform such duties or responsibilities caused by the Master
Servicer’s failure to provide information required by this Agreement shall not
be considered a default by the Indenture Trustee hereunder.  In addition, the Indenture Trustee shall have
no responsibility for any act or omission of the Master Servicer prior to the
issuance of any notice of termination and shall have no liability relating to
the representations and warranties of the Master Servicer set forth in Section 5.01.  In the Indenture Trustee’s capacity as such
successor, the Indenture Trustee shall have the same limitations on liability
herein granted to the Master Servicer. 
As compensation therefor, the Indenture Trustee shall be entitled to
receive all compensation payable to the Master Servicer under this Agreement.

 

(c)                                  Notwithstanding the above, the
Indenture Trustee may, if it shall be unwilling to continue to so act, or
shall, if it is unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established housing and home finance institution
servicer, master servicer, servicing or mortgage servicing institution having a
net worth of not less than $15,000,000 and meeting such other standards for a
successor master servicer as are set forth in this Agreement, as the successor
to such Master Servicer in the assumption of all of the responsibilities,
duties or liabilities of a master servicer, like the Master Servicer.  Such successor Master Servicer may be an
Affiliate of the Indenture Trustee; provided, however, that, unless such Affiliate meets the net
worth requirements and other standards set forth herein for a successor master
servicer, the Indenture Trustee, in its individual capacity shall agree, at the
time of such designation, to be and remain liable to the Issuer and the
Indenture Trustee for such Affiliate’s actions and omissions in performing its
duties hereunder.  In connection with
such appointment and assumption, the Indenture Trustee may make such
arrangements for the compensation of such successor out of payments on the
Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that
permitted to the Master Servicer hereunder. 
The Indenture Trustee and such successor shall take such actions,
consistent with this Agreement, as shall be necessary to effectuate any such
succession and may make other arrangements with respect to the servicing to be
conducted hereunder which are not inconsistent herewith.  The Master Servicer shall cooperate with the
Indenture Trustee and any successor master servicer in effecting the termination
of the Master Servicer’s responsibilities and rights hereunder including,
without limitation, notifying Servicers of the assignment of the master
servicing functions and providing the Indenture Trustee and successor master
servicer, as applicable, all documents and records in electronic or other form
reasonably requested by it to enable it to assume the Master Servicer’s
functions hereunder and the transfer to the Indenture Trustee or such successor
master servicer, as applicable, all amounts or investment property which shall
at the time be or should have been deposited by the Master Servicer in the
Collection Account and any other account or fund maintained with respect to the
Notes or thereafter be received with respect to the Mortgage Loans.  Neither the Indenture Trustee nor any other
successor master servicer shall be deemed to be in default hereunder by reason
of any failure to make, or any delay in making, any payment hereunder or any
portion thereof caused by (i) the failure of the Master Servicer to
deliver, or any delay in delivering, cash, documents or records to it, (ii) the
failure of the Master Servicer to cooperate as required 

 

136

 

by this Agreement, (iii) the failure of the Master Servicer to
deliver the Mortgage Loan data to the Indenture Trustee as required by this
Agreement or (iv) restrictions imposed by any regulatory authority having
jurisdiction over the Master Servicer.

 

Section 8.02.                             Additional Remedies of Indenture
Trustee Upon Event of Default.  During the continuance of any Master Servicer
Event of Default, so long as such Master Servicer Event of Default shall not
have been remedied, the Indenture Trustee, in addition to the rights specified
in Section 8.01, shall have the right, in its own name and as trustee of
an express trust, to take all actions now or hereafter existing at law, in
equity or by statute to enforce its rights and remedies and to protect the
interests, and enforce the rights and remedies, of the Noteholders (including
the institution and prosecution of all judicial, administrative and other
proceedings and the filings of proofs of claim and debt in connection
therewith).  Except as otherwise
expressly provided in this Agreement, no remedy provided for by this Agreement
shall be exclusive of any other remedy, and each and every remedy shall be
cumulative and in addition to any other remedy, and no delay or omission to
exercise any right or remedy shall impair any such right or remedy or shall be
deemed to be a waiver of any Event of Default.

 

Section 8.03.                             Waiver of Defaults.  The Majority Noteholders may, on behalf of
all Noteholders, waive any default or Master Servicer Event of Default by the
Master Servicer in the performance of its obligations hereunder, except that a
default in the making of any required deposit to the Collection Account that
would result in a failure of the Indenture Trustee to make any required payment
of principal of or interest on the Notes may only be waived with the consent of
100% of the affected Noteholders.  Upon
any such waiver of a past default, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement.  No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.

 

Section 8.04.                             Notification to Holders.  Upon termination of the Master Servicer or
appointment of a successor to the Master Servicer, in each case as provided
herein, the Indenture Trustee shall promptly mail notice thereof by first class
mail to the Noteholders at their respective addresses appearing on the
applicable Register.  The Indenture
Trustee shall also, within 45 days after the occurrence of any Master Servicer
Event of Default known to the Indenture Trustee, give written notice thereof to
Noteholders, unless such Event of Default shall have been cured or waived prior
to the issuance of such notice and within such 45-day period.

 

Section 8.05.                             Directions by Noteholders and
Duties of Indenture Trustee During Master Servicer Event of Default.  During the continuance of any Master Servicer
Event of Default, the Majority Noteholders may direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred upon the Indenture Trustee,
under this Agreement; provided, however, that
the Indenture Trustee shall be under no obligation to pursue any such remedy,
or to exercise any of the trusts or powers vested in it by this Agreement
(including, without limitation, (i) the conducting or defending of any
administrative action or litigation hereunder or in relation hereto and (ii) the
terminating of the Master Servicer or any successor master servicer from its
rights and duties as master servicer hereunder) at the request, order or
direction of any of the Noteholders, unless such Noteholders shall have offered
to the Indenture Trustee reasonable security or indemnity against the cost, 

 

137

 

expenses and liabilities which may be incurred therein or thereby; and,
provided further, that, the
Indenture Trustee shall have the right to decline to follow any such direction
if the Indenture Trustee, in accordance with an Opinion of Counsel, determines
that the action or proceeding so directed may not lawfully be taken or if the
Indenture Trustee in good faith determines that the action or proceeding so
directed would involve it in personal liability for which it is not indemnified
to its satisfaction or be unjustly prejudicial to the non-assenting
Noteholders.

 

Section 8.06.                             Action Upon Certain Failures of
the Master Servicer and Upon Master Servicer Event of Default.  In the event that a Responsible Officer of
the Indenture Trustee or the Trust Administrator shall have actual knowledge of
any action or inaction of the Master Servicer that would become a Master
Servicer Event of Default upon the Master Servicer’s failure to remedy the same
after notice, the Indenture Trustee or Trust Administrator, as applicable,
shall give notice thereof to the Master Servicer.

 

Section 8.07.                             Preparation of Reports.

 

(a)                                  The Depositor shall prepare or
cause to be prepared the initial current report on Form 8-K.  Thereafter, within 15 days after each Payment
Date, the Trust Administrator shall, in accordance with industry standards
customary for securities similar to the Notes as required by the Exchange Act
and the rules and regulations of the Securities and Exchange Commission
(the “Commission”), file with the Commission via the Electronic Data Gathering
and Retrieval System (EDGAR), a Form 8-K with a copy of the statement to
the Noteholders for such Payment Date as an exhibit thereto.  Prior to January 30, 2006, the Trust
Administrator shall, in accordance with industry standards applicable to the
Notes, file a Form 15 Suspension Notification with respect to the Issuer,
if applicable.  Prior to March 31,
2006, and prior to March 31 in each succeeding year so long as a Form 15
Suspension Notification has not been filed for the prior calendar year, the
Trust Administrator shall file (and the Master Servicer will execute) a Form 10-K,
in substance conforming to industry standards applicable to the Notes, with respect
to the Issuer.  The Form 10-K shall
include the certification required pursuant to Rule 13a-14 under the
Exchange Act, as amended (the “Form 10-K Certification,” which Form 10-K
Certification shall be signed by the Master Servicer).  The Indenture Trustee and the Trust
Administrator shall have no liability for any delay in filing the Form 10-K
due to the failure of such party to timely sign the Form 10-K or Form 10-K
Certification.  The Depositor hereby
grants to the Indenture Trustee, the Master Servicer and the Trust
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 Master Servicer and the Trust Administrator from the Depositor of
written termination of such power of attorney and (ii) the termination of
the Issuer.  The Depositor agrees to
promptly furnish to the Trust 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 Depositor reasonably
deems appropriate to prepare and file all necessary reports with the
Commission.  The Trust Administrator
shall have no responsibility to file any items other than those specified in
this section.

 

(b)                                 Each person (including their
officers or directors) that signs any Form 10-K Certification shall be
entitled to indemnification from the Trust Estate for any liability or expense
incurred by it in connection with such certification, other than any liability
or expense 

 

138

 

attributable to such Person’s own bad faith, negligence or willful
misconduct.  The provisions of this subsection shall
survive any termination of this Agreement and the resignation or removal of
such Person.

 

(c)                                  To the extent that, following
the Closing Date, the contents of Forms 8-K, 10-K or other Forms required by
the Exchange Act and the Rules and Regulations of the Commission and the
time by which such Forms are required to be filed, differs from the provisions
of this Agreement, the parties hereto hereby agree that each shall reasonably
cooperate to amend the provisions of this Agreement (in accordance with Section 10.03)
in order to comply with such amended reporting requirements and such amendment
of this Agreement.  Any such amendment
may result in the reduction of the reports filed by the Servicer under the
Exchange Act.  Notwithstanding the
foregoing, neither the Master Servicer nor the Trust Administrator shall be
obligated to enter into any amendment pursuant to this Section that
adversely affects its obligations and immunities under this Agreement.

 

ARTICLE IX

TERMINATION

 

Section 9.01.                             Termination.  The respective obligations and
responsibilities of the Master Servicer, the Trust Administrator, the
Depositor, the Issuer, the Servicer, the Subservicer and the Indenture Trustee
created hereby (other than obligations expressly stated to survive the
termination of the Trust) shall terminate on the day after the day on which the
Notes are paid in full (including payment pursuant to Section 9.02 below)
(the “Termination Date”).

 

Section 9.02.                             Termination Prior to Maturity
Date; and Optional Redemption.  On any Payment Date on which the Aggregate
Collateral Balance at the beginning of the Due Period related to that Payment
Date is less than 20% of the sum of the Aggregate Collateral Balance as of the
Closing Date, the Servicer acting directly or through one or more Affiliates, shall
have the option to purchase the Mortgage Loans, any REO Property and any other
property remaining in the Trust for a price equal to the Redemption Price.  The Master Servicer, the Servicer and the
Subservicer will be reimbursed from the Redemption Price for any outstanding
Advances, Servicing Advances and unpaid Servicing Administration Fees and other
amounts not previously reimbursed pursuant to the provisions of this Agreement,
as applicable, and the Trust Administrator, the Owner Trustee and the Indenture
Trustee shall be reimbursed for any previously unreimbursed amounts for which
they are entitled to be reimbursed pursuant to this Agreement, the Indenture or
the Trust Agreement, as applicable.  If
such option is exercised, the Trust will be terminated resulting in a mandatory
redemption of the Notes.  The Servicer
shall deliver written notice of its intention to exercise such option to the
Issuer, the Trust Administrator, the Indenture Trustee and the Master Servicer
not less than 15 days prior to the applicable Payment Date.  If the Servicer fails to exercise such option
prior to the Stepup Date, the Interest Rate for each Class of Notes will
be increased as set forth in the table in the Preliminary Statement herein
beginning on the Stepup Date and for each Payment Date thereafter.  The Servicer shall deliver written notice of
its intention to exercise such option to the Issuer, the Indenture Trustee and
the Master Servicer not less than ten days prior to the applicable Payment
Date.

 

139

 

In connection
with such purchase, the Servicer shall remit to the Trust Administrator all
amounts then on deposit in the Custodial Account in respect of the related
Total Remittance Amount for deposit to the Collection Account, which deposit
shall be deemed to have occurred immediately preceding such purchase.

 

Promptly
following any such purchase pursuant to paragraph (a) of this Section, the
Indenture Trustee or the applicable Custodian shall release the Mortgage Files
to the purchaser of such Mortgage Loans pursuant to this Section 10.02, or
otherwise upon its order.

 

Section 9.03.                             Certain Notices upon Final
Payment.  The Master Servicer or the Trust
Administrator, as applicable, shall give the Issuer, the Indenture Trustee, the
Owner Trustee, each Rating Agency, each Noteholder and the Depositor at least
30 days’ prior written notice of the date on which the Trust is expected to
terminate in accordance with Section 9.01, or the date on which the Notes
will be redeemed in accordance with Section 9.02.  Not later than the fifth Business Day in the
Due Period in which the final payment in respect to the Notes is payable to the
Noteholders, the Indenture Trustee shall mail to the Noteholders a notice
specifying the procedures with respect to such final payment.  The Trust Administrator on behalf of the
Indenture Trustee shall give a copy of such notice to each Rating Agency at the
time such notice is given to Noteholders. 
Following the final payment thereon, such Notes shall become void, no
longer outstanding and no longer evidence any right or interest in the Mortgage
Loans, the Mortgage Files or any proceeds of the foregoing.

 

Section 9.04.                             Beneficiaries.  This Agreement will inure to the benefit of
and be binding upon the parties hereto, the Noteholders, and their respective
successors and permitted assigns.  No
other Person will have any right or obligation hereunder. Notwithstanding
anything to the contrary herein, the Swap Counterparty is an express third
party beneficiary of this Agreement.

 

ARTICLE X

MISCELLANEOUS PROVISIONS

 

Section 10.01.                       Binding Nature of Agreement;
Assignment.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

 

Section 10.02.                       Entire Agreement.  This Agreement contains the entire agreement
and understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter
hereof.  The express terms hereof control
and supersede any course of performance and/or usage of the trade inconsistent
with any of the terms hereof.

 

Section 10.03.                       Amendment.

