Exhibit 4.1
BEAR XXXXXXX ASSET BACKED SECURITIES, INC.,
Depositor
EMC MORTGAGE CORPORATION,
Seller and Servicer
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
Master Servicer and Securities Administrator
and
JPMORGAN CHASE BANK
Trustee
______________________________________
POOLING AND SERVICING AGREEMENT
Dated as of February 1, 2003
______________________________________
BEAR XXXXXXX ASSET BACKED SECURITIES TRUST 2003-1
ASSET-BACKED CERTIFICATES, SERIES 2003-1
Table of Contents
Page
ARTICLE I.
DEFINITIONS
Section 1.01. Defined Terms................................................1
ARTICLE II.
CONVEYANCE OF TRUST FUND REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Trust Fund....................................28
Section 2.02. Acceptance of the Mortgage Loans............................30
Section 2.03. Representations, Warranties and Covenants of the
Master Servicer, the EMC Servicer and the Seller............32
Section 2.04. Representations and Warranties of the Depositor.............41
Section 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases...............................42
Section 2.06. Countersignature and Delivery of Certificates...............42
Section 2.07. Covenants of the Master Servicer and the EMC Servicer.......43
Section 2.08. Lost Mortgage Notes Indemnity...............................43
ARTICLE III.
Administration and Master Servicing of Mortgage Loans
Section 3.01. The Master Servicer.........................................44
Section 3.02. REMIC-Related Covenants.....................................44
Section 3.03. Monitoring of Servicers.....................................44
Section 3.04. Successor Master Servicer and Subservicing Agreements.......45
Section 3.05. Power to Act; Procedures....................................46
Section 3.06. Due-on-Sale Clauses; Assumption Agreements..................46
Section 3.07. Release of Mortgage Files...................................47
Section 3.08. Documents, Records and Funds in Possession of the
Master Servicer To Be Held for Trustee......................47
Section 3.09. Maintenance of Hazard Insurance.............................48
Section 3.10. Presentment of Claims and Collection of Proceeds............48
Section 3.11. Maintenance of the Primary Mortgage Insurance Policies......49
Section 3.12. Custodian to Retain Possession of Certain Insurance
Policies and Documents......................................49
Section 3.13. Realization Upon Defaulted Mortgage Loans...................49
Section 3.14. Compensation for the Servicers and the Master Servicer......50
Section 3.15. REO Property................................................50
Section 3.16. Annual Officer's Certificate as to Compliance...............50
Section 3.17. Annual Independent Accountant's Servicing Report............51
Section 3.18. Reports Filed with Securities and Exchange Commission.......51
Section 3.19. The EMC Servicer............................................52
Section 3.20. Optional Purchase of Defaulted Mortgage Loans...............52
ARTICLE IV.
ACCOUNTS
Section 4.01. Protected Accounts..........................................53
Section 4.02. Master Servicer Collection Account..........................53
Section 4.03. Permitted Withdrawals and Transfers from the Master
Servicer Collection Account.................................54
Section 4.04. Distribution Account........................................55
Section 4.05. Permitted Withdrawals and Transfers from the
Distribution Account........................................56
Section 4.06. Yield Maintenance Account...................................57
ARTICLE V.
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
Section 5.01. Advances....................................................59
Section 5.02. Compensating Interest Payments..............................60
Section 5.03. REMIC Distributions.........................................60
Section 5.04. Distributions...............................................60
Section 5.04A. Allocation of Realized Losses...............................63
Section 5.04B. Allocation of Deferred Interest.............................63
Section 5.05. Monthly Statements to Certificateholders....................63
Section 5.06. REMIC Designations and Allocations..........................66
ARTICLE VI.
THE CERTIFICATES
Section 6.01. The Certificates............................................69
Section 6.02. Certificate Register; Registration of Transfer
and Exchange of Certificates................................70
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates...........73
Section 6.04. Persons Deemed Owners.......................................73
Section 6.05. Access to List of Certificateholders' Names and Addresses...73
Section 6.06. Book-Entry Certificates.....................................74
Section 6.07. Notices to Depository.......................................75
Section 6.08. Definitive Certificates.....................................75
Section 6.09. Maintenance of Office or Agency.............................75
ARTICLE VII.
THE DEPOSITOR, THE MASTER SERVICER, THE EMC SERVICER AND THE SELLER
Section 7.01. Respective Liabilities of the Depositor, the
Master Servicer, the EMC Servicer and the Seller............76
Section 7.02. Merger or Consolidation of the Depositor, the Master
Servicer, the EMC Servicer or the Seller....................76
Section 7.03. Indemnification of the Trustee, the Master Servicer,
the Securities Administrator and Others.....................76
Section 7.04. Limitation on Liability of the Depositor, the Seller,
the Master Servicer and Others..............................77
Section 7.05. Limitation on Resignation of Master Servicer
and the EMC Master Servicer.................................78
Section 7.06. Errors and Omissions Insurance; Fidelity Bonds..............78
ARTICLE VIII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 8.01. Events of Default...........................................79
Section 8.02. Trustee to Act; Appointment of Successor....................80
Section 8.03. Notification to Certificateholders..........................82
ARTICLE IX.
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 9.01. Duties of Trustee and Securities Administrator..............83
Section 9.02. Certain Matters Affecting the Trustee and the
Securities Administrator....................................84
Section 9.03. Trustee and Securities Administrator Not Liable for
Certificates or Mortgage Loans..............................86
Section 9.04. Trustee and Securities Administrator May Own Certificates...87
Section 9.05. Trustee's and Securities Administrator's Fees and Expenses..87
Section 9.06. Eligibility Requirements for Trustee and
Securities Administrator....................................87
Section 9.07. Insurance...................................................88
Section 9.08. Resignation and Removal of Trustee and
Securities Administrator....................................88
Section 9.09. Successor Trustee or Securities Administrator...............89
Section 9.10. Merger or Consolidation of Trustee or
Securities Administrator....................................89
Section 9.11. Appointment of Co-Trustee or Separate Trustee...............89
Section 9.12. Tax Matters.................................................90
ARTICLE X.
TERMINATION
Section 10.01. Termination upon Liquidation or Repurchase of
all Mortgage Loans..........................................94
Section 10.02. Final Distribution on the Certificates......................94
Section 10.03. Additional Termination Requirements.........................95
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment...................................................97
Section 11.02. Recordation of Agreement; Counterparts......................98
Section 11.03. Governing Law...............................................98
Section 11.04. Intention of Parties........................................98
Section 11.05. Notices.....................................................99
Section 11.06. Severability of Provisions.................................100
Section 11.07. Assignment.................................................100
Section 11.08. Limitation on Rights of Certificateholders.................100
Section 11.09. Inspection and Audit Rights................................101
Section 11.10. Certificates Nonassessable and Fully Paid..................101
Schedules
Schedule I List of Servicing Agreements
Schedule II List of Assignment, Assumptions and Recognition Agreements
Exhibits
Exhibit A-1 Form of Class A-IO Certificates
Exhibit A-2 Form of Class A-1 Certificates
Exhibit A-3 Form of Class A-2 Certificates
Exhibit A-4 Form of Class M-1 Certificates
Exhibit A-5 Form of Class M-2 Certificates
Exhibit A-6 Form of Class B Certificates
Exhibit A-7 Form of Class B-IO Certificates
Exhibit A-8 Form of Class R-1 Certificates
Exhibit A-9 Form of Class R-2 Certificates
Exhibit A-10 Form of Class R-3 Certificates
Exhibit B Mortgage Loan Schedule
Exhibit C-1 Form of Initial Certification
Exhibit C-2 Form of Interim Certification
Exhibit C-3 Form of Final Certification
Exhibit D Form of Transfer Affidavit
Exhibit E Form of Transferor Certificate
Exhibit F Form of Investment Letter (Non-Rule 144A)
Exhibit G Form of Rule 144A Investment Letter
Exhibit H Form of Request for Release
Exhibit I DTC Letter of Representations
Exhibit J Schedule of Mortgage Loans with Lost Notes
Exhibit K EMC Mortgage Loan Servicing
POOLING AND SERVICING AGREEMENT, dated as of February 1, 2003, among
BEAR XXXXXXX ASSET BACKED SECURITIES, INC., a Delaware corporation, as depositor
(the "Depositor"), EMC MORTGAGE CORPORATION, a Delaware corporation, as seller
(in such capacity, the "Seller") and as servicer (in such capacity, the "EMC
Servicer"), XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association, as master servicer (in such capacity, the "Master Servicer") and as
securities administrator (in such capacity, the "Securities Administrator") and
JPMORGAN CHASE BANK, a New York banking corporation, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The parties to this Agreement hereby create a common law trust
pursuant to the laws of the State of New York. The Depositor is the owner of the
Trust Fund that is hereby conveyed to the Trustee in return for the
Certificates. As provided herein, the Trustee shall make three separate real
estate mortgage investment conduit (each a "REMIC") elections with respect to
the Trust Fund for Federal income tax purposes.
The Trust Fund shall be named, and may be referred to as, the "Bear
Xxxxxxx Asset Backed Securities Trust 2003-1." The Certificates issued hereunder
may be referred to as "Asset-Backed Certificates Series 2003-1" (including for
purposes of any endorsement or assignment of a Mortgage Note or Mortgage).
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Securities Administrator, the Seller, the
EMC Servicer and the Trustee agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. DEFINED TERMS.
In addition to those terms defined in Section 1.02, whenever used in
this Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
ACCEPTED MASTER SERVICING PRACTICES: With respect to any Mortgage
Loan, as applicable, either (a) those customary mortgage servicing practices of
prudent mortgage servicing institutions that master service mortgage loans of
the same type and quality as such Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located, to the extent applicable to the Master
Servicer (except in its capacity as successor to a Servicer) or to the Trustee
(in its capacity, if at all, as Successor Master Servicer), or (b) as provided
in the applicable Servicing Agreement, to the extent applicable to any Servicer,
but, in each case, in no event below the standard set forth in clause (a).
ACCOUNT: The Master Servicer Collection Account, a Protected Account,
the Distribution Account and the Yield Maintenance Account.
ACCRUAL PERIOD: With respect to the Certificates which bear a fixed
rate of interest and any Distribution Date, the calendar month immediately
preceding such Distribution Date. With respect to the Certificates which bear an
adjustable rate of interest and any Distribution Date, the period from and
including the immediately preceding Distribution Date (or, in the case of the
first Distribution Date, the Closing Date) to but excluding such Distribution
Date. All calculations of interest on the Certificates which bear a fixed rate
of interest will be made on the basis of a 360-day year consisting of twelve
30-day months, and all calculations of interest on the Certificates (including
any applicable Interest Rate Cap) which bear an adjustable rate of interest will
be made on the basis of the actual number of days elapsed in the related Accrual
Period and in a 360-day year.
ADJUSTABLE RATE CERTIFICATES: The Class A-1, Class A-2, Class M-1,
Class M-2 and Class B Certificates.
ADVANCE: An advance of delinquent payments of principal (other than in
respect of delinquent payments of principal on Simple Interest Loans) or
interest in respect of a Mortgage Loan required to be made by the applicable
Servicer pursuant to the related Servicing Agreement, or by the Master Servicer
pursuant to Section 5.01.
AGREEMENT: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
AMOUNT HELD FOR FUTURE DISTRIBUTION: As to any Distribution Date, the
aggregate amount held in the Master Servicer Collection Account at the close of
business on the immediately preceding Determination Date on account of (i) all
Scheduled Payments or portions thereof received in respect of the Mortgage Loans
due after the related Due Period and (ii) Principal Prepayments and Liquidation
Proceeds received in respect of such Mortgage Loans after the last day of the
related Prepayment Period.
APPLICABLE WRITTEN NOTICE: For purposes of Section 8.01, written
notice (i) in the case of the Master Servicer, to the Master Servicer by the
Trustee or the Depositor, or to the Trustee and the Master Servicer by the
Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates and (b) in the case of the EMC Servicer, to the
EMC Servicer by the Master Servicer
APPLIED REALIZED LOSS AMOUNT: With respect to any Distribution Date
and each Class of Subordinated Certificates and the Class A-2 Certificates, the
sum of the Realized Losses with respect to the Mortgage Loans, which are to be
applied in reduction of the Certificate Principal Balance of that Class of
Certificates pursuant to this Agreement, which shall on any such Distribution
Date equal with respect to the Class B Certificates, Class M-2 Certificates,
Class M-1 Certificates and Class A-2 Certificates, in that order, so long as
their respective Certificate Principal Balances have not been reduced to zero,
the amount, if any, by which, (i) the aggregate Certificate Principal Balance of
all of the Certificates (after all distributions of principal on such
Distribution Date) exceeds (ii) the aggregate Stated Principal Balance of all of
the Mortgage Loans as of the last day of the related Due Period.
APPRAISED VALUE: With respect to any Mortgage Loan originated in
connection with a refinancing, the appraised value of the Mortgaged Property
based upon the appraisal made at the time of such refinancing or, with respect
to any other Mortgage Loan, the appraised value of the Mortgaged Property based
upon the appraisal made by a fee appraiser at the time of the origination of the
related Mortgage Loan.
ASSUMPTION AGREEMENT: Any Assignment, Assumption and Recognition
Agreement or comparable document transferring or acknowledging the transfer of a
Servicing Agreement to the Trust listed on Schedule II hereto.
BALLOON LOAN: A Mortgage Loan, identified as such on the Mortgage Loan
Schedule, where the related Mortgage Note provides for lowered payments of
principal over the life of such Mortgage Loan and a larger payment of principal
than is usual at its stated maturity.
BANKRUPTCY CODE: Title 11 of the United States Code.
BASIS RISK SHORTFALL: As of any Distribution Date and for any Class of
Offered Certificates (other than the Residual Certificates), the excess of (i)
the amount of Current Interest that such Class would have been entitled to
receive on such Distribution Date had the applicable Pass-Through Rate been
calculated based upon the lesser of 11% and One-Month LIBOR plus the applicable
Certificate Margin for the related Accrual Period, with respect to a Class of
Adjustable Rate Certificates or, in the case of the Class A-IO Certificates,
5.00% per annum; over (ii) the sum of interest for such Class calculated at the
applicable Interest Rate Cap for such Distribution Date and (except with respect
to the Class A-IO Certificates) any amount paid to such Class under the Yield
Maintenance Agreement expressed as a per annum rate.
BASIS RISK SHORTFALL CARRY FORWARD AMOUNT: As of any Distribution Date
and for any Class of Offered Certificates (other than the Residual
Certificates), the sum of: (i) if on such Distribution Date the applicable
Pass-Through Rate for such Class is based upon the applicable Interest Rate Cap,
the applicable Basis Risk Shortfall; and (ii) the Basis Risk Shortfall for all
previous Distribution Dates not previously paid (including interest accrued
thereon at the applicable Pass-Through Rate for the applicable Accrual Period
with respect to each such prior Distribution Date), together with interest
thereon at a rate equal to the applicable Pass-Through Rate for such
Distribution Date.
BOOK-ENTRY CERTIFICATES: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 6.06). As of the Closing
Date, each Class of Regular Certificates (other than the Class B-IO
Certificates) constitutes a Class of Book-Entry Certificates.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in The City of New York, New York, or the
States of Maryland, Minnesota or Texas, or, if different, the city in which the
Corporate Trust Office of the Trustee or the principal office of the Securities
Administrator, the Master Servicer or of a Servicer is located are authorized or
obligated by law or executive order to be closed.
CEDE: Cede & Co., or its successors in interest.
CERTIFICATE: Any one of the certificates of any Class executed and
authenticated by the Trustee in substantially the forms attached hereto as
Exhibits A-1 through A-10.
CERTIFICATE MARGIN: Reference to any of the Class A-1 Margin, Class
A-2 Margin, Class M-1 Margin, Class M-2 Margin or Class B Margin.
CERTIFICATE NOTIONAL BALANCE: As to (i) the Class A-IO Certificates
and (a) any Distribution Date through and including the Distribution Date in
August 2005, the lesser of $61,735,000 and the aggregate Stated Principal
Balance of the Mortgage Loans as of the first day of the related Due Period, and
(b) any Distribution Date thereafter, zero and (ii) the Class B-IO Certificates
and any Distribution Date, the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period.
CERTIFICATE OWNER: With respect to a Book-Entry Certificate, the
Person that is the beneficial owner of such Book-Entry Certificate.
CERTIFICATE PRINCIPAL BALANCE: As to any Certificate (other than any
Class A-IO or Class B-IO Certificate) and as of any Distribution Date, the
Initial Certificate Principal Balance of such Certificate, increased by any
Deferred Interest previously allocated to such Certificate, less the sum of (i)
all amounts distributed with respect to such Certificate in reduction of the
Certificate Principal Balance thereof on previous Distribution Dates pursuant to
Section 5.04, and (ii) in the case of a Class A-2 Certificate or any
Subordinated Certificate, any Applied Realized Loss Amounts allocated to such
Certificate on previous Distribution Dates. References herein to the Certificate
Principal Balance of a Class of Certificates shall mean the Certificate
Principal Balances of all Certificates in such Class.
CERTIFICATE REGISTER: The register maintained pursuant to Section 6.02
hereof.
CERTIFICATEHOLDER OR HOLDER: The person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository, in the case of any Book-Entry Certificates).
CLASS: All Certificates bearing the same Class designation as set
forth in Section 6.01 hereof.
CLASS A CERTIFICATES: The Class A-1 Certificates and Class A-2
Certificates.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to the excess, if any, of (i) the aggregate Certificate Principal
Balance of the Class A Certificates immediately prior to such Distribution Date,
over (ii) the lesser of (a) 69.70% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (after reduction
for Realized Losses incurred during the related Prepayment Period) and (b) the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period (after reduction for Realized Losses incurred during the
related Prepayment Period) minus the Overcollateralization Floor.
CLASS A-1 CERTIFICATE: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-1 Certificates as set forth herein.
CLASS A-1 MARGIN: For any Distribution Date (i) on or prior to the
Optional Termination Date, 0.50% per annum and (ii) thereafter, 1.00% per annum.
CLASS A-1 PASS-THROUGH RATE: For the first Distribution Date, 1.8375%
per annum, and on any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class A-1 Margin for such
Distribution Date and (ii) the applicable Interest Rate Cap for such
Distribution Date.
CLASS A-2 CERTIFICATE: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class A-2 Certificates as set forth herein.
CLASS A-2 MARGIN: For any Distribution Date (i) on or prior to the
Optional Termination Date, 0.75% per annum and (ii) thereafter, 1.50% per annum.
CLASS A-2 PASS-THROUGH RATE: For the first Distribution Date, 2.0875%
per annum, and on any Distribution Date thereafter the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class A-2 Margin for such
Distribution Date and (ii) the applicable Interest Rate Cap for such
Distribution Date.
CLASS A-IO CERTIFICATE: Any Certificate designated as a "Class A-IO
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-IO Certificates as set forth herein.
CLASS A-IO PASS-THROUGH RATE: For any Distribution Date (i) through
and including the Distribution Date in August 2005, 5.00% per annum and (ii)
thereafter, 0%.
CLASS B CERTIFICATE: Any Certificate designated as a "Class B
Certificate" on the face thereof, in the form of Exhibit A-6 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B Certificates as set forth herein.
CLASS B MARGIN: For any Distribution Date (i) on or prior to the
Optional Termination Date, 2.25% per annum and (ii) thereafter, 3.375% per
annum.
CLASS B PASS-THROUGH RATE: For the first Distribution Date 3.5875% per
annum, and for any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class B Margin for such
Distribution Date and (ii) the applicable Interest Rate Cap for such
Distribution Date.
CLASS B PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to the excess, if any of (i) the sum of the Certificate Principal
Balances of the Class A Certificates (after taking into account distributions of
the Class A Principal Distribution Amount for such Distribution Date), the Class
M-1 Certificates (after taking into account distributions of the Class M-1
Principal Distribution Amount for such Distribution Date), the Class M-2
Certificates (after taking into account distributions of the Class M-2 Principal
Distribution Amount for such Distribution Date) and the Class B Certificates
immediately prior to such Distribution Date, over (ii) the lesser of (a) 96.70%
of the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period (after reduction for Realized Losses incurred
during the related Prepayment Period) and (b) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after reduction for Realized Losses incurred during the related Prepayment
Period) minus the Overcollateralization Floor.
CLASS B-IO CERTIFICATE: Any Certificate designated as a "Class B-IO
Certificate" on the face thereof, in the form of Exhibit A-7 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B-IO Certificates herein.
CLASS B-IO DISTRIBUTION AMOUNT: With respect to any Distribution Date,
an amount equal to the amount allocable to the Class B-IO Certificates as
provided in Section 5.06(c), note 4, for such Distribution Date.
CLASS M-1 CERTIFICATE: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-1 Certificates as set forth herein.
CLASS M-1 MARGIN: For any Distribution Date (i) on or prior to the
Optional Termination Date, 1.10% per annum and (ii) thereafter, 1.65% per annum.
CLASS M-1 PASS-THROUGH RATE: For the first Distribution Date, 2.4375%
per annum, and for any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class M-1 Margin for such
Distribution Date and (ii) the applicable Interest Rate Cap for such
Distribution Date.
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to the excess, if any of (i) the sum of the Certificate Principal
Balances of the Class A Certificates (after taking into account distributions of
the Class A Principal Distribution Amount for such Distribution Date) and the
Class M-1 Certificates immediately prior to such Distribution Date, over (ii)
the lesser of (a) 79.70% of the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after reduction for
Realized Losses incurred during the related Prepayment Period) and (b) the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period (after reduction for Realized Losses incurred during the
related Prepayment Period) minus the Overcollateralization Floor.
CLASS M-2 CERTIFICATE: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-2 Certificates as set forth herein.
CLASS M-2 MARGIN: For any Distribution Date (i) on or prior to the
Optional Termination Date, 2.00% per annum and (ii) thereafter, 3.00% per annum.
CLASS M-2 PASS-THROUGH RATE: For the first Distribution Date, 3.3375%
per annum, and for any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class M-2 Margin for such
Distribution Date and (ii) the applicable Interest Rate Cap for such
Distribution Date.
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an
amount equal to the excess, if any of (i) the sum of the Certificate Principal
Balances of the Class A Certificates (after taking into account distributions of
the Class A Principal Distribution Amount for such Distribution Date), the Class
M-1 Certificates (after taking into account distributions of the Class M-1
Principal Distribution Amount for such Distribution Date) and the Class M-2
Certificates immediately prior to such Distribution Date, over (ii) the lesser
of (a) 89.20% of the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after reduction for Realized Losses
incurred during the related Prepayment Period) and (b) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after reduction for Realized Losses incurred during the related
Prepayment Period) minus the Overcollateralization Floor.
CLASS R-1 CERTIFICATE: Any Certificate designated as a "Class R-1
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-8 hereto, and evidencing ownership of the residual interest in REMIC I and
representing the right to the Percentage Interest of distributions provided for
the Class R-1 Certificate as set forth herein.
CLASS R-2 CERTIFICATE: Any Certificate designated as a "Class R-2
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-9 hereto, and evidencing ownership of the residual interest in REMIC II and
representing the right to the Percentage Interest of distributions provided for
the Class R-2 Certificate as set forth herein.
CLASS R-3 CERTIFICATe: Any Certificate designated as a "Class R-3
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-10 hereto, and evidencing ownership of the residual interest in REMIC III and
representing the right to the Percentage Interest of distributions provided for
the Class R-3 Certificate as set forth herein.
CLOSING DATE: February 28, 2003.
CODE: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
COMBINED LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage,
the numerator of which is the sum of (x) the original principal balance of the
related Mortgage Loan and (y) the outstanding principal balance at the date of
origination of the Mortgage Loan of any senior mortgage loan, and the
denominator of which is the Appraised Value of the related Mortgaged Property.
COMPENSATING INTEREST: With respect to any Mortgage Loan, an amount,
not to exceed the related Servicing Fee, to be applied by the EMC Servicer
pursuant to Section 2.02 of Exhibit K or by any other Servicer pursuant to the
related Servicing Agreement to the payment of a Prepayment Interest Shortfall on
such Mortgage Loan or by the Master Servicer pursuant to Section 5.02 hereof.
CORPORATE TRUST OFFICE: The designated office of the Trustee where at
any particular time its corporate trust business with respect to this Agreement
shall be administered, which office at the date of the execution of this
Agreement is located, (i) for Certificate transfer purposes, at 0000 Xxxxx
Xxxxxx, Xxxxx 0, Xxxxxx, Xxxxx 00000, Attention: Institutional Trust Services
Transfer Department--BSABS Series 2003-1 and (ii) for all other purposes, at 4
New York Plaza, 6th Floor, New York, New York 10004 Attention: Institutional
Trust Services/Structured Finance Services--BSABS Series 2003-1, or at such
other address as the Trustee may designate from time to time.
CURRENT INTEREST: As of any Distribution Date, with respect to
Certificates of each Class (other than the Class B-IO Certificates and the
Residual Certificates), (i) the interest accrued on the Certificate Principal
Balance or Certificate Notional Balance, as applicable, during the related
Accrual Period at the applicable Pass-Through Rate plus any amount previously
distributed with respect to interest for such Certificate that has been
recovered as a voidable preference by a trustee in bankruptcy, minus, to the
extent allocated to such Class, (ii) the sum of (a) any Prepayment Interest
Shortfall for such Distribution Date, to the extent not covered by Compensating
Interest, (b) any shortfalls resulting from application of the Relief Act during
the related Due Period and (c) any Deferred Interest, provided, however, that
for purposes of calculating Current Interest for any such Class, amounts
specified in clause (ii) hereof for any such Distribution Date shall be
allocated first to the Class B-IO Certificates and the Residual Certificates in
reduction of amounts otherwise distributable to such Certificates on such
Distribution Date and then any excess shall be allocated to each Class of
Offered Certificates (other than the Residual Certificates) pro rata based on
the respective amounts of interest accrued pursuant to clause (i) hereof for
each such Class on such Distribution Date.
CUSTODIAL AGREEMENT: The Custodial Agreement, dated as of February 1,
2003, among the Trustee, the Depositor, the Master Servicer and the Custodian,
as amended or supplemented from time to time.
CUSTODIAN: Xxxxx Fargo Bank Minnesota, National Association, as
custodian and agent for the Trustee with respect to the Mortgage Loans.
CUT-OFF DATE: The close of business on February 1, 2003.
CUT-OFF DATE PRINCIPAL BALANCE: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the Cut-off Date after
application of all Principal Prepayments received prior to the Cut-off Date and,
except with respect to Simple Interest Loans, scheduled payments of principal
due on or before the Cut-off Date, whether or not received but without giving
effect to any installments of principal received in respect of Due Dates after
the Cut-off Date, i.e. $617,348,209.42.
DEFERRED INTEREST: The excess of the amount of interest due on a
negatively amortizing Mortgage Loan over the interest portion of the Scheduled
Payment due thereon, which is permitted under the terms of the related Mortgage
Note to be added to the principal of the Mortgage Note.
DEFINITIVE CERTIFICATES: As defined in Section 6.06.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
DELINQUENCY EVENT: A Delinquency Event shall have occurred and be
continuing if at any time, (x) the three-month rolling average of the percent
equivalent of a fraction, the numerator of which is the aggregate Stated
Principal Balance of the Mortgage Loans that are 61 days or more Delinquent or
are in bankruptcy or foreclosure or are REO Properties, and the denominator of
which is the aggregate Stated Principal Balance of all of the Mortgage Loans as
of the last day of the related Due Period equals or exceeds (y) 50% of the
Senior Enhancement Percentage for such Distribution Date.
DELINQUENT: A Mortgage Loan is "delinquent" if any payment due thereon
is not made pursuant to the terms of such Mortgage Loan by the close of business
on the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
DENOMINATION: With respect to each Certificate, the amount set forth
on the face thereof as the "Initial Principal Balance of this Certificate".
DEPOSITOR: Bear Xxxxxxx Asset Backed Securities, Inc., a Delaware
corporation, or its successor in interest.
DEPOSITORY: The initial Depository shall be DTC, the nominee of which
is Cede, or any other organization registered as a "clearing agency" pursuant to
Section 17A of the Securities Exchange Act of 1934, as amended. The Depository
shall initially be the registered Holder of the Book-Entry Certificates. The
Depository shall at all times be a "clearing corporation" as defined in Section
8-102(a)(5) of the Uniform Commercial Code of the State of New York.
DEPOSITORY AGREEMENT: With respect to the Class of Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, dated as of the Closing Date, substantially in the form of Exhibit
I.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DETERMINATION DATE: With respect to any Distribution Date and (i) the
EMC Servicer, the 15th day of the month of such Distribution Date or, if such
15th day is not a Business Day, the immediately preceding Business Day or (ii)
each other Servicer, the date specified in the related Servicing Agreement.
DISTRIBUTION ACCOUNT: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.04 in the name of the Trustee
for the benefit of the Certificateholders and designated "JPMorgan Chase Bank,
in trust for registered holders of Bear Xxxxxxx Asset Backed Securities, Inc.,
Asset-Backed Certificates, Series 2003-1". Funds in the Distribution Account
shall be held in trust for the Certificateholders for the uses and purposes set
forth in this Agreement.
DISTRIBUTION ACCOUNT DEPOSIT DATE: As to any Distribution Date, on or
before 1:00 p.m. Central time on the Business Day immediately preceding such
Distribution Date.
DISTRIBUTION DATE: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such 25th day is not a Business Day,
the next succeeding Business Day, commencing in March 2003.
DTC: The Depository Trust Company, or its successors in interest.
DUE DATE: As to any Mortgage Loan (other than a Simple Interest Loan),
the date in each month on which the related Scheduled Payment is due, as set
forth in the related Mortgage Note, and with respect to Simple Interest Loans,
the last day of the immediately preceding Prepayment Period, if its Scheduled
Payment is due during such Prepayment Period.
DUE PERIOD: With respect to any Distribution Date and any Mortgage
Loan (other than a Simple Interest Mortgage Loan), the period from the second
day of the calendar month preceding the calendar month in which such
Distribution Date occurs through close of business on the first day of the
calendar month in which such Distribution Date occurs, and with respect to
Simple Interest Mortgage Loans, the related Prepayment Period.
ELIGIBLE ACCOUNT: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt obligations
of which (or, in the case of a depository institution or trust company that is
the principal subsidiary of a holding company, the debt obligations of such
holding company, but only if Xxxxx'x is not a Rating Agency) are rated by each
Rating Agency in one of its two highest long-term and its highest short-term
rating categories respectively, at the time any amounts are held on deposit
therein, or (ii) an account or accounts in a depository institution or trust
company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee and to each Rating Agency, the Certificateholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
the corporate trust department of a federal or state chartered depository
institution or trust company having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity or (iv) any other account
acceptable to the Rating Agencies. Eligible Accounts may bear interest, and may
include, if otherwise qualified under this definition, accounts maintained with
the Trustee.
EMC: EMC Mortgage Corporation, a Delaware corporation.
EMC MORTGAGE LOANS: The Mortgage Loans listed on the Mortgage Loan
Schedule as being serviced by the EMC Servicer.
EMC SERVICER: EMC, in its capacity as servicer hereunder, and its
successors and assigns.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA RESTRICTED CERTIFICATE: Each Class of Certificates other than
the Class A-1 and the Class A-IO Certificates.
EVENT OF DEFAULT: As defined in Section 8.01 hereof.
EXCESS CASHFLOW: With respect to any Distribution Date, an amount, if
any, equal to the sum of (a) the Excess Overcollateralization Amount and (b) the
Remaining Excess Spread, in each case for such Distribution Date.
EXCESS LIQUIDATION PROCEEDS: To the extent not required by law to be
paid to the related Mortgagor, the excess, if any, of any Liquidation Proceeds
with respect to a Mortgage Loan over the Stated Principal Balance of such
Mortgage Loan and accrued and unpaid interest at the related Mortgage Rate
through the last day of the month in which the Mortgage Loan has been
liquidated.
EXCESS OVERCOLLATERALIZATION AMOUNT: With respect to any Distribution
Date, the lesser of (i) Principal Funds and (ii) the excess, if any, of the
Overcollateralization Amount over the Specified Overcollateralization Amount, in
each case for such Distribution Date.
EXCESS SPREAD: With respect to any Distribution Date, the excess, if
any, of (i) the Interest Funds for such Distribution Date over (ii) the sum of
Current Interest on the Offered Certificates and Interest Carry Forward Amounts
and Basis Risk Shortfall Carry Forward Amounts on the Class A-IO Certificates,
the Class A-1 Certificates and the Class A-2 Certificates, in each case for such
Distribution Date.
EXCESS YIELD MAINTENANCE AMOUNT: With respect to any Distribution
Date, the excess, if any, of (a) the sum of the amount received under the Yield
Maintenance Agreement, over (b) the amount required to pay Current Interest on
the Class X-0, Xxxxx X-0, Class M-1, Class M-2 and Class B Certificates at the
applicable pass-through rate, calculated at the lesser of (1) One-Month LIBOR
plus the applicable margin for the related accrual period or (2) 11% per annum,
to the extent not otherwise paid from Interest Funds.
EXTRA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution
Date, the lesser of (i) the excess, if any, of the Specified
Overcollateralization Amount for such Distribution Date over the
Overcollateralization Amount for such Distribution Date (after giving effect to
distributions of principal on the Certificates other than any Extra Principal
Distribution Amount) and (ii) the Excess Spread for such Distribution Date.
XXXXXX XXX: Xxxxxx Xxx (formerly, Federal National Mortgage
Association), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FITCH: Fitch, Inc.
FIXED RATE CERTIFICATES: The Class A-IO Certificates.
XXXXXXX MAC: Xxxxxxx Mac (formerly, Federal Home Loan Mortgage
Corporation), or any successor thereto.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989.
GROSS MARGIN: With respect to each Mortgage Loan that bears an
adjustable rate of interest, the fixed percentage set forth in the related
Mortgage Note and indicated on the Mortgage Loan Schedule which percentage is
added to the related Index on each Interest Adjustment Date to determine
(subject to rounding, the Minimum Lifetime Mortgage Rate, the Maximum Lifetime
Mortgage Rate and the Periodic Rate Cap, each as applicable) the Mortgage Rate
until the next succeeding Interest Adjustment Date.
INDEMNIFIED PERSONS: The Trustee, the Master Servicer, the Seller, the
Depositor, the Custodian and the Securities Administrator and their officers,
directors, agents and employees and, with respect to the Trustee, any separate
co-trustee and its officers, directors, agents and employees.
INDEX: With respect to each Mortgage Loan that bears an adjustable
rate of interest, the index set forth in the related Mortgage Note and indicated
on the Mortgage Loan Schedule, by reference to which the related Mortgage Rate
will be adjusted from time to time.
INITIAL CERTIFICATE PRINCIPAL BALANCE: With respect to any
Certificate, the Certificate Principal Balance of such Certificate or any
predecessor Certificate on the Closing Date.
INITIAL OVERCOLLATERALIZATION AMOUNT: $209.42.
INSURANCE POLICY: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect with respect to such Mortgage Loan, including any replacement policy
or policies for any such insurance policies.
INSURANCE PROCEEDS: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy, to the extent such proceeds are payable to the
mortgagee under the Mortgage, the related Servicer, the Master Servicer or the
trustee under the deed of trust and are not applied to the restoration of the
related Mortgaged Property or released to the Mortgagor in accordance with the
procedures that such Servicer or the Master Servicer would follow in servicing
mortgage loans held for its own account, in each case other than any amount
included in such Insurance Proceeds in respect of Insured Expenses.
INSURED EXPENSES: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
INTEREST RATE ADJUSTMENT DATE: With respect to each Mortgage Loan that
bears an adjustable rate of interest, the date set forth in the related Mortgage
Note and indicated on the Mortgage Loan Schedule, on which the related Mortgage
Rate is subject to adjustment.