 

(a)                                  This Agreement may be amended
from time to time by the parties hereto and the Holder of the Ownership
Certificate and with the prior written consent of the Swap Counterparty (but
only to the extent such amendment materially adversely affects the amounts,
priority or timing of payments under the Swap Agreement and for so long as the
Swap Agreement is in 

 

140

 

effect), without notice to or the consent of any of the Holders of the
Notes, (i) to cure any ambiguity, (ii) to cause the provisions herein
to conform to or be consistent with or in furtherance of the statements made
with respect to the Notes, the Trust or this Agreement in any Offering
Document, or to correct or supplement any provision herein which may be
inconsistent with any other provisions herein or in any other Operative
Agreement, to make any other provisions with respect to matters or questions
arising under this Agreement, (iii) to make any other provision with
respect to matters or questions arising under this Agreement or (iv) to
add, delete, or amend any provisions to the extent necessary or desirable to
comply with any requirements imposed by the Code or ERISA and applicable
regulations.  No such amendment effected
pursuant to the preceding sentence shall, as evidenced by an Opinion of Counsel
(which shall be an expense of the party requesting such amendment and shall not
be an expense of the Trust), adversely
affect the status of the Notes as debt for federal income tax purposes
and will not result in an entity level tax on the Trust nor shall such
amendment effected pursuant to clause (iii) of such sentence adversely
affect in any material respect the interests of any Holder, nor shall such
amendment be with respect to Section 6.02 or the definitions of “Interest
Funds,” “Principal Funds” or “Monthly Excess Cashflow” without the prior
written consent of the Swap Counterparty; provided, however, that
all outstanding payments under the Swap Agreement have been made.  Prior to entering into any amendment without
the consent of Holders pursuant to this paragraph, the Indenture Trustee may
require an Opinion of Counsel (at the expense of the party requesting such
amendment) to the effect that such amendment is permitted under this
paragraph.  Any such amendment shall be
deemed not to adversely affect in any material respect any Holder, if the
Indenture Trustee receives written confirmation from each Rating Agency that
such amendment will not cause such Rating Agency to reduce the then current
rating assigned to the Notes.

 

(b)                                 This Agreement may also be
amended from time to time by the parties hereto and with the prior written
consent of the Swap Counterparty (but only to the extent such amendment
materially adversely affects the amounts, priority or timing of payments under
the Swap Agreement and for so long as the Swap Agreement is in effect), with
the consent of the Noteholders representing 662/3% Voting Interests
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders; provided,
however, that no such amendment may (i) reduce
in any manner the amount of, or delay the timing of, payments which are
required to be paid on any Class of Notes or under the Swap Agreement,
without the consent of the Noteholders of such Class or the Swap
Counterparty, respectively, or (ii) reduce the aforesaid percentages of Class Principal
Amount of Notes, the Holders of which are required to consent to any such
amendment without the consent of the Holders of 100% of the Class Principal
Amount of the Notes.  For purposes of
this paragraph, references to “Holder” or “Holders” shall be deemed to include,
in the case of Book-Entry Notes, the related Note Owners; provided
further, however, that no such amendment may be made with respect to
Section 6.02(b) or (c) or the definition of “Interest Funds”
without the prior written consent of the Swap Counterparty but only for so long
as the Swap Agreement is in effect.

 

(c)                                  Promptly after the execution of
any such amendment, the Indenture Trustee shall furnish written notification of
the substance of such amendment to each Holder, the Depositor and to each
Rating Agency.

 

141

 

(d)                                 It shall not be necessary for
the consent of Holders under this Section 10.03 to approve the particular
form of any proposed amendment, but it shall be sufficient if such consent
shall approve the substance thereof.  The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations as
the Indenture Trustee may prescribe.

 

Section 10.04.                       Acts of Noteholders.  Except as otherwise specifically provided
herein, whenever Noteholder action, consent or approval is required under this
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Noteholders if the
Majority Noteholders agree to take such action or give such consent or
approval.

 

Section 10.05.                       Recordation of Agreement.  To the extent permitted by applicable law,
this Agreement, or a memorandum thereof if permitted under applicable law, is
subject to recordation in all appropriate public offices for real property
records in all of the counties or other comparable jurisdictions in which any
or all of the properties subject to the Mortgages are situated, and in any
other appropriate public recording office or elsewhere, such recordation to be
effected by the Depositor on direction and at the expense of Holders of not
less than 66-2/3% of the Note Principal Balance of the Notes and of the Holder
of the Ownership Certificate requesting such recordation, but only when
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Noteholders, or is
necessary for the administration or servicing of the Mortgage Loans.

 

Section 10.06.                       Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
APPLIED IN NEW YORK (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW WHICH SHALL APPLY HERETO).

 

Section 10.07.                       Notices.  All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed by overnight courier, addressed as follows or delivered by facsimile (or
such other address as may hereafter be furnished to the other party by like
notice):

 

(i)                                     if
to the Seller:

 

Fieldstone
Investment Corporation

11000 Broken
Land Parkway, Suite 600

Columbia,
Maryland 21044

Attention:  Senior Vice President—Investment Portfolio

Telephone:  (410) 772-7288

Facsimile:  (410) 772-7299

 

142

 

with a copy
to:

 

Fieldstone
Mortgage Investment Corporation

11000 Broken Land Parkway, Suite 600

Columbia, Maryland 21044

Attention:  Legal Department

 

(ii)                                  if
to the Servicer:

 

Fieldstone
Servicing Corp.

11000 Broken
Land Parkway, Suite 600

Columbia,
Maryland 21044

Attention:  Senior Vice President— Investment Portfolio

Telephone:  (410) 772-7288

Facsimile:  (410) 772-7299

 

(iii)                               if
to the Subservicer:

 

JPMorgan Chase
Bank, National Association

194 Wood
Avenue South

Iselin, New
Jersey 08830

 

(iv)                              if
to the Master Servicer:

 

Wells Fargo
Bank, N.A.

P.O. Box
98

Columbia,
Maryland 21046

Attention:
Fieldstone 2005-2

 

(or in the case of overnight deliveries, 

9062 Old Annapolis Road

Columbia, Maryland 21045)

Telephone:  (410) 884-2000

Facsimile:  (410) 715-2380

 

(v)                                 if
to the Trust Administrator:

 

Wells Fargo
Bank, N.A.

P.O. Box
98

Columbia,
Maryland 21046

Attention:
Fieldstone 2005-2

 

(or in the case of overnight deliveries, 

9062 Old Annapolis Road

Columbia, Maryland 21045)

Telephone:  (410) 884-2000

Facsimile:  (410) 715-2380

 

143

 

(vi)                              if
to the Indenture Trustee:

 

HSBC Bank USA, National Association

452 Fifth Avenue

New York, New York 10018

Attention: Corporate Trust

 

(vii)                           if to
the Depositor:

 

Fieldstone
Mortgage Investment Corporation

11000 Broken
Land Parkway, Suite 600

Columbia,
Maryland 21045

Attention:  President

Telephone:  (410) 772-7288

Facsimile:  (410) 772-7299

 

(viii)                        if to the
Issuer:

 

Fieldstone Mortgage Investment Trust, Series 2005-2

c/o U.S. Bank Trust National Association

300 Delaware Avenue

Suite 813

Wilmington, Delaware 19801

Attention: 
Corporate Trust Administration

 

(ix)                                if
to the Swap Counterparty:

 

Morgan Stanley Capital Services Inc.

1585 Broadway

New York, New York 10036-8293

Attention: Chief Legal Officer

Facsimile: (212) 507-4622

 

All demands,
notices and communications to a party hereunder shall be in writing and shall
be deemed to have been duly given when delivered to such party at the relevant
address, facsimile number or electronic mail address set forth above or at such
other address, facsimile number or electronic mail address as such party may
designate from time to time by written notice in accordance with this Section 10.07.

 

Section 10.08.                       Severability of Provisions.  If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
rights of the Holders thereof.

 

Section 10.09.                       Indulgences; No Waivers.  Neither the failure nor any delay on the part
of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a 

 

144

 

waiver thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise of the same
or of any other right, remedy, power or privilege, nor shall any waiver of any
right, remedy, power or privilege with respect to any occurrence be construed
as a waiver of such right, remedy, power or privilege with respect to any other
occurrence.  No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted
such waiver.

 

Section 10.10.                       Headings Not To Affect
Interpretation.  The headings contained in this Agreement are
for convenience of reference only, and they shall not be used in the
interpretation hereof.

 

Section 10.11.                       Benefits of Agreement.  Nothing in this Agreement or in the Notes,
express or implied, shall give to any Person, other than the parties to this
Agreement and their successors hereunder and the Holders of the Notes, any
benefit or any legal or equitable right, power, remedy or claim under this
Agreement.  Notwithstanding the
foregoing, the Owner Trustee and the Swap Counterparty shall be an express
third-party beneficiary of this Agreement.

 

Section 10.12.                       Special Notices to the Rating
Agencies.

 

(a)                                  The Seller shall give prompt
notice to each Rating Agency and the Swap Counterparty of the occurrence of any
of the following events of which it has notice:

 

(i)                                     any
amendment to this Agreement pursuant to Section 10.03; and

 

(ii)                                  the
making of a final payment hereunder.

 

(b)                                 All notices to the Rating
Agencies provided for by this Section shall be in writing and sent by
first class mail, telecopy or overnight courier, as follows:

 

if to Fitch:

 

Fitch Ratings

One State Street Plaza

New York, New York 10004

Fax no.: (212) 908-0269

 

if to Moody’s:

 

Moody’s Investors Service, Inc.

99 Church
Street

New York, New York 10004

Fax no.: 
(212) 553-4392

 

if to S&P:

 

Standard & Poor’s Ratings Services,
a division

of The McGraw-Hill Companies, Inc.

55 Water Street

New York, New York 10041

Fax no.: 
(212) 438-2661

 

145

 

(c)                                  The Trust Administrator shall
make available to the Rating Agencies each report prepared pursuant to Section 5.09.

 

Section 10.13.                       Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.

 

Section 10.14.                       Execution by the Issuer.  It is expressly understood and agreed by the
parties hereto that (a) this Agreement is executed and delivered by U.S.
Bank Trust National Association, not individually or personally but solely as
Owner Trustee of the Issuer, in the exercise of the powers and authority
conferred and vested in it as trustee, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by U.S.
Bank Trust National Association but is made and intended for the purpose of
binding only the Issuer, (c) nothing herein contained shall be construed
as creating any liability on U.S. Bank Trust National Association, individually
or personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties
hereto and by any person claiming by, through or under the parties hereto and (d) under
no circumstances shall U.S. Bank Trust National Association be personally
liable for the payment of any indebtedness or expenses of the Issuer or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Issuer under this Agreement or any other
document.

 

146

 

IN WITNESS
WHEREOF, the parties hereto have caused their names to be signed hereto by
their respective officers hereunto duly authorized as of the day and year first
above written.

 

	
   

  	
  FIELDSTONE MORTGAGE INVESTMENT

  
	
   

  	
  TRUST, SERIES 2005-2, as Issuer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  U.S. Bank Trust National Association, not
  in

  its individual capacity but solely as Owner

  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles F. Pedersen

  	
   

  
	
   

  	
  Name:

  	
  Charles F. Pedersen

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  FIELDSTONE MORTGAGE INVESTMENT

  CORPORATION, as Depositor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John C. Kendall

  	
   

  
	
   

  	
  Name: 

  	
  John C. Kendal

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  HSBC BANK USA, NATIONAL ASSOCIATION,

  
	
   

  	
  not in its individual capacity but solely
  as Indenture

  
	
   

  	
  Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elena Zheng

  	
   

  
	
   

  	
  Name:

  	
  Elena Zheng

  
	
   

  	
  Title:

  	
  Assistant Vice PResident

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK, N.A.,

  
	
   

  	
  as Trust Administrator and Master Servicer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Amy Doyle

  	
   

  
	
   

  	
  Name:

  	
  Amy Doyle

  
	
   

  	
  Title:

  	
  Vice President

  

 

[Signature Page One
to Fieldstone 2005-2 Transfer and Servicing Agreement]

 

 

	
   

  	
  FIELDSTONE SERVICING CORP., as Servicer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John C. Kendall

  	
   

  
	
   

  	
  Name:

  	
  John C. Kendall

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

  as Subservicer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Frances Dixon

  	
   

  
	
   

  	
  Name:

  	
  Frances Dixon

  
	
   

  	
  Title:

  	
  Assistant Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  FIELDSTONE INVESTMENT CORPORATION,

  
	
   

  	
  as Seller

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John C. Kendall

  	
   

  
	
   

  	
  Name:

  	
  John C. Kendall

  
	
   

  	
  Title:

  	
  Vice President

  

 

[Signature Page Two
to Fieldstone 2005-2 Transfer and Servicing Agreement]

 

 

	
  STATE OF MINNESOTA

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF RAMSEY

  	
  )

  

 

On this 4th
day of August, 2005, before me, personally appeared Charles F. Pedersen, known
to me to be a Vice President of U.S. Bank Trust National Association, one of
the corporations that executed the within instrument, and also known to me to
be the person who executed it on behalf of said corporation, and acknowledged
to me that such corporation executed the within instrument.

 

IN WITNESS
WHEREOF, I have hereunto set my hand and affixed my official

seal the day and year in this certificate first above written.

 

	
   

  	
   

  	
  /s/ Trisha L. Willett

  	
   

  
	
   

  	
   

  	
  Notary Public

  

 

[NOTARIAL SEAL]

 

 

 

	
  STATE OF MARYLAND

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF HOWARD

  	
  )

  

 

On the 4th
day of August, 2005, before me, personally appeared John C. Kendall,
known to me to be a Sr. Vice President of Fieldstone Mortgage Investment
Corporation, a corporation that executed the within instrument and also known
to me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.

 

IN WITNESS
WHEREOF, I have hereunto set my hand and affixed my official seal the day and
year in this certificate first above written.

 

 

	
   

  	
   

  	
  /s/ Melissa Brown

  	
   

  
	
   

  	
   

  	
  Notary Public

  

 

[NOTARIAL SEAL]

 

 

	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF NEW YORK

  	
  )

  

 

On the 1 of August 2005 before me, a
Notary Public in and for said State, personally appeared Elena Zheng, known to
me to be a AVP of HSBC Bank USA, National Association, a national banking
association that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

 

	
   

  	
   

  	
  /s/ Ecliff Jackman

  	
   

  
	
   

  	
   

  	
  Notary Public

  

 

[NOTARIAL SEAL]

 

 

	
  STATE OF MARYLAND

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF BALTIMORE

  	
  )

  

 

On the 4th
day of August 2005 , before me, a notary public in and for said State,
personally appeared Amy Doyle , known to me to be a Vice President of Wells
Fargo Bank, N.A., a national banking association that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

 

IN WITNESS
WHEREOF, I have hereunto set my hand and affixed my official seal the day and
year in this certificate first above written.

 

 

	
   

  	
   

  	
  /s/ Darron C. Woodus

  	
   

  
	
   

  	
   

  	
  Notary Public

  

 

[NOTARIAL SEAL]

 

 

 

	
  STATE OF MARYLAND

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF HOWARD

  	
  )

  

 

On the 4th
of August 2005 before me, a Notary Public in and for said State,
personally appeared John Kendall known to me to be a Sr. Vice President of
Fieldstone Servicing Corp., a corporation that executed the within instrument
and also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.

 

IN WITNESS
WHEREOF, I have hereunto set my hand and affixed my official seal the day and
year in this certificate first above written.

 

 

	
   

  	
   

  	
  /s/ Melissa Brown

  	
   

  
	
   

  	
   

  	
  Notary Public

  

 

[NOTARIAL SEAL]

 

 

	
  STATE OF CALIFORNIA

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF SAN DIEGO

  	
  )

  

 

On the 3rd
of  August 2005 before me, a Notary
Public in and for said State, personally appeared Frances Dixon known to me to
be a Asst. Vice President of JPMorgan Chase Bank, National Association, a
national banking association that executed the within instrument and also known
to me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.

 

IN WITNESS
WHEREOF, I have hereunto set my hand and affixed my official seal the day and
year in this certificate first above written.

 

 

	
   

  	
   

  	
  /s/ Barbara T. Tenorio

  	
   

  
	
   

  	
   

  	
  Notary Public

  

 

[NOTARIAL SEAL]

 

 

	
  STATE OF MARYLAND

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF HOWARD

  	
  )

  

 

On the 4th
of August 2005 before me, a Notary Public in and for said State,
personally appeared John Kendall known to me to be a Sr. Vice President of
Fieldstone Investment Corporation, a corporation that executed the within
instrument and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

 

IN WITNESS
WHEREOF, I have hereunto set my hand and affixed my official seal the day and
year in this certificate first above written.

 

 

	
   

  	
   

  	
  /s/ Melissa Brown

  	
   

  
	
   

  	
   

  	
  Notary Public

  

 

[NOTARIAL SEAL]

 

 

EXHIBIT A-1

 

FORM OF INITIAL CERTIFICATION

 

	
   

  	
   

  	
   

  	
   

  	
   

  

Date

 

HSBC Bank USA, National Association

452 Fifth Avenue

New York, New York 10018

Attention: Corporate Trust

 

Fieldstone Mortgage Investment Corporation

11000 Broken Land Parkway, Suite 600

Columbia, Maryland 21044

Attention:

 

	
  Re:

  	
  Transfer and Servicing Agreement (the “Transfer
  and Servicing Agreement”) dated as of July 1, 2005 by and among
  Fieldstone Mortgage Investment Corporation, as Depositor, HSBC Bank USA,
  National Association, as Indenture Trustee, Wells Fargo Bank, N.A., as Trust
  Administrator and Master Servicer, Fieldstone Mortgage Investment Trust, Series 2005-2,
  as Issuer, Fieldstone Servicing Corp., as Servicer, JPMorgan Chase Bank,
  National Association, as Subservicer, and Fieldstone Investment Corporation,
  as Seller

  

 

Ladies and Gentlemen:

 

In accordance
with Section 2.02(a) of the Transfer and Servicing Agreement, subject
to review of the contents thereof, the undersigned, as Custodian, hereby
certifies that it has received the documents listed in Section 2.0 1(b) of
the Transfer and Servicing Agreement for each Mortgage File pertaining to each
Mortgage Loan listed on Schedule A, to the Transfer and Servicing
Agreement, subject to any exceptions noted on Schedule I hereto.

 

Capitalized words and phrases used herein and not otherwise defined
herein shall have the respective meanings assigned to them in the Transfer and
Servicing Agreement.  This certificate is
subject in all respects to the terms of Section 2.02 of the Transfer and
Servicing Agreement and the  sections
cross-referenced therein.

 

	
   

  	
  [Custodian]

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

A-1

 

EXHIBIT A-2

 

FORM OF INTERIM CERTIFICATION

 

	
   

  	
   

  	
   

  	
   

  	
   

  

Date

 

HSBC Bank USA, National Association

452 Fifth Avenue

New York, New York 10018

Attention: Corporate Trust

 

Fieldstone Mortgage Investment Corporation

11000 Broken Land Parkway, Suite 600

Columbia, Maryland 21044

Attention:

 

	
  Re:

  	
  Transfer and Servicing Agreement (the “Transfer
  and Servicing Agreement”) dated as of July 1, 2005 by and among
  Fieldstone Mortgage Investment Corporation, as Depositor, HSBC Bank USA,
  National Association, as Indenture Trustee, Wells Fargo Bank, N.A., as Trust
  Administrator and Master Servicer, Fieldstone Mortgage Investment Trust, Series 2005
  2, as Issuer, Fieldstone Servicing Corp., as Servicer, JPMorgan Chase Bank,
  National Association, as Subservicer, and Fieldstone Investment Corporation,
  as Seller

  

 

Ladies and Gentlemen:

 

In accordance
with Section 2.02(b) of the Transfer and Servicing Agreement, the
undersigned, as Custodian, hereby certifies that as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on Schedule I hereto) it (or its custodian) has received
the applicable documents listed in Section 2.01(b) of the Transfer
and Servicing Agreement.

 

The
undersigned hereby certifies that as to each Mortgage Loan identified on the
Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents identified above and has determined that
each such document appears regular on its face and appears to relate to the
Mortgage Loan identified in such document.

 

Capitalized
words and phrases used herein shall have the respective meanings assigned to
them in the Transfer and Servicing Agreement. 
This certificate is qualified in all respects by the terms of said
Transfer and Servicing Agreement including, but not limited to, Section 2.02(b).

 

	
   

  	
  [Custodian]

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

A-2-1

 

EXHIBIT A-3

 

FORM OF FINAL CERTIFICATION

 

	
   

  	
   

  	
   

  	
   

  	
   

  

Date

 

HSBC Bank USA, National Association

452 Fifth Avenue

New York, New York 10018

Attention: Corporate Trust

 

Fieldstone Mortgage Investment Corporation

11000 Broken Land Parkway, Suite 600

Columbia, Maryland 21044

Attention:

 

Re:                               Transfer
and Servicing Agreement (the “Transfer and Servicing Agreement”) dated as of July 1,
2005 by and among Fieldstone Mortgage Investment Corporation, as Depositor,
HSBC Bank USA, National Association, as Indenture Trustee, Wells Fargo Bank,
N.A., as Trust Administrator and Master Servicer, Fieldstone Mortgage
Investment Trust, Series 2005-2, as Issuer, Fieldstone Servicing Corp., as
Servicer, JPMorgan Chase Bank ,National

Association, as Subservicer, and Fieldstone Investment Corporation, as
Seller

 

Ladies and Gentlemen:

 

In accordance
with Section 2.02(d) of the Transfer and Servicing Agreement, the
undersigned, as Custodian on behalf of the Indenture Trustee, hereby certifies
that as to each Mortgage Loan listed in the Mortgage Loan Schedule (other
than any Mortgage Loan paid in full or listed on Schedule I hereto) it (or
its custodian) has received the applicable documents listed in Section 2.01(b) of
the Transfer and Servicing Agreement.

 

The
undersigned hereby certifies that as to each Mortgage Loan identified on the
Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents listed above and has determined that each
such document appears to be complete and, based on an examination of such
documents, the information set forth in the Mortgage Loan Schedule is
correct.

 

Capitalized
words and phrases used herein shall have the respective meanings assigned to
them in the Transfer and Servicing Agreement. 
This certificate is qualified in all respects by the terms of said
Transfer and Servicing Agreement.

 

	
   

  	
  [Custodian]

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

A-3-1

 

EXHIBIT A-4

 

FORM OF ENDORSEMENT

 

Pay to the
order of HSBC Bank USA, National Association, as indenture trustee (the “Indenture
Trustee”) under the Transfer and Servicing Agreement dated as of July 1, 2005
by and among Fieldstone Mortgage Investment Corporation, as Depositor, the
Indenture Trustee, Wells Fargo Bank, N.A., as Trust Administrator and Master
Servicer, Fieldstone Mortgage Investment Trust, Series 2005-2, as Issuer,
Fieldstone Servicing Corp., as Servicer, JPMorgan Chase Bank , National
Assocsation, as Subservicer, and Fieldstone Investment Corporation, as Seller,
relating to Fieldstone Mortgage Investment Trust, Series 2005-2
Mortgage-Backed Notes, without recourse.

 

 

 

	
   

  	
   

  	
   

  
	
   

  	
  [current signatory on note]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

A-4-1

 

EXHIBIT B-1

 

FORM OF SWAP AGREEMENT

 

B-1-1

 

EXHIBIT B-2

 

FORM OF CORRIDOR CONTRACT

 

B-2-1

 

EXHIBIT C

 

FORM OF LOST NOTE AFFIDAVIT

 

I,                                                           ,
being duly sworn, do hereby state under oath that:

 

1.                                       I,
as                                     
of                                                          
(the “Company”), am authorized to make this Affidavit on behalf of the Company.

 

2.                                       The
Company received the following described mortgage note (the “Note”):

Loan No.:

Borrower(s):

Original Principal Amount:

from the Borrower(s) to secure a Deed of
Trust/Mortgage (the “Deed of Trust/Mortgage”) dated                          
from the Borrower(s) to the Company.

3.                                       The
Company represents and warrants that it has not canceled, altered, assigned, or
hypothecated the Note.

4.                                       The
original Note, a true and correct copy of which is attached hereto, was not
located after a thorough and diligent search, and based thereon, the Company
declares the Note lost.

5.                                      This
Affidavit is intended to be relied on by the Indenture Trustee and its
successors and assigns.

6.                                       The
Company has assigned all of its right, title and interest in the Note and the
Deed of Trust/Mortgage to the Indenture Trustee and agrees immediately and
without further consideration to surrender the original Note to the Indenture
Trustee or its successor and assigns if such original Note ever comes into the
Company’s possession, custody, or power.

7.                                       The
Company further agrees to indemnify and hold harmless the Indenture Trustee and
its successors and assigns from any and all loss, liability, costs, damages,
reasonable attorneys’ fees and expenses without limitation in connection with
or arising out of the representations, warranties, and agreements made in this
Affidavit and any claim of any nature made by any entity with respect to the
Note.

8.                                       The
Company agrees and acknowledges that this Affidavit may be presented as
evidence of the Note, whether in any proceeding or action with respect thereto
or otherwise, and hereby authorizes such use of this Affidavit.

9.                                       The
representations, warranties, and agreements herein shall bind the undersigned
and its successors and assigns, and shall inure to the benefit of the Indenture
Trustee and its successors and assigns.

 

 

C-1

 

EXECUTED THIS           
day of                        ,
200     on behalf of
                       

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  

 

 

	
  STATE OF

  	
  )

  
	
   

  	
  ) ss:

  
	
  COUNTY OF

  	
  )

  

 

On the           
day of                    ,
200     , before me,                                            ,
a notary public in and for said State, personally appeared                                            
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument, the person, or the
entity upon behalf of which the person acted, executed the instrument.

 

WITNESS my hand
and official seal.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
  My Commission Expires:

  	
   

  

 

 

 

C-2

 

EXHIBIT D

 

CUSTODIAL AGREEMENT

 

D-1

 

EXHIBIT E

 

CUSTODIAL ACCOUNT LETTER AGREEMENT

 

	
   

  	
                                                                 

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  To:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
    (the “Depository”)

  	
   

  	
   

  

 

 

As Subservicer
under the Transfer and Servicing Agreement dated as of July 1, 2005 by and
among Fieldstone Mortgage Investment Corporation, as Depositor, you, as
Indenture Trustee, Wells Fargo Bank, N.A., as Trust Administrator and Master
Servicer, Fieldstone Mortgage Investment Trust, Series 2005-2, as Issuer,
Fieldstone Servicing Corp., as Servicer, 
JPMorgan Chase Bank, National Association, as Subservicer and Fieldstone
Investment Corporation, as Seller (the “Transfer and Servicing Agreement”), we
hereby authorize and request you to establish an account as a Custodial Account
pursuant to Section 3.03 of the Transfer and Servicing Agreement,
designated as “Wells Fargo Bank, N.A. in trust for HSBC Bank USA, National
Association, as Indenture Trustee for the Fieldstone Mortgage Investment Trust,
Series 2005-2.” All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Subservicer. 
This letter is submitted to you in duplicate.  Please execute and return one original to us.

 

	
   

  	
  JPMorgan
  Chase Bank, National Association

  Subservicer

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Date:

  

 

The
undersigned, as Depository, hereby certifies that the above described account
has been established under Account Number                     ,
at the office of the Depository indicated above, and agrees to honor
withdrawals on such account as provided above.

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Depository

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  

 

E-1

 

EXHIBIT F

 

ESCROW ACCOUNT LETTER AGREEMENT

 

	
   

  	
                                            ,            

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  To:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
    (the “Depository”)

  	
   

  	
   

  

 

As Subservicer
under the Transfer and Servicing Agreement dated as of July 1, 2005 by and
among Fieldstone Mortgage Investment Corporation, as Depositor, you, as
Indenture Trustee, Wells Fargo Bank, N.A., as Trust Administrator and Master
Servicer, Fieldstone Mortgage Investment Trust, Series 2005-2, as Issuer,
Fieldstone Servicing Corp., as Servicer, 
JPMorgan Chase Bank, National Association, as Subservicer and Fieldstone
Investment Corporation, as Seller (the “Transfer and Servicing Agreement”), we
hereby authorize and request you to establish an account, as an Escrow Account
pursuant to Section 3.05 of the Transfer and Servicing Agreement, to be
designated as “Wells Fargo Bank, N.A. in trust for HSBC Bank USA, National
Association, as Indenture Trustee for the Fieldstone Mortgage Investment Trust,
Series 2005-2.” All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Subservicer. 
This letter is submitted to you in duplicate.  Please execute and return one original to us.