INTEREST CARRY FORWARD AMOUNT: As of any Distribution Date and with
respect to each Class of Certificates (other than the Class B-IO Certificates
and the Residual Certificates), the sum of (i) the excess of (a) the Current
Interest for such Class with respect to prior Distribution Dates over (b) the
amount actually distributed to such Class with respect to interest on such prior
Distribution Dates and (ii) interest thereon (to the extent permitted by
applicable law) at the applicable Pass-Through Rate for such Class for the
related Accrual Period including the Accrual Period relating to such
Distribution Date.
INTEREST DETERMINATION DATE: With respect to each Adjustable Rate
Certificate, for the first Accrual Period February 26, 2003, and with respect to
any Accrual Period thereafter, the second LIBOR Business Day preceding the
commencement of such Accrual Period.
INTEREST FUNDS: For any Distribution Date (i) the sum, without
duplication, of (a) all interest received during the related Due Period with
respect to the Mortgage Loans less the related Servicing Fee and Master
Servicing Fee, if applicable, (b) all Advances relating to interest with respect
to the Mortgage Loans made on or prior to the related Master Servicer Advance
Date, (c) all Compensating Interest with respect to the Mortgage Loans and
required to be remitted pursuant to the related Servicing Agreement or this
Agreement with respect to such Distribution Date, (d) Liquidation Proceeds with
respect to the Mortgage Loans collected during the related Prepayment Period (to
the extent such Liquidation Proceeds relate to interest), (e) all amounts
relating to interest with respect to each Mortgage Loan repurchased by the
Seller pursuant to Sections 2.02, 2.03 and 3.20 and (f) all amounts in respect
of interest paid by EMC pursuant to Section 10.01, in each case to the extent
remitted by the Master Servicer or Servicer to the Master Servicer Collection
Account pursuant to this Agreement or the related Servicing Agreement, minus
(ii) all amounts relating to interest reimbursed pursuant to Sections 4.03 and
4.05.
INTEREST RATE CAP: For any Distribution Date and (i) the Class A-1,
Class A-2, Class M-1, Class M-2 and Class B Certificates: the lesser of (a) 11%
per annum and (b) (1) through the applicable Accrual Period for any such Class
relating to the Distribution Date in August 2005, the excess of (x) the weighted
average of the Net Mortgage Rates of the Mortgage Loans as of the last day of
the related Due Period over (y) interest payable on the Class A-IO Certificates
on such Distribution Date expressed as a per annum rate calculated on the basis
of the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period, in each case, adjusted to an effective rate
reflecting the accrual of interest based on the actual number of days elapsed
divided by 360, and (2) thereafter, the weighted average of the Net Mortgage
Rates of the Mortgage Loans as of the last day of the related Due Period and
(ii) the Class A-IO Certificates, the weighted average of the Net Mortgage Rates
of the Mortgage Loans as of the last day of the related Due Period, adjusted to
an effective rate reflecting the accrual of interest based on the actual number
of days elapsed divided by 360.
XXXXX: Xxxxx Union Bank and Trust Company, or its successor in
interest.
LATEST POSSIBLE MATURITY DATE: The Distribution Date occurring in
November 2042, which is the Distribution date occurring in the month following
the final scheduled maturity date of the Mortgage Loan in the Trust Fund having
the latest scheduled maturity date as of the Cut-off Date. For purposes of the
Treasury Regulations under Code section 860A through 860G, the latest possible
maturity date of each regular interest issued by REMIC I, REMIC II and REMIC III
shall be the Latest Possible Maturity Date.
LIBOR BUSINESS DAY: Any day on which banks in the London, England and
New York City, U.S.A. are open and conducting transactions in foreign currency
and exchange.
LIQUIDATED LOAN: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Master Servicer or a Servicer has certified (in
accordance with Section 3.07) in the related Prepayment Period that it has
received all amounts it expects to receive in connection with such liquidation.
LIQUIDATION PROCEEDS: Amounts, other than Insurance Proceeds, received
in connection with the partial or complete liquidation of a Mortgage Loan,
whether through trustee's sale, foreclosure sale or otherwise, or in connection
with any condemnation or partial release of a Mortgaged Property and any other
proceeds received with respect to an REO Property, less the sum of related
unreimbursed Advances, Servicing Fees and Servicing Advances and all expenses of
liquidation, including property protection expenses and foreclosure and sale
costs, including court and reasonable attorneys fees.
MASTER SERVICER: Xxxxx Fargo Bank Minnesota, National Association, a
national banking association, in its capacity as master servicer hereunder, and
its successors and assigns.
MASTER SERVICER ADVANCE DATE: As to any Distribution Date, on or
before 1:00 p.m. Central time on the Business Day immediately preceding such
Distribution Date.
MASTER SERVICING FEE: For any Distribution Date, the sum of (i) all
income and gain, net of losses, realized from any investment of funds in the
Distribution Account and the Master Servicer Collection Account since the prior
Distribution Date and (ii) with respect to each Mortgage Loan, an amount equal
to 1/12th of the Master Servicing Fee Rate multiplied by the Stated Principal
Balance of such Mortgage Loan as of the first day of the related Due Period.
MASTER SERVICING FEE RATE: 0.005% per annum.
MASTER SERVICER CERTIFICATION: A written certification covering
servicing of the Mortgage Loans by all Servicers and signed by an officer of the
Master Servicer that complies with (i) the Xxxxxxxx-Xxxxx Act of 2002, as
amended from time to time, and (ii) the February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time; provided that if, after the Closing Date
(a) the Xxxxxxxx-Xxxxx Act of 2002 is amended, (b) the Statement referred to in
clause (ii) is modified or superceded by any subsequent statement, rule or
regulation of the Securities and Exchange Commission or any statement of a
division thereof, or (c) any future releases, rules and regulations are
published by the Securities and Exchange Commission from time to time pursuant
to the Xxxxxxxx-Xxxxx Act of 2002, which in any such case affects the form or
substance of the required certification and results in the required
certification being, in the reasonable judgment of the Master Servicer,
materially more onerous than the form of the required certification as of the
Closing Date, the Master Servicer Certification shall be as agreed to by the
Master Servicer, the Depositor and the Seller following a negotiation in good
faith to determine how to comply with any such new requirements.
MASTER SERVICER COLLECTION ACCOUNT: The separate Eligible Account
created and initially maintained by the Master Servicer pursuant to Section 4.02
with a depository institution in the name of the Trustee for the benefit of the
Certificateholders and designated "JPMorgan Chase Bank, in trust for registered
holders of Bear Xxxxxxx Asset Backed Securities Trust 2003-1, Asset-Backed
Certificates, Series 2003-1." Funds in the Master Servicer Collection Account
shall be held in trust for the Certificateholders for the uses and purposes set
forth in this Agreement.
MAXIMUM LIFETIME MORTGAGE RATE: As to each Mortgage Loan that bears an
adjustable rate of interest, the rate, if any, set forth in the related Mortgage
Note and indicated on the Mortgage Loan Schedule, that is the maximum level to
which a Mortgage Rate can adjust in accordance with its terms, regardless of the
change in the applicable Index.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans registered
with MERS on the MERS(R) System.
MINIMUM LIFETIME MORTGAGE RATE: As to each Mortgage Loan that bears an
adjustable rate of interest, the rate, if any, set forth in the related Mortgage
Note and indicated on the Mortgage Loan Schedule, that is the minimum level to
which a Mortgage Rate can adjust in accordance with its terms, regardless of the
change in the applicable Index.
MOM LOAN: Any Mortgage Loan as to which, at origination thereof, MERS
acts as the mortgagee, solely as nominee for the originator of such Mortgage
Loan and its successors and assigns.
MONTHLY STATEMENT: The statement delivered to the Certificateholders
pursuant to Section 5.05.
MOODY'S: Xxxxx'x Investors Service, Inc.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
first lien on or first priority ownership interest, or creating a second lien on
or second priority ownership interest, as applicable, in an estate in fee simple
in real property securing a Mortgage Note.
MORTGAGE FILE: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Custodian on behalf of the Trustee to be added to the Mortgage File
pursuant to this Agreement.
MORTGAGE LOANS: Such of the Mortgage Loans transferred and assigned to
the Trustee pursuant to the provisions hereof, as from time to time are held as
a part of the Trust Fund (including any REO Property), the mortgage loans so
held being identified in the Mortgage Loan Schedule, notwithstanding foreclosure
or other acquisition of title of the related Mortgaged Property. Any mortgage
loan that was intended by the parties hereto to be transferred to the Trust Fund
as indicated by such Mortgage Loan Schedule which is in fact not so transferred
for any reason including, without limitation, a breach of the representation
contained in Section 2.03(b)(v) hereof, shall continue to be a Mortgage Loan
hereunder until the Purchase Price with respect thereto has been paid to the
Trust Fund.
MORTGAGE LOAN PURCHASE PRICE: The price, calculated as set forth in
Section 10.01, to be paid in connection with the repurchase of the Mortgage
Loans pursuant to Section 10.01.
MORTGAGE LOAN SCHEDULE: The list of Mortgage Loans (as from time to
time amended by the Master Servicer to reflect the deletion of Deleted Mortgage
Loans and the addition of Replacement Mortgage Loans pursuant to the provisions
of this Agreement) transferred to the Trustee as part of the Trust Fund and from
time to time subject to this Agreement. The initial Mortgage Loan Schedule is
attached hereto as Exhibit B and sets forth the following information with
respect to each Mortgage Loan:
(i) the loan number;
(ii) the Servicer and/or Master Servicer thereof;
(iii) the Mortgage Rate in effect as of the Cut-off Date;
(iv) the Master Servicing Fee Rate;
(v) the related Servicing Fee Rate;
(vi) the Net Mortgage Rate in effect as of the Cut-off Date;
(vii) the maturity date;
(viii) the original principal balance;
(ix) the original term;
(x) the remaining term;
(xi) the property type;
(xii) if it is a second lien on the related Mortgaged Property;
(xiii) if applicable, that such Mortgage Loan is a Balloon Loan;
(xiv) the applicable Index (with respect to adjustable rate
Mortgage Loans);
(xv) the Gross Margin, if applicable;
(xvi) the intervals between Interest Adjustment Dates, if
applicable;
(xvii) the next succeeding Interest Adjustment Date, if
applicable;
(xviii) the Periodic Rate Cap, if applicable;
(xix) the Minimum Lifetime Mortgage Rate, if applicable;
(xx) the Maximum Lifetime Mortgage Rate, if applicable;
(xxi) the Combined Loan-to-Value Ratio as of the Cut-off Date;
(xxii) [Reserved];
(xxiii) the Cut-off Date Principal Balance;
(xxiv) if applicable, that such Mortgage Loan is a Simple
Interest Loan;
(xxv) if applicable, that such Mortgage Loan provides for
negative amortization; and
(xxvi) the MIN with respect to each Mortgage Loan registered on
the MERS(R) System.
Such schedule shall also set forth the total of the amounts described
under (xxiii) above for all of the Mortgage Loans.
MORTGAGE NOTE: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGE RATE: The annual rate of interest borne by a Mortgage Note.
MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan.
MORTGAGOR: The obligor on a Mortgage Note.
NET MORTGAGE RATE: As to each Mortgage Loan, and at any time, the per
annum rate equal to the Mortgage Rate less the sum of the related Servicing Fee
Rate and the Master Servicing Fee Rate.
NON-BOOK-ENTRY CERTIFICATE: Any Certificate other than a Book-Entry
Certificate.
NONRECOVERABLE ADVANCE: Any portion of an Advance previously made or
proposed to be made by the Master Servicer that, in the good faith judgment of
the Master Servicer, will not or, in the case of a proposed advance, would not,
be ultimately recoverable by it from the related Mortgagor, related Liquidation
Proceeds or otherwise.
OFFERED CERTIFICATES: The Class A-1 Certificates, Class A-2
Certificates, Class A-IO Certificates, Class M-1 Certificates, Class M-2
Certificates, Class B Certificates and Residual Certificates.
OFFICER'S CERTIFICATE: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the EMC
Servicer or the Master Servicer (or any other officer customarily performing
functions similar to those performed by any of the above designated officers and
also to whom, with respect to a particular matter, such matter is referred
because of such officer's knowledge of and familiarity with a particular
subject) or (ii), if provided for in this Agreement, signed by a Servicing
Officer, as the case may be, and delivered to the Depositor, the Seller, the
Securities Administrator and/or the Trustee, as the case may be, as required by
this Agreement.
ONE-MONTH LIBOR: With respect to any Accrual Period, the rate
determined by the Securities Administrator on the related Interest Determination
Date on the basis of the rate for U.S. dollar deposits for one month that
appears on Telerate Screen Page 3750 as of 11:00 a.m. (London time) on such
Interest Determination Date; provided that the parties hereto acknowledge that
One-Month LIBOR for the first Accrual Period shall equal 1.3375% per annum. If
such rate does not appear on such page (or such other page as may replace that
page on that service, or if such service is no longer offered, such other
service for displaying One-Month LIBOR or comparable rates as may be reasonably
selected by the Securities Administrator), One-Month LIBOR for the applicable
Accrual Period will be the Reference Bank Rate. If no such quotations can be
obtained by the Securities Administrator and no Reference Bank Rate is
available, One-Month LIBOR will be One-Month LIBOR applicable to the preceding
Accrual Period. The establishment of One-Month LIBOR on each Determination Date
by the Securities Administrator and the Securities Administrator's calculation
of the rate of interest applicable to the Certificates bearing interest based on
One-Month LIBOR shall, in the absence of manifest error, be conclusive and
binding.
OPINION OF COUNSEL: A written opinion of counsel, who may be counsel
for the Depositor or the Master Servicer, reasonably acceptable to each
addressee of such opinion; provided that with respect to Section 7.05 or 11.01,
or the interpretation or application of the REMIC Provisions, such counsel must
(i) in fact be independent of the Depositor and the Master Servicer, (ii) not
have any direct financial interest in the Depositor or the Master Servicer or in
any affiliate of either, and (iii) not be connected with the Depositor or the
Master Servicer as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions. For purposes of the
EMC Servicer's obligations pursuant to Exhibit K, a written opinion of counsel,
who may be counsel to the EMC Servicer, reasonably acceptable to each addressee
of such opinion.
OPTIONAL TERMINATION: The termination of the Trust Fund created
hereunder as a result of the purchase of all of the Mortgage Loans and any REO
Property pursuant to the last sentence of Section 10.01 hereof.
OPTIONAL TERMINATION DATE: The Distribution Date on which the Stated
Principal Balance of all of the Mortgage Loans is equal to or less than 10% of
the aggregate Cut-off Date Principal Balance of all of the Mortgage Loans.
ORIGINAL VALUE: The value of the property underlying a Mortgage Loan
based on an appraisal.
ORIGINATOR: Any of the entities which either originated or acquired a
Mortgage Loan and transferred such Mortgage Loan to the Seller.
OTS: The Office of Thrift Supervision.
OUTSTANDING: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(a) Certificates theretofore canceled by the Trustee or delivered to
the Trustee for cancellation; and
(b) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee pursuant to this
Agreement.
OUTSTANDING MORTGAGE LOAN: As of any date of determination, a Mortgage
Loan with a Stated Principal Balance greater than zero that was not the subject
of a Principal Prepayment in full, and that did not become a Liquidated Loan,
prior to the end of the related Prepayment Period.
OVERCOLLATERALIZATION AMOUNT: With respect to any Distribution Date,
the excess, if any, of (i) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period, over (ii) the sum
of the Certificate Principal Balances of the Certificates (after taking into
account the payment of principal other than any Extra Principal Distribution
Amount on such Certificates) on such Distribution Date.
OVERCOLLATERALIZATION FLOOR: For any date of determination, 0.50% of
the aggregate Cut-off Date Principal Balance of the Mortgage Loans
OWNERSHIP INTEREST: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
PASS-THROUGH RATE: With respect to each Class of Certificates, other
than the Class B-IO Certificates and the Residual Certificates, the applicable
interest rate for each such Class as set forth in Section 6.01, subject to the
applicable Interest Rate Cap for such Class.
PERCENTAGE INTEREST: With respect to any Certificate of a specified
Class, the Percentage Interest set forth on the face thereof or the percentage
obtained by dividing the Denomination of such Certificate by the aggregate of
the Denominations of all Certificates of the such Class.
PERIODIC RATE CAP: As to each Mortgage Loan that bears an adjustable
rate of interest, the rate, if any, set forth in the related Mortgage Note and
indicated on the Mortgage Loan Schedule, that is the maximum adjustment that can
be made to a Mortgage Rate on each Interest Adjustment Date in accordance with
its terms, regardless of the change in the applicable Index.
PERMITTED INVESTMENTS: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the United
States;
(ii) general obligations of or obligations guaranteed by any state of
the United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency, or such lower rating as will
not result in the downgrading or withdrawal of the ratings then assigned to
the Certificates by each Rating Agency;
(iii) [Reserved];
(iv) commercial or finance company paper which is then receiving the
highest commercial or finance company paper rating of each Rating Agency,
or such lower rating as will not result in the downgrading or withdrawal of
the ratings then assigned to the Certificates by each Rating Agency;
(v) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state thereof
and subject to supervision and examination by federal and/or state banking
authorities, provided that the commercial paper and/or long term unsecured
debt obligations of such depository institution or trust company (or in the
case of the principal depository institution in a holding company system,
the commercial paper or long-term unsecured debt obligations of such
holding company, but only if Xxxxx'x is not a Rating Agency) are then rated
one of the two highest long-term and the highest short-term ratings of each
such Rating Agency for such securities, or such lower ratings as will not
result in the downgrading or withdrawal of the rating then assigned to the
Certificates by any Rating Agency;
(vi) demand or time deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that such
deposits are fully insured by the FDIC;
(vii) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation containing, at the time of the issuance of
such agreements, such terms and conditions as will not result in the
downgrading or withdrawal of the rating then assigned to the Certificates
by any such Rating Agency;
(viii) repurchase obligations with respect to any security described
in clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal) described in
clause (v) above;
(ix) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face amount
thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any state thereof
which, at the time of such investment, have one of the two highest long
term ratings of each Rating Agency (provided that, for so long as Xxxxx'x
is a Rating Agency, such rating shall be the highest commercial paper
rating of Moody's for any such securities), or such lower rating as will
not result in the downgrading or withdrawal of the rating then assigned to
the Certificates by any Rating Agency, as evidenced by a signed writing
delivered by each Rating Agency;
(x) interests in any money market fund (including any such fund
managed or advised by the Trustee, the Master Servicer, the Securities
Administrator or any affiliate thereof) which at the date of acquisition of
the interests in such fund and throughout the time such interests are held
in such fund has the highest applicable long term rating by each Rating
Agency rating such fund or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the Certificates
by each Rating Agency;
(xi) short term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the United
States or any state thereof (including any such fund managed or advised by
the Trustee, the Master Servicer, the Securities Administrator or any
affiliate thereof) which on the date of acquisition has been rated by each
Rating Agency in their respective highest applicable rating category or
such lower rating as will not result in the downgrading or withdrawal of
the ratings then assigned to the Certificates by each Rating Agency; and
(xii) such other investments having a specified stated maturity and
bearing interest or sold at a discount acceptable to each Rating Agency as
will not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by any Rating Agency, as evidenced by a signed
writing delivered by each Rating Agency;
provided, that no such instrument shall be a Permitted Investment if
such instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no such
instrument shall be a Permitted Investment (A) if such instrument evidences
principal and interest payments derived from obligations underlying such
instrument and the interest payments with respect to such instrument provide a
yield to maturity of greater than 120% of the yield to maturity at par of such
underlying obligations, or (B) if it may be redeemed at a price below the
purchase price (the foregoing clause (B) not to apply to investments in units of
money market funds pursuant to clause (vii) above); provided further that no
amount beneficially owned by any REMIC (including, without limitation, any
amounts collected by the Master Servicer but not yet deposited in the Master
Servicer Collection Account) may be invested in investments (other than money
market funds) treated as equity interests for Federal income tax purposes,
unless the Master Servicer shall receive an Opinion of Counsel, at the expense
of the Master Servicer, to the effect that such investment will not adversely
affect the status of any such REMIC as a REMIC under the Code or result in
imposition of a tax on any such REMIC. Permitted Investments that are subject to
prepayment or call may not be purchased at a price in excess of par.
PERMITTED TRANSFEREE: Any person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to any
Residual Certificate, (iv) rural electric and telephone cooperatives described
in section 1381(a)(2)(C) of the Code, (v) a Person that is not a citizen or
resident of the United States, a corporation, partnership (other than a
partnership that has any direct or indirect foreign partners) or other entity
(treated as a corporation or a partnership for federal income tax purposes),
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia, an estate whose income from sources without
the United States is includible in gross income for United States federal income
tax purposes regardless of its connection with the conduct of a trade or
business within the United States, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have authority to control all
substantial decisions of the trust or and (vi) any other Person so designated by
the Trustee based upon an Opinion of Counsel (which shall not be an expense of
the Trustee) that states that the Transfer of an Ownership Interest in a
Residual Certificate to such Person may cause the Trust Fund to fail to qualify
as a REMIC at any time that any Certificates are Outstanding. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code or successor provisions. A corporation will
not be treated as an instrumentality of the United States or of any State or
political subdivision thereof for these purposes if all of its activities are
subject to tax and, with the exception of the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by such
government unit.
PERSON: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
PREPAYMENT ASSUMPTION: The applicable rate of prepayment, as described
in the Prospectus Supplement relating to each Class of Offered Certificates.
PREPAYMENT CHARGE: Any prepayment premium, penalty or charge payable
by a Mortgagor in connection with any Principal Prepayment on a Mortgage Loan
pursuant to the terms of the related Mortgage Note.
PREPAYMENT INTEREST SHORTFALL: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a partial Principal Prepayment, a
Principal Prepayment in full, or that became a Liquidated Loan during the
related Prepayment Period, (other than a Principal Prepayment in full resulting
from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03, 3.20 or
10.01 hereof), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan immediately prior to such prepayment (or liquidation) or in the case of a
partial Principal Prepayment on the amount of such prepayment (or Liquidation
Proceeds) exceeds (ii) the amount of interest paid or collected in connection
with such Principal Prepayment or such Liquidation Proceeds.
PREPAYMENT PERIOD: As to any Distribution Date and (i) the Mortgage
Loans serviced by each Servicer, other than the EMC Servicer, the prepayment
period specified in the related Servicing Agreement and (ii) the Mortgage Loans
serviced by the EMC Servicer, the calendar month immediately preceding the month
in which such Distribution Date occurs.
PRIMARY MORTGAGE INSURANCE POLICY: Any primary mortgage guaranty
insurance policy issued in connection with a Mortgage Loan which provides
compensation to a Mortgage Note holder in the event of default by the obligor
under such Mortgage Note or the related security instrument, if any or any
replacement policy therefor through the related Accrual Period for such Class
relating to a Distribution Date.
PRINCIPAL DISTRIBUTION AMOUNT: With respect to each Distribution Date,
an amount equal to (x) the Principal Funds for such Distribution Date plus (y)
any Extra Principal Distribution Amount for such Distribution Date minus (z) any
Excess Overcollateralization Amount for such Distribution Date.
PRINCIPAL FUNDS: With respect to any Distribution Date, (i) the sum,
without duplication, of (a) all scheduled principal (or with respect to Simple
Interest Loans, actual principal) collected during the related Due Period, (b)
all Advances (except with respect to Simple Interest Loans) relating to
principal made on or before the Master Servicer Advance Date, (c) Principal
Prepayments exclusive of Prepayment Charges collected during the related
Prepayment Period, (d) the Stated Principal Balance of each Mortgage Loan that
was repurchased by the Seller pursuant to Sections 2.02, 2.03 or 3.20, (e) the
aggregate of all Substitution Adjustment Amounts for the related Determination
Date in connection with the substitution of Mortgage Loans pursuant to Section
2.03(c), (f) amounts in respect of principal paid by the EMC Servicer pursuant
to Section 10.01 and (g) all Liquidation Proceeds collected during the related
Prepayment Period (to the extent such Liquidation Proceeds relate to principal),
in each case to the extent remitted by the Master Servicer or the applicable
Servicer to the Master Servicer Collection Account pursuant to this Agreement or
the related Servicing Agreement and minus (ii) all amounts relating to principal
reimbursed pursuant to Sections 4.03 and 4.05.
PRINCIPAL PREPAYMENT: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 3.20 and 10.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Master Servicer or the applicable Servicer,
as appropriate, in accordance with the terms of the related Mortgage Note.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated February 26,
2003 relating to the public offering of the Offered Certificates.
PROTECTED ACCOUNT: An account established and maintained by each
Servicer with respect to receipts on the Mortgage Loans and REO Property
serviced by such Servicer in accordance with the related Servicing Agreement or
Exhibit K hereto.
PROTECTED PARTY: As defined in Section 7.04 hereof.
PUD: A Planned Unit Development.
PURCHASE PRICE: With respect to any Mortgage Loan (x) required to be
repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof or (y) that
the Seller has a right to purchase pursuant to Section 3.20 hereof, an amount
equal to the sum of (i) 100% of the outstanding principal balance of the
Mortgage Loan as of the date of such purchase plus (ii) accrued interest thereon
at the applicable Mortgage Rate through the first day of the month in which the
Purchase Price is to be distributed to Certificateholders, reduced by any
portion of the Servicing Fee, Servicing Advances and Advances payable to the
purchaser of the Mortgage Loan.
RATING AGENCY: Each of Xxxxx'x, S&P and Fitch. If any such
organization or its successor is no longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization, or other comparable
Person, designated by the Depositor, notice of which designation shall be given
to the Trustee. References herein to a given rating category of a Rating Agency
shall mean such rating category without giving effect to any modifiers.
REALIZED LOSS: With respect to each Liquidated Loan, an amount (not
less than zero or more than the Stated Principal Balance of the Mortgage Loan)
as of the date of such liquidation, equal to (i) the Stated Principal Balance of
such Liquidated Loan as of the date of such liquidation, minus (ii) the
Liquidation Proceeds, if any, received in connection with such liquidation
during the month in which such liquidation occurs, to the extent applied as
recoveries of principal of the Liquidated Loan.
REALIZED LOSS EVENT: A Realized Loss Event will be deemed to have
occurred if, for the Distribution Dates in the months indicated below, the
aggregate of Realized Losses since the Closing Date with respect to the Mortgage
Loans, as a percentage of the aggregate Stated Principal Balance of the Mortgage
Loans on the Closing Date, exceed the following:
(i) one month through 36 months following the Closing Date, 2.25%;
(ii) 37 months through 48 months following the Closing Date, 4.40%;
(iii) 49 months through 60 months following the Closing Date, 5.50%;
(iv) 61 months through 72 months following the Closing Date, 6.75%
and
(v) 73 months following the Closing Date, and each month thereafter,
7.50%.
RECORD DATE: With respect to the Fixed Rate Certificates, the Class
B-IO Certificates and the Residual Certificates and (a) the first Distribution
Date, the Closing Date, and (b) with respect to any other Distribution Date, the
close of business on the last Business Day of the month preceding the month in
which such Distribution Date occurs. With respect to any Distribution Date and
the Adjustable Rate Certificates, so long as such Certificates are Book-Entry
Certificates, the Business Day preceding such Distribution Date, and otherwise,
the close of business on the last Business Day of the month preceding the month
in which such Distribution Date occurs.
REFERENCE BANK RATE: With respect to any Accrual Period, the
arithmetic mean (rounded upwards, if necessary, to the nearest whole multiple of
0.03125%) of the offered rates for United States dollar deposits for one month
that are quoted by the Reference Banks as of 11:00 a.m., New York City time, on
the related Interest Determination Date to prime banks in the London interbank
market for a period of one month in amounts approximately equal to the aggregate
Certificate Principal Balance of all Certificates which bear an adjustable rate
of interest on such Interest Determination Date, provided that at least two such
Reference Banks provide such rate. If fewer than two offered rates appear, the
Reference Bank Rate will be the arithmetic mean (rounded upwards, if necessary,
to the nearest whole multiple of 0.03125%) of the rates quoted by one or more
major banks in New York City, selected by the Securities Administrator, as of
11:00 a.m., New York City time, on such date for loans in U.S. dollars to
leading European banks for a period of one month in amounts approximately equal
to the aggregate Certificate Principal Balance of the Certificates which bear an
adjustable rate of interest on such Interest Determination Date.
REFERENCE BANKS: Barclays Bank PLC, Citibank, N.A. and Deutsche Bank
AG, provided that if any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Securities Administrator
which are engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London,
England, (ii) not controlling, under the control of or under common control with
the Depositor, the Seller, the Master Servicer or any affiliate thereof and
(iii) which have been designated as such by the Trustee.
REGULAR CERTIFICATE: Any Certificate other than a Residual
Certificate.
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
REMAINING EXCESS SPREAD: With respect to any Distribution Date, the
Excess Spread less any Extra Principal Distribution Amount, in each case for
such Distribution Date.
REMIC: A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code.
REMIC I: The segregated pool of assets described in Section 5.06(a).
REMIC I Certificates: The REMIC I Regular Interests and the Class R-1
Certificate.
REMIC I Regular Interests: As defined in Section 5.06(b).
REMIC II: The segregated pool of assets described in Section 5.06(a).
REMIC II Certificates: The REMIC II Regular Interests and the Class
R-2 Certificate.
REMIC II Regular Interests: As defined in Section 5.06(c).
REMIC III: The segregated pool of assets described in Section 5.06(a).
REMIC III Certificates: The REMIC III Regular Interests and the Class
R-3 Certificate.
REMIC III Regular Interests: As defined in Section 5.06(d).
REMIC Opinion: An Opinion of Counsel, to the effect that the proposed
action described therein would not, under the REMIC Provisions, (i) cause any of
REMIC I, REMIC II or REMIC III to qualify as a REMIC while any regular interest
in any such REMIC is outstanding, (ii) result in a tax on prohibited
transactions or (iii) constitute a taxable contribution after the Startup Day.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
REMITTANCE REPORT: As defined in Section 5.04(c).
REO PROPERTY: A Mortgaged Property acquired by a Servicer or the
Master Servicer through foreclosure or deed-in-lieu of foreclosure in connection
with a defaulted Mortgage Loan.
REPLACEMENT MORTGAGE LOAN: A Mortgage Loan or Mortgage Loans in the
aggregate substituted by the Seller for a Deleted Mortgage Loan, which must, on
the date of such substitution, as confirmed in a Request for Release, (i) have a
Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (ii)
have a Mortgage Rate not less than or more than 1% per annum higher than the
Mortgage Rate of the Deleted Mortgage Loan; (iii) have the same or higher credit
quality characteristics than that of the Deleted Mortgage Loan; (iv) if the
Deleted Mortgage Loan is an EMC Mortgage Loan, be an EMC Mortgage Loan; (v) have
a Combined Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan;
(vi) have a remaining term to maturity no greater than (and not more than one
year less than) that of the Deleted Mortgage Loan; (vii) not permit conversion
of the Mortgage Rate from a fixed rate to a variable rate; (viii) provide for a
Prepayment Charge on terms substantially similar to those of the Prepayment
Charge, if any, of the Deleted Mortgage Loan; (ix) have the same lien priority
as the Deleted Mortgage Loan; (x) constitute the same occupancy type as the
Deleted Mortgage Loan or be owner occupied; (xi) be current in payment of
principal and interest as of the date of substitution; (xii) have payment terms
that do not vary in any material respect from the payment terms of the Mortgage
Loan for which it is to be substituted; (xiii) if the Deleted Mortgage Loan
bears an adjustable rate of interest, have a Gross Margin, Periodic Rate Cap and
Maximum Lifetime Mortgage Rate no less than those of the Deleted Mortgage Loan,
have the same Index and interval between Interest Adjustment Dates, and a
Minimum Lifetime Mortgage Rate no lower than that of such Deleted Mortgage Loan;
and (xiv) comply with each representation and warranty set forth in Section 2.03
hereof.
REQUEST FOR RELEASE: The Request for Release to be submitted by the
Seller, a Servicer or the Master Servicer to the Trustee and/or the Custodian,
as appropriate, substantially in the form of Exhibit H. Each Request for Release
furnished to the Trustee and/or the Custodian by the Seller, a Servicer or the
Master Servicer shall be in duplicate and shall be executed by a Servicing
Officer (or, if furnished electronically to the Trustee and/or Custodian, shall
be deemed to have been sent and executed by a Servicing Officer) of the Seller,
the Servicer or the Master Servicer, as applicable.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement or the related Servicing Agreement.
RESIDUAL CERTIFICATES: The Class R-1 Certificates, Class R-2
Certificates and Class R-3 Certificates.
RESPONSIBLE OFFICER: With respect to the Trustee, any Vice President,
any Assistant Vice President, the Secretary, any Assistant Secretary, any Trust
Officer with specific responsibility for the transaction contemplated hereby or
other officers of the Trustee specified by the Trustee, as to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
S&P: Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc.
SCHEDULED PAYMENT: The scheduled monthly payment on a Mortgage Loan
due on any Due Date allocable to principal and/or interest on such Mortgage
Loan.
SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITIES ADMINISTRATOR: Xxxxx Fargo Bank Minnesota, National
Association, in its capacity as securities administrator hereunder, and its
successors and assigns.
SECURITIES ADMINISTRATOR FEE: As to any Distribution Date, a fee
payable to the Securities Administrator by the Master Servicer out of its own
funds in such capacity as they may separately agree.
SELLER: EMC, in its capacity as seller of the Mortgage Loans to the
Depositor.
SENIOR ENHANCEMENT PERCENTAGE: As to each Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the sum of (i)
the aggregate of the Certificate Principal Balances of the Subordinated
Certificates and (ii) the Overcollateralization Amount, in each case after
taking into account the distribution of the related Principal Distribution
Amounts on such Distribution Date, and the denominator of which is the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period.
SERVICER: Any of the EMC Servicer, WFHM or Xxxxx.
SERVICERS: Collective reference to the EMC Servicer, WFHM and Xxxxx.
SERVICER REMITTANCE DATE: With respect to each Mortgage Loan, (i) in
the case of the EMC Servicer, the 23rd day of each calendar month, or if such
23rd day is not a Business Day, the next succeeding Business Day (or, if such
next succeeding Business Day would be the Distribution Date, the immediately
preceding Business Day), commencing in March 2003 and (ii) in the case of any
other Servicer, the date set forth in the related Servicing Agreement, when the
related Servicer is required to remit funds in the related Protected Account to
the Master Servicer.
SERVICING AGREEMENT: Any servicing agreement listed on Schedule I
hereto, and, in the case of the EMC Servicer, the obligations of the EMC
Servicer set forth in this Agreement, including Exhibit K hereto, as amended,
including by the related Assumption Agreement, if applicable.
SERVICING ADVANCES: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable legal fees) incurred in the
performance by a Servicer of its servicing obligations under the related
Servicing Agreement, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, and including any
expenses incurred in relation to any such proceedings that result from a
Mortgage Loan being registered in the MERS(R) System, (iii) the management and
liquidation of any REO Property (including, without limitation, realtor's
commissions) and (iv) compliance with any obligations under a Servicing
Agreement or Section 3.09 hereof to cause insurance to be maintained.
SERVICING FEE: As to each Mortgage Loan and any Distribution Date, an
amount equal to 1/12th of the Servicing Fee Rate multiplied by the Stated
Principal Balance of such Mortgage Loan as of the last day of the related Due
Period or, in the event of any payment of interest that accompanies a Principal
Prepayment in full during the related Due Period made by the Mortgagor
immediately prior to such prepayment, interest at the Servicing Fee Rate on the
Stated Principal Balance of such Mortgage Loan for the period covered by such
payment of interest.
SERVICING FEE RATE: With respect to each Mortgage Loan, the per annum
rate set forth in the Mortgage Loan Schedule under the heading "Servicing Fee."
SERVICING OFFICER: Any officer of a Servicer or the Master Servicer
involved in, or responsible for, the administration and servicing or master
servicing of the Mortgage Loans (i) in the case of the EMC Servicer, whose name
and facsimile signature appear on a list of servicing officers furnished to the
Trustee by the EMC Servicer on the Closing Date pursuant to this Agreement, as
such list may from time to time be amended and (ii) in the case of the Master
Servicer or any other Servicer, as to which evidence reasonably acceptable to
the Custodian or the Trustee, as applicable, of due authorization, by such party
has been furnished from time to time to the Custodian or the Trustee, as
applicable.
SIMPLE INTEREST LOAN: A Mortgage Loan that provides for daily accrual
of interest and is identified as such on the Mortgage Loan Schedule.
SPECIFIED OVERCOLLATERALIZATION AMOUNT: With respect to the Mortgage
Loans and any Distribution Date (i) prior to the Stepdown Date, 1.65% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans and (ii) on and
after the Stepdown Date, the greater of (a) the lesser of (1) 3.30% of the
Stated Principal Balance of the Mortgage Loans as of the end of the Related Due
Period and (2) 1.65% of the Cut-off Date Principal Balance of the Mortgage Loans
and (b) the Overcollateralization Floor.
STARTUP DAY: The Startup Day for each REMIC formed hereunder shall be
the Closing Date.
STATED PRINCIPAL BALANCE: With respect to any Mortgage Loan or related
REO Property and any Distribution Date, the Cut-off Date Principal Balance
thereof minus the sum of (i) the principal portion of the Scheduled Payments due
(or, with respect to Simple Interest Loans, the principal portion of payments
actually received) with respect to such Mortgage Loan during each related Due
Period ending prior to such Distribution Date (and other than with respect to
Simple Interest Loans irrespective of any delinquency in their payment), (ii)
all Principal Prepayments with respect to such Mortgage Loan received prior to
or during the related Prepayment Period, and all Liquidation Proceeds to the
extent applied by the related Servicer or the Master Servicer as recoveries of
principal in accordance with Section 3.13 with respect to such Mortgage Loan,
that were received by the related Servicer or the Master Servicer as of the
close of business on the last day of the Prepayment Period related to such
Distribution Date, and (iii) any Realized Losses on such Mortgage Loan incurred
during the related Prepayment Period, and plus, with respect to negatively
amortizing Mortgage Loans, any Deferred Interest added to principal through the
last day of the related Due Period. The Stated Principal Balance of a Liquidated
Loan equals zero.
STEPDOWN DATE: The earlier to occur of (i) the Distribution Date on
which the aggregate Certificate Principal Balance of the Class A Certificates
has been reduced to zero and (ii) the later to occur of (a) the Distribution
Date in March 2006 and (b) the first Distribution Date on which the aggregate
Certificate Principal Balance of the Subordinated Certificates plus the
Overcollateralization Amount for such Distribution Date divided by the Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period is greater than or equal to 30.30%.
SUBORDINATED CERTIFICATES: The Class M-1 Certificates, Class M-2
Certificates and Class B Certificates.
SUBSTITUTION ADJUSTMENT AMOUNT: The meaning ascribed to such term
pursuant to Section 2.03(c).
SUCCESSOR MASTER SERVICER: The meaning ascribed to such term pursuant
to Section 8.01.
TAX MATTERS PERSON: The person designated as "tax matters person" in
the manner provided under Treasury regulation ss. 1.860F-4(d) and temporary
Treasury regulation ss. 301.6231(a)(7)-1T. The holder of the greatest Percentage
Interest in a Class of Residual Certificates shall be the Tax Matters Person for
the related REMIC. The Securities Administrator, or any successor thereto or
assignee thereof shall serve as tax administrator hereunder and as agent for the
related Tax Matters Person.
TRANSFER AFFIDAVIT: As defined in Section 6.02(c).
TRANSFER: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
TRIGGER EVENT: With respect to any Distribution Date on or after the
Stepdown Date, a Trigger Event exists if either a Delinquency Event or a
Realized Loss Event shall have occurred and be continuing.
TRUST FUND: The corpus of the trust created hereunder consisting of
(i) the Mortgage Loans and all interest accruing and principal due (or in the
case of Simple Interest Loan, received) with respect thereto after the Cut-off
Date to the extent not applied in computing the Cut-off Date Principal Balance
thereof; (ii) the Master Servicer Collection Account and the Distribution
Account and all amounts deposited therein pursuant to the applicable provisions
of this Agreement; (iii) property that secured a Mortgage Loan and has been
acquired by foreclosure, deed in lieu of foreclosure or otherwise; (iv) the
mortgagee's rights under the Insurance Policies with respect to the Mortgage
Loans; (v) the Servicing Agreements and Assumption Agreements; (vi) rights under
the Yield Maintenance Agreement and the Yield Maintenance Account and (vii) all
proceeds of the foregoing, including proceeds of conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquid property.
TRUSTEE: JPMorgan Chase Bank, a New York banking corporation, not in
its individual capacity, but solely in its capacity as trustee for the benefit
of the Certificateholders under this Agreement, and any successor thereto, and
any corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder.
TRUSTEE FEE: As to any Distribution Date, a fee payable to the Trustee
by the Master Servicer out of its own funds in such amount as they may
separately agree.
TURBO AMOUNT: As defined in Section 5.06(c).
UNPAID APPLIED REALIZED LOSS AMOUNT: As of any Distribution Date, and
each Class of Subordinated Certificates and the Class A-2 Certificates, the
excess of (i) the Applied Realized Loss Amount for such Class over (ii) the sum
of all distributions on such Class in reduction of the Applied Realized Loss
Amount for such Class on all previous Distribution Dates.
VOTING RIGHTS: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions hereunder. Voting Rights shall be allocated (i) 94% to the Offered
Certificates (other than the Class A-IO Certificates and the Residual
Certificates), (ii) 1% to the Class A-IO Certificates, (iii) prior to payment in
full of the Class A-IO Certificates, 2% and thereafter 3%, to the Class B-IO
Certificates and (iv) 1% to each Class of Residual Certificates, with the
allocation among the Offered Certificates (other than the Class A-IO
Certificates and the Residual Certificates) to be in proportion to the
Certificate Principal Balance of each Class relative to the Certificate
Principal Balance of all other such Classes. Voting Rights will be allocated
among the Certificates of each such Class in accordance with their respective
Percentage Interests.
WFHM: Xxxxx Fargo Home Mortgage, Inc., or its successor in interest.
YIELD MAINTENANCE ACCOUNT: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.06 in the name of the Trustee
for the benefit of the Class A-1 Certificateholders, the Class A-2
Certificateholders, the Class M-1 Certificateholders, the Class M-2
Certificateholders and the Class B Certificateholders and designated "JPMorgan
Chase Bank, in trust for registered holders of Bear Xxxxxxx Asset Backed
Securities, Inc., Asset-Backed Certificates, Series 2003-1, Class X-0, Xxxxx
X-0, Class M-1, Class M-2 and Class B Certificates." The Yield Maintenance
Account shall not constitute an asset of any REMIC hereunder.
YIELD MAINTENANCE AGREEMENT: ISDA Master Agreement (including the
schedule thereto), dated as of the Closing Date, by and between Bear Xxxxxxx
Financial Products, Inc. and the Trust, together with the Confirmation, Ref. No.
FXNEC5108, dated the Closing Date, between Bear Xxxxxxx Financial Products, Inc.
and the Trust.
ARTICLE II.
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01. CONVEYANCE OF TRUST FUND.
The Seller hereby sells, transfers, assigns, sets over and otherwise
conveys to the Depositor, without recourse, all the right, title and interest of
the Seller in and to the assets in the Trust Fund.
The Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans by the Depositor and has agreed to take the
actions specified herein.
The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee
for the use and benefit of the Certificateholders, without recourse, all the
right, title and interest of the Depositor in and to the Trust Fund.
In connection with any such transfer and assignment, the Depositor has
delivered to or caused to be delivered to, and deposited with, the Custodian the
following documents or instruments with respect to each Mortgage Loan so
assigned:
(i) except with respect to a MOM Loan, the original Mortgage Note,
including any riders thereto, endorsed without recourse to the order of
"JPMorgan Chase Bank, as Trustee for certificateholders of Bear Xxxxxxx Asset
Backed Securities, Inc. Asset Backed Certificates, Series 2003-1, without
recourse", and showing to the extent available to the Seller an unbroken chain
of endorsements from the original payee thereof to the Person endorsing it to
the Trustee,
(ii) the original Mortgage and, if the related Mortgage Loan is a MOM
Loan, noting the presence of the MIN and language indicating that such Mortgage
Loan is a MOM Loan, which shall have been recorded (or if the original is not
available, a copy), with evidence of such recording indicated thereon (or if
clause (x) in the proviso below applies, shall be in recordable form),
(iii) unless the Mortgage Loan is registered on the MERS(R) System,
the assignment (either an original or a copy, which may be in the form of a
blanket assignment if permitted in the jurisdiction in which the Mortgaged
Property is located) to the Trustee of the Mortgage, in recordable form, with
respect to each Mortgage Loan in the name of "JPMorgan Chase Bank, as Trustee
for certificateholders of Bear Xxxxxxx Asset Backed Securities, Inc. Asset
Backed Certificates, Series 2003-1" or in blank,
(iv) an original or a copy of all intervening assignments of the
Mortgage, if any, to the extent available to the Seller, with evidence of
recording thereon,
(v) the original policy of title insurance or mortgagee's certificate
of title insurance or commitment or binder for title insurance, if available, or
a copy thereof, or, in the event that such original title insurance policy is
unavailable, a photocopy thereof, or in lieu thereof, a current lien search on
the related Mortgaged Property and
(vi) originals or copies of all available assumption, modification or
substitution agreements, if any;
PROVIDED, HOWEVER, that the assignment of the Mortgage to the Trustee
will not be required to be submitted for recording with respect to any Mortgage
Loan: (a) if the Trustee and the Custodian shall have received an Opinion of
Counsel addressed to the Trustee stating that in such counsel's opinion, the
recordation of the assignment to the Trustee of the Mortgage securing a
particular Mortgage Note is not necessary to transfer to the assignee thereof
all the benefits and security provided by the Mortgage as against the related
assignor or any creditor of such assignor, and the Mortgage will continue to
secure the Mortgage Note to the same extent as if the Mortgage Note and Mortgage
had not been assigned and delivered or (b) if MERS is identified on the Mortgage
or on a properly recorded assignment of the Mortgage as the mortgagee of record
solely as nominee for the Seller and its successors and assigns;
AND PROVIDED, further, however, that in lieu of the foregoing, the
Depositor may deliver, or cause to be delivered, the following documents, under
the circumstances set forth below: (x) if any Mortgage, assignment thereof to
the Trustee or intervening assignments thereof have been delivered or are being
delivered to recording offices for recording and have not been returned in time
to permit their delivery as specified above, the Depositor may deliver, or cause
to be delivered, a true copy thereof with a certification by the applicable
Servicer or the title company issuing the commitment for title insurance, on the
face of such copy, substantially as follows: "Certified to be a true and correct
copy of the original, which has been transmitted for recording"; and (y) in lieu
of the Mortgage Notes relating to the Mortgage Loans identified in the list set
forth in Exhibit J, the Depositor may deliver, or cause to be delivered, a lost
note affidavit and a copy of the original note, if available; and provided,
further, however, that in the case of Mortgage Loans which have been prepaid in
full after the Cut-Off Date and prior to the Closing Date, the Depositor, in
lieu of delivering the above documents, may deliver, or cause to be delivered,
to the Custodian a certification of a Servicing Officer to such effect and in
such case shall deposit, or cause to be deposited, all amounts paid in respect
of such Mortgage Loans in the Master Servicer Collection Account on the Closing
Date.
In the case of the documents referred to in clause (x) above, the
Depositor shall deliver, or cause to be delivered, such documents to the
Custodian promptly after they are received. The Seller shall cause, at its
expense, the Mortgage and intervening assignments, if any, and to the extent
required in accordance with the foregoing, the assignment of the Mortgage to the
Trustee to be submitted for recording promptly after the Closing Date. In the
event that the Seller, the Depositor or the Master Servicer gives written notice
to the Trustee (a) that recording of the assignment of the Mortgage to the
Trustee is required to protect the right, title and interest of the Trustee on
behalf of the Certificateholders in and to any Mortgage Loan, (b) a court
recharacterizes the sale of the Mortgage Loans as a financing, or (c) as a
result of any change in or amendment to the laws of a State in which recording
was not effected or any applicable political subdivision thereof, or any change
in official position regarding application or interpretation of such laws,
including a holding by a court of competent jurisdiction, such recording is so
required, the Seller shall submit or cause to be submitted for recording as
specified above or, should the Seller fail to perform such obligations, the
Trustee shall cause each such previously unrecorded assignment to be submitted
for recording as specified above at the expense of the Trust pursuant to Section
9.05. In the event a Mortgage File is released to the Master Servicer or a
Servicer as a result of the Master Servicer's or a Servicer's having completed a
Request for Release, the Trustee shall, if not so completed, complete, or cause
the Custodian to complete, the assignment of the related Mortgage in the manner
specified in clause (iii) above.
In connection with the assignment of any Mortgage Loans registered on
the MERS(R) System, the Seller further agrees that it will cause, at the
Seller's own expense, within 30 days after the Closing Date, the MERS(R) System
to indicate that such Mortgage Loans have been assigned by the Seller to the
Depositor and by the Depositor to the Trustee in accordance with this Agreement
for the benefit of the Certificateholders by including (or deleting, in the case
of Mortgage Loans which are repurchased in accordance with this Agreement) in
such computer files (a) the code in the field which identifies the specific
Trustee, (b) the code in the field "Pool Field" which identifies the series of
the Certificates issued in connection with such Mortgage Loans and (c) a code
that provides the Custodian with access to such Mortgage Loans. The Seller
further agrees that it will not, and will not permit any Servicer or the Master
Servicer to, and the Master Servicer agrees that it will not, alter the codes
referenced in this paragraph with respect to any Mortgage Loan during the term
of this Agreement unless and until such Mortgage Loan is repurchased in
accordance with the terms of this Agreement.
Section 2.02. ACCEPTANCE OF THE MORTGAGE LOANS.
(a) The Trustee acknowledges receipt based on receipt by the Custodian
of, subject to the further review and the exceptions the Custodian notes
pursuant to the procedures described below, the documents (or certified copies
thereof) delivered to the Custodian pursuant to Section 2.01 and declares that
it holds and will continue to hold directly or through the Custodian those
documents and any amendments, replacements or supplements thereto and all other
assets of the Trust Fund delivered to the Custodian on its behalf in trust for
the use and benefit of all present and future Holders of the Certificates. On
the Closing Date, the Custodian will deliver an initial certification in the
form annexed hereto as Exhibit C-1 confirming whether or not it has received the
Mortgage File for each Mortgage Loan, but without review of such Mortgage File,
except to the extent necessary to confirm whether such Mortgage File contains
the original Mortgage Note or a lost note affidavit in lieu thereof. No later
than 90 days after the Closing Date, the Custodian agrees pursuant to the
Custodial Agreement, for the benefit of the Certificateholders, to review each
Mortgage File delivered to it and to execute and deliver, or cause to be
executed and delivered, to the Seller, the Master Servicer and to the Trustee an
interim certification substantially in the form annexed hereto as Exhibit C-2.
In conducting such review, the Custodian on behalf of the Trustee will ascertain
whether all required documents have been executed and received and whether those
documents relate, determined on the basis of the Mortgagor name, original
principal balance and loan number, to the Mortgage Loans identified in Exhibit B
to this Agreement, as supplemented (provided, however, that with respect to
those documents described in clauses (iv) and (vi) of the fourth paragraph of
Section 2.01, such obligations shall extend only to documents actually delivered
pursuant to such clauses). In performing any such review, the Custodian on
behalf of the Trustee and in accordance with the Custodial Agreement may
conclusively rely on the purported due execution and genuineness of any such
document and on the purported genuineness of any signature thereon. If the
Custodian finds any document constituting part of the Mortgage File not to have
been executed or received, or to be unrelated to the Mortgage Loans identified
in Exhibit B or to appear to be defective on its face, the Custodian shall
include such information in the exception report attached to Exhibit C-2. The
Seller shall correct or cure any such defect or, if prior to the end of the
second anniversary of the Closing Date, the Seller may substitute for the
related Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03 or shall deliver to the Trustee and the Custodian an Opinion of Counsel,
addressed to the Trustee and the Custodian, at the Seller's expense, to the
effect that such defect does not materially or adversely affect the interests of
Certificateholders in such Mortgage Loan within 90 days from the date of notice
from the Custodian of the defect and if the Seller fails to correct or cure the
defect or deliver such opinion within such period, the Seller will, subject to
Section 2.03, within 90 days from the notification of the Custodian purchase
such Mortgage Loan at the Purchase Price; provided, however, that if such defect
relates solely to the inability of the Seller to deliver the Mortgage,
assignment thereof to the Trustee, or intervening assignments thereof with
evidence of recording thereon because such documents have been submitted for
recording and have not been returned by the applicable jurisdiction, the Seller
shall not be required to purchase such Mortgage Loan if the Seller delivers such
documents promptly upon receipt, but in no event later than 360 days after the
Closing Date.
(b) No later than 180 days after the Closing Date, the Custodian on
behalf of the Trustee and in accordance with the Custodial Agreement will
review, for the benefit of the Certificateholders, the Mortgage Files and will
execute and deliver or cause to be executed and delivered to the Seller and the
Master Servicer and to the Trustee, a final certification substantially in the
form annexed hereto as Exhibit C-3. In conducting such review, the Custodian
will ascertain whether each document required to be recorded has been returned
from the recording office with evidence of recording thereon and the Custodian
has received either an original or a copy thereof, as required in Section 2.01
(provided, however, that with respect to those documents described in clauses
(iv) and (vi) of the fourth paragraph of Section 2.01, such obligations shall
extend only to documents actually delivered pursuant to such clauses). If the
Custodian finds any document with respect to a Mortgage Loan has not been
received, or to be unrelated, determined on the basis of the Mortgagor name,
original principal balance and loan number, to the Mortgage Loans identified in
Exhibit B or to appear defective on its face, the Custodian shall note such
defect in the exception report attached to the Final Certification and shall
promptly notify the Seller. The Seller shall correct or cure any such defect or,
if prior to the end of the second anniversary of the Closing Date, the Seller
may substitute for the related Mortgage Loan a Replacement Mortgage Loan, which
substitution shall be accomplished in the manner and subject to the conditions
set forth in Section 2.03 or shall deliver to the Trustee and the Custodian an
Opinion of Counsel, addressed to the Trustee and the Custodian, at the Seller's
expense, to the effect that such defect does not materially or adversely affect
the interests of Certificateholders in such Mortgage Loan within 90 days from
the date of notice from the Custodian of the defect and if the Seller is unable
within such period to correct or cure such defect, or to substitute the related
Mortgage Loan with a Replacement Mortgage Loan or to deliver such opinion, the
Seller shall, subject to Section 2.03, within 90 days from the notification of
the Custodian, purchase such Mortgage Loan at the Purchase Price; provided,
however, that if such defect relates solely to the inability of the Seller to
deliver the Mortgage, assignment thereof to the Trustee or intervening
assignments thereof with evidence of recording thereon, because such documents
have not been returned by the applicable jurisdiction, the Seller shall not be
required to purchase such Mortgage Loan, if the Seller delivers such documents
promptly upon receipt, but in no event later than 360 days after the Closing
Date.
(c) In the event that a Mortgage Loan is purchased by the Seller in
accordance with subsections 2.02(a) or (b) above or Section 2.03, the Seller
shall remit the applicable Purchase Price to the Trustee for deposit in the
Distribution Account and shall provide written notice to the Trustee detailing
the components of the Purchase Price, signed by a Servicing Officer. Upon
deposit of the Purchase Price in the Distribution Account and receipt of a
Request for Release, the Trustee will release or notify the Custodian which,
upon receipt of such notice from the Trustee, shall release to the Seller the
related Mortgage File and the Trustee shall execute and deliver all instruments
of transfer or assignment, without recourse, representation or warranty,
furnished to it by the Seller, as are necessary to vest in the Seller title to
and rights under the Mortgage Loan. Such purchase shall be deemed to have
occurred on the date on which the deposit into the Distribution Account was made
or if the Custodian is then acting, the date on which notice of the deposit of
the Purchase Price into the Distribution Account was received by the Custodian
from the Trustee. The Trustee shall promptly notify the Rating Agencies of such
repurchase. The obligation of the Seller to cure, repurchase or substitute for
any Mortgage Loan as to which a defect in a constituent document exists shall be
the sole remedy respecting such defect available to the Certificateholders or to
the Trustee on their behalf.
(d) The Seller shall deliver to the Trustee or upon its direction to
the Custodian, and the Trustee agrees to accept or to cause the Custodian to
accept, the Mortgage Note and other documents constituting the Mortgage File
with respect to any Replacement Mortgage Loan, which the Custodian will review
as provided in subsections 2.02(a) and 2.02(b), provided, that the Closing Date
referred to therein shall instead be the date of delivery of the Mortgage File
with respect to each Replacement Mortgage Loan.
(e) Until all amounts distributable in respect of the Certificates
have been distributed in full and the Master Servicer has otherwise fulfilled
its respective obligations under this Agreement, the Trustee, or the Custodian
acting on its behalf, shall retain possession and custody of each Mortgage File
in accordance with and subject to the terms and conditions of this Agreement.
Section 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
SERVICER, THE EMC SERVICER AND THE SELLER.
(a) The Master Servicer and the EMC Servicer each hereby represents
and warrants to the Depositor, the Securities Administrator and the Trustee (and
in the case of the EMC Servicer, to the Master Servicer) as follows, as of the
Closing Date:
(i) It is duly organized and is validly existing and in good standing
(a) in the case of the EMC Servicer, under the laws of the State of
Delaware and (b) in the case of the Master Servicer, as a national banking
association organized under the laws of the United States, and is duly
authorized and qualified to transact any and all business contemplated by
this Agreement to be conducted by it in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance with the
doing business laws of any such state, to the extent necessary to ensure
its ability to enforce each Mortgage Loan, to service the Mortgage Loans in
accordance with the terms of this Agreement and to perform any of its other
obligations under this Agreement in accordance with the terms hereof.
(ii) It has the full corporate power and authority to service each
Mortgage Loan, and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary corporate action on its part the execution,
delivery and performance of this Agreement; and this Agreement, assuming
the due authorization, execution and delivery hereof by the other parties
hereto, constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, except that (a) the enforceability
hereof may be limited by bankruptcy, insolvency, moratorium, receivership
and other similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by it, the
servicing of the Mortgage Loans by it under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof are
in its ordinary course of business and will not (A) result in a material
breach of any term or provision of its charter or by-laws or (B) materially
conflict with, result in a material breach, violation or acceleration of,
or result in a material default under, the terms of any other material
agreement or instrument to which it is a party or by which it may be bound,
or (C) constitute a material violation of any statute, order or regulation
applicable to it of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it; and it is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair its
ability to perform or meet any of its obligations under this Agreement.
(iv) It or one or more of its affiliates is an approved servicer of
conventional mortgage loans for Xxxxxx Xxx or Xxxxxxx Mac and is a
mortgagee approved by the Secretary of Housing and Urban Development
pursuant to sections 203 and 211 of the National Housing Act.
(v) No litigation is pending or, to the best of its knowledge,
threatened, against it that would materially and adversely affect the
execution, delivery or enforceability of this Agreement or its ability to
service the Mortgage Loans or to perform any of its other obligations under
this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for its execution, delivery and
performance of, or compliance with, this Agreement or the consummation of
the transactions contemplated hereby, or if any such consent, approval,
authorization or order is required, it has obtained the same.
(b) The Seller hereby represents and warrants to the Depositor, the
Securities Administrator, the Master Servicer and the Trustee as follows, as of
the Closing Date:
(i) The Seller is duly organized as a Delaware corporation and is
validly existing and in good standing under the laws of the State of
Delaware and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the Seller in
any state in which a Mortgaged Property is located or is otherwise not
required under applicable law to effect such qualification and, in any
event, is in compliance with the doing business laws of any such state, to
the extent necessary to ensure its ability to enforce each Mortgage Loan,
to sell the Mortgage Loans in accordance with the terms of this Agreement
and to perform any of its other obligations under this Agreement in
accordance with the terms hereof.
(ii) The Seller has the full corporate power and authority to sell
each Mortgage Loan, and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary corporate action on the part of the Seller the
execution, delivery and performance of this Agreement; and this Agreement,
assuming the due authorization, execution and delivery hereof by the other
parties hereto, constitutes a legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms, except
that (a) the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
(iii) The execution and delivery of this Agreement by the Seller, the
sale of the Mortgage Loans by the Seller under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof are
in the ordinary course of business of the Seller and will not (A) result in
a material breach of any term or provision of the charter or by-laws of the
Seller or (B) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under, the
terms of any other material agreement or instrument to which the Seller is
a party or by which it may be bound, or (C) constitute a material violation
of any statute, order or regulation applicable to the Seller of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Seller; and the Seller is not in breach or violation
of any material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
it which breach or violation may materially impair the Seller's ability to
perform or meet any of its obligations under this Agreement.
(iv) The Seller is an approved seller of conventional mortgage loans
for Xxxxxx Mae or Xxxxxxx Mac and is a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to sections 203 and 211 of the
National Housing Act.
(v) No litigation is pending or, to the best of the Seller's
knowledge, threatened, against the Seller that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Seller to sell the Mortgage Loans or to
perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this
Agreement or the consummation of the transactions contemplated hereby, or
if any such consent, approval, authorization or order is required, the
Seller has obtained the same.
(vii) With respect to each Mortgage Loan as of the Cut-off Date
(unless otherwise expressly provided):
(A) The information set forth in the Mortgage Loan Schedule on the
Closing Date is complete, true and correct.
(B) No Mortgage Loan is delinquent 61 or more days; and the Seller has
not advanced funds, or induced, solicited or knowingly received any advance of
funds from a party other than the owner of the Mortgaged Property subject to the
Mortgage, directly or indirectly, for the payment of any amount required under
any Mortgage Loan.
(C) Except with respect to taxes, insurance and other amounts
previously advanced by a Servicer with respect to any Mortgage Loan, to the best
of Seller's knowledge, there are no delinquent taxes, water charges, sewer
rents, assessments, insurance premiums, leasehold payments, including
assessments payable in future installments, or other outstanding charges
affecting the related Mortgaged Property.
(D) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments which in the case of the Mortgage Loans are in the Mortgage File and
have been or will be recorded, if necessary to protect the interests of the
Trustee, and which have been or will be delivered to the Trustee, all in
accordance with this Agreement. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required by
the related policy. No Mortgagor has been released, in whole or in part, except
in connection with an assumption agreement approved by the title insurer, to the
extent required by the policy, and which assumption agreement in the case of the
Mortgage Loans is part of the Mortgage File.
(E) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto.
(F) All buildings upon, or comprising part of, the Mortgaged Property
are insured by an insurer acceptable to Xxxxxx Mae and Xxxxxxx Mac against loss
by fire, hazards of extended coverage and such other hazards as are customary in
the area where the Mortgaged Property is located, and such insurer is licensed
to do business in the state where the Mortgaged Property is located. All such
insurance policies contain a standard mortgagee clause naming the Originator,
its successors and assigns as mortgagee and Seller has received no notice that
all premiums thereon have not been paid. If upon origination of the Mortgage
Loan, the Mortgaged Property was, or was subsequently deemed to be, in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available),
which require under applicable law that a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
(or any successor thereto) be obtained, such flood insurance policy is in effect
which policy is with a generally acceptable carrier in an amount representing
coverage not less than the least of (A) the Stated Principal Balance of the
related Mortgage Loan (together with, in the case of a Mortgage Loan that is not
a first priority lien, the outstanding principal balance of all related liens
that are prior to the applicable lien of such Mortgage Loan), (B) the minimum
amount required to compensate for damage or loss on a replacement cost basis, or
(C) the maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973. The Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at Mortgagor's cost and expense and, on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at Mortgagor's cost and expense and to obtain reimbursement
therefor from the Mortgagor.
(G) Each Mortgage Loan at the time it was made complied in all
material respects with any and all requirements of any federal, state or local
law including, but not limited to, all predatory and abusive lending laws,
usury, truth in lending, real estate settlement procedures (including the Real
Estate Settlement Procedures Act of 1974, as amended), consumer credit
protection, equal credit opportunity or disclosure laws applicable to such
Mortgage Loan.
(H) The Mortgage has not been satisfied, canceled, subordinated, or
rescinded, in whole or in part, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such release, cancellation, subordination or
rescission.
(I) The Mortgage is a valid, existing and enforceable first or second
lien on the Mortgaged Property, including all improvements on the Mortgaged
Property, if any, subject only to (1) the lien of current real property taxes
and assessments not yet due and payable, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording being acceptable to mortgage lending institutions
generally and specifically referred to in the lender's title insurance policy
delivered to the Originator of the Mortgage Loan and which do not adversely
affect the Appraised Value of the Mortgaged Property and (3) in the case of a
Mortgage that is a second priority lien, the first lien on the Mortgaged
Property identified in the related Mortgage File, and (4) other matters to which
like properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage. The Seller has
full right to sell and assign the Mortgage to the Depositor.
(J) The Mortgage Note and the related Mortgage are genuine and each is
the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency or reorganization or general principles of equity.
(K) All parties to the Mortgage Note and the Mortgage had the legal
capacity to enter into the Mortgage Loan transaction and to execute and deliver
the Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have
been duly and properly executed by such parties.
(L) The proceeds of the Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Mortgage Note or Mortgage.
(M) Immediately prior to the conveyance of the Mortgage Loans by the
Seller to the Depositor hereunder, the Seller was the sole owner and holder of
the Mortgage Loan and either serviced the Mortgage Loan itself or the Mortgage
Loan was being serviced pursuant to a Servicing Agreement with the Servicer
indicated on the Mortgage Loan Schedule; the related Originator or the Seller or
the applicable Servicer was the custodian of the related escrow account, if
applicable; the Mortgage Loan had neither been assigned nor pledged, and the
Seller had good and marketable title thereto, and had full right to transfer and
sell the Mortgage Loan and the related servicing rights to the Depositor free
and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest subject to the applicable Servicing Agreement, if any, and had full
right and authority subject to no interest or participation of, or agreement
with, any other party, to sell and assign the Mortgage Loan and the related
servicing rights to the Depositor pursuant to the terms of this Agreement.
(N) All parties which have had any interest in the Mortgage, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (2) organized under the laws of such state,
qualified to do business in such state, a federal savings and loan association
or national bank having principal offices in such state or not deemed to be
doing business in such state under applicable law.
(O) The Mortgage Loan is covered by an ALTA lender's title insurance
policy or equivalent form acceptable to the Department of Housing and Urban
Development, or any successor thereto, and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject to the
exceptions contained in clause (I) above) the Seller (as assignee), its
successors and assigns as to the first or more junior priority lien of the
Mortgage in the original principal amount of the Mortgage Loan and against any
loss by reason of the invalidity or unenforceability of the lien resulting from
the provisions of the Mortgage Note and/or Mortgage providing for adjustment in
the Mortgage Rate and monthly payment. Additionally, such lender's title
insurance policy affirmatively insures ingress and egress, and against
encroachments by or upon the Mortgaged Property or any interest therein. With
respect to each Mortgage Loan, the Seller (as assignee) is the sole insured of
such lender's title insurance policy, and such lender's title insurance policy
is in full force and effect. No claims have been made under such lender's title
insurance policy, and no prior holder of the related Mortgage, including the
Seller in the case of a Mortgage Loan, has done, by act or omission, anything
which would impair the coverage of such lender's title insurance policy.
(P) Except as provided in clause (B), immediately prior to the Cut-off
Date, there was no default, breach, violation or event of acceleration existing
under the Mortgage or the Mortgage Note and there was no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration, and the
Seller has not waived any default, breach, violation or event of acceleration.
(Q) There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under law
could give rise to such lien) affecting the related Mortgaged Property which are
or may be liens prior to or equal with, the lien of the related Mortgage.
(R) All improvements which were considered in any appraisal which was
used in determining the Appraised Value of the related Mortgaged Property lay
wholly within the boundaries and building restriction lines of the Mortgaged
Property, and no improvements on adjoining properties encroach upon the
Mortgaged Property.
(S) No Mortgage Loan is subject to the Georgia Fair Lending Act.
(T) The origination, servicing and collection practices with respect
to each Mortgage Note and Mortgage including, the establishment, maintenance and
servicing of the escrow accounts and escrow payments, if any, since origination,
have been conducted in all respects in accordance with the terms of Mortgage
Note and in compliance with all applicable laws and regulations and, unless
otherwise required by law or Xxxxxx Xxx/Xxxxxxx Mac standard, in accordance with
the proper, prudent and customary practices in the mortgage origination and
servicing business. With respect to the escrow accounts and escrow payments, if
any, and a Mortgage Loan all such payments are in the possession or under the
control of the Seller (including pursuant to a Servicing Agreement) and there
exists no deficiencies in connection therewith for which customary arrangements
for repayment thereof have not been made. All Mortgage Rate adjustments have
been made in strict compliance with state and federal law and the terms of the
related Mortgage Note. Any interest required to be paid pursuant to state and
local law has been properly paid and credited.
(U) The Mortgaged Property is free of material damage and waste and
there is no proceeding pending for the total or partial condemnation thereof.
(V) The Mortgage contains customary and enforceable provisions to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
intended to be provided thereby, including, (1) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (2) otherwise by judicial
foreclosure. There is no other exemption available to the Mortgagor which would
interfere with the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage. The Mortgagor has not notified the Seller
and the Seller has no knowledge of any relief requested or allowed to the
Mortgagor under the Soldiers and Sailors Civil Relief Act of 1940.
(W) The Mortgage Note is not and has not been secured by any
collateral except the lien of the applicable Mortgage.
(X) [Reserved]
(Y) In the event the Mortgage constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor.
(Z) No Mortgage Loan contains a permanent or temporary "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent interest
feature.
(AA) The Mortgagor has received all disclosure materials required by
applicable law with respect to the making of the Mortgage Loan. The Seller has
maintained or caused to be maintained all such statements in the Mortgage File.
(BB) No Mortgage Loan was made in connection with the construction or
rehabilitation of a Mortgaged Property.
(CC) To the best of Seller's knowledge, the Mortgaged Property is
lawfully occupied under applicable law and all inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities.
(DD) The assignment of Mortgage with respect to a Mortgage Loan is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located.
(EE) Any future advances made to the Mortgagor prior to the Cut-off
Date have been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term. The lien of the Mortgage securing the
consolidated principal amount is expressly insured as having first priority, by
a title insurance policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence acceptable to Xxxxxx Mae and
Xxxxxxx Mac. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan.
(FF) With respect to each Mortgage Loan that bears interest at an
adjustable rate, on each Interest Adjustment Date, the Mortgage Rate has been
adjusted to equal the respective Index plus the respective Gross Margin (subject
to standard rounding conventions), subject to the Periodic Rate Cap, the Maximum
Lifetime Mortgage Rate and the Minimum Lifetime Mortgage Rate, if any, as set
forth in the related Mortgage Note.
(GG) Except for 2.04% of the Mortgage Loans, by Cut-off Date Principal
Balance, the Mortgaged Property consists of a single parcel of real property
with or without a detached single family residence erected thereon, or an
individual condominium unit, or a 2-4 family dwelling, or an individual unit in
a planned unit development as defined by Xxxxxx Xxx or a manufactured dwelling
which conforms with Xxxxxx Mae and Xxxxxxx Mac requirements regarding such
dwellings, or a townhouse, each structure of which is permanently affixed to the
Mortgaged Property, and is legally classified as real estate.