 

	
   

  	
  JPMorgan
  Chase Bank, National Association,

  Subservicer

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Date:

  

 

F-1

 

The
undersigned, as Depository, hereby certifies that the above described account
has been established under Account Number           ,
at the office of the Depository indicated above, and agrees to honor
withdrawals on such account as provided above.

 

	
   

  	
   

  	
   

  
	
   

  	
  Depository

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							

 

F-2

 

EXHIBIT G-1

 

FORM OF MONTHLY REMITTANCE ADVICE

 

	
  FIELD NAME

  	
   

  	
  DESCRIPTION

  	
   

  	
  FORMAT

  
	
  INVNUM

  	
   

  	
  INVESTOR LOAN NUMBER

  	
   

  	
  Number no decimals

  
	
  SERVNUM

  	
   

  	
  SERVICER LOAN NUMBER, REQUIRED

  	
   

  	
  Number no decimals

  
	
  BEGSCHEDBAL

  	
   

  	
  BEGINNING SCHEDULED BALANCE FOR SCHED/SCHED
  BEGINNING TRAIL BALANCE FOR ACTUAL/ACTUAL, REQUIRED

  	
   

  	
  Number two decimals

  
	
  SCHEDPRIN

  	
   

  	
  SCHEDULED PRINCIPAL AMOUNT FOR SCHEDULED/SCHEDULED
  ACTUAL PRINCIPAL COLLECTED FOR ACTUAL/ACTUAL, REQUIRED, .00 IF NO COLLECTIONS

  	
   

  	
  Number two decimals

  
	
  CURT1

  	
   

  	
  CURTAILMENT 1 AMOUNT, .00 IF NOT APPLICABLE

  	
   

  	
  Number two decimals

  
	
  CURT1DATE

  	
   

  	
  CURTAILMENT 1 DATE, BLANK IF NOT APPLICABLE

  	
   

  	
  DD-MM-YY

  
	
  CURTIADJ

  	
   

  	
  CURTAILMENT 1 ADJUSTMENT, .00 IF NOT
  APPLICABLE

  	
   

  	
  Number two decimals

  
	
  CURT2

  	
   

  	
  CURTAILMENT 2 AMOUNT, .00 IF NOT APPLICABLE

  	
   

  	
  Number two decimals

  
	
  CURT2DATE

  	
   

  	
  CURTAILMENT 2 DATE, BLANK IF NOT APPLICABLE

  	
   

  	
  DD-MM-YY

  
	
  CURT2ADJ

  	
   

  	
  CURTAILMENT 2 ADJUSTMENT, .00 IF NOT
  APPLICABLE

  	
   

  	
  Number two decimals

  
	
  LIQPRIN

  	
   

  	
  PAYOFF, LIQUIDATION PRINCIPAL, .00 IF NOT
  APPLICABLE

  	
   

  	
  Number two decimals

  
	
  OTHPRIN

  	
   

  	
  OTHER PRINCIPAL, .00 IF NOT APPLICABLE

  	
   

  	
  Number two decimals

  
	
  PRINREMIT

  	
   

  	
  TOTAL PRINCIPAL REMITTANCE AMOUNT, .00 IF
  NOT APPLICABLE

  	
   

  	
  Number two decimals

  
	
  INTREMIT

  	
   

  	
  NET INTEREST REMIT, INCLUDE PAYOFF
  INTEREST, .00 IF NOT APPLICABLE

  	
   

  	
  Number two decimals

  
	
  TOTREMIT

  	
   

  	
  TOTAL REMITTANCE AMOUNT, .00 IF NOT
  APPLICABLE

  	
   

  	
  Number two decimals

  
	
  ENDSCHEDBAL

  	
   

  	
  ENDING SCHEDULED BALANCE FOR SCHEDULED/SCHEDULED
  ENDING TRIAL BALANCE FOR ACTUAL/ACTUAL .00 IF PAIDOFF, LIQUIDATED OR FULL
  CHARGEOFF 

  	
   

  	
  Number two decimals

  
	
  ENDACTBAL

  	
   

  	
  ENDING TRIAL BALANCE .00 IF PAIDOFF,
  LIQUIDATED OR FULL CHARGEOFF

  	
   

  	
  Number two decimals

  
	
  ENDDUEDATE

  	
   

  	
  ENDING ACTUAL DUE DATE, NOT LAST PAID INSTALLMENT

  	
   

  	
  DD-MM-YY

  
	
  ACTCODE

  	
   

  	
  60 IF PAIDOFF, BLANK IF NOT APPLICABLE

  	
   

  	
  Number no decimals

  
	
  ACTDATE

  	
   

  	
  ACTUAL PAYOFF DATE, BLANK IF NOT APPLICABLE

  	
   

  	
  DD-MM-YY

  
	
  INTRATE

  	
   

  	
  INTEREST RATE, REQUIRED

  	
   

  	
  Number seven decimals

  Example .0700000 for 7.00%

  
	
  SFRATE.

  	
   

  	
  SERVICING ADMINISTRATION FEE RATE, REQUIRED

  	
   

  	
  Number seven decimals

  Example .0025000 for .25%

  
	
  PTRATE

  	
   

  	
  PASS THRU RATE, REQUIRED

  	
   

  	
  Number seven decimals

  Example .0675000 for 6.75%

  
	
  PIPMT

  	
   

  	
  P&I CONSTANT, REQUIRED .00 IF PAIDOFF

  	
   

  	
  Number two decimals

  

 

 

EXHIBIT G-2

 

STANDARD LAYOUT FOR MONTHLY DEFAULTED LOAN REPORT

 

	
  1.

  	
  Deal Identifier by Loan

  
	
  2.

  	
  SBO Loan Number

  
	
  3.

  	
  Loan Number

  
	
  4.

  	
  Investor Loan Number

  
	
  5.

  	
  Street Address

  
	
  6.

  	
  City

  
	
  7.

  	
  State

  
	
  8.

  	
  Zip Code

  
	
  9.

  	
  Original Loan Amount

  
	
  10.

  	
  Origination Date

  
	
  11.

  	
  First Payment Date

  
	
  12.

  	
  Current Loan Amount

  
	
  13.

  	
  Current Interest Rate

  
	
  14.

  	
  Current P&I Payment Amount

  
	
  15.

  	
  [Reserved]

  
	
  16.

  	
  [Reserved]

  
	
  17.

  	
  Next Rate Adjustment Date

  
	
  18.

  	
  Next Payment Adjustment Date

  
	
  19.

  	
  Loan Term

  
	
  20.

  	
  Loan Type

  
	
  21.

  	
  [Reserved]

  
	
  22.

  	
  Product Type

  
	
  23.

  	
  Property Type

  
	
  24.

  	
  Ownership Code

  
	
  25.

  	
  Actual Due Date

  
	
  26.

  	
  Delinquency Status

  
	
  27.

  	
  [Reserved]

  
	
  28.

  	
  FC Flag

  
	
  29.

  	
  Date Loan Reinstated

  
	
  30.

  	
  FC Suspended Date

  
	
  31.

  	
  Reason Suspended

  
	
  32.

  	
  FC Start Date (referral date)

  
	
  33.

  	
  Actual Notice of Intent Date

  
	
  34.

  	
  Actual First Legal Date

  
	
  35.

  	
  [Reserved]

  
	
  36.

  	
  Date F/C Sale Scheduled

  
	
  37.

  	
  Foreclosure Actual Sale Date

  
	
  38.

  	
  Actual Redemption End Date

  
	
  39.

  	
  Occupancy Status

  
	
  40.

  	
  Occupancy Status Date

  
	
  41.

  	
  Actual Eviction Start Date

  
	
  42,

  	
  Actual Eviction Complete Date

  
	
  43.

  	
  Loss Mit Workstation Status

  

 

G-2-1

 

	
  44.

  	
  Loss Mit Flag

  
	
  45.

  	
  Loss Mit Type

  
	
  46.

  	
  Loss Mit Start Date

  
	
  47.

  	
  Loss Mit Approval Date

  
	
  48.

  	
  Loss Mit Removal Date

  
	
  49.

  	
  REO Flag

  
	
  50.

  	
  Actual REO Start Date

  
	
  51.

  	
  REO List Date

  
	
  52.

  	
  REO List Price

  
	
  53.

  	
  Date REO Offer Received

  
	
  54.

  	
  Date REO Offer Accepted

  
	
  55.

  	
  REO Scheduled Close Date

  
	
  56.

  	
  REO Actual Closing Date

  
	
  57.

  	
  REO Net Sales proceeds

  
	
  58.

  	
  REO Sales Price

  
	
  59.

  	
  Paid Off Code

  
	
  60.

  	
  Paid in Full Date

  
	
  61.

  	
  MI Certificate Number

  
	
  62.

  	
  [Reserved]

  
	
  63.

  	
  [Reserved]

  
	
  64.

  	
  [Reserved]

  
	
  65.

  	
  [Reserved]

  
	
  66.

  	
  [Reserved]

  
	
  67.

  	
  [Reserved]

  
	
  68.

  	
  [Reserved]

  
	
  69.

  	
  [Reserved]

  
	
  70.

  	
  [Reserved]

  
	
  71.

  	
  [Reserved]

  
	
  72.

  	
  Actual Claim Filed Date

  
	
  73.

  	
  Actual Claim Amount Filed

  
	
  74.

  	
  Claim Amount Paid

  
	
  75.

  	
  Claim Funds Received Date

  
	
  76.

  	
  Realized Gain or Loss

  
	
  77.

  	
  BK Flag

  
	
  78.

  	
  Bankruptcy Chapter

  
	
  79.

  	
  Actual Bankruptcy Start Date

  
	
  80.

  	
  Actual Payment Plan Start Date

  
	
  81.

  	
  Actual Payment Plan End Date

  
	
  82.

  	
  Date POC Filed

  
	
  83.

  	
  Date Filed Relief/Dismissal

  
	
  84.

  	
  Relief/Dismissal Hearing Date

  
	
  85.

  	
  Date Relief/Dismissal Granted

  
	
  86.

  	
  Post Petition Due Date

  
	
  87.

  	
  Prepayment Flag

  
	
  88.

  	
  Prepayment Waived

  
	
  89.

  	
  Prepayment Premium Collected

  

 

G-2-2

 

	
  90.

  	
  Partial Prepayment Amount Collected

  
	
  91.

  	
  Prepayment Expiration Date

  
	
  92.

  	
  Origination Value Date

  
	
  93.

  	
  Origination Value Source

  
	
  94.

  	
  Original Value Amount

  
	
  95.

  	
  FC Valuation Amount

  
	
  96.

  	
  FC Valuation Source

  
	
  97.

  	
  FC Valuation Date

  
	
  98.

  	
  REO Value Source

  
	
  99.

  	
  REO Value(As-is)

  
	
  100.

  	
  REO Repaired Value

  
	
  101.

  	
  REO Value Date

  
	
  102.

  	
  Investor/Security Billing Date Sent

  

 

	
  Table:

  	
  Delinquency

  

 

	
  Name

  	
   

  	
  Type

  	
   

  	
  Max Character Size

  	
   

  
	
  Servicer Loan #

  	
   

  	
  Number

  	
   

  	
  10

  	
   

  
	
  Investor Loan #

  	
   

  	
  Number

  	
   

  	
  10

  	
   

  
	
  Servicer Investor #

  	
   

  	
  Text

  	
   

  	
  3

  	
   

  
	
  Borrower Name

  	
   

  	
  Text

  	
   

  	
  20

  	
   

  
	
  Address

  	
   

  	
  Text

  	
   

  	
  30

  	
   

  
	
  State

  	
   

  	
  Text

  	
   

  	
  2

  	
   

  
	
  Zip

  	
   

  	
  Text

  	
   

  	
  5

  	
   

  
	
  Due Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Loan Type

  	
   

  	
  Text

  	
   

  	
  8

  	
   

  
	
  BK Filed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  BK Chapter

  	
   

  	
  Text

  	
   

  	
  6

  	
   

  
	
  BK Case Number

  	
   

  	
  Text

  	
   

  	
  30 Maximum

  	
   

  
	
  Post Petition Due

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Motion for Relief

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Lift of Stay

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  BK Discharge/Dismissal Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Loss Mit Approval Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Loss Mit Type

  	
   

  	
  Text

  	
   

  	
  5

  	
   

  
	
  Loss Mit Code

  	
   

  	
  Number

  	
   

  	
  2

  	
   

  
	
  Loss Mit Estimated Completion Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Loss Mit Actual Completion Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  FC Approval Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  File Referred to Attorney

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  NOD

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Complaint Filed

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Scheduled Sale Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Actual Sale Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  F/C Sale Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Eviction Start Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  

 

G-2-3

 

	
  Eviction Completed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  List Price

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  List Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Accepted Offer Price

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Accepted Offer Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Estimated REO Closing Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Actual REO Sale Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Occupant Code

  	
   

  	
  Text

  	
   

  	
  10

  	
   

  
	
  Property Condition Code

  	
   

  	
  Text

  	
   

  	
  2

  	
   

  
	
  Property Inspection Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Property Value Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Current Property Value

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Repaired Property Value

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Current LTV

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  FNMA Delinquent Status Code

  	
   

  	
  Text

  	
   

  	
  2

  	
   

  
	
  FNMA Delinquent Reason Code

  	
   

  	
  Text

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  If applicable:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MI Cancellation Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  MI Claim Filed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  MI Claim Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  MI Claim Reject Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  MI Claim Resubmit Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  MI Claim Paid Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  MI Claim Amount Paid

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Pool Claim Filed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Pool Claim Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Pool Claim Reject Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Pool Claim Paid Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Pool Claim Amount Paid

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Pool Claim Resubmit Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  FHA Part A Claim Filed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  FHA Part A Claim Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  FHA Part A Claim Paid Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  FHA Part A Claim Paid Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  FHA Part B Claim Filed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  FHA Part B Claim Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  FHA Part B Claim Paid Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  FHA Part B Claim Paid Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  VA Claim Filed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  VA Claim Paid Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  VA Claim Paid Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  

 

The Loss Mit
Type field should show the approved Loss Mitigation arrangement.  The following are acceptable:

 

•                  ASUM-                              Approved
Assumption

 

G-2-4

 

	
  •

  	
  BAP-

  	
  Borrower Assistance Program

  
	
  •

  	
  CO-

  	
  Charge Off

  
	
  •

  	
  DIL-

  	
  Deed-in-Lieu

  
	
  •

  	
  FFA-

  	
  Formal Forbearance Agreement

  
	
  •

  	
  MOD-

  	
  Loan Modification

  
	
  •

  	
  PRE-

  	
  Pre-Sale

  
	
  •

  	
  SS-

  	
  Short Sale

  
	
  •

  	
  MISC-

  	
  Anything else approved by the PMI or Pool
  Insurer

  

 

[Master
Servicer and Trust Administrator] will accept alternative Loss Mitigation Types
to those above, provided that they are consistent with industry standards.  If Loss Mitigation Types other than those
above are used, the Servicer must supply [Master Servicer and Trust
Administrator] with a description of each of the Loss Mitigation Types prior to
sending the file.