(HH) [Reserved]
(II) None of the Mortgage Loans contains a provision allowing the
Mortgagor to convert the Mortgage Note from a fixed rate mortgage loan to an
adjustable rate mortgage loan. Except with respect to 3.25% of the Mortgage
Loans (by Cut-Off Date Principal Balance), all of which are Simple Interest
Loans, the principal and interest due on each Mortgage Loan is calculated
pursuant to the standard amortization method (30/360 day interest accrual).
(JJ) Each Mortgage Loan at the time of origination was underwritten in
general in accordance with guidelines not inconsistent with the guidelines set
forth in the Prospectus Supplement and generally accepted prime or sub-prime
credit underwriting guidelines.
(KK) No error, omission, misrepresentation, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on the part of the
Seller or the related Originator.
(LL) No more than 0.92% of the Mortgage Loans by Cut-off Date
Principal Balance provided for negative amortization.
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section 2.03(b)(vii) that materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the party discovering such breach shall give prompt written notice thereof to
the other parties. The Seller hereby covenants with respect to the
representations and warranties set forth in Section 2.03(b)(vii), that within 90
days of the discovery of a breach of any representation or warranty set forth
therein that materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, it shall cure such breach in all
material respects and, if such breach is not so cured, (i) if such 90-day period
expires prior to the second anniversary of the Closing Date, remove such
Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and substitute in
its place a Replacement Mortgage Loan, in the manner and subject to the
conditions set forth in this Section; or (ii) repurchase the affected Mortgage
Loan or Mortgage Loans from the Trustee at the Purchase Price in the manner set
forth below; provided that any such substitution pursuant to (i) above or
repurchase pursuant to (ii) above shall not be effected prior to the delivery to
the Trustee of an Opinion of Counsel if required by Section 2.05 hereof and any
such substitution pursuant to (i) above shall not be effected prior to the
additional delivery to the Trustee of a Request for Release. The Seller shall
promptly reimburse the Master Servicer and the Trustee for any expenses
reasonably incurred by the Master Servicer or the Trustee in respect of
enforcing the remedies for such breach. To enable the Master Servicer to amend
the Mortgage Loan Schedule, the Seller shall, unless it cures such breach in a
timely fashion pursuant to this Section 2.03, promptly notify the Master
Servicer whether it intends either to repurchase, or to substitute for, the
Mortgage Loan affected by such breach. With respect to the representations and
warranties in Section 2.03(b)(vii) that are made to the best of the Seller's
knowledge, if it is discovered by any of the Depositor, the Master Servicer, the
Seller, the Securities Administrator or the Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan, notwithstanding the
Seller's lack of knowledge with respect to the substance of such representation
or warranty, the Seller shall nevertheless be required to cure, substitute for
or repurchase the affected Mortgage Loan in accordance with the foregoing.
With respect to any Replacement Mortgage Loan or Loans, the Seller
shall deliver to the Trustee for the benefit of the Certificateholders such
documents and agreements as are required by Section 2.01. No substitution will
be made in any calendar month after the Determination Date for such month.
Scheduled Payments due with respect to Replacement Mortgage Loans in the Due
Period related to the Distribution Date on which such proceeds are to be
distributed shall not be part of the Trust Fund and will be retained by the
Seller. For the month of substitution, except with respect to Simple Interest
Loans, distributions to Certificateholders will include the Scheduled Payment
due on any Deleted Mortgage Loan for the related Due Period (and with respect to
Simple Interest Loans, payments of principal actually received during such Due
Period) and thereafter the Seller shall be entitled to retain all amounts
received in respect of such Deleted Mortgage Loan. The Master Servicer shall
amend the Mortgage Loan Schedule for the benefit of the Certificateholders to
reflect the removal of such Deleted Mortgage Loan and the substitution of the
Replacement Mortgage Loan or Loans and the Master Servicer shall deliver the
amended Mortgage Loan Schedule to the Trustee and the Custodian. Upon such
substitution, the Replacement Mortgage Loan or Loans shall be subject to the
terms of this Agreement in all respects, and the Seller shall be deemed to have
made with respect to such Replacement Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties set forth in Section
2.03(b)(vi) with respect to such Mortgage Loan. Upon any such substitution and
the deposit to the Master Servicer Collection Account, of the amount required to
be deposited therein in connection with such substitution as described in the
following paragraph, the Trustee shall release to the Seller the Mortgage File
relating to such Deleted Mortgage Loan and held for the benefit of the
Certificateholders and shall execute and deliver at the Seller's direction such
instruments of transfer or assignment as have been prepared by the Seller, in
each case without recourse, representation or warranty, as shall be necessary to
vest in the Seller, or its respective designee, title to the Trustee's interest
in any Deleted Mortgage Loan substituted for pursuant to this Section 2.03.
For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for a Deleted Mortgage Loan, the Master Servicer will determine
the amount (if any) by which the aggregate principal balance of all the
Replacement Mortgage Loans as of the date of substitution is less than the
Stated Principal Balance (after application of the principal portion of the
Scheduled Payment due in the month of substitution, except the actual payment
received with respect to Simple Interest Loans) of such Deleted Mortgage Loan.
An amount equal to the aggregate of such deficiencies, described in the
preceding sentence for any Distribution Date (such amount, the "Substitution
Adjustment Amount") shall be deposited into the Master Servicer Collection
Account by the Seller delivering such Replacement Mortgage Loan on the
Determination Date for the Distribution Date relating to the Prepayment Period
during which the related Mortgage Loan became required to be purchased or
replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage Loan,
the Purchase Price therefor shall be deposited in the Master Servicer Collection
Account pursuant to Section 3.08 on the Determination Date for the Distribution
Date in the month following the month during which the Seller became obligated
to repurchase or replace such Mortgage Loan and upon such deposit of the
Purchase Price, the delivery of an Opinion of Counsel if required by Section
2.05 and the receipt of a Request for Release, the Trustee shall release the
related Mortgage File held for the benefit of the Certificateholders to the
Seller, and the Trustee shall execute and deliver at such Person's direction the
related instruments of transfer or assignment prepared by the Seller, in each
case without recourse, representation or warranty, as shall be necessary to
transfer title from the Trustee for the benefit of the Certificateholders and
transfer the Trustee's interest to the Seller to any Mortgage Loan purchased
pursuant to this Section 2.03. It is understood and agreed that the obligation
under this Agreement of the Seller to cure, repurchase or replace any Mortgage
Loan as to which a breach has occurred and is continuing shall constitute the
sole remedy against the Seller respecting such breach available to
Certificateholders, the Depositor or the Trustee.
(d) The representations and warranties set forth in Section 2.03
hereof shall survive delivery of the respective Mortgage Files to the Trustee
for the benefit of the Certificateholders.
Section 2.03(A) ASSIGNMENT OF INTERESTS IN THE SERVICING AGREEMENTS.
To the extent not provided for in the related Assumption Agreements,
the Seller hereby assigns to the Depositor who concurrently with the execution
and delivery of this Agreement assigns to the Trustee, on behalf of the
Certificateholders, all of their respective right, title and interest in the
Servicing Agreements and, if applicable, the Assumption Agreements, including
but not limited to the Seller's rights pursuant to the Servicing Agreements
(noting that the Seller has retained the right in the event of breach of the
representations, warranties and covenants, if any, with respect to the Mortgage
Loans of each of WFHM and Xxxxx under the related Servicing Agreement to enforce
the provisions thereof and to seek all or any available remedies).
Section 2.04. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents and warrants to the Master Servicer,
the Securities Administrator and the Trustee as follows, as of the date hereof
and as of the Closing Date:
(i) The Depositor is duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has full power and authority (corporate and other) necessary to own or hold
its properties and to conduct its business as now conducted by it and to
enter into and perform its obligations under this Agreement.
(ii) The Depositor has the full corporate power and authority to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and has duly authorized, by
all necessary corporate action on its part, the execution, delivery and
performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of the Depositor,
enforceable against the Depositor in accordance with its terms, subject, as
to enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
(ii) general principles of equity, regardless of whether enforcement is
sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement by the Depositor,
the consummation of the transactions contemplated by this Agreement, and
the fulfillment of or compliance with the terms hereof are in the ordinary
course of business of the Depositor and will not (A) result in a material
breach of any term or provision of the charter or by-laws of the Depositor
or (B) materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which the Depositor is a party or
by which it may be bound or (C) constitute a material violation of any
statute, order or regulation applicable to the Depositor of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Depositor; and the Depositor is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair the
Depositor's ability to perform or meet any of its obligations under this
Agreement.
(iv) No litigation is pending, or, to the best of the Depositor's
knowledge, threatened, against the Depositor that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Depositor to perform its obligations under
this Agreement in accordance with the terms hereof.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement or the consummation of the transactions contemplated hereby, or
if any such consent, approval, authorization or order is required, the
Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee as of the
Closing Date, following the transfer of the Mortgage Loans to it by the Seller,
the Depositor had good title to the Mortgage Loans free and clear of all liens,
claims and encumbrances, and the related Mortgage Notes were subject to no
offsets, claims, defenses or counterclaims.
It is understood and agreed that the representations and warranties
set forth in the immediately preceding paragraph shall survive delivery of the
Mortgage Files to the Custodian on behalf of the Trustee to the Trustee. Upon
discovery by the Depositor or the Trustee of a breach of such representations
and warranties, the party discovering such breach shall give prompt written
notice to the others and to each Rating Agency.
Section 2.05. DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH
SUBSTITUTIONS AND REPURCHASES.
(a) Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan that is not in default or as to which default is
not imminent, no repurchase or substitution pursuant to Sections 2.02 or 2.03
shall be made unless the Seller delivers to the Trustee, with a copy to the
Custodian, an Opinion of Counsel, addressed to the Trustee, to the effect that
such repurchase or substitution would not (i) result in the imposition of the
tax on "prohibited transactions" of REMIC I, REMIC II or REMIC III or
contributions after the Closing Date, as defined in sections 860F(a)(2) and
860G(d) of the Code, respectively or (ii) cause any of REMIC I, REMIC II or
REMIC III to fail to qualify as a REMIC at any time that any Certificates are
outstanding. Any Mortgage Loan as to which repurchase or substitution was
delayed pursuant to this paragraph shall be repurchased or the substitution
therefor shall occur (subject to compliance with Sections 2.02 or 2.03) upon the
earlier of (a) the occurrence of a default or imminent default with respect to
such Mortgage Loan and (b) receipt by the Trustee, with a copy to the Custodian,
of an Opinion of Counsel addressed to the Trustee to the effect that such
repurchase or substitution, as applicable, will not result in the events
described in clause (i) or clause (ii) of the preceding sentence.
(b) Upon discovery by the Depositor, the Seller, the Master Servicer,
the Custodian or the Trustee that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of section 860G(a)(3) of the Code, the
party discovering such fact shall promptly (and in any event within 5 Business
Days of discovery) give written notice thereof to the other parties. In
connection therewith, the Trustee shall require the Seller, at the Seller's
option, to either (i) substitute, if the conditions in Section 2.03(c) with
respect to substitutions are satisfied, a Replacement Mortgage Loan for the
affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within 90
days of such discovery in the same manner as it would a Mortgage Loan for a
breach of representation or warranty contained in Section 2.03. The Trustee
shall reconvey to the Seller the Mortgage Loan to be released pursuant hereto in
the same manner, and on the same terms and conditions, as it would a Mortgage
Loan repurchased for breach of a representation or warranty contained in Section
2.03.
Section 2.06. COUNTERSIGNATURE AND DELIVERY OF CERTIFICATES.
The Trustee acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, has executed,
countersigned and delivered, to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing the entire ownership of the
Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the rights
referred to above for the benefit of all present and future Holders of the
Certificates and to perform the duties set forth in this Agreement, to the end
that the interests of the Holders of the Certificates may be adequately and
effectively protected.
Section 2.07. COVENANTS OF THE MASTER SERVICER AND THE EMC SERVICER.
The Master Servicer covenants to the Depositor, the Securities
Administrator and the Trustee, and the EMC Servicer covenants to the Master
Servicer, as follows:
(a) it shall comply in the performance of its obligations under this
Agreement;
(b) no written information, certificate of an officer, statement
furnished in writing or written report prepared by the Master Servicer or
the EMC Servicer, as applicable, pursuant to this Agreement and delivered,
the case of the Master Servicer, to the Securities Administrator, the
Depositor, any affiliate of the Depositor or the Trustee or, in the case of
the EMC Servicer, to the Master Servicer, will contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
information, certificate, statement or report not misleading; and
(c) it shall (in the case of the Master Servicer, only in its capacity
as successor servicer pursuant to a Servicing Agreement) accurately and
fully provide information regarding payment performance of the Mortgagors
to the nationally recognized credit repositories, to the extent such
reporting remains customary and prudent in the servicing of mortgage loans
similar to the Mortgage Loans. Nothing in this Section shall derogate from
the obligation of the Master Servicer or the EMC Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Master Servicer or the EMC Servicer to
provide access as provided in this Section as a result of such obligation
shall not constitute a breach of this Section.
Section 2.08. LOST MORTGAGE NOTES INDEMNITY
With respect to each Mortgage Loan for which the Seller has delivered
a lost note affidavit in lieu of an original Mortgage Note, the Seller does
hereby agree to defend, indemnify, and hold harmless the Trust Fund and the
Trustee, from and against any and all losses or damages, together with all
reasonable costs, charges and expenses (whether or not a lawsuit is filed),
incurred as a result of (i) the inability to enforce the related Mortgage Note
according to its terms, (ii) any claim, demand, suit, cause of action or
proceeding by a third party arising out of a Servicer's, the Master Servicer's
or the Trustee's inability to enforce the related Mortgage Note according to its
terms due to the lack of an original Mortgage Note, or (iii) the inability to
receive any related Insurance Proceeds, Liquidation Proceeds or other amounts
due to the lack of an original Mortgage Note. Upon demand from a Servicer, the
Master Servicer or the Trustee, the Seller shall deposit all amounts
constituting lost principal with respect to such Mortgage Loan into the Master
Servicer Collection Account to be treated as a Principal Prepayment, and
reimburse such Servicer, the Master Servicer or the Trustee, as applicable, for
all costs and expenses incurred in connection with such lost Mortgage Note.
ARTICLE III.
Administration and Master Servicing of Mortgage Loans
Section 3.01. THE MASTER SERVICER.
The Master Servicer shall supervise, monitor and oversee the
obligation of the Servicers to service and administer their respective Mortgage
Loans in accordance with the terms of the applicable Servicing Agreement and
shall have full power and authority to do any and all things which it may deem
necessary or desirable in connection with such master servicing and
administration. In performing its obligations hereunder, the Master Servicer
shall act in a manner consistent with Accepted Master Servicing Practices.
Furthermore, the Master Servicer shall oversee and consult with each such
Servicer as necessary from time-to-time to carry out the Master Servicer's
obligations hereunder, shall receive and review all reports, information and
other data provided to the Master Servicer by each such Servicer and shall cause
each such Servicer to perform and observe the covenants, obligations and
conditions to be performed or observed by such Servicer under the applicable
Servicing Agreement. The Master Servicer shall independently and separately
monitor each such Servicer's servicing activities with respect to each related
Mortgage Loan, reconcile the results of such monitoring with such information
provided in the previous sentence on a monthly basis and coordinate corrective
adjustments to such Servicers' and the Master Servicer's records, and based on
such reconciled and corrected information, prepare the statements specified in
Section 5.04(c) and any other information and statements required hereunder. The
Master Servicer shall reconcile the results of its Mortgage Loan monitoring with
the actual remittances of each such Servicer to its Protected Account pursuant
to the applicable Servicing Agreement.
Section 3.02. REMIC-RELATED COVENANTS.
For as long as each REMIC shall exist, the Trustee shall act in
accordance herewith to assure continuing treatment of such REMIC as a REMIC, and
the Trustee shall comply with any directions of the Seller, the Depositor, any
Servicer or the Master Servicer to assure such continuing treatment. In
particular, the Trustee shall not (a) sell or permit the sale of all or any
portion of the Mortgage Loans or of any investment of deposits in an Account
unless such sale is as a result of a repurchase of the Mortgage Loans pursuant
to this Agreement or the Trustee has received a REMIC Opinion, addressed to the
Trustee and prepared at the expense of the Trust Fund; and (b) other than with
respect to a substitution pursuant to a Servicing Agreement or Section 2.04 of
this Agreement, as applicable, accept any contribution to any REMIC after the
Startup Day without receipt of a REMIC Opinion addressed to the Trustee.
Section 3.03. MONITORING OF SERVICERS.
(a) The Master Servicer shall be responsible for reporting to the
Trustee, the Depositor and the Seller the compliance by each Servicer with its
duties under the related Servicing Agreement. In the review of each such
Servicer's activities, the Master Servicer may rely upon an officer's
certificate of such Servicer with regard to such Servicer's compliance with the
terms of its Servicing Agreement. In the event that the Master Servicer, in its
judgment, determines that any such Servicer should be terminated in accordance
with its Servicing Agreement, or that a notice should be sent pursuant to such
Servicing Agreement with respect to the occurrence of an event that, unless
cured, would constitute grounds for such termination, the Master Servicer shall
notify the Seller, the Depositor and the Trustee thereof and the Master Servicer
shall issue such notice or take such other action as it deems appropriate.
(b) The Master Servicer, on behalf of the Trustee and the
Certificateholders, shall enforce the obligations of each Servicer under the
related Servicing Agreement, and shall, in the event that any such Servicer
fails to perform its obligations in accordance with the related Servicing
Agreement, subject to the preceding paragraph, terminate the rights and
obligations of such Servicer thereunder and act as successor servicer of the
related Mortgage Loans or cause the Trustee to enter into a new Servicing
Agreement with a successor servicer selected by the Master Servicer (which new
Servicing Agreement shall have terms generally in accordance with the terms of
the terminated Servicing Agreement); provided, however, it is understood and
acknowledged by the parties hereto that there will be a period of transition
(not to exceed 90 days) before the actual servicing functions can be fully
transferred to such successor servicer. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Servicing Agreements
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. Except as contemplated by subsection (c) below, the Master Servicer shall
pay the costs of such enforcement at its own expense, provided that the Master
Servicer shall not be required to prosecute or defend any legal action except to
the extent that the Master Servicer shall have received reasonable indemnity for
its costs and expenses in pursuing such action.
(c) The EMC Servicer shall reimburse the Master Servicer for the costs
and expenses of the Master Servicer related to the termination of the EMC
Servicer, appointment of a successor servicer or the transfer and assumption of
servicing by the Master Servicer with respect to the related Servicing
Agreement, including, without limitation, (i) all legal costs and expenses and
all due diligence costs and expenses associated with an evaluation of the
potential termination of the EMC Servicer as a result of an event of default by
such Servicer and (ii) all costs and expenses associated with the complete
transfer of servicing, including all servicing files and all servicing data and
the completion, correction or manipulation of such servicing data as may be
required by the successor servicer to correct any errors or insufficiencies in
the servicing data or otherwise to enable the successor servicer to service the
Mortgage Loans in accordance with the related Servicing Agreement (collectively,
the "Termination Costs"). To the extent that any Termination Costs with respect
to the EMC Servicer or any other terminated servicer pursuant to the related
Servicing Agreement are not fully and timely reimbursed by the EMC Servicer or
such other terminated Servicer, as applicable, the Master Servicer shall be
entitled to reimbursement of such Termination Costs from the Master Servicer
Collection Account.
(d) The Master Servicer shall require each Servicer to comply with the
remittance requirements and other obligations set forth in the related Servicing
Agreement, including any related Assumption Agreement. The Master Servicer shall
enforce the obligation of each Servicer pursuant to the related Servicing
Agreement to provide it with the annual officer's certificate of compliance and
annual independent accountants' servicing reports, as well as back-up
certifications to each Master Servicer Certification pursuant to Section 3.18.
(e) If the Master Servicer assumes the servicing with respect to any
of the Mortgage Loans, it will not assume liability for the representations and
warranties of any Servicer that it replaces.
Section 3.04. SUCCESSOR MASTER SERVICER AND SUBSERVICING AGREEMENTS.
In the event that, pursuant to Section 8.01 hereof, the Trustee or any
other Person shall become Successor Master Servicer, such Successor Master
Servicer may, at its option, succeed to any rights and obligations of the
predecessor Master Servicer under any subservicing agreement in accordance with
the terms thereof; provided that such Successor Master Servicer shall not incur
any liability or have any obligations in its capacity as servicer under a
subservicing agreement arising prior to the date of such succession unless it
expressly elects to succeed to the rights and obligations of the predecessor
Master Servicer thereunder; and the predecessor Master Servicer shall not
thereby be relieved of any liability or obligations under the subservicing
agreement arising prior to the date of such succession.
Such predecessor Master Servicer shall, upon request of the Trustee,
but at the expense of such predecessor Master Servicer, deliver to the assuming
party all documents and records relating to each subservicing agreement and the
Mortgage Loans then being serviced thereunder and an accounting of amounts
collected held by it and otherwise use its best efforts to effect the orderly
and efficient transfer of the subservicing agreement to the assuming party.
Section 3.05. POWER TO ACT; PROCEDURES.
The Master Servicer shall master service the Mortgage Loans and shall
have full power and authority, subject to the REMIC Provisions and the
provisions of Article X hereof, to do any and all things that it may deem
necessary or desirable in connection with the master servicing and
administration of such Mortgage Loans, including but not limited to the power
and authority (i) to execute and deliver, on behalf of the Certificateholders
and the Trustee, customary consents or waivers and other instruments and
documents, (ii) to consent to transfers of any Mortgaged Property and
assumptions of the Mortgage Notes and related Mortgages, (iii) to collect any
Insurance Proceeds and Liquidation Proceeds and (iv) to effectuate foreclosure
or other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan, in each case, in accordance with the provisions of the related
Servicing Agreement, including any related Assumption Agreement. The Trustee
shall furnish the Master Servicer, upon written request from a Servicing
Officer, with any powers of attorney empowering it or any Servicer to execute
and deliver instruments of satisfaction or cancellation, or of partial or full
release or discharge, and to foreclose upon or otherwise liquidate Mortgaged
Property, and to appeal, prosecute or defend in any court action relating to the
Mortgage Loans or the Mortgaged Property, in accordance with the applicable
Servicing Agreement and this Agreement, and the Trustee shall execute and
deliver such other documents, as the Master Servicer may request, to enable it
to master service and administer the Mortgage Loans and carry out its duties
hereunder, in each case in accordance with Accepted Master Servicing Practices
(and the Trustee shall have no liability for the use or misuse of any such
powers of attorney by the Master Servicer or any Servicer). If the Master
Servicer or the Trustee has been advised that it is likely that the laws of the
state in which action is to be taken prohibit such action if taken in the name
of the Trustee or that the Trustee would be adversely affected under the "doing
business" or tax laws of such state if such action is taken in its name, the
Master Servicer shall join with the Trustee in the appointment of a co-trustee
pursuant to Section 9.11 hereof. In the performance of its duties hereunder, the
Master Servicer shall be an independent contractor and shall not, except in
those instances where it is taking action in the name of the Trustee, be deemed
to be the agent of the Trustee.
The Trustee and the Securities Administrator shall each execute and
deliver to related Servicer and the Master Servicer any court pleadings,
requests for trustee's sale or other documents necessary or desirable to (i) the
foreclosure or trustee's sale with respect to a Mortgaged Property; (ii) any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or related Mortgage; (iii) obtain a deficiency judgment against the
Mortgagor; or (iv) enforce any other rights or remedies provided by the Mortgage
Note or related Mortgage or otherwise available at law or equity.
Section 3.06. DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.
To the extent provided in the applicable Servicing Agreement, for any
Mortgage Loans that contain enforceable due-on-sale clauses, the Master Servicer
shall cause the related Servicer to enforce such clauses in accordance with the
applicable Servicing Agreement. If applicable law prohibits the enforcement of a
due-on-sale clause or such clause is otherwise not enforced in accordance with
such applicable Servicing Agreement, and, as a consequence, a Mortgage Loan is
assumed, the original Mortgagor may be released from liability in accordance
with the applicable Servicing Agreement.
Section 3.07. RELEASE OF MORTGAGE FILES.
(a) Upon becoming aware of the payment in full of any Mortgage Loan,
or the receipt by the Master Servicer or any Servicer of a notification that
payment in full has been escrowed in a manner customary for such purposes for
payment to Certificateholders on the next Distribution Date, the Servicer will,
if required under the applicable Servicing Agreement, promptly furnish to the
Custodian on behalf of the Trustee two copies of a certification substantially
in the form of Exhibit H hereto signed by a Servicing Officer or in a mutually
agreeable electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer (which certification shall include a
statement to the effect that all amounts received in connection with such
payment that are required to be deposited in the Protected Account maintained by
the Master Servicer (as successor servicer) or the applicable Servicer pursuant
to its Servicing Agreement have been or will be so deposited or escrowed) and
shall request that the Custodian on behalf of the Trustee deliver to the Master
Servicer or the applicable Servicer, as appropriate, the related Mortgage File.
Upon receipt of such certification and request, the Custodian on behalf of the
Trustee shall promptly release the related Mortgage File to the Master Servicer
or the applicable Servicer, as appropriate, and neither the Custodian nor the
Trustee shall have any further responsibility with regard to such Mortgage File.
Upon any such payment in full, the Master Servicer and each Servicer is
authorized, to give, as agent for the Trustee, as the mortgagee under the
Mortgage that secured the Mortgage Loan, an instrument of satisfaction (or
assignment of mortgage without recourse) regarding the Mortgaged Property
subject to the Mortgage, which instrument of satisfaction or assignment, as the
case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of such payment, it being understood and agreed that no
expenses incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Protected Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with the applicable Servicing
Agreement, the Trustee shall execute such documents as shall be prepared and
furnished to the Trustee by a Servicer or the Master Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings. The Custodian on behalf of the Trustee shall, upon the
request of a Servicer or the Master Servicer, and delivery to the Custodian on
behalf of the Trustee, of two copies of a request for release signed by a
Servicing Officer substantially in the form of Exhibit H (or in a mutually
agreeable electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer), release the related Mortgage File held in
its possession or control to the Servicer or the Master Servicer, as applicable.
Such trust receipt shall obligate the Servicer or the Master Servicer to return
the Mortgage File to the Custodian on behalf of the Trustee, when the need
therefor by the Servicer or the Master Servicer no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a certificate
of a Servicing Officer similar to that hereinabove specified, the Mortgage File
shall be released by the Custodian on behalf of the Trustee, to the Servicer or
the Master Servicer.
Section 3.08. DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF THE MASTER
SERVICER TO BE HELD FOR TRUSTEE.
(a) The Master Servicer and each Servicer (to the extent required by
the related Servicing Agreement) shall transmit to the Trustee or Custodian such
documents and instruments coming into the possession of the Master Servicer or
such Servicer from time to time as are required by the terms hereof, or in the
case of the Servicers, in accordance with the applicable Servicing Agreement, to
be delivered to the Trustee or the Custodian. Any funds received by the Master
Servicer or a Servicer in respect of any Mortgage Loan or which otherwise are
collected by the Master Servicer or a Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan shall be held for the benefit
of the Trustee and the Certificateholders subject to, in the case of the Master
Servicer, the Master Servicer's right to retain or withdraw from the Master
Servicer Collection Account the Master Servicing Fee and other amounts provided
in this Agreement and to the right of each Servicer to retain its Servicing Fee
and other amounts as provided in the applicable Servicing Agreement. The Master
Servicer shall, and, to the extent provided in the applicable Servicing
Agreement, shall cause each Servicer to, provide access to information and
documentation regarding the Mortgage Loans to the Trustee, the Securities
Administrator and their respective agents and accountants at any time upon
reasonable request and during normal business hours, and to Certificateholders
that are savings and loan associations, banks or insurance companies, the Office
of Thrift Supervision, the FDIC and the supervisory agents and examiners of such
Office and Corporation or examiners of any other federal or state banking or
insurance regulatory authority if so required by applicable regulations of the
Office of Thrift Supervision or other regulatory authority, such access to be
afforded without charge but only upon reasonable request in writing and during
normal business hours at the offices of the Master Servicer designated by it. In
fulfilling such a request the Master Servicer shall not be responsible for
determining the sufficiency of such information.
(b) All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer in respect of any Mortgage Loans, whether from
the collection of principal and interest payments or from Liquidation Proceeds
or Insurance Proceeds, shall be held by the Master Servicer for and on behalf of
the Trustee and the Certificateholders and shall be and remain the sole and
exclusive property of the Trustee; provided, however, that the Master Servicer
and each 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
such Servicer under this Agreement or the applicable Servicing Agreement.
Section 3.09. MAINTENANCE OF HAZARD INSURANCE.
(a) For each Mortgage Loan, the Master Servicer shall enforce any
obligation of a Servicer under the related Servicing Agreement to maintain or
cause to be maintained hazard insurance in accordance with the provisions of the
related Servicing Agreement.
(b) Pursuant to Section 4.01, any amounts collected by the Master
Servicer, or by any Servicer, under any Insurance Policies (other than amounts
to be applied to the restoration or repair of the property subject to the
related Mortgage or released to the Mortgagor in accordance with the applicable
Servicing Agreement) shall be deposited into the Master Servicer Collection
Account, subject to withdrawal pursuant to Section 4.03. Any cost incurred by
the Master Servicer or any such Servicer in maintaining any such insurance if
the Mortgagor defaults in its obligation to do so shall be added to the amount
owing under the Mortgage Loan where the terms of the Mortgage Loan so permit;
provided, however, that the addition of any such cost shall not be taken into
account for purposes of calculating the distributions to be made to
Certificateholders and shall be recoverable by the Master Servicer or such
Servicer pursuant to Section 4.03.
Section 3.10. PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.
The Master Servicer shall (to the extent provided in the applicable
Servicing Agreement) cause the related Servicer to prepare and present on behalf
of the Trustee and the Certificateholders all claims under the Insurance
Policies and take such actions (including the negotiation, settlement,
compromise or enforcement of the insured's claim) as shall be necessary to
realize recovery under such Insurance Policies. Any proceeds disbursed to the
Master Servicer (or disbursed to a Servicer and remitted to the Master Servicer)
in respect of such Insurance Policies shall be promptly deposited in the Master
Servicer Collection Account upon receipt, except that any amounts realized that
are to be applied to the repair or restoration of the related Mortgaged Property
as a condition precedent to the presentation of claims on the related Mortgage
Loan to the insurer under any applicable Insurance Policy need not be so
deposited (or remitted).
Section 3.11. MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES.
(a) The Master Servicer shall not take, or permit any Servicer, to the
extent such action is prohibited under the applicable Servicing Agreement, to
take, any action that would result in noncoverage under any applicable Primary
Mortgage Insurance Policy of any loss which, but for the actions of the Master
Servicer or such Servicer, would have been covered thereunder. The Master
Servicer shall use its best efforts to cause each such Servicer (to the extent
required under the related Servicing Agreement) to keep in force and effect (to
the extent that the Mortgage Loan requires the Mortgagor to maintain such
insurance), Primary Mortgage Insurance applicable to each Mortgage Loan in
accordance with the provisions of the related Servicing Agreement. The Master
Servicer shall not, and shall not permit any Servicer, to the extent required
under the related Servicing Agreement, to cancel or refuse to renew any such
Primary Mortgage Insurance Policy that is in effect at the date of the initial
issuance of the Mortgage Note and is required to be kept in force hereunder
except in accordance with the provisions of the related Servicing Agreement.
(b) The Master Servicer agrees to present, or to cause each Servicer
to the extent required under the related Servicing Agreement to present, on
behalf of the Trustee and the Certificateholders, claims to the insurer under
any Primary Mortgage Insurance Policies and, in this regard, to take such
reasonable action as shall be necessary to permit recovery under any Primary
Mortgage Insurance Policies respecting defaulted Mortgage Loans. Pursuant to
Section 4.01, any amounts collected by the Master Servicer or any such Servicer
under any Primary Mortgage Insurance Policies shall be deposited in the Master
Servicer Collection Account, subject to withdrawal pursuant to Section 4.03.
Section 3.12. CUSTODIAN TO RETAIN POSSESSION OF CERTAIN INSURANCE
POLICIES AND DOCUMENTS.
The Custodian shall, on behalf of the Trustee, retain possession and
custody of the originals (to the extent available) of any Primary Mortgage
Insurance Policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time.
Until all amounts distributable in respect of the Certificates have been
distributed in full and the Master Servicer otherwise has fulfilled its
obligations under this Agreement, the Custodian, on behalf of the Trustee, shall
also retain possession and custody of each Mortgage File in accordance with and
subject to the terms and conditions of this Agreement and the Custodial
Agreement. The Master Servicer shall promptly deliver or cause to be delivered
to the Custodian, on behalf of the Trustee, upon the execution or receipt
thereof the originals of any Primary Mortgage Insurance Policies, any
certificates of renewal, and such other documents or instruments that constitute
portions of the Mortgage File that come into the possession of the Master
Servicer from time to time.
Section 3.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS.
The Master Servicer shall cause each Servicer to the extent required
under the related Servicing Agreement, to foreclose upon, repossess or otherwise
comparably convert the ownership of Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments, all
in accordance with the terms of the applicable Servicing Agreement, including
any related Assumption Agreement.
Section 3.14. COMPENSATION FOR THE SERVICERS AND THE MASTER SERVICER.
Servicing compensation in the form of any prepayment charges and
penalties, assumption fees, tax service fees, fees for statement of account
payoff or late payment charges collected by any Servicer shall be retained by
such Servicer and shall not be deposited in the Master Servicer Collection
Account. In accordance with Sections 4.02(b) and 4.03, the Master Servicer shall
be entitled to pay itself the Master Servicing Fee in respect of remittances
from Servicers prior to deposit in the Master Servicer Collection Account or to
withdraw such portion of the Master Servicing Fee from the Master Servicer
Collection Account. The Master Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder and shall not be
entitled to reimbursement therefor except as specifically provided in this
Agreement. Pursuant to Article IV, all income and gain realized from any
investment of funds in the Distribution Account and the Master Servicer
Collection Account shall be for the benefit of the Master Servicer.
Section 3.15. REO PROPERTY.
(a) In the event the Trust Fund acquires ownership of any REO Property
in respect of any related Mortgage Loan, the deed or certificate of sale shall
be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall, to the extent provided in the
applicable Servicing Agreement, cause the applicable Servicer to sell any REO
Property as expeditiously as possible and in accordance with the provisions of
this Agreement and the related Servicing Agreement. Pursuant to its efforts to
sell such REO Property, the Master Servicer shall cause such applicable Servicer
to protect and conserve such REO Property in the manner and to the extent
required by the applicable Servicing Agreement, subject to the REMIC Provisions.
(b) The Master Servicer shall, to the extent required by the related
Servicing Agreement, cause the applicable Servicer to deposit all funds
collected and received in connection with the operation of any REO Property into
the related Protected Account.
(c) The Master Servicer and such applicable Servicer, upon the final
disposition of any REO Property, shall be entitled to reimbursement for any
related unreimbursed Advances, unreimbursed Servicing Advances or Servicing Fees
from Liquidation Proceeds received in connection with the final disposition of
such REO Property; provided, that any such unreimbursed Advances or Servicing
Fees as well as any unpaid Servicing Fees may be reimbursed or paid, as the case
may be, prior to final disposition, out of any net rental income or other net
amounts derived from such REO Property.