 

 

G-2-5

 

 

The Occupant Code field should show the
current status of the property.  The
acceptable codes are:

 

•              Mortgagor

 

•              Tenant

 

•              Unknown

 

•              Vacant

 

The Property
Condition field should show the last reported condition of the property.  The acceptable codes are:

 

•              Damaged

 

•              Excellent

 

•              Fair

 

•              Gone

 

•              Good

 

•              Poor

 

•              Special
Hazard

 

•              Unknown

 

The FNMA
Delinquent Reason Code field should show the Reason for Default.  The following FNMA Delinquency Reason Codes
to be used are below.

 

	
  Delinquency Code

  	
   

  	
  Delinquency Description

  
	
  001

  	
   

  	
  FNMA-Death of principal mortgagor

  
	
  002

  	
   

  	
  FNMA-Illness of principal mortgagor

  
	
  003

  	
   

  	
  FNMA-Illness of mortgagor’s family member

  
	
  004

  	
   

  	
  FNMA-Death of mortgagor’s family member

  
	
  005

  	
   

  	
  FNMA-Marital difficulties

  
	
  006

  	
   

  	
  FNMA-Curtailment of income

  
	
  007

  	
   

  	
  FNMA-Excessive Obligation

  
	
  008

  	
   

  	
  FNMA-Abandonment of property

  
	
  009

  	
   

  	
  FNMA-Distant employee transfer

  
	
  011

  	
   

  	
  FNMA-Property problem

  
	
  012

  	
   

  	
  FNMA-Inability to sell property

  
	
  013

  	
   

  	
  FNMA-Inability to rent property

  
	
  014

  	
   

  	
  FNMA-Military Service

  
	
  015

  	
   

  	
  FNMA-Other

  
	
  016

  	
   

  	
  FNMA-Unemployment

  
	
  017

  	
   

  	
  FNMA-Business failure

  
	
  019

  	
   

  	
  FNMA-Casualty loss

  
	
  022

  	
   

  	
  FNMA-Energy environment costs

  

 

G-2-6

 

	
  023

  	
   

  	
  FNMA-Servicing problems

  
	
  026

  	
   

  	
  FNMA-Payment adjustment

  
	
  027

  	
   

  	
  FNMA-Payment dispute

  
	
  029

  	
   

  	
  FNMA-Transfer of ownership pending

  
	
  030

  	
   

  	
  FNMA-Fraud

  
	
  031

  	
   

  	
  FNMA-Unable to contact borrower

  
	
  INC

  	
   

  	
  FNMA-Incarceration

  

 

The FNMA
Delinquent Status Code field should show the Status of Default.  The following FNMA Delinquency Status Codes
to be used are below.

 

	
  Status Code

  	
   

  	
  Status Description

  
	
  09.

  	
   

  	
   

  	
  Forbearance

  
	
  17

  	
   

  	
   

  	
  Pre-foreclosure Sale Closing Plan Accepted

  
	
  24

  	
   

  	
   

  	
  Government Seizure

  
	
  26

  	
   

  	
   

  	
  Refinance

  
	
  27

  	
   

  	
   

  	
  Assumption

  
	
  28

  	
   

  	
   

  	
  Modification

  
	
  29

  	
   

  	
   

  	
  Charge-Off

  
	
  30

  	
   

  	
   

  	
  Third Party Sale

  
	
  31

  	
   

  	
   

  	
  Probate

  
	
  32

  	
   

  	
   

  	
  Military Indulgence

  
	
  43

  	
   

  	
   

  	
  Foreclosure Started

  
	
  44

  	
   

  	
   

  	
  Deed-in-Lieu Started

  
	
  49

  	
   

  	
   

  	
  Assignment Completed

  
	
  61

  	
   

  	
   

  	
  Second Lien Considerations

  
	
  62

  	
   

  	
   

  	
  Veteran’s Affairs-No Bid

  
	
  63

  	
   

  	
   

  	
  Veteran’s Affairs-Refund

  
	
  64

  	
   

  	
   

  	
  Veteran’s Affairs-Buydown

  
	
  65

  	
   

  	
   

  	
  Chapter 7 Bankruptcy

  
	
  66

  	
   

  	
   

  	
  Chapter 11 Bankruptcy

  
	
  67

  	
   

  	
   

  	
  Chapter 13 Bankruptcy

  

 

G-2-7

 

EXHIBIT G-3

 

FORM 332 REALIZED LOSS REPORT

WELLS FARGO BANK, N.A.

 

Purpose

 

To provide the
Servicer with a form for the calculation of any Realized Loss (or gain) as a
result of a Mortgage Loan having been foreclosed and Liquidated.

 

Distribution

 

The Servicer
will prepare the form in duplicate and send the original together with evidence
of conveyance of title and appropriate supporting documentation to the Master
Servicer with the Monthly Accounting Reports which supports the Mortgage Loan’s
removal from the Mortgage Loan Activity Report. 
The Servicer will retain the duplicate for its own records.

 

Due Date

 

With respect
to any liquidated Mortgage Loan, the form will be submitted to the Master
Servicer no later than the date on which statements are due to the Master
Servicer under Section 4.02 of this Agreement (the “Statement Date”) in
the month following receipt of final liquidation proceeds and supporting
documentation relating to such liquidated Mortgage Loan; provided, that if such
Statement Date is not at least 30 days after receipt of final liquidation
proceeds and supporting documentation relating to such liquidated Mortgage
Loan, then the form will be submitted on the first Statement Date occurring
after the 30th day following receipt of final liquidation proceeds and
supporting documentation.

 

Preparation Instructions

 

The numbers on
the form correspond with the numbers listed below.

 

1.             The
actual Unpaid Principal Balance of the Mortgage Loan.

 

2.             The
Total Interest Due less the aggregate amount of servicing fee that would have
been earned if all delinquent payments had been made as agreed.

 

3-7.          Complete
as necessary.  All line entries must be
supported by copies of appropriate statements, vouchers, receipts, canceled
checks, etc., to document the expense. 
Entries not properly documented will not be reimbursed to the Servicer.

 

8.             Accrued
Servicing Fees based upon the Stated Principal Balance of the Mortgage Loan as
calculated on a monthly basis.

 

10.           The
total of lines 1 through 9.

 

G-3-1

 

Credits

 

11-17.      Complete
as necessary.  All line entries must be
supported by copies of the appropriate claims forms, statements, payment
checks, etc. to document the credit.  If
the Mortgage Loan is subject to a Bankruptcy Deficiency, the difference between
the Unpaid Principal Balance of the Note prior to the Bankruptcy Deficiency and
the Unpaid Principal Balance as reduced by the Bankruptcy Deficiency should be
input on line 16.

 

18.           The total of lines 11
through 17.

 

Total Realized Loss (or Amount of Any Gain)

 

19.           The
total derived from subtracting line 18 from 10. 
If the amount represents a realized gain, show the amount in parenthesis
( ).

 

G-3-2

 

WELLS
FARGO BANK, N.A.

CALCULATION OF REALIZED LOSS

 

	
   

  	
  [                                     ]
  Trust:

  	
   

  	
   

  
	
  Prepared by: 

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Phone: 

  	
   

  	
   

  	
   

  
											

 

	
  Servicer
  Loan No.

  	
   

  	
  Servicer
  Name

  	
   

  	
  Servicer
  Address

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  [Master Servicer and Trust Administrator]

  
	
  Loan No.

  	
   

  	
   

  
	
  Borrower’s Name:

  
	
  Property

  
	
  Address:

  

 

	
  Liquidation
  and Acquisition Expenses:

  	
   

  	
   

  
	
   

  	
  Actual Unpaid Principal Balance of Mortgage
  Loan

  	
  $

  	
  (1)

  
	
   

  	
  Interest accrued at Net Rate

  	
   

  	
  (2)

  
	
   

  	
  Attorney’s Fees

  	
   

  	
  (3)

  
	
   

  	
  Taxes

  	
   

  	
  (4)

  
	
   

  	
  Property Maintenance

  	
   

  	
  (5)

  
	
   

  	
  MI/Hazard Insurance Premiums

  	
   

  	
  (6)

  
	
   

  	
  Hazard Loss Expenses

  	
   

  	
  (7)

  
	
   

  	
  Accrued Servicing Fees

  	
   

  	
  (8)

  
	
   

  	
  Other (itemize)

  	
   

  	
  (9)

  
	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Expenses

  	
  $

  	
  (10)

  
	
  Credits:

  	
   

  	
   

  
	
   

  	
  Escrow Balance

  	
  $

  	
  (11)

  
	
   

  	
  HIP Refund

  	
   

  	
  (12)

  
	
   

  	
  Rental Receipts

  	
   

  	
  (13)

  
	
   

  	
  Hazard Loss Proceeds

  	
   

  	
  (14)

  
	
   

  	
  Primary Mortgage Insurance Proceeds

  	
   

  	
  (15)

  
	
   

  	
  Proceeds from Sale of Acquired Property

  	
   

  	
  (16)

  
	
   

  	
  Other (itemize)

  	
   

  	
  (17)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Credits

  	
   

  	
  $

  	
  (18)

  
	
  Total Realized Loss (or of Gain)

  	
   

  	
  $

  	
  (19)

  
						

 

Data must be submitted to [Master Servicer
and Trust Administrator] in an Excel spreadsheet format with fixed field names
and data type.  The Excel spreadsheet
should be used as a template consistently every month when submitting data for all
loans that are 60 days + delinquent and/or in bankruptcy, foreclosure or REO.

 

G-3-3

 

EXHIBIT H

 

FORM OF BACK-UP CERTIFICATION

 

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

 

[Name and address of

master servicer]

 

Re:          [name of securitization]

 

JPMorgan Chase
Bank, National Association, as Subservicer hereby certifies to the Seller, the
Master Servicer, the Indenture Trustee, the Trust Administrator and the
Servicer that:

 

1.  To our knowledge, the information in the
Annual Statement of Compliance, the Annual Independent Public Accountant’s
Servicing Report and all servicing reports, officer’s certificates and other
information relating to the servicing of the Mortgage Loans submitted to the
Master Servicer taken as a whole, does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading as of the last day of the period covered by such reports;

 

2.  To our knowledge, the servicing information
required to be provided to the Master Servicer by the Servicer under the
Transfer and Servicing Agreement has been provided to the Master Servicer;

 

3.  Based upon the review required by the
Transfer and Servicing Agreement, and except as disclosed in the Annual
Statement of Compliance or the Annual Independent Public Accountant’s Servicing
Report, the Subservicer has, as of the last day of the period covered by such
reports fulfilled the obligations of the Servicer under the Transfer and
Servicing Agreement; and

 

4.  The Subservicer has disclosed to the Master
Servicer all significant deficiencies relating to the Subservicer’s compliance
with the minimum servicing standards in accordance with a review conducted in
compliance with the Uniform Single Attestation Program for Mortgage Bankers or
similar standard as set forth in the Transfer and Servicing Agreement.

 

Capitalized
terms used but not defined herein have the meanings ascribed to them in the
Transfer and Servicing Agreement, dated as of July 1, 2005 (the “Servicing
Agreement”), among Fieldstone Mortgage Investment Trust, Series 2005-2, as issuer (the “Issuer”),
Fieldstone

 

H-1

 

Mortgage Investment Corporation, as depositor (the “Depositor”), HSBC
Bank USA, National Association, as indenture trustee (the “Indenture Trustee”),
Fieldstone Servicing Corp., as servicer (the “Servicer”), Fieldstone Investment
Corporation, as seller (the “Seller”), JPMorgan Chase Bank, National
Association, as Subservicer (the “Subservicer”) and Wells Fargo Bank, N.A., as
master servicer (the “Master Servicer”) and trust administrator (the “Trust
Administrator”).

 

	
   

  	
   

  	
  JPMorgan Chase Bank, National Association,
  as

  Subservicer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
  Date:

  

 

H-2

 

EXHIBIT I

 

FORM OF SUBSEQUENT TRANSFER AGREEMENT

 

SUBSEQUENT
TRANSFER AGREEMENT (the “Agreement”), dated as of         ,
200   by and among Fieldstone Investment Corporation (the “Seller”),
Fieldstone Mortgage Investment Corporation (the “Depositor)”, Fieldstone
Mortgage Investment Trust, Series 2005-2] (the “Trust”), HSBC Bank USA,
National Association (the “Indenture Trustee”) and Wells Fargo Bank, N.A. (the “Trust
Administrator”) pursuant to the Transfer and Servicing Agreement referred to
below.

 

WITNESSETH:

 

WHEREAS,
pursuant to a Transfer and Servicing Agreement (the “Transfer and Servicing
Agreement”), dated as of July 1, 2005, among the Seller, the Depositor,
the Trust, the Indenture Trustee and the Trust Administrator, the Seller wishes
to convey the Subsequent Mortgage Loans (as defined below) to the Depositor,
the Depositor wishes to convey the Subsequent Mortgage Loans to the Trust, and
the Trust wishes to acquire the same for the consideration set forth in Section IV
below; and

 

WHEREAS, the
Seller shall timely deliver to the Indenture Trustee, Trust Administrator and
Depositor an Addition Notice related to such conveyance as required by Section 2.04
of the Transfer and Servicing Agreement;

 

NOW THEREFORE,
the Seller, the Depositor, the Trust, the Indenture Trustee and the Trust
Administrator hereby agree as follows:

 

Section I.               Capitalized
terms used herein shall have the meanings ascribed to them in the Transfer and
Servicing Agreement unless otherwise defined.

 

“Subsequent
Mortgage Loans” shall mean, for purposes of this Agreement, the Subsequent
Mortgage Loans listed in the Subsequent Mortgage Loan Schedule attached
hereto as Schedule I.

 

“Subsequent
Transfer Date” shall mean, with respect to the Subsequent Mortgage Loans
transferred hereby, the date hereof.

 

“Subsequent
Cut-off Date” shall mean, with respect to the Subsequent Mortgage Loans
transferred hereby, [                    ].

 

Section II.              Subsequent
Mortgage Loan Schedule.  The
Subsequent Mortgage Loan Schedule attached hereto as Schedule I is a
supplement to the Initial Mortgage Loan Schedule attached as Schedule A
to the Transfer and Servicing Agreement.  The Mortgage Loans listed in the Subsequent
Mortgage Loan Schedule constitute the Subsequent Mortgage Loans to be
transferred pursuant to this Agreement on the Subsequent Transfer Date.

 

I-1

 

Section III.             Transfer
of Subsequent Mortgage Loans.  As of
the related Cut-off Date, subject to and upon the terms and conditions set
forth in Sections 2.01,2.02, 2.04, 3.01, 3.02 and 3.03 of the Transfer and
Servicing Agreement and set forth in this Agreement, the Seller hereby
irrevocably sells, transfers, assigns, sets over and otherwise conveys to the
Depositor and the Depositor hereby irrevocably sells, transfers, assigns, sets
over and otherwise conveys to the Trust without recourse other than as
expressly provided herein and in the Transfer and Servicing Agreement, all the
right, title and interest of the Seller and the Depositor in and to the (i) Subsequent
Mortgage Loans including the related Stated Principal Balance as of the
subsequent Cut-off Date, all interest accruing thereon after the Subsequent
Cut-off Date, and all collections in respect of principal received after the
Subsequent Cut-off Date; (ii) property which secured a Subsequent Mortgage
Loan and which is acquired by foreclosure or in lieu of foreclosure; (iii) interest
of the Seller in any insurance policies in respect of the Subsequent Mortgage
Loans; and (iv) all proceeds of any of the foregoing.

 

Section IV.             Representations
and Warranties of the Seller and the Depositor.  (a) The Seller and the Depositor hereby
represent and warrant to the Trust for the benefit of the Certificateholders
that the representations and warranties of the Seller and the Depositor set
forth in Sections, (b) and (c) of the Transfer and Servicing
Agreement are true and correct with respect to the Seller and the Subsequent
Mortgage Loans as of the Subsequent Transfer Date.

 

(b)           The
Seller hereby represents and warrants that (i) the aggregate of the Stated
Principal Balances of the Subsequent Mortgage Loans listed on the Subsequent
Mortgage Loan Schedule and conveyed to the Trust pursuant to this
Agreement as of the Subsequent Cut-off Date is $                        and
(ii) the conditions precedent for the transfer of Subsequent Mortgage
Loans set forth in Section 2.04 of the Transfer and Servicing Agreement
have been satisfied as of the Subsequent Transfer Date.

 

(c)           The
Seller and the Depositor hereby represent and warrant that neither the Seller
nor the Depositor is (i) insolvent and will not be rendered insolvent by
the transfer of Subsequent Mortgage Loans pursuant to this Agreement or (ii) aware
of any pending insolvency.

 

Section V.              Counterparts.  This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the
same instrument.

 

Section VI.             Governing
Law.  This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, and the obligations, rights and remedies of the parties hereunder shall
be determined in accordance with such laws without regard to conflict of laws
principles applied in New York (other than Section 5-1401 of the New York
General Obligations Law which shall apply hereto).

 

Section VII.           Execution
by the Issuer.  It is expressly
understood and agreed by the parties hereto that (a) this Agreement is
executed and delivered by U.S. Bank Trust National Association, not
individually or personally but solely as Owner Trustee of the Issuer, in the
exercise of the powers and authority conferred and vested in it as trustee, (b) each
of the representations, undertakings and agreements herein made on the part of
the Issuer is made and intended not as personal representations, undertakings
and agreements by U.S. Bank Trust

 

I-2

 

National Association but is made and intended for the purpose of
binding only the Issuer, (c) nothing herein contained shall be construed
as creating any liability on U.S. Bank Trust National Association, individually
or personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties
hereto and by any person claiming by, through or under the parties hereto and (d) under
no circumstances shall U.S. Bank Trust National Association be personally
liable for the payment of any indebtedness or expenses of the Issuer or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Issuer under this Agreement or any other
document.

 

I-3

 

IN WITNESS
WHEREOF, the parties hereto have caused this agreement to be executed by their
respective officers thereunto authorized as of the date first written above.

 

	
   

  	
   

  	
  FIELDSTONE MORTGAGE INVESTMENT TRUST,

  
	
   

  	
   

  	
  SERIES 2005-2, as Issuer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  U.S. BANK TRUST NATIONAL ASSOCIATION,

  
	
   

  	
   

  	
   

  	
  not in its individual capacity but solely
  as Owner

  
	
   

  	
   

  	
   

  	
  Trustee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FIELDSTONE MORTGAGE INVESTMENT

  CORPORATION,

  
	
   

  	
   

  	
  as Depositor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HSBC BANK USA, NATIONAL ASSOCIATION, not

  
	
   

  	
   

  	
  in its individual capacity but solely as
  Indenture

  
	
   

  	
   

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WELLS FARGO BANK, N.A.,

  
	
   

  	
   

  	
  as Trust Administrator and Master Servicer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
						

 

I-4

 

	
   

  	
   

  	
  FIELDSTONE SERVICING CORP.,

  
	
   

  	
   

  	
  as Servicer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FIELDSTONE INVESTMENT CORPORATION, as

  
	
   

  	
   

  	
  Seller

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

I-5

 

	
  STATE OF

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF

  	
  )

  

 

On this     day of           ,
before me, personally appeared              ,
known to me to be a         of
[                                  ],
a Delaware banking corporation that executed the within instrument, and also
known to me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

[NOTARIAL SEAL]

 

I-6

 

	
  STATE OF MARYLAND

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF HOWARD

  	
  )

  

 

On the    day of             ,
before me, personally appeared             ,
known to me to be a             
of Fieldstone Mortgage Investment Corporation, a corporation that executed the
within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

[NOTARIAL SEAL]

 

I-7

 

	
  STATE OF

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF

  	
  )

  

 

On the    day of             ,
before me, a Notary Public in and for said State, personally appeared             
known to me to be a            
of [Indenture Trustee], a [  ] that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

[NOTARIAL SEAL]

 

I-8

 

	
  STATE OF

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF

  	
  )

  

 

On the    day of             ,
before me, a Notary Public in and for said State, personally appeared             
known to me to be a             
of [Master Servicer], a  [  ] that executed the within instrument and
also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.

 

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

[NOTARIAL SEAL]

 

I-9

 

	
  STATE OF

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF

  	
  )

  

 

On the    day of             ,
before me, a Notary Public in and for said State, personally appeared             
known to me to be a             
of Fieldstone Servicing Corp., a corporation that executed the within
instrument and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

[NOTARIAL SEAL]

 

I-10

 

EXHIBIT J

 

SUBSEQUENT MORTGAGE LOAN CRITERIA

 

The obligation
of the Trust to purchase Subsequent Mortgage Loans during the Pre-Funding
Period is subject to the following requirements:

 

•              such
Subsequent Mortgage Loan may not be more than one calendar month contractually
delinquent as of the related Subsequent Cut-off Date;

 

•              such
Subsequent Mortgage Loan may not have a final maturity date later than November 1,
2035;

 

•              the
remaining term to stated maturity of such Subsequent Mortgage Loan will not
exceed 30 years;

 

•              such
Subsequent Mortgage Loan will have a Mortgage Rate not less than 6.000% per
annum;

 

•              such
Subsequent Mortgage Loan will not have an original loan-to-value ratio greater
than 100%;

 

•              such
Subsequent Mortgage Loan will have a principal balance not greater than
$850,000;

 

•              such
Subsequent Mortgage Loan will be secured by a first or second lien on a
Mortgaged Property; and

 

•              such
Subsequent Mortgage Loan will be otherwise acceptable to the Rating Agencies.

 

Following the
purchase of such Subsequent Mortgage Loans by the Trust, the mortgage pool and
each Mortgage Group will have the following characteristics (based upon the
characteristics of the (a) Initial Mortgage Loans as of the Initial
Cut-off Date and (b) Subsequent Mortgage Loans as of the related
Subsequent Cut-off Date):

 

Mortgage Pool

 

•              a
weighted average current Mortgage Rate of at least 7.162% per annum;

 

•              a
weighted average remaining term to stated maturity of less than 360 months;

 

•              a
weighted average original loan-to-value ratio of not more than 82.05%;

 

•              a
weighted average Credit Score of at least 647; and

 

•              no more
than 9.30% of the Mortgage Loans by Aggregate Loan Balance at the end of the
Pre-Funding Period will be used for cash-out refinances.

 

J-1

 

Group 1

 

•              a
weighted average current Mortgage Rate of at least 7.408% per annum;

 

•              a
weighted average remaining term to stated maturity of less than 360 months;

 

•              a
weighted average original loan-to-value ratio of not more than 81.42%; and

 

•              no more
than 15.73% of the Group 1 Mortgage Loans by Aggregate Loan Balance at the end
of the Pre-Funding Period will be used for cash-out refinances.

 

Group 2

 

•              a
weighted average current Mortgage Rate of at least 6.962% per annum;

 

•              a
weighted average remaining term to stated maturity of less than 360 months;

 

•              a
weighted average original loan-to-value ratio of not more than 82.56%; and

 

•              no more
than 4.07% of the Group 1 Mortgage Loans by Aggregate Loan Balance at the end
of the Pre-Funding Period will be used for cash-out refinances.

 

J-2

 

EXHIBIT K

 

FANNIE MAE GUIDE NO. 95-19

 

Reference

 

•      Selling            This
announcement amends the guide(s) indicated.

•      Servicing       Please
keep it for reference until we issue a formal change.

 

Subject          “Full-File”
Reporting to Credit Repositories

 

Part IV, Section 107,
of the servicing Guide currently requires servicers to report only 90-day
delinquencies to the four major credit repositories.  To ensure that the repositories have
up-to-date information for both servicing and origination activity, we have
decided to begin requiring 

— as of the month ending March 31, 1996 — servicers to provide the credit
repositories a “full-file” status report for the mortgages they service for us.

 

“Full-file”
reporting requires that servicers submit a monthly report to each of the credit
repositories to describe the exact status for each mortgage they service for
us.  The status reported generally should
be the one in effect as of the last business day of each month.  Servicers may, however, use a slightly later
cut-off date — for example, at the end of the first week of a month — to assure
that payment corrections, returned checks, and other adjustments related to the
previous month’s activity can be appropriately reflected in their report for
that month.  Statuses that must be
reported for any given mortgage include the following:  new origination, current, delinquent (30-, 60-,
90-days, etc.), foreclosed, and charged-off. 
(The credit repositories will provide the applicable codes for reporting
these statuses to them.) A listing of each of the major repositories to which “full-file”
status reports must be sent is attached.

 

Servicers are
responsible for the complete and accurate reporting of mortgage status
information to the repositories and for resolving any disputes that arise about
the information they report.  Servicers
must respond promptly to any inquiries from borrowers regarding specific
mortgage status information about them that was reported to the credit
repositories.

 

Servicers
should contact their Customer Account Team in their lead Fannie Mae regional
office if they have any questions about this expanded reporting requirement.

 

Robert J. Engeletad

Senior Vice President – Mortgage and Lender Standards

 

11/20/95

 

K-1

 

FANNIE MAE GUIDE 95-19

 

ATTACHMENT I

 

ANNOUNCEMENT

 

Major Credit Repositories

 

A “full-file”
status report for each mortgage serviced for Fannie Mae must be sent to the
following repositories each month (beginning with the month ending March 31,
1996):

 

	
  Company

  	
   

  	
  Telephone Number

  
	
  Consumer Credit Associates, Inc.
950 Threadneedle Street, Suite 200

  Houston, Texas 77079-2903

  	
   

  	
  Call (713) 595-1190, either
  extension 150, 101, or 112, for all inquiries.

  
	
   

  	
   

  	
   

  
	
  Equifax

  	
   

  	
  Members that have an account number may
  call their local sales representative for all inquiries; lenders that need to
  set up an account should call (800) 685-5000 and select the customer
  assistance option.

  
	
   

  	
   

  	
   

  
	
  TRW Information Systems & Services

  601 TRW Parkway

  Allen, Texas 75002

  	
   

  	
  Call (800) 831-5614 for all inquiries,
  current members should select option 3; lenders that need to set up an
  account should select Option 4.

  
	
   

  	
   

  	
   

  
	
  Trans Union Corporation
555 West Adams

  Chicago, Illinois 60661

  	
   

  	
  Call (312) 258-1818 to get the name of the
  local bureau to contact about setting up an account or obtaining other
  information.

  

 

 

SCHEDULE A

 

MORTGAGE LOAN SCHEDULE

 

 

A-1

 

SCHEDULE A-1

 

 

A-1-1Exhibit 4.2

 

Execution Copy

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION
RIGHTS AGREEMENT, dated as of June 21, 2005 (the “Agreement”),
among the institutional investors whose names and addresses appear from time to
time on Schedule I hereto (the “Institutional Investors”);
the investors whose names and addresses appear from time to time on Schedule II
hereto (the “Management Investors”); and ev3 Inc., a Delaware corporation
(the “Company”).  The
Institutional Investors and the Management Investors are hereinafter
collectively referred to as the “Investors.”

 

R  E  C  I  T  A
L  S

 

WHEREAS, the
Investors were formerly members of ev3 LLC, a Delaware limited liability
company (“ev3 LLC”);

 

WHEREAS, in
contemplation of an Initial Public Offering (as defined below), ev3 LLC merged
with and into the Company (the “Merger”);

 

WHEREAS, as a
result of the Merger, the Investors are holders of common stock, par value
$0.01 per share (“Common Stock”), of the Company; and

 

WHEREAS, the
Company has agreed to grant the Investors certain registration rights; and

 

WHEREAS, the
Company and the Investors desire to define the registration rights of the
Investors on the terms and subject to the conditions herein set forth.