Section 3.16. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
(a) The Master Servicer shall deliver to the Depositor, the Trustee
and the Rating Agencies by March 1, 2004, and by March 1 of each year
thereafter, in each case for the immediately preceding calendar year, an
Officer's Certificate, certifying that with respect to the period ending on such
calendar year end: (i) such Servicing Officer has reviewed the activities of the
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, the Master Servicer has performed and fulfilled
its duties, responsibilities and obligations under this Agreement in all
material respects throughout such year, or, if there has been a default in the
fulfillment of any such duties, responsibilities or obligations, specifying each
such default known to such Servicing Officer and the nature and status thereof
and (iii) nothing has come to the attention of such Servicing Officer to lead
such Servicing Officer to believe that any Servicer has failed to perform any of
its duties, responsibilities and obligations under its Servicing Agreement in
all material respects throughout such year, or, if there has been a material
default in the performance or fulfillment of any such duties, responsibilities
or obligations, specifying each such default known to such Servicing Officer and
the nature and status thereof.
(b) Copies of such statements shall be provided by the Trustee to any
Certificateholder upon request at the Master Servicer's expense, provided that
such statement shall have been delivered to the Trustee.
Section 3.17. ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT.
If the Master Servicer has, during the course of any calendar year,
directly serviced any of the Mortgage Loans, the Master Servicer, at its
expense, shall cause a nationally recognized firm of independent certified
public accountants to furnish a statement to the Trustee, the Rating Agencies
and the Seller by March 1, 2004, and by March 1 of each year thereafter, in each
case for the immediately preceding calendar year, to the effect that, with
respect to the most recently ended calendar year, such firm has examined certain
records and documents relating to the Master Servicer's performance of its
servicing obligations under this Agreement and pooling and servicing and trust
agreements in material respects similar to this Agreement and to each other and
that, on the basis of such examination conducted substantially in compliance
with the audit program for mortgages serviced for Xxxxxxx Mac or the Uniform
Single Attestation Program for Mortgage Bankers, such firm is of the opinion
that the Master Servicer's activities have been conducted in compliance with
this Agreement, or that such examination has disclosed no material items of
noncompliance except for (i) such exceptions as such firm believes to be
immaterial, (ii) such other exceptions as are set forth in such statement and
(iii) such exceptions that the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages Serviced by Xxxxxxx Mac requires it
to report. Copies of such statements shall be provided to any Certificateholder,
upon request, by the Master Servicer, or by the Trustee at the expense of the
Master Servicer if the Master Servicer shall fail to provide such copies. If any
such report discloses exceptions that are material, the Master Servicer shall
advise the Trustee whether such exceptions have been or are susceptible of cure,
and will take prompt action to do so.
Section 3.18. REPORTS FILED WITH SECURITIES AND EXCHANGE COMMISSION.
Within 15 days after each Distribution Date, the Securities
Administrator shall, in accordance with industry standards, file with the
Commission via the Electronic Data Gathering and Retrieval System ("XXXXX"), a
Form 8-K with a copy of the statement to the Trustee who shall furnish a copy of
the monthly statement to the Certificateholders for such Distribution Date as an
exhibit thereto. Prior to January 30 in each year, the Securities Administrator
shall, in accordance with industry standards and only if instructed by the
Depositor, file a Form 15 Suspension Notice with respect to the Trust Fund, if
applicable. Prior to (i) March 15, 2004 and (ii) unless and until a Form 15
Suspension Notice shall have been filed, prior to March 15 of each year
thereafter, the Master Servicer shall provide the Securities Administrator with
a Master Servicer Certification, together with a copy of the annual independent
accountant's servicing report and annual statement of compliance of each
Servicer, in each case, required to be delivered pursuant to its Servicing
Agreement, and, if applicable, the annual independent accountant's servicing
report and annual statement of compliance to be delivered by the Master Servicer
pursuant to Sections 3.16 and 3.17. Prior to (i) March 31, 2004 and (ii) unless
and until a Form 15 Suspension Notice shall have been filed, March 31 of each
year thereafter, the Securities Administrator shall file a Form 10-K, in
substance conforming to industry standards, with respect to the Trust. Such Form
10-K shall include the Master Servicer Certification and other documentation
provided by the Master Servicer pursuant to the second preceding sentence. The
Depositor hereby grants to the Securities Administrator a limited power of
attorney to execute and file each such document on behalf of the Depositor. Such
power of attorney shall continue until either the earlier of (i) receipt by the
Securities Administrator from the Depositor of written termination of such power
of attorney and (ii) the termination of the Trust Fund. The Depositor agrees to
promptly furnish to the Securities Administrator, from time to time upon
request, such further information, reports and financial statements within its
control related to this Agreement, the Mortgage Loans as the Securities
Administrator reasonably deems appropriate to prepare and file all necessary
reports with the Commission. The Securities Administrator shall have no
responsibility to file any items other than those specified in this Section
3.18; provided, however, the Securities Administrator will cooperate with the
Depositor in connection with any additional filings with respect to the Trust
Fund as the Depositor deems necessary under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Copies of all reports filed by the Securities
Administrator under the Exchange Act shall be sent to: the Depositor c/o Bear,
Xxxxxxx & Co. Inc., Attn: Managing Director-Analysis and Control, Xxx Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000-0000. Fees and expenses incurred by the
Securities Administrator in connection with this Section 3.18 shall not be
reimbursable from the Trust Fund.
Section 3.19. THE EMC SERVICER.
The EMC Servicer shall service the EMC Mortgage Loans pursuant to and
in accordance with the terms and provisions of Exhibit K hereto.
Section 3.20. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.
Beginning on the first Business Day of the fiscal quarter immediately
following the date on which a Mortgage Loan has become at least 91 days
delinquent, the Seller, in its sole discretion, shall have the right to elect
(by written notice sent to the Trustee, with a copy to the Master Servicer and
the applicable Servicer) to purchase for its own account from the Trust Fund any
such Mortgage Loan at a price equal to the Purchase Price. The Purchase Price
for any Mortgage Loan purchased hereunder shall be deposited in the Master
Servicer Collection Account, and the Trustee, upon receipt of a Request for
Release from the Seller, shall release or cause the Custodian to release to the
Seller, the related Mortgage File and shall execute and deliver such instruments
of transfer or assignment prepared by the Seller, in each case without recourse,
representation or warranty as shall be necessary to vest in the Seller any
Mortgage Loan released pursuant hereto and the Seller shall succeed to all the
Trust's right, title and interest in and to such Mortgage Loan and all security
and documents related thereto. Such assignment shall be an assignment outright
and not for security. The Seller shall thereupon own such Mortgage Loan, and all
security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto. Notwithstanding the foregoing, any such
optional right of repurchase by the Seller hereunder with respect to a
delinquent Mortgage Loan shall, if unexercised, terminate on the earlier of (i)
the date on which such delinquency has been cured or (ii) the last Business Day
of such fiscal quarter immediately following the date on which such Mortgage
Loan became 91 days delinquent, provided however, that such optional right of
repurchase shall be reinstated if (a) in the case of clause (i), the related
Mortgage Loan shall thereafter again have become 91 or more days delinquent and
(b) in the case of clause (ii), such delinquency shall have been subsequently
cured and the related Mortgage Loan shall thereafter again become 91 or more
days delinquent in any subsequent fiscal quarter. In either event, the purchase
option shall again become exercisable on the first day of the fiscal quarter
immediately following the date on which the related Mortgage Loan again becomes
at least 91 days delinquent.
ARTICLE IV.
ACCOUNTS
Section 4.01. PROTECTED ACCOUNTS.
(a) The Master Servicer shall enforce the obligation of each Servicer
to establish and maintain a Protected Account in accordance with the applicable
Servicing Agreement, with records to be kept with respect thereto on a Mortgage
Loan by Mortgage Loan basis, into which Protected Accounts shall be deposited
daily (or as of such other time specified in the related Servicing Agreement)
all collections of principal and interest on any Mortgage Loan and with respect
to any REO Property received by a Servicer, including Principal Prepayments,
Insurance Proceeds, Liquidation Proceeds, and advances made from the Servicer's
own funds (less Servicing Fees as permitted by such applicable Servicing
Agreement in the case of any such Servicer) and all other amounts to be
deposited in the Protected Account pursuant to the related Servicing Agreement.
(b) [Reserved]
(c) Subject to this Article IV, on or before each Servicer Remittance
Date, the Master Servicer shall (if acting as successor servicer to a Servicer),
or shall cause the related Servicer to withdraw or shall cause to be withdrawn
from the Protected Accounts and immediately deposit or cause to be deposited
into the Master Servicer Collection Account, amounts representing the following
collections and payments (other than with respect to principal of or interest on
the Mortgage Loans due on or before the Cut-off Date) with respect to each
Mortgage Loan serviced by it:
(i) Scheduled Payments on the Mortgage Loans received or any related
portion thereof advanced by the related Servicers pursuant to the Servicing
Agreements which were due on or before the related Due Date, net of the
amount thereof comprising the Servicing Fees;
(ii) full Principal Prepayments and any Liquidation Proceeds received
by the Servicers with respect to such Mortgage Loans in the related
Prepayment Period, with interest to the date of prepayment or liquidation,
net of the amount thereof comprising the Servicing Fees;
(iii) partial Principal Prepayments received by the Servicers for such
Mortgage Loans in the related Prepayment Period; and
(iv) any amount to be used as an Advance and any payments of
Compensating Interest.
Section 4.02. MASTER SERVICER COLLECTION ACCOUNT.
(a) The Master Servicer shall establish and maintain in the name of
the Trustee, for the benefit of the Certificateholders, the Master Servicer
Collection Account as a segregated trust account or accounts. The Master
Servicer will deposit in the Master Servicer Collection Account as identified by
the Master Servicer and as received by the Master Servicer, the following:
(i) Any amounts withdrawn from a Protected Account and remitted to the
Master Servicer Collection Account pursuant to Section 4.01(c);
(ii) Any Advances and any payments of Compensating Interest which were
not deposited in a Protected Account;
(iii) Any Insurance Proceeds or Liquidation Proceeds received by or on
behalf of the Master Servicer or which were not deposited in a Protected
Account;
(iv) The Purchase Price with respect to any Mortgage Loans purchased
by the Seller pursuant to Sections 2.02, 2.03 or 3.20;
(v) Any amounts required to be deposited with respect to losses on
investments of deposits in the Master Servicer Collection Account; and
(vi) Any other amounts received by or on behalf of the Master Servicer
or the Trustee and required to be deposited in the Master Servicer
Collection Account pursuant to this Agreement.
(b) All amounts deposited to the Master Servicer Collection Account
shall be held by the Master Servicer in the name of the Trustee in trust for the
benefit of the Certificateholders in accordance with the terms and provisions of
this Agreement. The requirements for crediting the Master Servicer Collection
Account or the Distribution Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, payments in the
nature of (i) prepayment or late payment charges or assumption, tax service,
statement account or payoff, substitution, satisfaction, release and other like
fees and charges and (ii) the items enumerated in Subsections 4.05(a)(i), (ii),
(iii), (iv), (vi), (vii), (ix) and (xi) need not be credited by the Master
Servicer or the related Servicer to the Master Servicer Collection Account. In
the event that the Master Servicer shall deposit or cause to be deposited to the
Distribution Account any amount not required to be credited thereto, the
Trustee, upon receipt of a written request therefor signed by a Servicing
Officer of the Master Servicer, shall promptly transfer such amount to the
Master Servicer, any provision herein to the contrary notwithstanding.
(c) The amount at any time credited to the Master Servicer Collection
Account shall be invested, in the name of the Trustee, or its nominee, for the
benefit of the Certificateholders, in Permitted Investments as directed by the
Master Servicer. All Permitted Investments shall mature or be subject to
redemption or withdrawal on or before, and shall be held until, the next
succeeding Distribution Account Deposit Date. Any and all investment earnings
from the Master Servicer Collection Account shall be paid to the Master
Servicer. The risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the Master Servicer. The Master Servicer shall deposit the amount of any
such loss in the Master Servicer Collection Account within two Business Days of
receipt of notification of such loss but not later than the second Business Day
prior to the Distribution Date on which the moneys so invested are required to
be distributed to the Certificateholders.
(d) On or before each Distribution Account Deposit Date, the Master
Servicer shall deposit in the Distribution Account (or separately remit to the
Trustee for deposit in the Distribution Account) any Advances or payments of
Compensating Interest required to be made by the Master Servicer with respect to
the Mortgage Loans.
Section 4.03. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE MASTER
SERVICER COLLECTION ACCOUNT.
(a) The Master Servicer will, from time to time in its discretion or
on demand of the Securities Administrator, make or cause to be made such
withdrawals or transfers from the Master Servicer Collection Account as the
Master Servicer has designated for such transfer or withdrawal pursuant to the
Servicing Agreements. The Master Servicer may make withdrawals in payment of any
Master Servicing Fee not previously reimbursed or withheld from funds in the
Master Servicer Collection Account or the Distribution Account, and may clear
and terminate the Master Servicer Collection Account pursuant to Section 10.01
and remove amounts from time to time deposited in error.
(b) On an ongoing basis, Master Servicer shall withdraw from the
Master Servicer Collection Account any expenses recoverable by the Trustee, the
Master Servicer, the EMC Servicer, the Custodian, the Seller or the Securities
Administrator pursuant to Sections 3.03, 7.01, 7.03, 7.04 and 9.05.
(c) No later than 1:00 p.m. New York time on each Distribution Account
Deposit Date, the Master Servicer will transfer all amounts on deposit in the
Master Servicer Collection Account to the Distribution Account.
Section 4.04. DISTRIBUTION ACCOUNT.
(a) The Trustee shall establish and maintain in the name of the
Trustee, for the benefit of the Certificateholders, the Distribution Account as
a segregated trust account or accounts.
(b) All amounts deposited to the Distribution Account shall be held by
the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement.
(c) The Distribution Account shall constitute an Eligible Account of
the Trust Fund segregated on the books of the Trustee and held by the Trustee in
a financial institution located in the State of the Corporate Trustee Office or
in the State of New York, and the Distribution Account and the funds deposited
therein shall not be subject to, and shall be protected from, all claims, liens,
and encumbrances of any creditors or depositors of the Trustee or the Master
Servicer (whether made directly, or indirectly through a liquidator or receiver
of the Trustee or the Master Servicer). The amount at any time credited to the
Distribution Account shall be (i) fully insured by the FDIC to the maximum
coverage provided thereby or (ii) invested in the name of the Trustee in such
Permitted Investments, or deposited in demand deposits with such depository
institutions, as directed in writing by the Master Servicer. All Permitted
Investments shall mature or be subject to redemption or withdrawal on or before,
and shall be held until, the next succeeding Distribution Date if the obligor
for such Permitted Investment is the Trustee or, if such obligor is any other
Person, the Business Day preceding such Distribution Date. All investment
earnings on amounts on deposit in the Distribution Account or benefit from funds
uninvested therein from time to time shall be for the account of the Master
Servicer. The Master Servicer shall be permitted to withdraw or receive
distribution of any and all investment earnings from the Distribution Account on
each Distribution Date. If there is any loss on a Permitted Investment or demand
deposit, the Master Servicer shall deposit the amount of the loss in the
Distribution Account. With respect to the Distribution Account and the funds
deposited therein, the Master Servicer shall take such action as may be
necessary to ensure that the Certificateholders shall be entitled to the
priorities afforded to such a trust account (in addition to a claim against the
estate of the Trustee) as provided by 12 U.S.C. ss. 92a(e), and applicable
regulations pursuant thereto, if applicable, or any applicable comparable state
statute applicable to state chartered banking corporations.
(d) In addition to depositing in the Distribution Account amounts
received by it pursuant to 4.02(d) and 4.03(c), the Trustee shall deposit
therein the $150 received on the Closing Date to be used to pay principal on the
Residual Certificates.
Section 4.05. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE
DISTRIBUTION ACCOUNT.
(a) The Trustee will, from time to time on demand of the Master
Servicer or the Securities Administrator, make or cause to be made such
withdrawals or transfers from the Distribution Account as the Master Servicer
has designated for such transfer or withdrawal pursuant to the Servicing
Agreements or as the Securities Administrator has instructed hereunder for the
following purposes (limited in the case of amounts due the Master Servicer to
those not withdrawn from the Master Servicer Collection Account in accordance
with the terms of this Agreement, and in the case of amounts due the EMC
Servicer or any other Servicer to those not withdrawn from its Protected Account
in accordance with the related Servicing Agreement):
(i) to reimburse the Master Servicer or any Servicer for any Advance,
the right of the Master Servicer or a Servicer to reimbursement pursuant to
this subclause (i) being limited to amounts received on a particular
Mortgage Loan (including, for this purpose, the Purchase Price therefor,
Insurance Proceeds and Liquidation Proceeds) which represent late payments
or recoveries of the principal of or interest on such Mortgage Loan
respecting which such Advance or advance was made;
(ii) to reimburse the Master Servicer or any Servicer from Insurance
Proceeds or Liquidation Proceeds relating to a particular Mortgage Loan for
amounts expended by the Master Servicer or such Servicer in good faith in
connection with the restoration of the related Mortgaged Property which was
damaged not covered by any Insurance Policy, including any hazard insurance
or in connection with the liquidation of such Mortgage Loan;
(iii) to reimburse the Master Servicer or any Servicer from Insurance
Proceeds relating to a particular Mortgage Loan for insured expenses
incurred with respect to such Mortgage Loan and to reimburse the Master
Servicer or such Servicer from Liquidation Proceeds from a particular
Mortgage Loan for liquidation expenses incurred with respect to such
Mortgage Loan; provided that the Master Servicer shall not be entitled to
reimbursement for liquidation expenses with respect to a Mortgage Loan to
the extent that (i) any amounts with respect to such Mortgage Loan were
paid as Excess Liquidation Proceeds pursuant to clause (xi) of this
Subsection (a) to the Master Servicer; and (ii) such liquidation expenses
were not included in the computation of such Excess Liquidation Proceeds;
(iv) to pay the Master Servicer or any Servicer, as appropriate, from
Liquidation Proceeds or Insurance Proceeds received in connection with the
liquidation of any Mortgage Loan, the amount which it or such Servicer
would have been entitled to receive under subclause (xi) of this Subsection
4.03(a) as servicing compensation on account of each defaulted scheduled
payment on such Mortgage Loan if paid in a timely manner by the related
Mortgagor;
(v) to pay the Master Servicer or any Servicer from the Purchase Price
for any Mortgage Loan, the amount which it or such Servicer would have been
entitled to receive under subclause (xi) of this subsection (a) as
servicing compensation;
(vi) to reimburse the Master Servicer or any Servicer for unreimbursed
Servicing Advances made pursuant to the applicable Servicing Agreement, the
right to reimbursement pursuant to this subclause being limited to amounts
received on the related Mortgage Loan (including, for this purpose, the
Purchase Price therefor, Insurance Proceeds and Liquidation Proceeds) which
represent late recoveries of the payments for which such Servicing Advances
were made;
(vii) to reimburse the Master Servicer or any Servicer for any
unreimbursed Advance or any Servicing Advance, after a Realized Loss has
been allocated with respect to the related Mortgage Loan if the Advance or
Servicing Advance has not been reimbursed pursuant to clause (i) or (vi);
(viii) to pay any Master Servicing Fee;
(ix) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Sections 3.03,
7.04 and 11.02, as applicable;
(x) to pay to the Master Servicer, as additional compensation, any
Excess Liquidation Proceeds with respect to a Mortgage Loan to the extent
not retained by the related Servicer and to pay to the EMC Servicer, as
additional servicing compensation, any Excess Liquidation Proceeds with
respect to an EMC Mortgage Loan;
(xi) to reimburse or pay any Servicer or the Master Servicer any such
amounts as are due thereto under the applicable Servicing Agreement and
have not been retained by or paid to the Servicer, to the extent provided
in the related Servicing Agreement;
(xii) to reimburse the Trustee or the Securities Administrator for
expenses, costs and liabilities incurred by or reimbursable to it pursuant
to this Agreement;
(xiii) to remove amounts deposited in error; and
(xiv) to clear and terminate the Distribution Account pursuant to
Section 10.01.
(b) The Master Servicer shall keep and maintain separate accounting,
on a Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Distribution Account pursuant to subclauses (i) through
(xii), inclusive, or with respect to any such amounts which would have been
covered by such subclauses had the amounts not been retained by the Master
Servicer without being deposited in the Distribution Account under Section
4.02(b).
(c) On each Distribution Date, based solely on the applicable
Remittance Report, the Trustee shall distribute Interest Funds and Principal
Funds in the Distribution Account to the Holders of the Certificates in
accordance with Section 5.04(a).
Section 4.06. YIELD MAINTENANCE ACCOUNT.
The Trustee shall establish and maintain in the name of the Trustee,
for the benefit of the Class X-0, Xxxxx X-0, Class M-1, Class M-2 and Class B
Certificateholders, the Yield Maintenance Account as a segregated trust account.
The Yield Maintenance Account shall not constitute an asset of any REMIC
hereunder. Amounts distributed to the Trustee pursuant to the Yield Maintenance
Agreement shall be deposited into the Yield Maintenance Account and distributed
on each Distribution Date, as follows:
(a) FIRST, to the Class A-1 and Class A-2 Certificateholders, the
lesser of (1) the amount received under the Yield Maintenance Agreement, and (2)
the amount of Current Interest that each such Class would have been entitled to
receive on such Distribution Date had the applicable Pass-Through Rate been
calculated at the lesser of (A) One-Month LIBOR plus the Class A-1 Margin or the
Class A-2 Margin, as applicable, for the related Accrual Period and (B) 11% per
annum, in each case to the extent not otherwise paid from Interest Funds, pro
rata, based on the amount of such shortfall in Interest Funds;
(b) SECOND, to the Class M-1 Certificateholders, the lesser of
(1) the amount received under the Yield Maintenance Agreement remaining after
application pursuant to clause (a) above, and (2) the amount of Current Interest
that the Class M-1 Certificates would have been entitled to receive on such
Distribution Date had the applicable Pass-Through Rate been calculated at the
lesser of (A) One-Month LIBOR plus the Class M-1 Margin for the related Accrual
Period and (B) 11% per annum to the extent not otherwise paid from Interest
Funds;
(c) THIRD, to the Class M-2 Certificateholders, the lesser of (1)
the amount received under the Yield Maintenance Agreement remaining after
application pursuant to clauses (a) and (b) above and (2) the amount of Current
Interest that the Class M-2 Certificates would have been entitled to receive on
such Distribution Date had the applicable Pass-Through Rate been calculated at
the lesser of (A) One-Month LIBOR plus the Class M-2 Margin for the related
Accrual Period and (B) 11% per annum to the extent not otherwise paid from
Interest Funds; and
(d) FOURTH, to the Class B Certificateholders, the lesser of (1)
the amount received under the Yield Maintenance Agreement remaining after
application pursuant to clauses (a), (b) and (c) above and (2) the amount of
Current Interest that the Class B Certificates would have been entitled to
receive on such Distribution Date had the applicable Pass-Through Rate been
calculated at the lesser of (A) One-Month LIBOR plus the Class B Margin for the
related Accrual Period and (B) 11% per annum, to the extent not otherwise paid
from Interest Funds.
In the event that the amount received by the Trustee with respect
to the Yield Maintenance Agreement for any Distribution Date, exceeds the
amounts required under subclause (2) of clauses (a) through (d) above on such
Distribution Date, such aggregate amount will constitute the Excess Yield
Maintenance Amount and will be distributed by the Trustee on such Distribution
Date in the manner set forth in Section 5.04(a)(iii) in accordance with the
Remittance Report for such Distribution Date.
ARTICLE V.
DISTRIBUTIONS AND ADVANCES
BY THE MASTER SERVICER
Section 5.01. ADVANCES.
Except with respect to Simple Interest Loans, for which no Advances of
principal are required to be made, if the Scheduled Payment on a Mortgage Loan,
that was due on a related Due Date and is delinquent other than as a result of
application of the Relief Act and for which the related Servicer was required to
make an Advance pursuant to the related Servicing Agreement exceeds the amount
deposited in the Master Servicer Collection Account for use as an Advance with
respect to such Mortgage Loan, the Master Servicer will make an Advance in an
amount equal to such deficiency for deposit into the Master Servicer Collection
Account or the Distribution Account, as applicable. Each such Advance shall be
remitted to the Master Servicer Collection Account or the Distribution Account,
as appropriate, no later than 1:00 p.m. Central time on the Master Servicer
Advance Date in immediately available funds. The Master Servicer shall be
obligated to make any such Advance only to the extent that such advance would
not be a Nonrecoverable Advance. If the Master Servicer shall have determined
that it has made a Nonrecoverable Advance or that a proposed Advance or a lesser
portion of such Advance would constitute a Nonrecoverable Advance, the Master
Servicer shall deliver (i) to the Trustee for the benefit of the
Certificateholders funds constituting the remaining portion of such Advance, if
applicable, and (ii) to the Depositor, each Rating Agency and the Trustee an
Officer's Certificate setting forth the basis for such determination.
In lieu of making all or a portion of such Advance from its own funds,
the Master Servicer may (i) cause to be made an appropriate entry in its records
relating to the Master Servicer Collection Account that any Amount Held for
Future Distributions has been used by the Master Servicer in discharge of its
obligation to make any such Advance and (ii) transfer such funds from the Master
Servicer Collection Account to the Distribution Account. Any funds so applied
and transferred shall be replaced by the Master Servicer by deposit in the
Master Servicer Collection Account, no later than the close of business on the
Business Day immediately preceding the Distribution Date on which such funds are
required to be distributed pursuant to this Agreement.
The Master Servicer shall be entitled to be reimbursed from the Master
Servicer Collection Account or the Distribution Account for all Advances of its
own funds made pursuant to this Section as provided in Section 4.05. The
obligation to make Advances with respect to any Mortgage Loan shall continue
until such Mortgage Loan is paid in full or the related Mortgaged Property or
related REO Property has been liquidated or until the purchase or repurchase
thereof (or substitution therefor) from the Trust Fund pursuant to any
applicable provision of this Agreement, except as otherwise provided in this
Section 5.01.
Subject to and in accordance with the provisions of Article VIII
hereof, in the event of a failure by the Master Servicer to make an Advance
pursuant to this Section 5.01, then the EMC Servicer, as Successor Master
Servicer, shall be obligated to make such Advance, and if the EMC Servicer, as
Successor Master Servicer, fails to make such Advance, then the Trustee, as
Successor Master Servicer, shall be obligated to make such Advance.
Section 5.02. COMPENSATING INTEREST PAYMENTS.
The Master Servicer shall deposit into the Distribution Account, no
later than the close of business on the Business Day immediately preceding such
Distribution Date, an amount equal to the aggregate amount of Compensating
Interest required to be paid by a Servicer pursuant to the related Servicing
Agreement for such Distribution Date, that is not so paid by such Servicer;
provided that such amount shall not exceed the Master Servicing Fee; and in case
of such deposit, the Master Servicer shall not be entitled to any recovery or
reimbursement in respect of any such payment.
Section 5.03. REMIC DISTRIBUTIONS.
On each Distribution Date the Securities Administrator, as agent for
the Trustee, shall allocate distributions to the REMIC I Regular Interests, the
REMIC II Regular Interests and the REMIC III Regular Interests, in accordance
with Section 5.06 hereof.
Section 5.04. DISTRIBUTIONS.
(a) On each Distribution Date, an amount equal to the Interest Funds
and Principal Funds for such Distribution Date shall be withdrawn by the Trustee
from the Distribution Account and distributed as directed in accordance with the
Remittance Report for such Distribution Date, in the manner set forth in clauses
(i), (ii) and (iii) below:
(i) The Trustee shall apply Interest Funds for such Distribution Date
as follows:
FIRST, to the Class A-IO Certificates, the Class A-1 Certificates and
the Class A-2 Certificates, the Current Interest and any Interest Carry Forward
Amount for each such Class, pro rata in accordance with the amount of Current
Interest or Interest Carry Forward Amount, as applicable, due on such Class;
SECOND, from remaining Interest Funds, to the Class A-IO Certificates,
the Class A-1 Certificates and the Class A-2 Certificates, any Basis Risk
Shortfall Carry Forward Amount for such Class, pro rata based on the amounts of
Basis Risk Carry Forward Amount for each such Class;
THIRD, from remaining Interest Funds, to the Class M-1 Certificates,
the Class M-2 Certificates and the Class B Certificates, sequentially, in that
order, the Current Interest for each such Class;
FOURTH, any Excess Spread to the extent necessary to meet a level of
overcollateralization equal to the Specified Overcollateralization Amount will
be the Extra Principal Distribution Amount and will be included as part of the
Principal Distribution Amount; and
FIFTH, any Remaining Excess Spread will be added to any Excess
Overcollateralization Amount and will be included in Excess Cashflow and applied
as described under clause (iii) below.
On any Distribution Date, any shortfalls resulting from the
application of the Relief Act, any Prepayment Interest Shortfalls to the extent
not covered by Compensating Interest and any Deferred Interest will be
allocated, FIRST, in reduction of amounts otherwise distributable to the Class
B-IO Certificates and Residual Certificates, AND THEREAFTER, to the Current
Interest payable to the Offered Certificates on such Distribution Date, on a PRO
RATA basis, based on the respective amounts of interest accrued on such
Certificates for such Distribution Date. The Holders of the Offered Certificates
will not be entitled to reimbursement for any such interest shortfalls.
Notwithstanding the provisions of subclauses FOURTH and FIFTH of
clause (i) above, on the first Distribution Date, all Excess Spread will be paid
to the Holders of the Class B-IO Certificates.
(ii) The Trustee shall apply the Principal Distribution Amount for
such Distribution Date as follows:
(A) for each Distribution Date (i) prior to the Stepdown Date or (ii)
on which a Trigger Event is in effect:
FIRST, to the Class A-1 Certificates and the Class A-2 Certificates,
pro rata, in each case until the Certificate Principal Balance of such
Class is reduced to zero;
SECOND, to the Class M-1 Certificates, any remaining Principal
Distribution Amount until the Certificate Principal Balance thereof is
reduced to zero;
THIRD, to the Class M-2 Certificates, any remaining Principal
Distribution Amount until the Certificate Principal Balance thereof is
reduced to zero; and
FOURTH, to the Class B Certificates, any remaining Principal
Distribution Amount until the Certificate Principal Balance thereof is
reduced to zero.
(B) For each Distribution Date on or after the Stepdown Date, so long
as a Trigger Event is not in effect:
FIRST, to the Class A-1 Certificates and the Class A-2 Certificates,
pro rata, the Class A Principal Distribution Amount, in each case until the
Certificate Principal Balance thereof is reduced to zero;
SECOND, to the Class M-1 Certificates, from any remaining Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, until the
Certificate Principal Balance thereof is reduced to zero;
THIRD, to the Class M-2 Certificates, from any remaining Principal
Distribution Amount, the Class M-2 Principal Distribution Amount, until the
Certificate Principal Balance thereof is reduced to zero; and
FOURTH, to the Class B Certificates, from any remaining Principal
Distribution Amount, the Class B Principal Distribution Amount, until the
Certificate Principal Balance thereof is reduced to zero.
(iii) The Trustee shall apply any Excess Cashflow and any Excess Yield
Maintenance Amount for such Distribution Date as follows:
FIRST, to the Class A-IO Certificates, the Class A-1 Certificates and
the Class A-2 Certificates, to the extent not fully paid pursuant to subclause
first under clause (i) above, an amount equal to any remaining Interest Carry
Forward Amount for such Class for such Distribution Date, pro rata in each case,
based on the amount of remaining Interest Carry Forward Amounts owed to each
such Class;
SECOND, from the sum of any remaining Excess Cashflow and any
remaining Excess Yield Maintenance Amount, to the Class A-IO Certificates, the
Class A-1 Certificates and the Class A-2 Certificates, to the extent not fully
paid pursuant to subclause second of clause (i) above, an amount equal to any
remaining Basis Risk Shortfall Carry Forward Amount for such Class for such
Distribution Date, pro rata in each case, based on the amount of remaining Basis
Risk Shortfall Carry Forward Amount owed to each such Class;
THIRD, from the sum of any remaining Excess Cashflow and any remaining
Excess Yield Maintenance Amount, to the Class A-2 Certificates, an amount equal
to any Unpaid Applied Realized Loss Amount for such Class for such Distribution
Date;
FOURTH, from the sum of any remaining Excess Cashflow and any
remaining Excess Yield Maintenance Amount, to the Class M-1 Certificates, an
amount equal to (a) any Interest Carry Forward Amount, (b) any Unpaid Applied
Realized Loss Amount, and (c) any Basis Risk Shortfall Carry Forward Amount, in
that order, for such Class for such Distribution Date;
FIFTH, from the sum of any remaining Excess Cashflow and any remaining
Excess Yield Maintenance Amount, to the Class M-2 Certificates, an amount equal
to (a) any Interest Carry Forward Amount, (b) any Unpaid Applied Realized Loss
Amount, and (c) any Basis Risk Shortfall Carry Forward Amount, in that order,
for such Class for such Distribution Date;
SIXTH, from the sum of any remaining Excess Cashflow and any remaining
Excess Yield Maintenance Amount, to the Class B Certificates, an amount equal to
(a) any Interest Carry Forward Amount, (b) any Unpaid Applied Realized Loss
Amount and (c) any Basis Risk Shortfall Carry Forward Amount, in that order, for
such Class for such Distribution Date;
SEVENTH, from any remaining Excess Cashflow, to the Class B-IO
Certificates, the Class B-IO Distribution Amount; and
EIGHTH, any remaining amounts to each of the Class R-1 Certificates,
the Class R-2 Certificates and the Cass R-3 Certificates, based on the related
REMIC in which such amounts remain.
Notwithstanding the foregoing, on the first Distribution Date, an
amount equal to $50 shall be distributed to each of the Class R-1 Certificates,
the Class R-2 Certificates and the Class R-3 Certificates from funds deposited
in the Distribution Account on the Closing Date.
(b) Subject to Section 10.02 hereof respecting the final
distribution, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either by wire
transfer in immediately available funds to the account of such holder at a bank
or other entity having appropriate facilities therefor, if (i) such Holder has
so notified the Trustee at least five (5) Business Days prior to the related
Record Date and (ii) such Holder shall hold Regular Certificates with aggregate
principal denominations of not less than $1,000,000 or evidencing a Percentage
Interest aggregating 10% or more with respect to such Class or, if not, by check
mailed by first class mail to such Certificateholder at the address of such
holder appearing in the Certificate Register. Notwithstanding the foregoing, but
subject to Section 10.02 hereof respecting the final distribution, distributions
with respect to Certificates registered in the name of a Depository shall be
made to such Depository in immediately available funds.
(c) On or before 5:00 p.m. Central time (i) on the twelfth
calendar day of each month (or if such day is not a Business Day, the
immediately preceding Business Day), the EMC Servicer shall deliver to the
Master Servicer with respect to the EMC Mortgage Loans and (ii) on the fifth
Business Day immediately preceding each Distribution Date, the Master Servicer
shall deliver to the Securities Administrator with respect to all Mortgage
Loans, a report in the form of a computer readable magnetic tape (or by such
other means as the Master Servicer and the Securities Administrator may agree
from time to time) containing such data and information, as agreed to by the EMC
Servicer, the Master Servicer and the Securities Administrator such as to permit
the Securities Administrator to prepare the Monthly Statement to
Certificateholders and to direct the Trustee in writing to make the required
distributions for the related Distribution Date (the "Remittance Report"). The
Securities Administrator shall deliver a Remittance Report to the Trustee on or
before 2:00 p.m. Central time on the Business Day immediately preceding each
Distribution Date. The Trustee shall, provide to the Master Servicer a monthly
Statement of the account activity in the Distribution Account by the 15th day of
the month following the Distribution Date.
Section 5.04A. ALLOCATION OF REALIZED LOSSES.
Any Realized Losses with respect to the Mortgage Loans shall be
applied on each Distribution Date after the distributions provided for in
Section 5.04 in reduction of the Certificate Principal Balance of the Class or
Classes of Certificates as provided in the definition of Applied Realized Loss
Amount.