 

NOW,
THEREFORE, in consideration of the foregoing premises and for other good and
valuable consideration, the parties hereby agree as follows:

 

SECTION 1.  DEFINITIONS

 

As used in
this Agreement, the following terms have the respective meaning set forth
below:

 

Commission:  shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act;

 

Exchange Act:  shall mean the Securities Exchange Act of
1934, as amended (or any successor act), and the rules and regulations
promulgated thereunder;

 

Holder:  shall mean any holder of Registrable
Securities;

 

 

Initial Public
Offering:  shall
mean the initial public offering of shares of Common Stock pursuant to a
registration under the Securities Act;

 

Initiating
Holder:  shall
mean any Holder or Holders who in the aggregate are Holders of more than 50% of
the then outstanding Registrable Securities;

 

Person:  shall mean an individual, partnership,
joint-stock company, corporation, trust or unincorporated organization, and a
government or agency or political subdivision thereof;

 

Register,
Registered and Registration: 
shall mean a registration effected by preparing and filing a
registration statement in compliance with the Securities Act (and any
post-effective amendments filed or required to be filed) and the declaration or
ordering of effectiveness of such registration statement;

 

Registrable
Securities: 
shall mean (A) shares of Common Stock held by the Investors, (B) any
additional shares of Common Stock acquired by the Investors and (C) any
stock of the Company issued to the Investors as a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
shares of Common Stock referred to in clause (A) or (B);

 

Registration
Expenses:  shall
mean all expenses incurred by the Company in compliance with Section 2(a),
(b) and (c) hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, fees and expenses of one counsel for all of the
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the
compensation of regular employees of the Company, which shall be paid in any
event by the Company);

 

Securities Act:  shall mean the Securities Act of 1933, as
amended (or any successor act), and the rules and regulations promulgated
thereunder;

 

Security,
Securities: 
shall have the meaning set forth in Section 2(1) of the
Securities Act; and

 

Selling
Expenses:  shall
mean all underwriting discounts and selling commissions applicable to the sale
of Registrable Securities and all fees and disbursements of counsel for each of
the Holders other than fees and expenses of one counsel for all the Holders.

 

SECTION 2.  REGISTRATION RIGHTS

 

(a)           Requested
Registration.

 

(i)            Request
for Registration.  If the Company
shall receive from an Initiating Holder, at any time after the Initial Public
Offering, a written request that the Company

 

2

 

effect any registration with respect to all or a part of the
Registrable Securities, the Company will:

 

(1)           promptly
give written notice of the proposed registration, qualification or compliance
to all other Holders; and

 

(2)           as
soon as practicable, use its reasonable best efforts to effect such
registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder
or Holders joining in such request as are specified in a written request
received by the Company within ten (10) business days after written notice
from the Company is given under Section 2(a)(i)(1) above; provided
that the Company shall not be obligated to effect, or take any action to
effect, any such registration pursuant to this Section 2(a):

 

(A)          In
any particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance, unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act or
applicable rules or regulations thereunder;

 

(B)           After
the Company has effected two (2) such registrations pursuant to this Section 2(a) and
such registrations have been declared or ordered effective and the sales of
such Registrable Securities shall have closed;

 

(C)           If
the Registrable Securities requested by all Holders to be registered pursuant
to such request do not have an anticipated aggregate public offering price
(before any underwriting discounts and commissions) of not less than
$10,000,000; or

 

(D)          If
the Company shall furnish to the Initiating Holder a certificate signed by the
President of the Company stating that in the good faith judgment of the Board
of Directors of the Company it would be materially detrimental to the Company
or its stockholders for such registration statement to be filed in the near
future, in which case the Company’s obligation to use its reasonable best
efforts to comply with this Section 2(a) shall be deferred for one or
more periods not to exceed ninety (90) days in the aggregate in any
twelve-month period.

 

The
registration statement filed pursuant to the request of the Initiating Holders
may, subject to the provisions of Section 2(a)(ii) below, include
other securities of the Company which are held by Persons who, by virtue of
agreements with the Company, are entitled to include their

 

3

 

securities in
any such registration (“Other Stockholders”).  In the event any Institutional Investor
requests a registration pursuant to this Section 2(a) in connection
with a distribution of Registrable Securities to its partners or members, the
registration shall provide for the resale by such partners or members, if
requested by such Institutional Investor.

 

The
registration rights set forth in this Section 2 may be assigned, in whole
or in part, to any transferee of Registrable Securities (who shall be bound by
all obligations of this Agreement).

 

(ii)           Underwriting.  If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, then they shall so advise the Company as a part of their request
made pursuant to Section 2(a).

 

If Other
Stockholders request inclusion in such registration, then the Holders shall
offer to include the securities of such Other Stockholders in the underwriting
and may condition such offer on their acceptance of the further applicable
provisions of this Section 2.  The
Holders whose shares are to be included in such registration and the Company
shall (together with all Other Stockholders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for such underwriting by the Initiating Holders and reasonably
acceptable to the Company.  Notwithstanding
any other provision of this Section 2(a), if the representative advises
the Holders in writing that marketing factors require a limitation on the
number of shares to be underwritten, the securities of the Company held by
Other Stockholders shall be excluded from such registration to the extent so
required by such limitation.  If, after
the exclusion of such shares, further reductions are still required, the number
of shares included in the registration by each Holder (other than the
Institutional Investors) shall be reduced on a pro rata basis (based on the
number of shares held by such Holder), by such minimum number of shares as is
necessary to comply with such request. 
If, after exclusion of such shares, further reductions are still required,
the number of shares included in the registration by Institutional Investors
shall be reduced on a pro rata basis by such minimum number of shares as is
necessary to comply with such request. 
No Registrable Securities or any other securities excluded from the
underwriting by reason of the underwriter’s marketing limitation shall be
included in such registration.  If any
Other Stockholder who has requested inclusion in such registration as provided
above disapproves of the terms of the underwriting, such Person may elect to
withdraw therefrom by providing prompt written notice to the Company, the
underwriter and the Initiating Holders. 
The securities so withdrawn shall also be withdrawn from registration.  If the underwriter has not limited the number
of Registrable Securities or other securities to be underwritten, then the
Company and officers and directors of the Company may include its or their
securities for its or their own account in such registration if the
representative so agrees and if the number of Registrable Securities and other
securities which would otherwise have been included in such registration and
underwriting will not thereby be limited.

 

(b)           Company
Registration.

 

(i)            Inclusion
in Registration.  If, after the
Initial Public Offering, the Company shall determine to register any of its
equity securities either for its own account or for the account of Other
Stockholders, other than a registration relating solely to

 

4

 

employee benefit plans, or a registration relating solely to a
Commission Rule 145 transaction, or a registration on any registration
form which does not permit secondary sales or does not include substantially
the same information as would be required to be included in a registration
statement covering the sale of Registrable Securities, the Company will:

 

(1)           promptly
give to each of the Holders a written notice thereof (which shall include a
list of the jurisdictions in which the Company intends to attempt to qualify
such securities under the applicable blue sky or other state securities laws);
and

 

(2)           include
in such registration (and any related qualification under blue sky laws or
other compliance), and in any underwriting involved therein, all the
Registrable Securities specified in a written request or requests, made by the
Holders within fifteen (15) days after receipt of the written notice from the
Company described in Section 2(b)(i) above, except as set forth in Section 2(b)(ii) below.  Such written request may specify all or a
part of the Holders’ respective Registrable Securities.  In the event any Holder requests inclusion in
a registration pursuant to this Section 2(b) in connection with a
distribution of Registrable Securities to its partners or members, the registration
shall provide for the resale by such partners or members, if requested by such
Holder.

 

(ii)           Underwriting.  If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise each of the Holders as a part of the written notice
given pursuant to Section 2(b)(i)(1). 
In such event, the right of each of the Holders to registration pursuant
to this Section 2(b) shall be conditioned upon such Holders’
participation in such underwriting and the inclusion of such Holders’
Registrable Securities in the underwriting to the extent provided herein.  The Holders whose shares are to be included
in such registration shall (together with the Company and the Other
Stockholders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for underwriting by the Company.  Notwithstanding any other provision of this Section 2(b),
if the representative determines that marketing factors require a limitation on
the number of shares to be underwritten, the representative may (subject to the
allocation priority set forth below) limit the number of Registrable Securities
to be included in the registration and underwriting to not less than twenty
five percent (25%) of the shares included therein (based on the number of
shares).  The Company shall immediately
advise all holders of securities requesting registration of such limitation,
and the number of such shares of securities that are entitled to be included in
the registration and underwriting shall be allocated in the following
manner:  The securities of the Company
held by officers, directors and Other Stockholders of the Company (other than
Registrable Securities and other than securities held by holders who by
contractual right demanded such registration (“Demanding Holders”))
shall be excluded from such registration and underwriting to the extent
required by such limitation, and, if a limitation on the number of shares is
still required, the number of shares that may be included in the registration
and underwriting by each of the Holders and Demanding Holders shall be reduced,
on a pro rata basis (based on the number of shares held by such Holder), by
such minimum number of shares

 

5

 

as is necessary to comply with such limitation.  If any of the Holders or any officer,
director or Other Stockholder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by providing prompt written
notice to the Company and the underwriter. 
Any Registrable Securities or other securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration.

 

(c)           Form S-3.  Following the Initial Public Offering, the
Company shall use its best efforts to qualify for registration on Form S-3
for secondary sales.  After the Company
has qualified for the use of Form S-3, the Holders shall have the right to
request three (3) registrations on Form S-3 (such requests shall be
in writing and shall state the number of shares of Registrable
Securities to be disposed of and the intended method of disposition of shares
by such holders), provided that the Company shall not be obligated to
effect, or take any action to effect, any such registration pursuant to this Section 2(c):

 

(i)            Unless
the Holder or Holders requesting registration propose to dispose of shares of
Registrable Securities having an aggregate price to the public (before
deduction of underwriting discounts and expenses of sale) of more than
$1,000,000;

 

(ii)           Within
180 days of the effective date of the most recent registration pursuant to this
Section 2(c) in which securities held by the requesting Holder could
have been included for sale or distribution; or

 

(iii)          In
any particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance, unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act or
applicable rules or regulations thereunder.

 

(iv)          If
the Company shall furnish to the Holder or Holders requesting registration a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company it would be materially
detrimental to the Company or its stockholders for such registration statement
to be filed in the near future, in which case the Company’s obligation to use
its best efforts to comply with this Section 2(c) shall be deferred
for one or more periods not to exceed ninety (90) days in the aggregate in any
twelve-month period.

 

The Company
shall give written notice to all Holders of the receipt of a request for
registration pursuant to this Section 2(c) and shall provide a
reasonable opportunity for other Holders to participate in the registration,
provided that if the registration is for an underwritten offering, the terms of
Section 2(a)(ii) shall apply to all participants in such
offering.  Subject to the foregoing, the
Company will use its best efforts to effect promptly the registration of all
shares of Registrable Securities on Form S-3 to the extent requested by
the Holder or Holders thereof for purposes of disposition.  In the event any Holder requests a
registration pursuant to this Section 2(c) in connection with a
distribution of Registrable Securities to its partners or members, the

 

6

 

registration
shall provide for the resale by such partners or members, if requested by such
Holder.

 

(d)           Company Control.  The Company may decline to file a
registration statement referenced in Section 2(b), or withdraw such
registration statement after filing but prior to the effectiveness of the
registration statement, provided that the Company shall promptly notify
each Holder participating in the offering covered by such registration
statement in writing of any such action. 
The Holders shall not be permitted to sell any securities pursuant to Section 2(b) or
2(c) at any time that the Board of Directors of the Company determines in
good faith that it would be materially detrimental to the Company or its
stockholders for sales of securities to be made, provided that (1) the
Company shall promptly notify each Holder in writing of any such action and (2) in
the case of Section 2(c), such periods shall not exceed ninety (90) days
in the aggregate in any twelve-month period.

 

(e)           Expenses of Registration.  All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to this Section 2
shall be borne by the Company, and all Selling Expenses shall be borne by the
Holders of the securities so registered pro rata on the basis of the number of
their shares so registered.

 

(f)            Registration Procedures.  In the case of each registration effected by
the Company pursuant to this Section 2, the Company will keep the Holders,
as applicable, advised in writing as to the initiation of each registration and
as to the completion thereof.  At its
expense, the Company will:

 

(i)            keep
such registration effective for a period of one hundred twenty (120) days or
until the Holders (or in the case of a distribution to the partners or members
of such Holder, such partners or members), as applicable, have completed the
distribution described in the registration statement relating thereto,
whichever first occurs; provided, however, that (A) such 120-day
period shall be extended for a period of time equal to the period during which
the Holders, partners or members, as applicable, refrain from selling any
securities included in such registration in accordance with provisions in Section 2(j)
hereof; and (B) in the case of any registration of Registrable Securities
on Form S-3 which are intended to be offered on a continuous or delayed
basis, such 120-day period shall be extended until all such Registrable
Securities are sold, provided that Rule 415, or any successor rule under
the Securities Act, permits an offering on a continuous or delayed basis, and
provided further that applicable rules under the Securities Act governing
the obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (y) includes any prospectus required by Section 10(a) of
the Securities Act or (z) reflects facts or events representing a material or
fundamental change in the information set forth in the registration statement,
the incorporation by reference of information required to be included in (y)
and (z) above to be contained in periodic reports filed pursuant to Section 12
or 15(d) of the Exchange Act in the registration statement;

 

7

 

(ii)           furnish
such number of prospectuses and other documents incident thereto as each of the
Holders, as applicable, from time to time may reasonably request;

 

(iii)          notify
each Holder of Registrable Securities covered by such registration at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and

 

(iv)          furnish,
on the date that such Registrable Securities are delivered to the underwriters
for sale, if such securities are being sold through underwriters or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (1) an
opinion, dated as of such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering and reasonably satisfactory to
a majority in interest of the Holders participating in such registration,
addressed to the underwriters, if any, and to the Holders participating in such
registration and (2) a letter, dated as of such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering and reasonably satisfactory to a majority in
interest of the Holders participating in such registration, addressed to the underwriters,
if any, and if permitted by applicable accounting standards, to the Holders
participating in such registration.