Any amounts distributed to a Class of Subordinated Certificates or the
Class A-2 Certificates in respect of any Unpaid Applied Realized Loss Amount
will not be applied to reduce the Certificate Principal Balance of such Class.
Section 5.04B. ALLOCATION OF DEFERRED INTEREST.
(a) On or prior to the latest Determination Date in each month, the
Securities Administrator shall determine the amount of any Deferred Interest in
respect of each Mortgage Loan that occurred during the immediately preceding
calendar month.
(b) With respect to any Distribution Date, any Deferred Interest with
respect to a Mortgage Loan will be allocated to increase the Certificate
Principal Balance of each of the Class X-0, Xxxxx X-0, Class M-1, Class M-2 and
Class B Certificates in the following manner:
(i) to the Class A-1 Certificates and the Class A-2 Certificates (PRO
RATA, based on the Certificate Principal Balance of each such Class) in an
amount equal to the amount of Deferred Interest times (x) the aggregate
Certificate Principal Balance of the Class A Certificates over (y)the
aggregate Stated Principal Balance of the Mortgage Loans; and
(ii) all remaining amounts of Deferred Interest not allocated to the
Class A Certificates, pursuant to clause (i) above, to the then outstanding
Classes of Subordinate Certificates, PRO RATA, based upon the Current
Principal Amount of each such Class.
(d) On each Distribution Date on which the Current Principal Amount of
a Class of Certificates is increased by Deferred Interest in accordance
with Section 5.04B(b) above, the interest otherwise paid to such Class
shall be decreased by an equivalent amount.
Section 5.05. MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.
(a) Not later than each Distribution Date, the Securities
Administrator shall prepare and make available to each Holder of Certificates,
the Trustee, the Rating Agencies, the Master Servicer, the EMC Servicer and the
Depositor a statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each Class
allocable to principal, separately identifying (A) the aggregate amount of
any Principal Prepayments included therein, (B) the aggregate of all
scheduled payments (except with respect to Simple Interest Loans) of
principal included therein (and with respect to Simple Interest Loans, the
amount of principal actually received included therein), and (C) the Extra
Principal Distribution Amount (if any);
(ii) the amount of such distribution to Holders of each Class
allocable to interest, and, if applicable, the portion thereof allocable to
amounts provided pursuant to the Yield Maintenance Agreement;
(iii) the Interest Carry Forward Amounts and any Unpaid Applied
Realized Loss Amounts for each Class of Offered Certificates (other than
the Residual Certificates), if any;
(iv) the Certificate Principal Balance or Certificate Notional Balance
of each Class after giving effect (i) to all distributions allocable to
principal on such Distribution Date and (ii) the allocation of any Applied
Realized Loss Amounts for such Distribution Date, and, in the case of any
Certificate Principal Balance, separately stating the amount of Deferred
Interest, if any, added to such Certificate Principal Balance;
(v) the cumulative amount of Applied Realized Loss Amounts to date and
the Unpaid Applied Realized Loss Amounts for each Class of Offered
Certificates after giving effect to the distribution of principal and
allocation of Applied Realized Loss Amounts on such Distribution Date.
(vi) the Pass-Through Rate for each Class of Offered Certificates with
respect to the current Accrual Period, and, if applicable, whether such
Pass-Through Rate was limited by an Interest Rate Cap;
(vii) the amount of any Excess Cashflow Amount and any Excess Yield
Maintenance Amount;
(viii) the aggregate of the Stated Principal Balances of the fixed
rate Mortgage Loans, the adjustable rate Mortgage Loans and all of the
Mortgage Loans for the following Distribution Date;
(ix) the related amount of the Master Servicing Fees paid to or
retained by the Master Servicer and the Servicing Fees paid to or retained
by each Servicer for the related Due Period;
(x) the amount of Advances included in the distribution on such
Distribution Date;
(xi) the number and aggregate principal amounts of Mortgage Loans (A)
Delinquent (exclusive of Mortgage Loans in foreclosure and bankruptcy) (1)
31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, (B) in
foreclosure and delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3) 91
or more days and (C) in bankruptcy and delinquent (1) 31 to 60 days, (2) 61
to 90 days and (3) 91 or more days, in each case as of the close of
business on the last day of the calendar month preceding such Distribution
Date;
(xii) with respect to any Mortgage Loan that was liquidated during the
preceding calendar month, the loan number and Stated Principal Balance of,
and Realized Loss on, such Mortgage Loan as of the close of business on the
Determination Date preceding such Distribution Date;
(xiii) whether a Trigger Event exists.
(xiv) the total number and principal balance of any REO Properties as
of the close of business on the Determination Date preceding such
Distribution Date;
(xv) the Realized Losses during the related Prepayment Period and the
cumulative Realized Losses through the end of the preceding month; and
(xvi) the three month rolling average of the percent equivalent of a
fraction, the numerator of which is the aggregate stated Principal Balance
of the Mortgage Loans that are 61 days or more delinquent or are in
bankruptcy or foreclosure or are REO Properties, and the denominator of
which is the aggregate Stated Principal Balance of all of the Mortgage
Loans as of the last day of the calendar month preceding such Distribution
Date.
The Securities Administrator may make the foregoing monthly statement
(and, at its option, any additional files containing the same information in an
alternative format) available each month to Certificateholders via the
Securities Administrator's internet website. The Security Administrator's
internet website shall initially be located at "xxx.xxxxxxx.xxx". Assistance in
using the Securities Administrator's website can be obtained by calling the
Securities Administrator's customer service desk at (000) 000-0000. To the
extent timely received from the Securities Administrator, the Trustee will also
make monthly statements available each month to Certificateholders via the
Trustee's internet website. The trustee's internet website will initially be
located at xxx.xxxxxxxx.xxx/xxxxxx. Assistance in using the Trustee's website
service can be obtained by calling the Trustee's customer service desk at (877)
722-1095. Parties that are unable to use the above distribution options are
entitled to have a paper copy mailed to them via first class mail by calling the
Securities Administrator's customer service desk and indicating such. The
Securities Administrator may change the way monthly statements are distributed
in order to make such distributions more convenient or more accessible to the
above parties.
(b) The Securities Administrator's responsibility for making the above
information available to the Certificateholders is limited to the availability,
timeliness and accuracy of the information derived from the Master Servicer, the
EMC Servicer and the Trustee. The Securities Administrator will make available a
copy of each statement provided pursuant to this Section 5.05 to each Rating
Agency.
(c) Within a reasonable period of time after the end of each calendar
year, the Trustee shall cause to be furnished to the EMC Servicer, the Master
Servicer and upon request to each Person who at any time during the calendar
year was a Certificateholder, a statement containing the information set forth
in clauses (a)(i) and (a)(ii) of this Section 5.05 aggregated for such calendar
year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time in effect.
(d) Upon filing with the Internal Revenue Service, the Securities
Administrator shall furnish to the Holders of the Residual Certificates the
applicable Form 1066 and each applicable Form 1066Q and shall respond promptly
to written requests made not more frequently than quarterly by any Holder of a
Residual Certificate with respect to the following matters:
(i) The original projected principal and interest cash flows on the
Closing Date on each Class of regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment Assumption;
(ii) The projected remaining principal and interest cash flows as of
the end of any calendar quarter with respect to each Class of regular and
residual interests created hereunder and the Mortgage Loans, based on the
Prepayment Assumption;
(iii) The applicable Prepayment Assumption and any interest rate
assumptions used in determining the projected principal and interest cash
flows described above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to each Class of regular or residual
interests created hereunder and to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of a REMIC with respect
to such regular interests or bad debt deductions claimed with respect to
the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of a REMIC;
and
(vii) Any taxes (including penalties and interest) imposed on the
REMIC, including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or local
income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above
shall be provided by the Depositor pursuant to Section 9.12.
Section 5.06. REMIC DESIGNATIONS AND ALLOCATIONS.
(a) The Trustee shall elect that each of REMIC I, REMIC II and REMIC
III shall be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of
this Agreement shall be resolved in a manner that preserves the validity of such
REMIC elections. The assets of REMIC I shall include the Mortgage Loans and all
interest owing in respect of and principal due thereon, the Master Servicer
Collection Account, the Distribution Account, any REO Property, and any proceeds
of the foregoing. The REMIC I Regular Interests shall constitute the assets of
REMIC II. The REMIC II Regular Interests shall constitute the assets of REMIC
III.
(b) REMIC I will be evidenced by (x) the Class I-NAS and Class I-Q
interests (together, the "REMIC I Regular Interests"), which (i) will be
uncertificated and non-transferable, and (ii) are hereby designated as the
"regular interests" in REMIC I and (y) the Class R-1 Certificate, which is
hereby designated as the single "residual interest" in REMIC I (the REMIC I
Regular Interests, together with the Class R-1 Certificate, the "REMIC I
Certificates"). Cash of $50 will be deposited into REMIC I and shall be paid out
on the first Distribution Date to the Class R-1 Certificate. Principal shall be
paid on the Class I-Q REMIC I Regular Interest until paid in full, and then to
the Class I-NAS REMIC I Regular Interest. The REMIC I Certificates will have the
following designations, initial principal balances and pass-through rates:
Pass-
REMIC I Initial Principal Through
Certificates Balance Rate
------------ ------- ----
I-NAS $ 61,735,000 (1)
I-Q $ 555,613,159.42 (1)
R-1 $ 50.00 0%(2)
(1) The weighted average of the Net Mortgage Rates of the Mortgage Loans.
(2) On each Distribution Date, amounts, if any, remaining in REMIC I after
payments of interest and principal, as designated above, will be
distributed to the Class R-1 Certificate.
(c) REMIC II will be evidenced by (x) the Class II-a1, Class II-a2,
Class II-m1, Class II-m2, Class II-b, Class II-io and Class II-Q (the "REMIC II
Regular Interests"), which are hereby designated as the "regular interests" in
REMIC II and will be uncertificated and non-transferable and (y) the Class R-2
Certificate, which is hereby designated as the single "residual interest" in
REMIC II (the REMIC II Regular Interests, together with the Class R-2
Certificate, the "REMIC II Certificates"). The REMIC II Regular Interests shall
be recorded on the records of REMIC II as being issued to and held by the
Trustee on behalf of REMIC III.
Interest on the REMIC II Regular Interests that corresponds to
interest on the Mortgage Loans that is allocable to payments of principal on the
Certificates (the "Turbo Amount") will not be paid directly as principal to the
REMIC II Regular Interests, but instead a portion of the interest otherwise
payable with respect to the Class II-Q REMIC II Regular Interest which equals
0.01% of the Turbo Amount will be payable as a reduction of the principal
balances of the Class II-a1, Class II-a2, Class II-m1, Class II-m2, and Class
II-b REMIC II Regular Interests in the same proportions that the Turbo Amount is
allocated among the Class X-0, Xxxxx X-0, Class M-1, Class M-2, and Class B
Certificates, respectively, and will be accrued and added to principal on the
Class II-Q REMIC II Regular Interest.
Principal payments on the REMIC I Regular Interests held by REMIC II
shall be allocated 0.01% to the Class II-a1, Class II-a2, Class II-m1, Class
II-m2 and Class II-b REMIC II Regular Interests. The remaining 99.99% shall be
allocated to Class II-Q REMIC II Regular Interest. The aggregate amount of
principal allocated to Class II-a1, Class II-a2, Class II-m1, Class II-m2 and
Class II-b REMIC II Regular Interests shall be apportioned among such classes in
the same proportions as principal is payable with respect to the Class X-0,
Xxxxx X-0, Class M-1, Class M-2 and Class B Certificates, respectively.
Notwithstanding the above, principal payments on REMIC II Regular Interests that
are attributable to an Excess Overcollateralization Amount shall be allocated to
the Class II-Q REMIC II Regular Interests. Cash of $50 will be deposited into
REMIC II and shall be paid out on the first Distribution Date to the Class R-2
Certificate.
The REMIC II Certificates will have the following designations,
initial principal balances, pass-through rates and allocations of interest:
Pass- Allocation Corresponding
REMIC II Initial Principal Through of Class of
Certificates Balance Rate Interest Certificates
------------ ------- ---- -------- ------------
II-a1 $ 47,227.10 (2) (3),(4) A-1
II-a2 $ 6,173.50 (2) (3),(4) X-0
XX-x0 $ 3,086.70 (2) (3),(4) M-1
II-m2 $ 2,932.40 (2) (3),(4) M-2
II-b $ 2,315.10 (2) (3),(4) B
II-io $ 61,735,000(1) (5) (3) A-IO
II-Q $ 617,286,374.64 (2) (3),(4) ---
R-2 $ 50.00(6) 0%(6) --- ---
_______________
(1) Notional Balance.
(2) The pass-through rate on this REMIC II Regular Interest shall at any time
of determination equal the weighted average of the pass-through rates of
the REMIC I Regular Interests, where for the first 30 Distribution Dates
the interest on Class I-NAS is reduced for purposes of this computation by
the lesser of 5.00% and all the interest on such Class.
(3) Except as provided in note (4) below, interest will be allocated among the
REMIC II Regular Interests in the same proportion as interest is payable on
the corresponding Classes of Certificates. Interest on the Class II-Q
Certificate will be allocated among Classes X-0, X-0, X-0, M-2 and B.
(4) Any interest with respect to this REMIC II Regular Interest -- in excess of
the product of (i) 10,000 times the weighted average coupon of the Class
II-a1, Class II-a2, Class II-m1, Class II-m2, Class II-b and Class II-Q
REMIC II Regular Interests, where each of Class II-a1, Class II-a2, Class
II-m1, Class II-m2 and Class II-b REMIC II Regular Interests is first
subject to a cap and floor equal to the Pass-Through Rates of the Class
X-0, Xxxxx X-0, Class M-1, Class M-2 and Class B Certificates,
respectively, and the Class II-Q REMIC II Regular Interest is subject to a
cap equal to 0%, and (ii) the principal balance of this REMIC II Regular
Interest will be allocated to the Class B-IO Certificates. However, the
Class B-IO Certificates shall be subordinated to the extent provided in
Section 5.04.
(5) Class II-io pays interest equal to 500 basis points of the interest paid on
the Class I-NAS interest (or the total interest paid on the Class I-NAS
interest, if less) for the first 30 distribution dates, and 0% thereafter.
(6) On each Distribution Date, amounts, if any, remaining in REMIC II after
payments of interest and principal, as designated above, will be
distributed to the Class R-2 Certificate.
(d) The Class A-1, Class A-2, Class M-1, Class M-2, Class B, Class
A-IO and Class B-IO Certificates, are hereby designated as "regular interests"
with respect to REMIC III (the "REMIC III Regular Interests") and the Class R-3
Certificate is hereby designated as the single "residual interest" with respect
to REMIC III. On each Distribution Date, amounts, if any, remaining in REMIC III
after payments of interest and principal as designated herein shall be
distributed to the Class R-3 Certificate. The terms of the REMIC III Regular
Interests are set out in Section 6.01. Cash of $50 will be deposited into REMIC
III and shall be paid out on the first distribution date to the R-3 Class.
(e) [Reserved].
(f) Payments of Basis Risk Carry Forward Shortfall Amounts and
payments of Yield Maintenance Amounts shall be deemed to be made to the holder
of the Class B-IO Certificate, who will be the owner of such amounts for federal
income tax purposes. The Class B-IO Certificateholder will be considered to pay
such amounts to the Class X-0, Xxxxx X-0, Class A-IO, Class M-1, Class M-2 or
Class B Certificates, as appropriate, pursuant to a notional principal contract.
ARTICLE VI.
THE CERTIFICATES
Section 6.01. THE CERTIFICATES.
The Certificates shall be substantially in the forms attached hereto
as Exhibits A-1 through A-10. The Certificates shall be issuable in registered
form, in the minimum dollar denominations, integral dollar multiples in excess
thereof (except that one Certificate of each Class may be issued in a different
amount which must be in excess of the applicable minimum dollar denomination)
and aggregate dollar denominations as set forth in the following table:
Original
Integral Certificate
Multiples Principal
Minimum in Excess of Balance/or Notional Pass-Through
Class Denomination Minimum Principal Balance Rate
----------------- ---------------------- ----------------------- ---------------------- --------------------
A-IO $25,000 $1,000 Notional(6) 5.00% (7)
A-1 $25,000 $1,000 $ 472,271,000 Adjustable (1)
A-2 $25,000 $1,000 $ 61,735,000 Adjustable (2)
M-1 $25,000 $1,000 $ 30,867,000 Adjustable (3)
M-2 $25,000 $1,000 $ 29,324,000 Adjustable (4)
B $25,000 $1,000 $ 23,151,000 Adjustable (5)
B-IO $10,000,000 $1,000,000 Notional (8) N/A
R-1 100% N/A $50 N/A
R-2 100% N/A $50 N/A
R-3 100% N/A $50 N/A
___________________
(1) For the first Distribution Date, 1.8375% per annum, and on any Distribution
Date thereafter, the lesser of (i) One-Month LIBOR for the related Accrual
Period plus the Class A-1 Margin for such Distribution Date and (ii) the
applicable Interest Rate Cap for such Distribution Date.
(2) For the first Distribution Date, 2.0875% per annum, and on any Distribution
Date thereafter, the lesser of (i) One-Month LIBOR for the related Accrual
Period plus the Class A-2 Margin for such Distribution Date and (ii) the
applicable Interest Rate Cap for such Distribution Date.
(3) For the first Distribution Date, 2.4375% per annum, and on any Distribution
Date thereafter, the lesser of (i) One-Month LIBOR for the related Accrual
Period plus the Class M-1 Margin for such Distribution Date and (ii) the
applicable Interest Rate Cap for such Distribution Date.
(4) For the first Distribution Date, 3.3375% per annum, and on any Distribution
Date thereafter, the lesser of (i) One-Month LIBOR for the related Accrual
Period plus the Class M-2 Margin for such Distribution Date and (ii) the
applicable Interest Rate Cap for such Distribution Date.
(5) For the first Distribution Date, 3.5875 per annum, and for any Distribution
Date thereafter, the lesser of (i) One-Month LIBOR for the related Accrual
Period plus the Class B Margin for such Distribution Date and (ii) the
applicable Interest Rate Cap for such Distribution Date.
(6) On the Closing Date, $61,735,000 and on (i) any Distribution Date through
and including the Distribution Date in August 2005, the lesser of
$61,735,000 and the aggregate Stated Principal Balance of the Mortgage
Loans as of the last day of the related Due Period.
(7) Subject to the applicable Interest Rate Cap.
(8) Initially $617,348,209.42 and thereafter the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such authentication and delivery. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate the countersignature
of the Trustee by manual signature, and such countersignature upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly countersigned and delivered hereunder. All
Certificates shall be dated the date of their countersignature. On the Closing
Date, the Trustee shall authenticate the Certificates to be issued at the
written direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee
on a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
Section 6.02. CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND
EXCHANGE OF CERTIFICATES.
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 6.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
Transfer of any Certificate, the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to the Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or exchange
shall be canceled and subsequently destroyed by the Trustee in accordance with
the Trustee's customary procedures.
(b) No Transfer of a Class B-IO Certificate shall be made unless such
Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall each certify
to the Trustee and the Securities Administrator in writing the facts surrounding
the Transfer in substantially the forms set forth in Exhibit E (the "Transferor
Certificate") and (x) deliver a letter in substantially the form of either
Exhibit F (the "Investment Letter") or Exhibit G (the "Rule 144A Letter") or (y)
there shall be delivered to the Trustee and the Securities Administrator an
Opinion of Counsel addressed to the Trustee and the Securities Administrator
that such Transfer may be made pursuant to an exemption from the Securities Act,
which Opinion of Counsel shall not be an expense of the Depositor, the Seller,
any Servicer, the Master Servicer, the Securities Administrator or the Trustee.
The Depositor shall provide to any Holder of a Class B-IO Certificate and any
prospective transferee designated by any such Holder, information regarding the
related Certificates and the Mortgage Loans and such other information as shall
be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for Transfer of any such Certificate without registration thereof
under the Securities Act pursuant to the registration exemption provided by Rule
144A. The Trustee, the Securities Administrator and the Master Servicer shall
cooperate with the Depositor in providing the Rule 144A information referenced
in the preceding sentence, including providing to the Depositor such information
regarding the Certificates, the Mortgage Loans and other matters regarding the
Trust Fund as the Depositor shall reasonably request to meet its obligation
under the preceding sentence. Each Holder of a Class B-IO Certificate desiring
to effect such Transfer shall, and does hereby agree to, indemnify the Trustee,
the Depositor, the Seller, the Securities Administrator and the Master Servicer
against any liability that may result if the Transfer is not so exempt or is not
made in accordance with such federal and state laws.
No Transfer of an ERISA Restricted Certificate shall be made unless
the Trustee, the Master Servicer and the Securities Administrator shall have
received either (i) a representation from the transferee of such Certificate
acceptable to and in form and substance satisfactory to the Trustee and the
Securities Administrator, to the effect that such transferee is not an employee
benefit plan subject to Section 406 of ERISA and/or a plan subject to Section
4975 of the Code ("Plan"), or a Person, directly or indirectly, acting on behalf
of any such Plan, or (ii) in the case of any such ERISA Restricted Certificate
presented for registration in the name of a Plan, or a trustee of any Plan or
any other person, directly or indirectly, acting on behalf of any such Plan, a
representation satisfactory to the Trustee and the Securities Administrator to
the effect that neither the purchase or holding of such ERISA Restricted
Certificate nor the servicing, management and operation of the Trust Fund will
result in any prohibited transactions under ERISA or Section 4975 of the Code
which will not be covered under Prohibited Transactions Class Exemption ("PTCE")
00-00, XXXX 00-0, XXXX 91-38, XXXX 00-00, XXXX 96-23 or some other applicable
exemption and will not subject the Trustee, the Securities Administrator, any
Servicer, the Master Servicer or the Depositor to any fiduciary duties under
ERISA in addition to those expressly undertaken in this Agreement, which in the
case of a Book-Entry Certificate shall be deemed to have been represented by the
Transferee. Notwithstanding anything else to the contrary herein, any purported
transfer of an ERISA Restricted Certificate to or on behalf of any Plan without
satisfying the above conditions shall be void and of no effect. None of the
Trustee, the Securities Administrator or the Master Servicer shall be required
to monitor, determine or inquire as to compliance with the transfer restrictions
with respect to any ERISA Restricted Certificate that is a Book-Entry
Certificate, and none of the Trustee, the Securities Administrator or the Master
Servicer shall have any liability for transfers of any such Book-Entry
Certificates made through the book-entry facilities of any Depository or between
or among participants of the Depository or Certificate Owners made in violation
of the transfer restrictions set forth herein. None of the Trustee, the
Securities Administrator or the Master Servicer shall be under any liability to
any Person for any registration of transfer of any ERISA Restricted Certificate
that is in fact not permitted by this Section 6.02(b) or for making any payments
due on such Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement. The Trustee and
the Securities Administrator shall be entitled, but not obligated, to recover
from any Holder of any ERISA Restricted Certificate that was in fact a Plan or a
Person, directly or indirectly, acting on behalf of any Plan at the time it
became a Holder or, at such subsequent time as it became a Plan or Person acting
on behalf of a Plan, all payments made on such ERISA Restricted Certificate at
and after either such time. Any such payments so recovered by the Trustee or the
Securities Administrator shall be paid and delivered by the Trustee or the
Securities Administrator to the last preceding Holder of such Certificate that
is not a Plan or Person acting on behalf of a Plan.
(c) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Ownership Interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Residual Certificate
unless, in addition to the certificates required to be delivered to
the Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "Transfer Affidavit") of the initial
owner or the proposed transferee in the form attached hereto as
Exhibit D.
(iii) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall agree (A) to obtain a Transfer Affidavit
from any other Person to whom such Person attempts to Transfer its
Ownership Interest in a Residual Certificate, (B) to obtain a Transfer
Affidavit from any Person for whom such Person is acting as nominee,
trustee or agent in connection with any Transfer of a Residual
Certificate and (C) not to Transfer its Ownership Interest in a
Residual Certificate or to cause the Transfer of an Ownership Interest
in a Residual Certificate to any other Person if it has actual
knowledge that such Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of
this Section 6.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Residual Certificate in violation of the
provisions of this Section 6.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Residual
Certificate. The Trustee shall be under no liability to any Person for
any registration of Transfer of a Residual Certificate that is in fact
not permitted by Section 6.02(b) and this Section 6.02(c) or for
making any payments due on such Certificate to the Holder thereof or
taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit and Transferor
Certificate. The Trustee shall be entitled but not obligated to
recover from any Holder of a Residual Certificate that was in fact not
a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Residual Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of
such Certificate.
(v) The Master Servicer shall make available within 60 days of
written request from the Trustee, all information necessary to compute
any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Residual Certificate to any
Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set forth in
this Section 6.02(c) shall cease to apply (and the applicable portions of the
legend on a Residual Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel addressed to
the Trustee, which Opinion of Counsel shall not be an expense of the Trustee,
the Securities Administrator, the Seller, any Servicer or the Master Servicer to
the effect that the elimination of such restrictions will not cause the REMIC I,
REMIC II and/or REMIC III, as applicable, to fail to qualify as a REMIC at any
time that the Certificates are outstanding or result in the imposition of any
tax on the Trust Fund, a Certificateholder or another Person. Each Person
holding or acquiring any Ownership Interest in a Residual Certificate hereby
consents to any amendment of this Agreement that, based on an Opinion of Counsel
furnished to the Trustee, is reasonably necessary (a) to ensure that the record
ownership of, or any beneficial interest in, a Residual Certificate is not
transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the Transfer of a Residual
Certificate that is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 6.02 shall not be an expense of the Trust
Fund, the Trustee, the Depositor, the Seller, the Securities Administrator, the
Master Servicer or any Servicer.
Section 6.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Master Servicer, the Securities Administrator and the Trustee such security
or indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Trustee that such Certificate has been acquired by
a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and Percentage Interest. In
connection with the issuance of any new Certificate under this Section 6.03, the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Any replacement Certificate issued pursuant to this Section 6.03 shall
constitute complete and indefeasible evidence of ownership in the Trust Fund, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time. All Certificates surrendered to the Trustee under
the terms of this Section 6.03 shall be canceled and destroyed by the Trustee in
accordance with its standard procedures without liability on its part.
Section 6.04. PERSONS DEEMED OWNERS.
The Securities Administrator, the Trustee and any agent of the
Securities Administrator or the Trustee may treat the person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Securities Administrator, the Trustee nor any agent
of the Securities Administrator or the Trustee shall be affected by any notice
to the contrary.
Section 6.05. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES.
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor or the Master Servicer shall request such information in writing from
the Trustee, then the Trustee shall, within ten Business Days after the receipt
of such request, provide the Depositor, the Master Servicer or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of the Trust Fund held by the Trustee, if any. The Depositor
and every Certificateholder, by receiving and holding a Certificate, agree that
the Trustee shall not be held accountable by reason of the disclosure of any
such information as to the list of the Certificateholders hereunder, regardless
of the source from which such information was derived.
Section 6.06. BOOK-ENTRY CERTIFICATES.
The Regular Certificates (other than the Class B-IO Certificates),
upon original issuance, shall be issued in the form of one or more typewritten
Certificates representing the Book-Entry Certificates, to be delivered to the
Depository or its agent by or on behalf of the Depositor. Such Certificates
shall initially be registered on the Certificate Register in the name of the
Depository or its nominee, and no Certificate Owner of such Certificates will
receive a definitive certificate representing such Certificate Owner's interest
in such Certificates, except as provided in Section 6.08. Unless and until
definitive, fully registered Certificates ("Definitive Certificates") have been
issued to the Certificate Owners of such Certificates pursuant to Section 6.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the Securities Administrator and the Trustee may
deal with the Depository and the Depository Participants for all purposes
(including the making of distributions) as the authorized representative of the
respective Certificate Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be transferred
by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 6.08, the Depository will make
book-entry transfers among the Depository Participants and receive and transmit
distributions of principal and interest on the related Certificates to such
Depository Participants;
(e) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of any Class of Certificates, such direction or consent may be
given by Certificate Owners (acting through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing the requisite percentage
of principal amount of such Class of Certificates.
Section 6.07. NOTICES TO DEPOSITORY.
Whenever any notice or other communication is required to be given to
Certificateholders of a Class with respect to which Book-Entry Certificates have
been issued, unless and until Definitive Certificates shall have been issued to
the related Certificate Owners, the Trustee shall give all such notices and
communications to the Depository.
Section 6.08. DEFINITIVE CERTIFICATES.
If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depositor or the Depository advises the Trustee that the
Depository is no longer willing or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Depositor is unable to locate a qualified successor, (b)
the Depositor, at its sole option, advises the Trustee that it elects to
terminate the book-entry system with respect to such Certificates through the
Depository or (c) after the occurrence and continuation of an Event of Default,
Certificate Owners of such Book-Entry Certificates having not less than 51% of
the Voting Rights evidenced by any Class of Book-Entry Certificates advise the
Trustee and the Depository in writing through the Depository Participants that
the continuation of a book-entry system with respect to Certificates of such
Class through the Depository (or its successor) is no longer in the best
interests of the Certificate Owners of such Class, then the Trustee shall notify
all Certificate Owners of such Certificates, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to applicable Certificate Owners requesting the same. The Depositor shall
provide the Trustee with an adequate inventory of certificates to facilitate the
issuance and transfer of Definitive Certificates. Upon surrender to the Trustee
of any such Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee shall countersign
and deliver such Definitive Certificates. Neither the Depositor nor the Trustee
shall be liable for any delay in delivery of such instructions and each may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of such Definitive Certificates, all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of such Definitive Certificates as Certificateholders hereunder.
Section 6.09. MAINTENANCE OF OFFICE OR AGENCY.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies in New York City or at the Corporate
Trust Office (if not in New York City) where Certificates may be surrendered for
registration of transfer or exchange. The Trustee initially designates its
Corporate Trust Office in Dallas, Texas, as the office for such purposes. The
Trustee will give prompt written notice to the Certificateholders of any change
in such location of any such office or agency.
ARTICLE VII.
THE DEPOSITOR, THE MASTER SERVICER, THE EMC SERVICER AND THE SELLER
Section 7.01. RESPECTIVE LIABILITIES OF THE DEPOSITOR, THE MASTER
SERVICER, THE EMC SERVICER AND THE SELLER.
The Depositor, the Master Servicer, the EMC Servicer and the Seller
shall each be liable in accordance herewith only to the extent of the
obligations specifically and respectively imposed upon and undertaken by them
herein.
Section 7.02. MERGER OR CONSOLIDATION OF THE DEPOSITOR, THE MASTER
SERVICER, THE EMC SERVICER OR THE SELLER.
The Depositor, the Master Servicer, the EMC Servicer and the Seller
will each keep in full effect its existence, rights and franchises as a
corporation under the laws of the United States or under the laws of one of the
States thereof and will each obtain and preserve its qualification to do
business as a foreign 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 respective duties under this Agreement.
Any Person into which the Depositor, the Master Servicer, the EMC
Servicer or the Seller may be merged or consolidated, or any Person resulting
from any merger or consolidation to which the Depositor, the Master Servicer,
the EMC Servicer or the Seller shall be a party, or any person succeeding to the
business of the Depositor, the Master Servicer, the EMC Servicer or the Seller
shall be the successor of the Depositor, the Master Servicer, the EMC Servicer
or the Seller, as the case may be, hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided that the successor or surviving
Person to the Master Servicer or the EMC Servicer shall be qualified to sell
mortgage loans to, and to service mortgage loans on behalf of, Xxxxxx Xxx or
Xxxxxxx Mac.
Section 7.03. INDEMNIFICATION OF THE TRUSTEE, THE MASTER SERVICER,
THE SECURITIES ADMINISTRATOR AND OTHERS.
(a) The Master Servicer agrees to indemnify the Indemnified Persons
(other than the Master Servicer) for, and to hold them harmless against, any
loss, liability or expense (except as otherwise provided herein with respect to
expenses) (including reasonable legal fees and disbursements of counsel)
incurred on their part that may be sustained in connection with, arising out of,
or relating to this Agreement or the Certificates (i) related to the Master
Servicer's failure to perform its duties in compliance with this Agreement
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) or (ii) incurred by reason of the Master Servicer's
willful misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder, provided, in each case, that with respect to any such claim or legal
action (or pending or threatened claim or legal action), an Indemnified Person
shall have given Master Servicer and the Depositor written notice thereof
promptly after a Responsible Officer of such Indemnified Person shall have with
respect to such claim or legal action actual knowledge thereof. The Indemnified
Person's failure to give such notice shall not affect the Indemnified Person's
right to indemnification hereunder. This indemnity shall survive the resignation
or removal of the Trustee, the Master Servicer or the Securities Administrator
and the termination of this Agreement.
(b) The Trust will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise indemnified by the
Master Servicer that is referred to in Subsection (a) above.
(c) The Securities Administrator agrees to indemnify the Indemnified
Persons (other than the Securities Administrator) for, and to hold them harmless
against, any loss, liability or expense (except as otherwise provided herein
with respect to expenses) (including reasonable legal fees and disbursements of
counsel) incurred on their part (i) in connection with, arising out of, or
relating to the Securities Administrator's failure to file a Form 10-K in
accordance with Section 3.18, (ii) by reason of the Securities Administrator's
willful misfeasance, bad faith or gross negligence in the performance of its
obligations pursuant to Section 3.18 or (iii) by reason of the Securities
Administrator's reckless disregard of its obligations pursuant to Section 3.18,
(including, without limitation, in respect of any powers of attorney furnished
to the Securities Administrator) provided, in each case, that with respect to
any such claim or legal action (or pending or threatened claim or legal action),
an Indemnified Person shall have given the Securities Administrator written
notice thereof promptly after such Indemnified Person shall have with respect to
such claim or legal action knowledge thereof. The Indemnified Person's failure
to give such notice shall not affect the Indemnified Person's right to
indemnification hereunder. This indemnity shall survive the resignation or
removal of the Trustee, the Master Servicer or the Securities Administrator and
the termination of this Agreement.
Section 7.04. LIMITATION ON LIABILITY OF THE DEPOSITOR, THE SELLER,
THE MASTER SERVICER AND OTHERS.
None of the Depositor, the Seller, the Master Servicer or the EMC
Servicer, the Custodian or any of the directors, officers, employees or agents
of the Depositor, the Seller, the Master Servicer, the Custodian or the EMC
Servicer (each, a "Protected Party") shall be under any liability to any
Indemnified Person, the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided that this provision shall
not protect any such Protected Party against any breach of representations or
warranties made by it herein or protect any such Protected Party from any
liability that would otherwise be imposed by reasons of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder or, in the case of the Master
Servicer, its liability pursuant to Section 7.03(a). The Protected Parties may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Protected
Parties shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense incurred in connection with any audit, controversy or
judicial proceeding relating to a governmental taxing authority or any legal
action relating to this Agreement or the Certificates other than any loss,
liability or expense related to a specific Mortgage Loan or Mortgage Loans,
except any loss, liability or expense shall be otherwise reimbursable pursuant
to this Agreement and any loss, liability or expense incurred by reason of such
Protected Party's willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder or by reason of its reckless disregard of
its obligations and duties hereunder. None of the Depositor, the Seller, the
Master Servicer, the Custodian or the EMC Servicer shall be under any obligation
to appear in, prosecute or defend any legal action that is not incidental to its
respective duties hereunder and that in its opinion may involve it in any
expense or liability; provided that any of the Depositor, the Seller, the Master
Servicer or the EMC Servicer may, in its discretion undertake any such action
that it may deem necessary or desirable in respect of this Agreement and the
rights and duties of the parties hereto and interests of the Trustee and the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be, expenses, costs and
liabilities of the Trust Fund, and the Depositor, the Seller, the Master
Servicer and the EMC Servicer shall be entitled to be reimbursed therefor out of
the Master Servicer Collection Account as provided by Section 4.03 and out of
the Distribution Account as provided in Section 4.05 hereof.
Section 7.05. LIMITATION ON RESIGNATION OF MASTER SERVICER AND THE
EMC MASTER SERVICER.
Neither the Master Servicer nor the EMC Servicer shall resign from the
obligations and duties hereby imposed on it except upon (x) determination that
its duties hereunder are no longer permissible under applicable law or (y) in
the case of the Master Servicer, compliance with the following requirements: (i)
the Master Servicer has proposed a successor to the Trustee and the Trustee has
consented thereto (such consent not to be withheld unreasonably; (ii) the
successor is qualified to sell mortgage loans to, and to service mortgage loans
on behalf of, Xxxxxx Xxx or Xxxxxxx Mac; and (iii) each Rating Agency shall have
delivered to the Trustee written confirmation that the appointment of such
successor will not result in the qualification, reduction or withdrawal of the
then-current ratings assigned by such Rating Agency to any of the Certificates.
Any such determination permitting the resignation of the Master Servicer shall
be evidenced by an Opinion of Counsel to such effect delivered to the Trustee.
No resignation by the Master Servicer shall become effective until the Trustee
or a successor servicer to such appointment shall have assumed the Master
Servicer's responsibilities, duties, liabilities and obligations hereunder.
Section 7.06. ERRORS AND OMISSIONS INSURANCE; FIDELITY BONDS.
The Master Servicer shall, for so long as it acts as a successor
servicer under a Servicing Agreement, obtain and maintain in force (a) a policy
or policies of insurance covering errors and omissions in the performance of its
obligations as successor servicer thereunder, and (b) a fidelity bond in respect
of its officers, employees and agents. Each such policy or policies and bond
shall, together, comply with the requirements from time to time of Xxxxxx Mae or
Xxxxxxx Mac for persons performing servicing for mortgage loans purchased by
Xxxxxx Mae or Xxxxxxx Mac. In the event that any such policy or bond ceases to
be in effect, the Master Servicer shall use its reasonable best efforts to
obtain a comparable replacement policy or bond from an insurer or issuer,
meeting the requirements set forth above as of the date of such replacement.
ARTICLE VIII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 8.01. EVENTS OF DEFAULT.
"EVENT OF DEFAULT," wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer or the EMC Servicer to
deposit in the Master Servicer Collection Account the amounts required
pursuant to this Agreement or by the Master Servicer to remit to the
Trustee any payment, including any Advance, required to be made
pursuant to this Agreement, which failure shall continue unremedied
for five Business Days after the date on which Applicable Written
Notice of such failure shall have been given to the Master Servicer or
the EMC Servicer, as applicable; or
(ii) any failure by the Master Servicer or the EMC Servicer to
observe or perform in any material respect any other of the covenants
or agreements on the part of the Master Servicer or the EMC Servicer,
as applicable, contained in this Agreement or any breach of a
representation or warranty by the Master Servicer or the EMC Servicer,
which failure or breach shall continue unremedied for a period of 60
days (or, in the case of a breach of its obligation to provide a
Master Servicer Certification pursuant to Section 3.18, 30 days) after
the date on which Applicable Written Notice of such failure shall have
been given to the Master Servicer or the EMC Servicer, as applicable;
or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer or the EMC Servicer and such decree or
order shall have remained in force undischarged or unstayed for a
period of 60 consecutive days; or
(iv) the Master Servicer or the EMC Servicer shall consent to the
appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Master Servicer or the EMC Servicer,
as applicable, or all or substantially all of the property of the
Master Servicer or the EMC Servicer, as applicable;
(v) the Master Servicer or the EMC Servicer shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of, or commence a voluntary case
under, any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations, or
(vi) in the case of the EMC Servicer, failure by the EMC Servicer
to duly perform, within the required time period, its obligations
under Article III of Exhibit K, which failure continues unremedied for
a period of thirty (30) days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given
to EMC Servicer by the Master Servicer.
If an Event of Default shall occur, then, and in each and every such
case, so long as such Event of Default shall not have been remedied, (i) in the
case of the Master Servicer, the Trustee may, and, at the direction of the
Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates, the Trustee shall, by notice in writing to the
Master Servicer (with a copy to each Rating Agency) and (ii) in the case of the
EMC Servicer, the Master Servicer may, by notice in writing to the EMC Servicer
(with a copy to each Rating Agency), terminate all of the rights and obligations
of the Master Servicer or the EMC Servicer, as applicable, under this Agreement
and in and to the Mortgage Loans and the proceeds thereof, other than its rights
as a Certificateholder hereunder. On or after the receipt by the Master Servicer
of such written notice, all authority and power of the Master Servicer
hereunder, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the EMC Servicer, as successor Master Servicer or, if the
EMC Servicer is unable or unwilling to act as such successor Master Servicer,
the Trustee, or any successor appointed pursuant to Section 8.02 (a "Successor
Master Servicer"). Such Successor Master Servicer shall thereupon make any
Advance described in Section 5.01 hereof and payments of Compensating Interest
pursuant to Section 5.02 hereof, subject, in the case of the Trustee, to Section
8.02. The Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the terminated Master Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
any Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Master Servicer to pay amounts owed pursuant to Article IX.
The Master Servicer and the EMC Servicer each agree to cooperate with
the Trustee, and, in the case of the EMC Servicer, the Master Servicer, in
effecting the termination of the Master Servicer's or the EMC Servicer's
responsibilities and rights hereunder (including Exhibit K), including, without
limitation, the transfer to the applicable Successor Master Servicer or the
Master Servicer, as applicable, of all cash amounts which shall at the time be
credited to the Master Servicer Collection Account or the Protected Account
maintained pursuant to Section 1.05 of Exhibit K, as applicable, or thereafter
be received with respect to the applicable Mortgage Loans. The Trustee shall
promptly notify the Rating Agencies of the occurrence of an Event of Default
with respect to the Master Servicer actually known to a Responsible Officer of
the Trustee.
Notwithstanding any termination of the activities of the Master
Servicer or the EMC Servicer hereunder, the Master Servicer or the EMC Servicer
shall be entitled to receive, out of any late collection of a Scheduled Payment
on a Mortgage Loan that was due prior to the notice terminating the Master
Servicer's or EMC Servicer's rights and obligations as Master Servicer or
Servicer hereunder, as applicable, and received after such notice, that portion
thereof to which the Master Servicer or the EMC Service would have been entitled
pursuant to Sections 4.03 and 4.05 or Exhibit K, as applicable, and to receive
any other amounts payable to the Master Servicer or the EMC Servicer hereunder
the entitlement to which arose prior to the termination of its activities
hereunder.
Section 8.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 8.01 hereof (unless, the EMC Servicer becomes
Successor Master Servicer as specified in Section 8.01) the Trustee shall
automatically become the successor to the Master Servicer with respect to the
transactions set forth or provided for herein and after a transition period (not
to exceed 90 days), shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof and applicable law including, if applicable, the obligation to
make Advances pursuant to Section 5.01 hereof, and payments of Compensating
Interest pursuant to Section 5.02 hereof, except as otherwise provided herein.
Effective on the date of such notice of termination, as compensation therefor,
the Trustee shall be entitled to all fees, costs and expenses relating to the
Mortgage Loans that the Master Servicer would have been entitled to if it had
continued to act hereunder, provided, however, that the Trustee shall not be (i)
liable for any losses pursuant to Section 3.09 or as a result of any acts or
omissions of the Master Servicer, (ii) obligated to make Advances if it is
prohibited from doing so under applicable law, (iii) obligated to effectuate any
repurchases or substitutions of Mortgage Loans hereunder, including pursuant to
Section 2.02 or 2.03 hereof, (iv) responsible for expenses of the Master
Servicer pursuant to Section 2.03 or (v) deemed to have made any representations
and warranties hereunder, including pursuant to Section 2.03. Notwithstanding
the foregoing, the Trustee may, if it shall be unwilling to so act, or shall, if
it is prohibited by applicable law from making Advances pursuant to Section 5.01
hereof, or if it is otherwise unable to so act, appoint, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution the appointment of which does not adversely affect the then current
rating of the Certificates by each Rating Agency as the successor to the Master
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Master Servicer hereunder. Any Successor Master
Servicer shall (i) be an institution that is a Xxxxxx Mae and Xxxxxxx Mac
approved seller/servicer in good standing, that has a net worth of at least
$15,000,000 and (ii) be willing to act as successor servicer of any Mortgage
Loans under any Servicing Agreement with respect to which the original Servicer
has been terminated as servicer, and shall have executed and delivered to the
Depositor and the Trustee an agreement accepting such delegation and assignment,
that contains an assumption by such Person of the rights, powers, duties,
responsibilities, obligations and liabilities of the Master Servicer (other than
any liabilities of the Master Servicer hereof incurred prior to termination of
the Master Servicer under Section 8.01 or as otherwise set forth herein), with
like effect as if originally named as a party to this Agreement, provided that
each Rating Agency shall have acknowledged in writing that its rating of the
Certificates in effect immediately prior to such assignment and delegation will
not be qualified or reduced as a result of such assignment and delegation. If
the Trustee assumes the duties and responsibilities of the Master Servicer in
accordance with this Section 8.02, the Trustee shall not resign as Master
Servicer until a Successor Master Servicer has been appointed and has accepted
such appointment. Pending appointment of a successor to the Master Servicer
hereunder, the Trustee, unless the Trustee is prohibited by law from so acting,
shall, subject to Section 3.04 hereof, act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans or otherwise as it and such successor shall agree; provided that
no such compensation shall be in excess of that permitted the Master Servicer
hereunder. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
Neither the Trustee nor any other Successor Master Servicer shall be deemed to
be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Master Servicer to deliver or
provide, or any delay in delivering or providing, any cash, information,
documents or records to it.
The costs and expenses of the Trustee and the Successor Master
Servicer in connection with the termination of the Master Servicer, appointment
of a Successor Master Servicer and, if applicable, any transfer of servicing,
including, without limitation, all costs and expenses associated with the
complete transfer of all servicing data and the completion, correction or
manipulation of such servicing data as may be required by the Trustee to correct
any errors or insufficiencies in the servicing data or otherwise to enable the
Trustee or the Successor Master Servicer to service the related Mortgage Loans
properly and effectively, to the extent not paid by the terminated Master
Servicer, shall be payable to the Trustee and the Successor Master Servicer
pursuant to Section 9.05.
Any successor to the Master Servicer as successor servicer under any
Servicing Agreement shall give notice to the applicable Mortgagors of such
change of servicer and shall, during the term of its service as successor
servicer maintain in force the policy or policies that the Master Servicer is
required to maintain pursuant to Section 7.06.
Section 8.03. NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any termination of or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default with
respect to the Master Servicer, the Trustee shall transmit by mail to all
Certificateholders notice of each such Event of Default hereunder actually known
to a Responsible Officer of the Trustee, unless such Event of Default shall have
been cured or waived.
ARTICLE IX.
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 9.01. DUTIES OF TRUSTEE AND SECURITIES ADMINISTRATOR.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing or waiver of all Events of Default which may have occurred, and
the Securities Administrator each undertake to perform such duties and only such
duties as are specifically set forth in this Agreement as duties of the Trustee
and the Securities Administrator, respectively. If an Event of Default has
occurred and has not been cured or waived, the Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and the same degree of
care and skill in their exercise, as a prudent person would exercise under the
circumstances in the conduct of such Person's own affairs.
(b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee or the Securities Administrator pursuant
to any provision of this Agreement, the Trustee or the Securities Administrator,
respectively, shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that neither the Trustee nor the
Securities Administrator shall be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Master Servicer; provided, further, that neither the
Trustee nor the Securities Administrator shall be responsible for the accuracy
or verification of any calculation provided to it pursuant to this Agreement.
(c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 5.04 and 10.01 herein based
solely on the applicable Remittance Report.
(d) No provision of this Agreement shall be construed to relieve the
Trustee or the Securities Administrator from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing or waiver of all such Events of Default which may have occurred
with respect to the Trustee and at all times with respect to the
Securities Administrator, the duties and obligations of the Trustee
and the Securities Administrator shall be determined solely by the
express provisions of this Agreement, neither the Trustee nor the
Securities Administrator shall be liable except for the performance of
their respective duties and obligations as are specifically set forth
in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee or the Securities
Administrator and, in the absence of bad faith on the part of the
Trustee or the Securities Administrator, respectively, the Trustee or
the Securities Administrator, respectively, may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Trustee or the Securities Administrator, respectively, and conforming
to the requirements of this Agreement;
(ii) Neither the Trustee nor the Securities Administrator shall
be liable for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee or an officer or
officers of the Securities Administrator, respectively, unless it
shall be proved that the Trustee or the Securities Administrator,
respectively, was negligent in ascertaining the pertinent facts;
(iii) Neither the Trustee nor the Securities Administrator shall
be liable with respect to any action taken, suffered or omitted to be
taken by it in good faith in accordance with the directions of the
Holders of Certificates evidencing not less than 25% of the aggregate
Voting Rights of the Certificates, if such action or non-action
relates to the time, method and place of conducting any proceeding for
any remedy available to the Trustee or the Securities Administrator,
respectively, or exercising any trust or other power conferred upon
the Trustee or the Securities Administrator, respectively, under this
Agreement;
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default or Event of Default
unless a Responsible Officer of the Trustee shall have actual
knowledge thereof. In the absence of such notice, the Trustee may
conclusively assume there is no such default or Event of Default;
(v) The Trustee shall not in any way be liable by reason of any
insufficiency in any Account held by or in the name of Trustee unless
it is determined by a court of competent jurisdiction that the
Trustee's gross negligence or willful misconduct was the primary cause
of such insufficiency (except to the extent that the Trustee is
obligor and has defaulted thereon);
(vi) Anything in this Agreement to the contrary notwithstanding,
in no event shall the Trustee or the Securities Administrator be
liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if
the Trustee or the Securities Administrator, respectively, has been
advised of the likelihood of such loss or damage and regardless of the
form of action; and
(vii) None of the Securities Administrator, the Master Servicer,
any Servicer, the Seller, the Depositor or the Trustee shall be
responsible for the acts or omissions of the others, it being
understood that this Agreement shall not be construed to render them
partners, joint venturers or agents of one another.
Neither the Trustee nor the Securities Administrator shall be required
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it, and none of the provisions contained in this Agreement
shall in any event require the Trustee or the Securities Administrator to
perform, or be responsible for the manner of performance of, any of the
obligations of the Master Servicer hereunder or under the applicable Servicing
Agreements.
(e) All funds received by the Trustee and required to be deposited in
the Distribution Account pursuant to this Agreement will be promptly so
deposited by the Trustee.
Section 9.02. CERTAIN MATTERS AFFECTING THE TRUSTEE AND THE
SECURITIES ADMINISTRATOR.
(a) Except as otherwise provided in Section 9.01:
(i) The Trustee and the Securities Administrator may rely and
shall be protected in acting or refraining from acting in reliance on
any resolution or certificate of the Seller or the Master Servicer or
any Servicer, any certificates of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(ii) The Trustee and the Securities Administrator may consult
with counsel or accountants and any advice of such counsel or
accountants or any Opinion of Counsel shall be full and complete
authorization and protection with respect to any action taken or
suffered or omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;
(iii) Neither the Trustee nor the Securities Administrator shall
be under any obligation to exercise any of the trusts or powers vested
in it by this Agreement, other than its obligation to give notices
pursuant to this Agreement, or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or
direction of any of the Certificateholders pursuant to the provisions
of this Agreement, unless such Certificateholders shall have offered
to the Trustee or the Securities Administrator, as applicable,
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby. Nothing
contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge (which has not
been cured or waived), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and
skill in their exercise, as a prudent person would exercise under the
circumstances in the conduct of his own affairs;
(iv) Prior to the occurrence of an Event of Default hereunder and
after the curing or waiver of all Events of Default which may have
occurred with respect to the Trustee and at all times with respect to
the Securities Administrator, neither the Trustee nor the Securities
Administrator shall be liable in its individual capacity for any
action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(v) Neither the Trustee nor the Securities Administrator shall be
bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing to do so by Holders of
Certificates evidencing not less than 25% of the aggregate Voting
Rights of the Certificates and provided that the payment within a
reasonable time to the Trustee or the Securities Administrator, as
applicable, of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion
of the Trustee or the Securities Administrator, as applicable,
reasonably assured to the Trustee or the Securities Administrator, as
applicable, by the security afforded to it by the terms of this
Agreement. The Trustee or the Securities Administrator may require
reasonable indemnity against such expense or liability as a condition
to taking any such action. The reasonable expense of every such
examination shall be paid by the Certificateholders requesting the
investigation;
(vi) The Trustee and the Securities Administrator may execute any
of the trusts or powers hereunder or perform any duties hereunder
either directly or through Affiliates, agents or attorneys; provided,
however, that the Trustee may not appoint any agent other than the
Custodian to perform its custodial functions with respect to the
Mortgage Files or any paying agent other than the Securities
Administrator to perform any paying agent functions under this
Agreement without the express written consent of the Master Servicer,
which consent will not be unreasonably withheld or delayed. Neither
the Trustee nor the Securities Administrator shall be liable or
responsible for the misconduct or negligence of any of the Trustee's
or the Securities Administrator's agents or attorneys or a custodian
or paying agent appointed hereunder by the Trustee or the Securities
Administrator with due care and, when required, with the consent of
the Master Servicer;
(vii) Should the Trustee or the Securities Administrator deem the
nature of any action required on its part, other than a payment or
transfer under Section 4.02 hereof, to be unclear, the Trustee or the
Securities Administrator, respectively, may require prior to such
action that it be provided by the Depositor with reasonable further
instructions; the right of the Trustee or the Securities Administrator
to perform any discretionary act enumerated in this Agreement shall
not be construed as a duty, and neither the Trustee nor the Securities
Administrator shall be accountable for other than its gross negligence
or willful misconduct in the performance of any such act;
(viii) Neither the Trustee nor the Securities Administrator shall
be required to give any bond or surety with respect to the execution
of the trust created hereby or the powers granted hereunder, except as
provided in Subsection 9.07; and
(ix) Neither the Trustee nor the Securities Administrator shall
have any duty to conduct any affirmative investigation as to the
occurrence of any condition requiring the repurchase of any Mortgage
Loan by any Person pursuant to this Agreement, or the eligibility of
any Mortgage Loan for purposes of this Agreement.
Section 9.03. TRUSTEE AND SECURITIES ADMINISTRATOR NOT LIABLE FOR
CERTIFICATES OR MORTGAGE LOANS
The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Trustee on the Certificates) shall be
taken as the statements of the Depositor, and neither the Trustee nor the
Securities Administrator shall have any responsibility for their correctness.
Neither the Trustee nor the Securities Administrator makes any representations
as to the validity or sufficiency of the Certificates (other than the signature
and countersignature of the Trustee on the Certificates) or with respect to any
Mortgage Loan except as expressly provided in Sections 2.02 and 2.06 hereof;
provided, however, that the foregoing shall not relieve the Custodian of the
obligation to review the Mortgage Files pursuant to Sections 2.02 and 2.05 and
the Custodial Agreement. The Trustee's signature and countersignature (or
countersignature of its agent) on the Certificates shall be solely in its
capacity as Trustee and shall not constitute the Certificates an obligation of
the Trustee in any other capacity. Neither the Trustee or the Securities
Administrator shall be accountable for the use or application by the Depositor
of any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any funds paid to the Depositor with respect to the
Mortgage Loans. Subject to the provisions of Section 2.06, neither the Trustee
nor the Securities Administrator shall be responsible for the legality or
validity of this Agreement or any document or instrument relating to this
Agreement, the validity of the execution of this Agreement or of any supplement
hereto or instrument of further assurance, or the validity, priority, perfection
or sufficiency of the security for the Certificates issued hereunder or intended
to be issued hereunder. Neither the Trustee nor the Securities Administrator
shall at any time have any responsibility or liability for or with respect to
the legality, validity and enforceability of any Mortgage or any Mortgage Loan,
or the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
Fund or its ability to generate the payments to be distributed to
Certificateholders, under this Agreement. Neither the Trustee nor the Securities
Administrator shall have any responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 9.04. TRUSTEE AND SECURITIES ADMINISTRATOR MAY OWN
CERTIFICATES.
Each of the Trustee and the Securities Administrator in its individual
capacity or in any capacity other than as Trustee or Securities Administrator
hereunder may become the owner or pledgee of any Certificates with the same
rights it would have if it were not the Trustee or the Securities Administrator,
as applicable, and may otherwise deal with the parties hereto.
Section 9.05. TRUSTEE'S AND SECURITIES ADMINISTRATOR'S FEES AND
EXPENSES.
The Trustee and the Securities Administrator shall be entitled to the
Trustee Fee and the Securities Administrator Fee, respectively, which shall be
paid by the Master Servicer out of funds received by it hereunder in respect of
the Master Servicing Fee. In addition, the Trustee and the Securities
Administrator shall be indemnified and held harmless by the Trust Fund (and
accordingly will be entitled to recover from the Master Servicer Collection
Account pursuant to Section 4.03(b) and from comparable funds in a comparable
order provided to the Trustee and held in the Distribution Account) for all
liabilities, losses, costs, reasonable out-of-pocket expenses, disbursements and
advances and the expenses of the Trustee and the Securities Administrator,
respectively, in connection with the performance of its duties and obligations
and the exercise of its rights under this Agreement, (including exercise of such
party's rights under the Assumption Agreements and the Servicing Agreements),
the Custodial Agreement, the Certificates, the Mortgage Loans, any Event of
Default, any breach of this Agreement or any claim or legal action (including
any pending or threatened claim or legal action) incurred or made by the Trustee
in the administration of the trusts hereunder or the Securities Administrator,
respectively, (including the reasonable compensation, expenses and disbursements
of its counsel) except any such liability, loss, cost, expense, disbursement or
advance as may arise from its negligence, bad faith or intentional misconduct.
If such funds are insufficient therefor, any such insufficiency shall be
recoverable from the Depositor. Such compensation and reimbursement obligation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust. The indemnification set forth herein shall survive
the resignation or removal of the Trustee or the Securities Administrator and
the termination of this Agreement.
Section 9.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE AND SECURITIES
ADMINISTRATOR.
The Trustee and any successor Trustee and the Securities Administrator
and any successor Securities Administrator shall during the entire duration of
this Agreement be a state bank or trust company or a national banking
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus and undivided profits of at least
$40,000,000 or, in the case of a successor Trustee, $50,000,000, subject to
supervision or examination by federal or state authority and, in the case of the
Trustee, rated "BBB" or higher by each of Standard & Poor's and Fitch and "Baa2"
or higher by Moody's with respect to any outstanding long-term unsecured
unsubordinated debt, and, in the case of a successor Trustee or successor
Securities Administrator other than pursuant to Section 9.10, rated in one of
the two highest long-term debt categories of, or otherwise acceptable to, each
of the Rating Agencies. The Trustee shall not be an Affiliate of the Master
Servicer. If the Trustee publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 9.06 the combined capital and
surplus of such entity shall be deemed to be its total equity capital (combined
capital and surplus) as set forth in its most recent report of condition so
published. In case at any time the Trustee or the Securities Administrator, as
applicable, shall cease to be eligible in accordance with the provisions of this
Section 9.06, the Trustee or the Securities Administrator shall resign
immediately in the manner and with the effect specified in Section 9.08.
Section 9.07. INSURANCE.
The Trustee and the Securities Administrator, at their own expense,
shall at all times maintain and keep in full force and effect: (i) fidelity
insurance, (ii) theft of documents insurance and (iii) forgery insurance (which
may be collectively satisfied by a "Financial Institution Bond" and/or a
"Bankers' Blanket Bond"). All such insurance shall be in amounts, with standard
coverage and subject to deductibles, as are customary for insurance typically
maintained by banks or their affiliates which act as custodians for
investor-owned mortgage pools. A certificate of an officer of the Trustee or the
Securities Administrator as to the Trustee's or the Securities Administrator's,
respectively, compliance with this Section 9.07 shall be furnished to any
Certificateholder upon reasonable written request.
Section 9.08. RESIGNATION AND REMOVAL OF TRUSTEE AND SECURITIES
ADMINISTRATOR.
The Trustee and the Securities Administrator may at any time resign
and be discharged from the Trust hereby created by giving written notice thereof
to the Depositor, the Seller, the Securities Administrator (or the Trustee, if
the Securities Administrator resigns) and the Master Servicer, with a copy to
the Rating Agencies. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor trustee or successor securities
administrator, as applicable, by written instrument, in triplicate, one copy of
which instrument shall be delivered to each of the resigning trustee or
securities administrator, as applicable, and the successor trustee or securities
administrator, as applicable. If no successor trustee or successor securities
administrator shall have been so appointed and have accepted appointment within
30 days after the giving of such notice of resignation, the resigning Trustee or
Securities Administrator may petition any court of competent jurisdiction for
the appointment of a successor trustee or securities administrator.
If at any time (i) the Trustee or the Securities Administrator shall
cease to be eligible in accordance with the provisions of Section 9.06 hereof
and shall fail to resign after written request thereto by the Depositor, (ii)
the Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged as bankrupt or insolvent, or a receiver of the Trustee or the
Securities Administrator or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or the Securities
Administrator or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, or (iii)(A) a tax is imposed with respect to the
Trust Fund by any state in which the Trustee or the Securities Administrator or
the Trust Fund is located, (B) the imposition of such tax would be avoided by
the appointment of a different trustee or securities administrator and (C) the
Trustee or the Securities Administrator, as applicable fails to indemnify the
Trust Fund against such tax, then the Depositor or the Master Servicers may
remove the Trustee or the Securities Administrator, as applicable, and appoint a
successor trustee or successor securities administrator, as applicable, by
written instrument, in multiple copies, a copy of which instrument shall be
delivered to the Trustee, the Securities Administrator, the Master Servicer and
the successor trustee or successor securities administrator, as applicable.
The Holders evidencing at least 51% of the Voting Rights of each Class
of Certificates may at any time remove the Trustee or Securities Administrator
and appoint a successor trustee or securities administrator by written
instrument or instruments, in multiple copies, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered by the successor trustee or successor securities administrator to
the Master Servicer, the Trustee or Securities Administrator so removed and the
successor trustee or securities administrator so appointed. Notice of any
removal of the Trustee or Securities Administrator shall be given to each Rating
Agency by the Trustee or successor trustee.
Any resignation or removal of the Trustee or Securities Administrator
and appointment of a successor trustee or securities administrator pursuant to
any of the provisions of this Section 9.08 shall become effective upon
acceptance of appointment by the successor trustee or securities administrator
as provided in Section 9.09 hereof.
Section 9.09. SUCCESSOR TRUSTEE OR SECURITIES ADMINISTRATOR.
Any successor trustee or securities administrator appointed as
provided in Section 9.08 hereof shall execute, acknowledge and deliver to the
Depositor and to its predecessor trustee or predecessor securities
administrator, as applicable, and the Master Servicer an instrument accepting
such appointment hereunder and thereupon the resignation or removal of the
predecessor trustee or securities administrator shall become effective and such
successor trustee or securities administrator, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee or securities administrator herein.
No successor trustee or securities administrator shall accept
appointment as provided in this Section 9.09 unless at the time of such
acceptance such successor trustee or securities administrator shall be eligible
under the provisions of Section 9.07 hereof and its appointment shall not
adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee or securities
administrator as provided in this Section 9.09, the successor trustee or
securities administrator shall mail notice of the succession of such trustee or
securities administrator hereunder to all Holders of Certificates. If the
successor trustee or securities administrator fails to mail such notice within
ten days after acceptance of appointment, the Depositor shall cause such notice
to be mailed at the expense of the Trust Fund.
Section 9.10. MERGER OR CONSOLIDATION OF TRUSTEE OR SECURITIES
ADMINISTRATOR.
Any corporation, state bank or national banking association into which
the Trustee or the Securities Administrator may be merged or converted or with
which it may be consolidated or any corporation, state bank or national banking
association resulting from any merger, conversion or consolidation to which the
Trustee or the Securities Administrator shall be a party, or any corporation,
state bank or national banking association succeeding to substantially all of
the corporate trust business of the Trustee or of the business of the Securities
Administrator, shall be the successor of the Trustee or the Securities
Administrator hereunder, provided that such entity shall be eligible under the
provisions of Section 9.06 hereof without the execution or filing of any paper
or further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 9.11. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Master Servicer and the Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 9.11, such powers, duties, obligations, rights and trusts as the Master
Servicer and the Trustee may consider necessary or desirable. If the Master
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in the case an Event of Default shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 9.06 and
no notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 9.09.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee, except for the obligation of the Trustee
under this Agreement to advance funds on behalf of the Master
Servicer, shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as
Trustee hereunder or as a Successor Master Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Master Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 9.12. TAX MATTERS.
It is intended that the Trust Fund shall constitute, and that the
affairs of the Trust Fund shall be conducted so that each REMIC formed hereunder
qualifies as, a "real estate mortgage investment conduit" as defined in and in
accordance with the REMIC Provisions. In furtherance of such intention, the
Securities Administrator covenants and agrees that it shall act as agent (and
the Securities Administrator is hereby appointed to act as agent) on behalf of
the Trust Fund. The Trustee and/or the Securities Administrator, as agent on
behalf of the Trust Fund, shall do or refrain from doing, as applicable, the
following: (a) the Securities Administrator shall prepare and file, or cause to
be prepared and filed, in a timely manner, U.S. Real Estate Mortgage Investment
Conduit Income Tax Returns (Form 1066 or any successor form adopted by the
Internal Revenue Service) and prepare and file or cause to be prepared and filed
with the Internal Revenue Service and applicable state or local tax authorities
income tax or information returns for each taxable year with respect to each
such REMIC containing such information and at the times and in the manner as may
be required by the Code or state or local tax laws, regulations, or rules, and
furnish or cause to be furnished to Certificateholders the schedules, statements
or information at such times and in such manner as may be required thereby; (b)
the Securities Administrator shall apply for an employer identification number
with the Internal Revenue Service via a Form SS-4 or other comparable method for
each REMIC that is or becomes a taxable entity, and within thirty days of the
Closing Date, furnish or cause to be furnished to the Internal Revenue Service,
on Forms 8811 or as otherwise may be required by the Code, the name, title,
address, and telephone number of the person that the holders of the Certificates
may contact for tax information relating thereto, together with such additional
information as may be required by such Form, and update such information at the
time or times in the manner required by the Code for the Trust Fund; (c) the
Trustee shall make or cause to be made elections, on behalf of each REMIC formed
hereunder to be treated as a REMIC on the federal tax return of such REMIC for
its first taxable year (and, if necessary, under applicable state law); (d) the
Securities Administrator shall prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service and, if
necessary, state tax authorities, all information returns and reports as and
when required to be provided to them in accordance with the REMIC Provisions,
including without limitation, the calculation of any original issue discount
using the Prepayment Assumption; (e) the Securities Administrator shall provide
information necessary for the computation of tax imposed on the transfer of a
Residual Certificate to a Person that is not a Permitted Transferee, or an agent
(including a broker, nominee or other middleman) of a Person that is not a
Permitted Transferee, or a pass-through entity in which a Person that is not a
Permitted Transferee is the record holder of an interest (the reasonable cost of
computing and furnishing such information may be charged to the Person liable
for such tax) and the Trustee shall forward that information to the requesting
party in accordance with Treasury Regulation ss. 1.860E-2(a)(5); (f) each of the
Securities Administrator and the Trustee shall, to the extent under its control,
conduct the affairs of the Trust Fund at all times that any Certificates are
outstanding so as to maintain the status of each REMIC formed hereunder as a
REMIC under the REMIC Provisions; (g) neither the Trustee nor the Securities
Administrator shall knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status of any REMIC
formed hereunder; (h) the Trustee shall pay, from the sources specified in the
last paragraph of this Section 9.12, as directed by the Securities Administrator
in its Remittance Report, the amount of any federal, state and local taxes,
including prohibited transaction taxes as described below, imposed on any REMIC
formed hereunder prior to the termination of the Trust Fund when and as the same
shall be due and payable (but such obligation shall not prevent the Trustee, the
Securities Administrator at the written request of the Trustee, or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Securities Administrator from withholding payment of such
tax, if permitted by law, pending the outcome of such proceedings); (i) the
Trustee shall sign or cause to be signed federal, state or local income tax or
information returns or any other document prepared by the Securities
Administrator pursuant to this Section 9.12 requiring a signature thereon by the
Trustee; (j) the Securities Administrator shall maintain records relating to
each REMIC formed hereunder including but not limited to the income, expenses,
assets and liabilities of each such REMIC and adjusted basis of the Trust Fund
property determined at such intervals as may be required by the Code, as may be
necessary to prepare the foregoing returns, schedules, statements or
information; and (k) as and when necessary and appropriate, the Trustee, or at
the written request of the Trustee, the Securities Administrator, shall
represent the Trust Fund in any administrative or judicial proceedings relating
to an examination or audit by any governmental taxing authority, request an
administrative adjustment as to any taxable year of any REMIC formed hereunder,
enter into settlement agreements with any governmental taxing agency, extend any
statute of limitations relating to any tax item of the Trust Fund, and otherwise
act on behalf of each REMIC formed hereunder in relation to any tax matter
involving any such REMIC.
In order to enable each of the Trustee and the Securities
Administrator to perform its duties as set forth herein, the Depositor shall
provide, or cause to be provided, to the Trustee or the Securities Administrator
within 10 days after the Closing Date all information or data that the Trustee
or the Securities Administrator requests in writing and determines to be
relevant for tax purposes to the valuations and offering prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flows of the Certificates and the Mortgage Loans.
Thereafter, the Depositor shall provide to the Trustee or the Securities
Administrator promptly upon written request therefor, any such additional
information or data that the Trustee or the Securities Administrator may, from
time to time, request in order to enable the Trustee or the Securities
Administrator to perform its duties as set forth herein. The Depositor hereby
indemnifies each of Trustee and the Securities Administrator for any losses,
liabilities, damages, claims or expenses of the Trustee or the Securities
Administrator arising from any errors or miscalculations of the Trustee or the
Securities Administrator, as applicable, that result from any failure of the
Depositor to provide, or to cause to be provided, accurate information or data
to the Trustee or the Securities Administrator, as applicable, on a timely
basis, which indemnification shall survive the resignation or removal of the
Trustee, the Master Servicer, the EMC Servicer or the Securities Administrator
and the termination of this Agreement.
In the event that any tax is imposed on "prohibited transactions" of
any of REMIC I, REMIC II or REMIC III as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" of the Trust Fund as defined
in Section 860G(c) of the Code, on any contribution to any of REMIC I, REMIC II
or REMIC III after the startup day pursuant to Section 860G(d) of the Code, or
any other tax is imposed, including, without limitation, any federal, state or
local tax or minimum tax imposed upon any of REMIC I, REMIC II or REMIC III, and
is not paid as otherwise provided for herein, such tax shall be paid by (i) the
Trustee or the Securities Administrator, if any such other tax arises out of or
results from a breach by the Trustee or the Securities Administrator,
respectively, of any of its obligations under this Agreement, (ii) any party
hereto (other than the Trustee or the Securities Administrator) to the extent
any such other tax arises out of or results from a breach by such other party of
any of its obligations under this Agreement or (iii) in all other cases, or in
the event that any liable party hereto fails to honor its obligations under the
preceding clauses (i) or (ii), any such tax will be paid first with amounts
otherwise to be distributed to the Class R Certificateholders and the Class B-IO
Certificateholders (pro rata based on the amounts to be distributed), and second
with amounts otherwise to be distributed to all other Certificateholders in the
following order of priority: first, to the Class B Certificates, second, to the
Class M-2 Certificates, third, to the Class M-1 Certificates and fourth, to the
Class A Certificates and the Class A-IO Certificates (pro rata based on the
amounts to be distributed). Notwithstanding anything to the contrary contained
herein, to the extent that such tax is payable by the Holder of any
Certificates, the Trustee is hereby authorized to retain on any Distribution
Date, from the Holders of the Class R Certificates (and, if necessary, second,
from the Holders of the other Certificates in the priority specified in the
preceding sentence), funds otherwise distributable to such Holders in an amount
sufficient to pay such tax. Following written notification to the Securities
Administrator by the Trustee of any amount payable out of distributions to the
Certificateholders pursuant to the preceding two sentences, the Securities
Administrator shall include in its Remittance Report instructions as to
distributions to such parties taking into account the priorities described in
the second preceding sentence. The Securities Administrator, on written request
by the Trustee, agrees to promptly notify in writing the party liable for any
such tax of the amount thereof and the due date for the payment thereof.