 

(g)           Indemnification.

 

(i)            To
the fullest extent permitted by law, the Company will indemnify each of the
Holders, as applicable, each of its officers, directors, partners and members,
and each Person controlling each of the Holders, with respect to each
registration which has been effected pursuant to this Section 2, and each
underwriter, if any, and each Person who controls any underwriter, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, in light of the circumstances under which they were made) not
misleading, or any violation by the Company of the Securities Act or the
Exchange Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each of the Holders, each of its officers, directors, partners and
members, and each Person controlling each of the Holders, each such underwriter
and each Person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection

 

8

 

with investigating and defending any such claim, loss, damage,
liability or action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based upon
written information furnished to the Company by the Holders or underwriter and
stated to be specifically for use therein.

 

(ii)           Each
of the Holders will, if Registrable Securities held by it are included in the
securities as to which such registration, qualification or compliance is being
effected, indemnify the Company, each of its directors and officers and each
underwriter, if any, of the Company’s securities covered by such a registration
statement, each Person who controls the Company or such underwriter, each Other
Stockholder and each of their officers, directors, partners and members, and
each Person controlling such Other Stockholder against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document made by such Holder in writing, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements by such Holder therein (in the case of a
prospectus, in light of the circumstances under which they were made) not
misleading, and will reimburse the Company and such Other Stockholders,
directors, officers, partners, members, Persons, underwriters or control
Persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by such Holder and stated to be specifically for use therein;
provided, however, that the obligations of each of the Holders hereunder shall
be limited to an amount equal to the net proceeds to such Holder of securities
sold as contemplated herein.

 

(iii)          Each
party entitled to indemnification under this Section 2(g) (the “Indemnified
Party”) shall give notice to the party required to provide indemnification
(the “Indemnifying Party”) promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such
defense at such party’s expense (unless the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in such action, in which case the
fees and expenses of counsel shall be at the expense of the Indemnifying
Party), and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 2 unless the Indemnifying Party is
materially prejudiced thereby.  No
Indemnifying Party, in the defense of any such claim or litigation shall,
except with the consent of each Indemnified

 

9

 

Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. 
Each Indemnified Party shall furnish such information regarding itself
or the claim in question as an Indemnifying Party may reasonably request in
writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.

 

(iv)          If
the indemnification provided for in this Section 2(g) is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, liability, claim, damage or expense in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party on the
one hand and of the Indemnified Party on the other in connection with the
statements or omissions which resulted in such loss, liability, claim, damage
or expense, as well as any other relevant equitable considerations.  The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by reference to, among other
things, whether the untrue (or alleged untrue) statement of a material fact or
the omission (or alleged omission) to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.

 

(v)           Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with any underwritten public offering contemplated by this Agreement are in
conflict with the foregoing provisions, the provisions in such underwriting
agreement shall be controlling.

 

(vi)          The
foregoing indemnity agreement of the Company and Holders is subject to the
condition that, insofar as they relate to any loss, claim, liability or damage
arising out of a statement made in or omitted from a preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the Commission at
the time the registration statement in question becomes effective or the
amended prospectus filed with the Commission pursuant to Commission Rule 424(b) (the
“Final Prospectus”), such indemnity or contribution agreement shall not
inure to the benefit of any underwriter or Holder if a copy of the Final
Prospectus was furnished to the underwriter and was not furnished to the Person
asserting the loss, liability, claim or damage at or prior to the time such
action is required by the Securities Act.

 

(h)           Information
by the Holders.

 

(i)            Each
of the Holders holding securities included in any registration shall furnish to
the Company such information regarding such Holder and the distribution
proposed by such Holder as the Company may reasonably request in writing and as
shall

 

10

 

be reasonably required in connection with any registration,
qualification or compliance referred to in this Section 2.

 

(ii)           In
the event that, either immediately prior to or subsequent to the effectiveness
of any registration statement, any Holder shall distribute Registrable
Securities to its partners or members, such Holder shall so advise the Company
and provide such information as shall be necessary to permit an amendment to
such registration statement to provide information with respect to such
partners or members, as selling securityholders.  Promptly following receipt of such
information, the Company shall file an appropriate amendment to such
registration statement reflecting the information so provided.  Any incremental expense to the Company
resulting from such amendment shall be borne by such Holder.

 

(i)            Rule 144
Reporting.

 

With a view to
making available the benefits of certain rules and regulations of the
Commission which may permit the sale of restricted securities to the public
without registration, the Company agrees to:

 

(i)            make
and keep public information available as those terms are understood and defined
in Rule 144 under the Securities Act (“Rule 144”), at all
times from and after ninety (90) days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;

 

(ii)           use
its best efforts to file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act at any time after it has become subject to such reporting
requirements; and

 

(iii)          so
long as the Holder owns any Registrable Securities, furnish to the Holder upon
request, a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 (at any time from and after ninety (90)
days following the effective date of the first registration statement filed by
the Company for an offering of its securities to the general public), and of
the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
as the Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing the Holder to sell any such securities
without registration.

 

(j)            “Market Stand-off” Agreement.  Each of the Holders agrees, if requested by
the Company and an underwriter of equity securities of the Company, not to sell
or otherwise transfer or dispose of any Registrable Securities held by such
Holder during (A) the 180-day period following the effective date of a
registration statement of the Company filed under the Securities Act, provided
that (i) such agreement only applies to the Initial Public Offering and (ii) all
officers and directors of the Company enter into similar agreements and (B) the
90-day period following the effective date of a registration statement of the
Company filed under the Securities Act, provided that (i) such agreement
only applies to the first two registration

 

11

 

statements of the Company filed
after the Initial Public Offering and (ii) all officers and directors of
the Company enter into similar agreements.

 

If requested by the underwriters, the Holders shall execute a separate
agreement to the foregoing effect.  The
Company may impose stop-transfer instructions with respect to the shares (or
securities) subject to the foregoing restriction until the end of said 180-day
period or 90-day period, as applicable. 
The provisions of this Section 2(j) shall be binding upon any
transferee who acquires Registrable Securities.

 

(k)           Termination.  The registration rights set forth in this Section 2
shall not be available to any Holder if, (i) in the opinion of counsel to
the Company, all of the Registrable Securities then owned by such Holder could
be sold in any 90-day period pursuant to Rule 144 (without giving effect
to the provisions of Rule 144(k)) or (ii) all of the Registrable
Securities held by such Holder have been sold in a registration pursuant to the
Securities Act or pursuant to Rule 144.

 

SECTION 3.  MISCELLANEOUS

 

(a)           Directly or Indirectly.  Where any provision in this Agreement refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.

 

(b)           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State.

 

(c)           Section Headings.  The headings of the sections and subsections
of this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.

 

(d)           Notices.

 

(i)            All
communications under this Agreement shall be in writing and shall be delivered
by hand or facsimile or mailed by overnight courier or by registered or
certified mail, postage prepaid:

 

(1)           if
to the Company, at: ev3 Inc., 4600 Nathan Lane North, Plymouth, Minnesota  55442 (facsimile: (763) 398-7240), Attention:
L. Cecily Hines, or at such other address or facsimile number as it may have
furnished the Investors in writing.

 

(2)           if
to the Institutional Investors, at the address or facsimile number listed on Schedule I
hereto, or at such other address or facsimile number as may have been

 

12

 

furnished the Company in writing, with a copy to Willkie Farr &
Gallagher, 787 Seventh Avenue, New York, NY 10019 (facsimile: (212) 728-8111),
Attention: Steven J. Gartner, Esq.

 

(3)           if
to the Management Investors, at the address or facsimile number listed on Schedule II
hereto, or at such other address or facsimile number as may have been furnished
the Company in writing.

 

(ii)           Any
notice so addressed shall be deemed to be given: if delivered by hand or
facsimile, on the date of such delivery; if mailed by courier, on the first
business day following the date of such mailing; and if mailed by registered or
certified mail, on the third business day after the date of such mailing.

 

(e)           Reproduction of Documents.  This Agreement and all documents relating
thereto, including, without limitation, any consents, waivers and
modifications which may hereafter be executed may be reproduced by the Holders
by any photographic, photostatic, microfilm, microcard, miniature photographic
or other similar process and the Holders may destroy any original document so
reproduced.  The parties hereto agree and
stipulate that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made by
the Holders in the regular course of business) and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.

 

(f)            Successors and Assigns.  This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties.

 

(g)           Entire Agreement; Amendment and
Waiver.  This Agreement constitutes
the entire understanding of the parties hereto and supersedes all prior
understanding among such parties.  This
Agreement may be amended, and the observance of any term of this Agreement may
be waived, with (and only with) the written consent of the Company and the
Holders holding a majority of the then outstanding Registrable Securities.

 

(h)           Severability.  In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not affect the
remaining provisions of this Agreement which shall remain in full force and
effect.

 

(i)            Counterparts.  This Agreement may be executed in one or more
counterparts (including by facsimile), each of which shall be deemed an
original and all of which together shall be considered one and the same
agreement.

 

13

 

IN WITNESS
WHEREOF, the undersigned have executed this Agreement as of the date first set
forth above.

 

	
   

  	
  ev3 Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James M.
  Corbett

  	
   

  
	
   

  	
  Name:

  	
  James M. Corbett

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WARBURG, PINCUS
  EQUITY PARTNERS,

  L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Warburg Pincus Partners LLC,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
  By:

  	
  Warburg Pincus & Co.,

  
	
   

  	
   

  	
   

  	
  its Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Elizabeth H. Weatherman

  	
   

  
	
   

  	
  Name:

  	
  Elizabeth H. Weatherman

  
	
   

  	
  Title:

  	
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WARBURG, PINCUS
  NETHERLANDS

  EQUITY PARTNERS I, C.V.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Warburg Pincus Partners LLC

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Warburg Pincus & Co.,

  
	
   

  	
   

  	
   

  	
  its Managing Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Elizabeth H. Weatherman

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Elizabeth H. Weatherman

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Partner

  	
   

  
												

 

 

	
   

  	
  WARBURG, PINCUS NETHERLANDS

  EQUITY PARTNERS III, C.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Warburg Pincus Partners LLC,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Warburg Pincus & Co.,

  
	
   

  	
   

  	
   

  	
  its Managing Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Elizabeth H. Weatherman

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Elizabeth H. Weatherman

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTICAL FUND I,
  L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Vertical Group, L.P.,

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard B. Emmitt

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard B. Emmitt

  	
   

  
	
   

  	
   

  	
  Title:

  	
  General Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTICAL FUND II,
  L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Vertical Group, L.P.,

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
												

 

	
   

  	
  By:

  	
    /s/ Richard B. Emmitt

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard B. Emmitt

  	
   

  
	
   

  	
   

  	
  Title:

  	
  General Partner

  	
   

  

 

 

	
   

  	
  /s/ James M. Corbett

  	
   

  
	
   

  	
  James M. Corbett

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  L. Cecily Hines

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Stacy Enxing Seng

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Paul Kapsner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Paul Buckman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Dale Spencer

  	
   

  
	
   

  	
  Dale Spencer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Rick Olson

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Megan
  Becker

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Piet van
  den Bosch

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Bruce
  Krattenmaker

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mojdeh
  Poul

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Stewart
  M. Kume

  

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Paresh A. Gandhi

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Chandra Coughlin

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Martin Hieb

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Thuzar
  Han

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Karen
  Yahnke

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Chad
  Roue

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Michele
  Roggemann

  
	
   

  	
   

  

 

 

SCHEDULE I

 

Institutional Investors

 

Institutional
Investor’s Name and Address

 

	
  Warburg,
  Pincus Equity Partners, L.P.

  c/o Warburg Pincus & Co.

  466 Lexington Avenue

  New York, NY 10017

  Facsimile: (212) 716-5068

  Attention: Sean D. Carney

  
	
  Elizabeth H.
  Weatherman

  
	
   

  
	
  Warburg,
  Pincus Netherlands Equity Partners

  I, C.V.

  c/o Warburg Pincus & Co.

  466 Lexington Avenue

  New York, NY 10017

  Facsimile: (212) 716-5068

  Attention: Sean D. Carney 

  
	
  Elizabeth H.
  Weatherman

  
	
   

  
	
  Warburg,
  Pincus Netherlands Equity Partners

  III, C.V.

  c/o Warburg Pincus & Co.

  466 Lexington Avenue

  New York, NY 10017

  Facsimile: (212) 716-5068

  Attention: Sean D. Carney

  
	
  Elizabeth H.
  Weatherman

  
	
   

  
	
  Vertical
  Fund I, L.P.

  c/o Vertical Group, L.P.

  25 Deforest Avenue

  Summit, New Jersey 07901

  Facsimile: (908) 273-9434

  Attention: John Runnells

  
	
   

  
	
  Vertical
  Fund II, L.P.

  c/o Vertical Group, L.P.

  25 Deforest Avenue

  Summit, New Jersey 07901

  Facsimile: (908) 273-9434

  Attention: John Runnells

  

 

 

SCHEDULE II

 

Management Investors

 

Managment
Investor’s Name and Address

 

James M.
Corbett

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

L. Cecily
Hines

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile: (763) 398-7000

 

Stacy Enxing
Seng

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

Paul Kapsner

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth, Minnesota  55442

Facsimile:
(763) 398-7000

 

Paul Buckman

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

Dale A.
Spencer

503 North
Ferndale Road

Wayzata,
Minnesota  55391

 

Rick Olson

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

 

Megan Becker

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

Piet van den Bosch

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile: (763)
398-7000

 

Bruce
Krattenmaker

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

Mojdeh Poul

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

Stewart M.
Kume

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

Paresh A.
Gandhi

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

Chandra
Coughlin

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

 

Martin Hieb

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

Thuzar Han

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

Karen Yahnke

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

 

Chad Roue

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile: (763) 398-7000

 

Michele
Roggemann

c/o ev3 Inc.

4600 Nathan
Lane North

Plymouth,
Minnesota  55442

Facsimile:
(763) 398-7000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00089-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00089-of-00352.parquet"}]]