The Trustee and the Securities Administrator each agree that, in the
event it should obtain any information necessary for the other party to perform
its obligations pursuant to this Section 9.12, it will promptly notify and
provide such information to such other party. Notwithstanding anything in this
Agreement to the contrary, the Trustee agrees that, in the event that the
Trustee obtains actual knowledge that the Securities Administrator has breached
any of its obligations pursuant to this Section 9.12, the Trustee shall perform
such obligations on its behalf to the extent that the Trustee possesses all
documents necessary to so perform and receives reasonable compensation therefor,
provided, however, that the Trustee shall not be liable for any losses resulting
from any such breach.
ARTICLE X.
TERMINATION
Section 10.01. TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL
MORTGAGE LOANS.
Subject to Section 10.03, the obligations and responsibilities of the
Depositor, the Master Servicer, the EMC Servicer, the Securities Administrator,
the Seller and the Trustee created hereby with respect to the Trust Fund shall
terminate upon the earlier of (a) the purchase by the EMC Servicer of all of the
Mortgage Loans (and REO Properties) remaining in the Trust Fund at the price
equal to the sum of (i) 100% of the Stated Principal Balance of each Mortgage
Loan (other than in respect of REO Property), (ii) accrued interest thereon at
the applicable Mortgage Rate, (iii) the appraised value of any REO Property in
the Trust Fund (up to the Stated Principal Balance of the related Mortgage
Loan), such appraisal to be conducted by an appraiser mutually agreed upon by
the EMC Servicer and the Securities Administrator and (iv) unreimbursed out-of
pocket costs of the related Servicer or Master Servicer, including unreimbursed
servicing advances and the principal portion of any unreimbursed Advances, made
on the Mortgage Loans prior to the exercise of such repurchase right, (v) any
unreimbursed costs and expenses of the Trustee and the Securities Administrator
payable pursuant to Section 9.05 and (vi) any unreimbursed costs and expenses of
the Custodian payable pursuant to the Custodial Agreement and (b) the later of
(i) the maturity or other liquidation (or any Advance with respect thereto) of
the last Mortgage Loan remaining in the Trust Fund and the disposition of all
REO Property, and (ii) the distribution to Certificateholders of all amounts
required to be distributed to them pursuant to this Agreement, as applicable. In
no event shall the trusts created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to the Court of St.
Xxxxx, living on the date hereof and (ii) the Latest Possible Maturity Date.
The right to repurchase all Mortgage Loans and REO Properties pursuant
to clause (a) above shall be conditioned upon the Stated Principal Balance of
all of the Mortgage Loans in the Trust Fund, at the time of any such repurchase,
aggregating ten percent or less of the aggregate Cut-off Date Principal Balance
of all of the Mortgage Loans.
Section 10.02. FINAL DISTRIBUTION ON THE CERTIFICATES.
If on any Determination Date, (i) the Master Servicer determines that
there are no Outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than the funds in the Master Servicer Collection Account, the
Master Servicer shall direct the Securities Administrator to send a final
distribution notice promptly to each Certificateholder or (ii) the Securities
Administrator determines that a Class of Certificates shall be retired after a
final distribution on such Class, the Securities Administrator shall notify the
Certificateholders within five (5) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the related Certificates at the
Corporate Trust Office of the Trustee. If the EMC Servicer elects to terminate
the Trust Fund pursuant to Section 10.01, on or before the Distribution Date
occurring in the month preceding the month in which notice is to be mailed to
the Certificateholders, the EMC Servicer shall notify the Depositor, the
Securities Administrator, the Custodian, the Trustee, the Securities
Administrator and the Master Servicer of the date that EMC intends to terminate
the Trust Fund and the Master Servicer shall provide the EMC Servicer, the
Depositor, the Securities Administrator, the Custodian and the Trustee with the
applicable repurchase price of the Mortgage Loans and REO Properties serviced
and administered by the Master Servicer. The EMC Servicer shall remit the
Mortgage Loan Repurchase Price to the Trustee on the Business Day immediately
preceding the Distribution Date on which such Optional Termination by the EMC
Servicer will be effected.
Provided that timely notice has been received, the Securities
Administrator shall give notice of any termination of the Trust Fund, specifying
the Distribution Date on which Certificateholders may surrender their
Certificates for payment of the final distribution and cancellation. To the
extent reasonably practical, such notice shall be given by letter mailed not
earlier than the 1st day and no later than the 15th day of the month of such
final distribution and shall specify: (a) the Distribution Date upon which final
distribution on the Certificates will be made upon presentation and surrender of
Certificates at the office therein designated, (b) the amount of such final
distribution, (c) the location of the office or agency at which such
presentation and surrender must be made and (d) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being made
only upon presentation and surrender of the Certificates at the office therein
specified. The Securities Administrator will give such notice to each Rating
Agency at the time such notice is given to Certificateholders.
In the event such notice is given, the Master Servicer shall cause all
funds in the Master Servicer Collection Account to be remitted to the Trustee
for deposit in the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit with respect to the Trust
Fund and the receipt by the Trustee of a Request for Release therefor, the
Trustee shall promptly release to the EMC Servicer or its designee the Mortgage
Files for the Mortgage Loans, and any documents necessary to transfer any REO
Property.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class, based on the
applicable Remittance Report for such Distribution Date, the amounts allocable
to such Certificates held in the Distribution Account in the order and priority
set forth in Section 5.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Securities Administrator shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Securities
Administrator may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets that remain a part of the Trust Fund. If within one year
after the second notice all Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to all unclaimed
funds and other assets of the Trust Fund that remain subject hereto.
Section 10.03. ADDITIONAL TERMINATION REQUIREMENTS.
(a) Upon exercise by the EMC Servicer of its purchase option as
provided in Section 10.01, the Trust Fund shall be terminated in accordance with
the following additional requirements, unless each of the Trustee and the
Securities Administrator have been supplied with an Opinion of Counsel, at the
expense of the EMC Servicer, to the effect that the failure of the Trust Fund to
comply with the requirements of this Section 10.03 will not (i) result in the
imposition of taxes on "prohibited transactions" of a REMIC, or (ii) cause a
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(1) The EMC Servicer shall establish a 90-day liquidation period and
notify the Trustee and Securities Administrator thereof, and the Securities
Administrator shall in turn specify the first day of such period in a statement
attached to each of REMIC I, REMIC II and REMIC III's Tax Return pursuant to
Treasury Regulation Section 1.860F-1. The EMC Servicer shall satisfy all the
requirements of a qualified liquidation under Section 860F of the Code and any
regulations thereunder, as evidenced by an Opinion of Counsel obtained at the
expense of the EMC Servicer;
(2) During such 90-day liquidation period, and at or prior to the time
of making the final payment on the Certificates, the EMC Servicer, acting as
agent of the Trustee, shall sell all of the assets of REMIC I, REMIC II and
REMIC III for cash; and
(3) At the time of the making of the final payment on the
Certificates, the Securities Administrator as agent for the Trustee shall
distribute or credit, or cause to be distributed or credited, to the Holders of
the Residual Certificates all cash on hand (other than cash retained to meet
claims), and REMIC I, REMIC II and REMIC III shall terminate at that time.
(b) By their acceptance of the Certificates, the Holders thereof
hereby authorize the EMC Servicer to specify the 90-day liquidation period for
REMIC I, REMIC II and REMIC III, which authorization shall be binding upon all
successor Certificateholders.
(c) The Securities Administrator as agent for each REMIC hereby agrees
to adopt and sign such a plan of complete liquidation upon the written request
of the EMC Servicer, and the receipt of the Opinion of Counsel referred to in
Section 10.03(a)(1) and to take such other action in connection therewith as may
be reasonably requested by the EMC Servicer.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01. AMENDMENT.
This Agreement may be amended from time to time by parties hereto,
without the consent of any of the Certificateholders to cure any ambiguity, to
correct or supplement any provisions herein (including to give effect to the
expectations of investors), to change the manner in which the Master Servicer
Collection Account, or the Protected Account maintained by the EMC Servicer is
maintained or to make such other provisions with respect to matters or questions
arising under this Agreement as shall not be inconsistent with any other
provisions herein if such action shall not, as evidenced by an Opinion of
Counsel addressed to the Trustee, adversely affect in any material respect the
interests of any Certificateholder; provided that any such amendment shall be
deemed not to adversely affect in any material respect the interests of the
Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Certificates.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the parties hereto may at any time and from time to time
amend this Agreement to modify, eliminate or add to any of its provisions to
such extent as shall be necessary or appropriate to maintain the qualification
of each of REMIC I, REMIC II and REMIC III as a REMIC under the Code or to avoid
or minimize the risk of the imposition of any tax on any of REMIC I, REMIC II or
REMIC III pursuant to the Code that would be a claim against any of REMIC I,
REMIC II or REMIC III at any time prior to the final redemption of the
Certificates, provided that the Trustee has been provided an Opinion of Counsel
addressed to the Trustee, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the Trustee
or the Securities Administrator, to the effect that such action is necessary or
appropriate to maintain such qualification or to avoid or minimize the risk of
the imposition of such a tax.
This Agreement may also be amended from time to time by the parties
hereto and the Holders of each Class of Certificates affected thereby evidencing
over 50% of the Voting Rights of such Class or Classes for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, payments required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (ii) cause
any of REMIC I, REMIC II or REMIC III's REMIC elections to fail to qualify or
(iii) reduce the aforesaid percentages of Certificates of each Class the Holders
of which are required to consent to any such amendment without the consent of
the Holders of all Certificates of such Class then outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel addressed to the Trustee, which opinion shall be
an expense of the party requesting such amendment but in any case shall not be
an expense of the Trustee or the Securities Administrator, to the effect that
such amendment will not (other than an amendment pursuant to clause (ii) of, and
in accordance with, the preceding paragraph) cause the imposition of any tax on
REMIC I, REMIC II or REMIC III or the Certificateholders or cause REMIC I, REMIC
II or REMIC III's REMIC elections to fail to qualify at any time that any
Certificates are outstanding. Further, nothing in this Agreement shall require
the Trustee to enter into an amendment without receiving an Opinion of Counsel,
addressed to and satisfactory to the Trustee that (i) such amendment is
permitted and is not prohibited by this Agreement and that all requirements for
amending this Agreement (including any consent of the applicable
Certificateholders) have been complied with.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Section 11.02. RECORDATION OF AGREEMENT; COUNTERPARTS.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all of the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere. The Master Servicer shall effect such recordation at the
Trust's expense upon the request in writing of a Certificateholder, but only if
such direction is accompanied by an Opinion of Counsel (provided at the expense
of the Certificateholder requesting recordation) to the effect that such
recordation would materially and beneficially affect the interests of the
Certificateholders or is required by law.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 11.03. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
Section 11.04. INTENTION OF PARTIES.
It is the express intent of the parties hereto that the conveyance of
the Mortgage Notes, Mortgages, assignments of Mortgages, title insurance
policies and any modifications, extensions and/or assumption agreements and
private mortgage insurance policies relating to the Mortgage Loans by the Seller
to the Depositor, and by the Depositor to the Trustee be, and be construed as,
an absolute sale thereof to the Depositor or the Trustee, as applicable. It is,
further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Seller to the Depositor, or by the Depositor to the
Trustee. However, in the event that, notwithstanding the intent of the parties,
such assets are held to be the property of the Seller or the Depositor, as
applicable, or if for any other reason this Agreement is held or deemed to
create a security interest in such assets, then (i) this Agreement shall be
deemed to be a security agreement within the meaning of the Uniform Commercial
Code of the State of New York, (ii) each conveyance provided for in this
Agreement shall be deemed to be an assignment and a grant by the Seller or the
Depositor, as applicable , for the benefit of the Certificateholders, of a
security interest in all of the assets that constitute the Trust Fund, whether
now owned or hereafter acquired, (iii) the possession by the Trustee or the
Custodian of the Mortgage Notes and such other items of property as may be
perfected by possession pursuant to Section 9-313 (or comparable provision) of
the applicable Uniform Commercial Code for purposes of effecting the security
interest pursuant to such section of the applicable Uniform Commercial Code and
other applicable law. Any assignment of the Seller and the Depositor shall also
be deemed to be an assignment of any security interest created hereby.
Each of the Seller and the Depositor for the benefit of the
Certificateholders shall, to the extent consistent with this Agreement, take
such actions as may be necessary to ensure that, if this Agreement were deemed
to create a security interest in the assets of the Trust Fund, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of the
Agreement.
Section 11.05. NOTICES.
(a) The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency with respect to each of the following of which it has
actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured;
(iii) The resignation or termination of the Master Servicer, the
Securities Administrator or the Trustee and the appointment of any
successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02, 2.03, 3.12 and 10.01; and
(v) The final payment to Certificateholders.
In addition, the Securities Administrator shall promptly furnish to
each Rating Agency copies of the following:
(i) Each report to Certificateholders described in Section 5.05,
if requested by such Rating Agency;
(vi) Each annual statement as to compliance described in Section
3.16; and
(vii) Each annual independent public accountants' servicing
report described in Section 3.17.
(b) All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when delivered at or mailed by
registered mail, return receipt requested, postage prepaid, or by recognized
overnight courier, or by facsimile transmission to a number provided by the
appropriate party if receipt of such transmission is confirmed to (i) in the
case of the Depositor, Bear Xxxxxxx Asset Backed Securities, Inc., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Chief Counsel, or such other
address as may be hereafter furnished to the other parties hereto by the
Depositor in writing; (ii) in the case of the Seller or the EMC Servicer, EMC
Mortgage Corporation, 000 Xxxxxx Xxxxx Xxxxx, Xxxxxx, Xxxxx 00000, Attention:
Xxxxxx Xxxxx or such other address as may be hereafter furnished to the other
parties hereto by the EMC Servicer in writing; (iv) in the case of the Trustee,
at the Corporate Trust Office or such other address as the Trustee may hereafter
furnish to the other parties hereto; (v) in the case of the Master Servicer, the
Securities Administrator or the Custodian, X.X. Xxx 00, Xxxxxxxx, Xxxxxxxx 00000
(or, in the case of overnight delivery, 0000 Xxx Xxxxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxx 21045), in either case: Attention: BSABS 2003-1; or such other address
as may be hereafter furnished to the other parties hereto by the Master Servicer
in writing and (vi) in the case of the Rating Agencies, (x) Xxxxx'x Investors
Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Home
Equity Monitoring (y) Standard & Poor's, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Mortgage Surveillance Group and (z) Fitch, Inc., Xxx
Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxx Xxxxxxx-Xxxxxxx.
Any notice delivered to the Seller, the Depositor, the Master Servicer, the EMC
Servicer, the Securities Administrator, the Custodian or the Trustee under this
Agreement shall be effective only upon receipt. Any notice required or permitted
to be mailed to a Certificateholder, unless otherwise provided herein, shall be
given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register; any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.
Section 11.06. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.07. ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 7.02, this Agreement may not be assigned by the
Master Servicer, the EMC Servicer, the Seller or the Depositor.
Section 11.08. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee or the Securities
Administrator, as appropriate, a written notice of an Event of Default and of
the continuance thereof, as hereinbefore provided, the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the Certificates
shall also have made written request to the Trustee or the Securities
Administrator, as appropriate to institute such action, suit or proceeding in
its own name as Trustee or the Securities Administrator, as appropriate,
hereunder and shall have offered to the Trustee or the Securities Administrator,
as appropriate, such reasonable indemnity as it may require against the costs,
expenses, and liabilities to be incurred therein or thereby, and the Trustee or
the Securities Administrator, as appropriate, for 60 days after its receipt of
such notice, request and offer of indemnity shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 11.08, each and every Certificateholder, the
Trustee or the Securities Administrator shall be entitled to such relief as can
be given either at law or in equity.
Section 11.09. INSPECTION AND AUDIT RIGHTS.
(a) The Master Servicer agrees that, on reasonable prior notice, it
will permit any representative of the Depositor or the Trustee during the Master
Servicer's normal business hours, to examine all the books of account, records,
reports and other papers of the Master Servicer relating to the Mortgage Loans,
to make copies and extracts therefrom, to cause such books to be audited by
independent certified public accountants selected by the Depositor or the
Trustee and to discuss its affairs, finances and accounts relating to such
Mortgage Loans with its officers, employees and independent public accountants
(and by this provision the Master Servicer hereby authorizes such accountants to
discuss with such representative such affairs, finances and accounts), all at
such reasonable times and as often as may be reasonably requested. Any
out-of-pocket expense incident to the exercise by the Depositor or the Trustee
of any right under this Section 11.09 shall be borne by the party requesting
such inspection, subject to any right to reimbursement of such party hereunder
(in the case of the Trustee, pursuant to Section 4.05(a)(xii) hereof); all other
such expenses shall be borne by the Master Servicer.
(b) The Trustee and the Securities Administrator shall each provide
access to the records and documentation in its possession regarding the related
Mortgage Loans and REO Property and the servicing thereof to the
Certificateholders, the FDIC, and the supervisory agents and examiners of the
FDIC, such access being afforded only upon reasonable prior written request and
during normal business hours at its respective office; provided, however, that,
unless otherwise required by law, neither the Trustee nor the Securities
Administrator shall be required to provide access to such records and
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor. The Trustee and the Securities Administrator shall each allow
representatives of the above entities to photocopy any of the records and
documentation and shall provide equipment for that purpose at a charge that
covers its actual costs.
Section 11.10. CERTIFICATES NONASSESSABLE AND FULLY PAID.
It is the intention of the Depositor that Certificateholders shall not
be personally liable for obligations of the Trust Fund, that the interests in
the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Trustee pursuant to this Agreement, are and shall be deemed fully paid.
* * *
IN WITNESS WHEREOF, the Depositor, the Master Servicer, the EMC
Servicer, the Seller and the Trustee have caused their names to be signed hereto
by their respective officers thereunto duly authorized as of the day and year
first above written.
BEAR XXXXXXX ASSET BACKED SECURITIES,
INC.,
as Depositor
By: /s/ Xxxxxx X. Xxxxxxxxx, Xx.
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx, Xx.
Title: Vice President
EMC MORTGAGE CORPORATION,
as Seller and Servicer
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Executive Vice President
XXXXX FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Master Servicer and Securities
Administrator
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Trust Officer
JPMORGAN CHASE BANK,
as Trustee
By /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Assistant Vice President
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 28th day of February 2003, before me, a notary public in and
for said State, appeared Xxxxx Xxxxxxxxxxx, personally known to me on the basis
of satisfactory evidence to be an authorized representative of Bear Xxxxxxx
Asset Backed Securities, Inc., one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
such corporation and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxxxx Xxxxxxxx
------------------------
Notary Public
[Notarial Seal]
STATE OF MARYLAND )
) ss.:
COUNTY OF XXXXXX )
On this 28th day of February 2003, before me, a notary public in and
for said State, appeared Xxxxxx Xxxxxxxxxx, personally known to me on the basis
of satisfactory evidence to be an authorized representative of Xxxxx Fargo Bank
Minnesota, National Association that executed the within instrument, and also
known to me to be the person who executed it on behalf of such corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxxxx X. Xxxxx
----------------------------
Notary Public
[Notarial Seal]
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On this 28th day of February 2003, before me, a notary public in and
for said State, appeared Xxxxxx Xxxxxxxxx, personally known to me on the basis
of satisfactory evidence to be an authorized representative of EMC Mortgage
Corporation, one of the corporations that executed the within instrument, and
also known to me to be the person who executed it on behalf of such corporation
and acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxxxx X. Xxxxx
------------------------
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 28th day of February 2003, before me, a notary public in and
for said State, appeared Xxxxx X. Xxxxxxx, personally known to me on the basis
of satisfactory evidence to be an authorized representative of JPMorgan Chase
Bank, one of the corporations that executed the within instrument, and also
known to me to be the person who executed it on behalf of such corporation and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxxxx X. Xxxxx
------------------------
Notary Public
[Notarial Seal]
Exhibit B
Mortgage Loan Schedule
[ To be provided separately]
EXHIBIT C-1
FORM OF INITIAL CERTIFICATION
[Exhibit One of the Custodial Agreement]
EXHIBIT C-2
FORM OF INTERIM CERTIFICATION
[Exhibit Two of the Custodial Agreement]
EXHIBIT C-3
FORM OF FINAL CERTIFICATION
[Exhibit Three of the Custodial Agreement]
EXHIBIT D
TRANSFER AFFIDAVIT
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _______________, the proposed
Transferee of an Ownership Interest in a [Class R-1] [Class R-2] [Class R-3]
Certificate (the "Certificate") issued pursuant to the Pooling and Servicing
Agreement, dated as of February 1, 2003 (the "Agreement"), by and among Bear
Xxxxxxx Asset Backed Securities, Inc., as depositor, EMC Mortgage Corporation as
seller and servicer, Xxxxx Fargo Bank Minnesota, National Association, as master
servicer and securities administrator, and JPMorgan Chase Bank, as trustee.
Capitalized terms used, but not defined herein or in Exhibit 1 hereto, shall
have the meanings ascribed to such terms in the Agreement. The Transferee has
authorized the undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the date of
the Transfer, a Permitted Transferee. The Transferee is acquiring its Ownership
Interest in the Certificate for its own account.
3. The Transferee has been advised of, and understands that (i) a tax will
be imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) for
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.
4. The Transferee has been advised of, and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 6.02(c) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the Transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 6.02(c) of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the Transfer
to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any Person to
whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit E to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment or
collection of any tax legally required to be paid with respect to the Class
[R-1] [R-2] [R-3] Certificates.
8. The Transferee's taxpayer identification number is _____.
9. The Transferee is a U.S. Person as defined in Code Section 7701(a)(30).
10. The Transferee is aware that the Class [R-1] [R-2] [R-3] Certificate
may be "noneconomic residual interests" within the meaning of Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax. In addition, as the
holder of a noneconomic residual interest, the Transferee may incur tax
liabilities in excess of any cash flows generated by the interest and the
Transferee hereby represents that it intends to pay taxes associated with
holding the residual interest as they become due.
11. Transferee is not a foreign permanent establishment or fixed base
(within the meaning of an applicable income tax treaty) of a U.S. taxpayer.
12. The Transferee will not transfer the Class [R-1][R-2][R-3]Certificate,
directly or indirectly, to a foreign permanent establishment or fixed base
(within the meaning of an applicable income tax treaty) of the Transferee or
another U.S. taxpayer.
13. The Transferee will not cause income from the Class [R-1][R-2][R-3]
Certificate to be attributable to a foreign permanent establishment or fixed
base (within the meaning of an applicable income tax treaty) of the Transferee
or another U.S. taxpayer.
14. The Transferee has provided financial statements or other financial
information requested by the Transferor in connection with the transfer of the
Class [R-1][R-2][R-3] Certificate to permit the Transferor to assess the
financial capability of the Transferee to pay such taxes.
* * *
-----------------------------------
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ____ day of _____________, 20__.
[NAME OF TRANSFEREE]
By: __________________________
Name:
Title:
[Corporate Seal]
ATTEST:
-------------------------
[Assistant] Secretary
Personally appeared before me the above-named _____________, known or
proved to me to be the same person who executed the foregoing instrument and to
be the ____________ of the Transferee, and acknowledged that he executed the
same as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this ____ day of _______, 20__.
------------------------------
________________________________
NOTARY PUBLIC
My Commission expires the ___ day
of _______________, 20__.
EXHIBIT 1 TO EXHIBIT D
CERTAIN DEFINITIONS
"Ownership Interest": As to any Certificate, any ownership interest in such
Certificate, including any interest in such Certificate as the Holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial.
"Permitted Transferee": Any person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to any
Class [R-1][R-2][R-3] Certificate, (iv) rural electric and telephone
cooperatives described in section 1381(a)(2)(C) of the Code, (v) an "electing
large partnership" as defined in Section 775 of the Code, (vi) a Person that is
not a citizen or resident of the United States, a corporation, partnership, or
other entity (treated as a corporation or a partnership for federal income tax
purposes) created or organized in or under the laws of the United States, any
state thereof or the District of Columbia, or an estate whose income from
sources without the United States is includable in gross income for United
States federal income tax purposes regardless of its connection with the conduct
of a trade or business within the United States, or a trust if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have authority
to control all substantial decisions of the trustor unless such Person has
furnished the transferor and the Trustee with a duly completed Internal Revenue
Service Form W-8ECI, and (vii) any other Person so designated by the Trustee
based upon an Opinion of Counsel that the Transfer of an Ownership Interest in a
Class [R-1][R-2][R-3] Certificate to such Person may cause the Trust Fund to
fail to qualify as a REMIC at any time that certain Certificates are
Outstanding. The terms "United States," "State" and "International Organization"
shall have the meanings set forth in section 7701 of the Code or successor
provisions. A corporation will not be treated as an instrumentality of the
United States or of any State or political subdivision thereof for these
purposes if all of its activities are subject to tax and, with the exception of
the Federal Home Loan Mortgage Corporation, a majority of its board of directors
is not selected by such government unit.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, bank, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
EXHIBIT 2 TO EXHIBIT D
SECTION 6.02(C) OF THE AGREEMENT
(c) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Residual Certificate may be registered
on the Closing Date or thereafter transferred, and the Trustee shall not
register the Transfer of any Residual Certificate unless, in addition to
the certificates required to be delivered to the Trustee under subparagraph
(b) above, the Trustee shall have been furnished with an affidavit (a
"TRANSFER AFFIDAVIT") of the initial owner or the proposed transferee in
the form attached hereto as Exhibit D.
(iii) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Residual Certificate, (B) to obtain a Transfer Affidavit from
any Person for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Residual Certificate and (C) not to
Transfer its Ownership Interest in a Residual Certificate or to cause the
Transfer of an Ownership Interest in a Residual Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest in
a Residual Certificate in violation of the provisions of this Section
6.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Residual Certificate in violation of the provisions of this Section
6.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Residual Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Residual
Certificate that is in fact not permitted by Section 6.02(b) and this
Section 6.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under
the provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit and Transferor Certificate.
The Trustee shall be entitled but not obligated to recover from any Holder
of a Residual Certificate that was in fact not a Permitted Transferee at
the time it became a Holder or, at such subsequent time as it became other
than a Permitted Transferee, all payments made on such Residual Certificate
at and after either such time. Any such payments so recovered by the
Trustee shall be paid and delivered by the Trustee to the last preceding
Permitted Transferee of such Certificate.
(v) The Xxxxx Master Servicer shall make available within 60 days of
written request from the Trustee, all information necessary to compute any
tax imposed under Section 860E(e) of the Code as a result of a Transfer of
an Ownership Interest in a Residual Certificate to any Holder who is not a
Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set forth in this
Section 6.02(c) shall cease to apply (and the applicable portions of the legend
on a Residual Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee of an Opinion of Counsel, which Opinion of Counsel
shall not be an expense of the Trustee, the Securities Administrator, the Seller
or either Master Servicer to the effect that the elimination of such
restrictions will not cause the REMIC I, REMIC II and/or REMIC III, as
applicable, to fail to qualify as a REMIC at any time that the Certificates are
outstanding or result in the imposition of any tax on the Trust Fund, a
Certificateholder or another Person. Each Person holding or acquiring any
Ownership Interest in a Residual Certificate hereby consents to any amendment of
this Agreement that, based on an Opinion of Counsel furnished to the Trustee, is
reasonably necessary (a) to ensure that the record ownership of, or any
beneficial interest in, a Residual Certificate is not transferred, directly or
indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Residual Certificate that is held by a
Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.
EXHIBIT E
FORM OF TRANSFEROR CERTIFICATE FOR
CLASS B-IO, CLASS R-1, CLASS R-2 AND CLASS R-3
CERTIFICATES
Date:___________
Bear Xxxxxxx Asset Backed Securities, Inc.,
as Depositor
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
JPMorgan Chase Bank,
as Trustee
0000 Xxxxx Xxxxxx, Xxxxx 0
Xxxxxx, Xxxxx 00000
Attention: Institutional Trust Services Transfer Department
Xxxxx Fargo Bank Minnesota, National Association,
as Securities Administrator
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: BSABS 2003-1
Re: Bear Xxxxxxx Asset Backed Securities, Inc. Asset-Backed
CERTIFICATES, SERIES 2003-1
Ladies and Gentlemen:
In connection with our disposition of the Class __ Certificates, we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action that would result in, a violation of Section 5 of the Act and (c)
if we are disposing of a [R-1] [R-2] [R-3] Certificate, we have no knowledge the
Transferee is not a Permitted Transferee. All capitalized terms used herein but
not defined herein shall have the meanings assigned to them in the Pooling and
Servicing Agreement dated as of February 1, 2003, among Bear Xxxxxxx Asset
Backed Securities, Inc., as Depositor, EMC Mortgage Corporation as Seller and
Servicer, Xxxxx Fargo Bank Minnesota, National Association, as master servicer
and securities administrator and JPMorgan Chase Bank, as Trustee.
Very truly yours,
----------------------------------
Name of Transferor
By: _______________________________
Name:
Title:
EXHIBIT F
FORM OF INVESTMENT LETTER [NON-RULE 144A] FOR
CLASS [B-IO] [R-1] [R-2] [R-3] CERTIFICATES
Date: __________________
Bear Xxxxxxx Asset Backed Securities, Inc.,
as Depositor
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
JPMorgan Chase Bank,
as Trustee
0000 Xxxxx Xxxxxx, Xxxxx 0
Xxxxxx, Xxxxx 00000
Attention: Institutional Trust Services Transfer Department
Xxxxx Fargo Bank Minnesota, National Association,
as Securities Administrator
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: BSABS 2003-1
Re: Bear Xxxxxxx Asset Backed Securities, Inc. Asset-Backed
CERTIFICATES, SERIES 2003-1
Ladies and Gentlemen:
In connection with our acquisition of the Class ____ Certificates in the
Denomination of (the "Certificates"), we certify that (a) we understand that the
Certificates are not being registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities laws and are being transferred to
us in a transaction that is exempt from the registration requirements of the Act
and any such laws, (b) we are an "accredited investor," as defined in Regulation
D under the Act, and have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks of
investments in the Certificates, (c) we have had the opportunity to ask
questions of and receive answers from the Depositor concerning the purchase of
the Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Certificates, (d) either (i) we
are not an employee benefit plan that is subject to the Employee Retirement
Income Security Act of 1974, as amended, nor a plan subject to Section 4975 of
the Internal Revenue Code of 1986 (each of the foregoing, a "PLAN"), nor are we
acting on behalf of any Plan or (ii) the purchase or holding of such ERISA
Restricted Certificate will not result in any prohibited transactions under
ERISA or Section 4975 of the Code and will not subject the Trustee, the
Securities Administrator or the Master Servicer to any obligation in addition to
those expressly undertaken in the Agreement referred to below, (e) we are
acquiring the Certificates for investment for our own account and not with a
view to any distribution of the Certificates (but without prejudice to our right
at all times to sell or otherwise dispose of the Certificates in accordance with
clause (g) below), (f) we have not offered or sold any Certificates to, or
solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, or taken any
other action that would result in a violation of Section 5 of the Act, and (g)
we will not sell, transfer or otherwise dispose of any Certificates unless (1)
such sale, transfer or other disposition is made pursuant to an effective
registration statement under the Act or is exempt from such registration
requirements, and if requested, we will at our expense provide an opinion of
counsel satisfactory to the addressees of this certificate that such sale,
transfer or other disposition may be made pursuant to an exemption from the Act,
(2) the purchaser or transferee of the Certificate has executed and delivered to
you a certificate to substantially the same effect as this certificate, and (3)
the purchaser or transferee has otherwise complied with any conditions for
transfer set forth in the Pooling and Servicing Agreement dated as of February
1, 2003 (the "Agreement"), among Bear Xxxxxxx Asset Backed Securities, Inc., as
Depositor, EMC Mortgage Corporation, as Seller and Servicer, Xxxxx Fargo Bank
Minnesota, National Association, as Master Servicer and Securities
Administrator, and JPMorgan Chase Bank, as Trustee. All capitalized terms used
herein but not defined herein shall have the meanings assigned to them in the
Agreement.
Very truly yours,
_______________________________
Name of Transferee
By: ________________________________
Name:
Title:
EXHIBIT G
FORM OF RULE 144A LETTER FOR
CLASS [B-IO] [R-1] [R-2] [R-3] CERTIFICATES
Date: ___________________
Bear Xxxxxxx Asset Backed Securities, Inc.,
as Depositor
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
JPMorgan Chase Bank,
as Trustee
0000 Xxxxx Xxxxxx, Xxxxx 0
Xxxxxx, Xxxxx 00000
Attention: Institutional Trust Services Transfer Department
Xxxxx Fargo Bank Minnesota, National Association,
as Securities Administrator
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: BSABS 2003-1
Re: Bear Xxxxxxx Asset Backed Securities, Inc. Asset-Backed
CERTIFICATES, SERIES 2003-1
Ladies and Gentlemen:
In connection with our proposed purchase of the Class ____ Certificates
(the "Certificates") we certify that (a) we understand that the Certificates are
not being registered under the Securities Act of 1933, as amended (the "Act"),
or any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such laws,
(b) we have such knowledge and experience in financial and business matters that
we are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Certificates, (d) either (i) we are not an employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended, nor a plan subject to Section 4975 of the Internal Revenue
Code of 1986 (each of the foregoing, a "PLAN"), nor are we acting on behalf of
any Plan or (ii) the purchase or holding of such ERISA Restricted Certificate
will not result in any prohibited transactions under ERISA or Section 4975 of
the Code and will not subject the Trustee, the Securities Administrator or the
Master Servicer to any obligation in addition to those expressly undertaken in
the Agreement referred to below, (e) we have not, nor has anyone acting on our
behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, and (f) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificates for our own account or for resale
pursuant to Rule 144A and further, understand that the Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement, dated as of February 1,
2003, among Bear Xxxxxxx Asset Backed Securities, Inc., as Depositor, EMC
Mortgage Corporation, as Seller and Servicer, Xxxxx Fargo Bank Minnesota,
National Association, as Master Servicer and Securities Administrator and
JPMorgan Chase Bank, as Trustee.
Very truly yours,
_______________________________
Name of Buyer
By: ________________________________
Name:
Title:
ANNEX 1 TO EXHIBIT G
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("RULE 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $__________1 in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.
___ CORPORATION, ETC. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended.
___ BANK. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to banking
and is supervised by the State or territorial banking commission or
similar official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, A COPY OF WHICH IS ATTACHED
HERETO.
___ SAVINGS AND LOAN. The Buyer (a) is a savings and loan association,
building and loan association, cooperative bank, homestead association
or similar institution, which is supervised and examined by a State or
Federal authority having supervision over any such institutions or is
a foreign savings and loan association or equivalent institution and
(b) has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which is attached
hereto.
___ BROKER-DEALER. The Buyer is a dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934.
___ INSURANCE COMPANY. The Buyer is an insurance company whose primary and
predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a similar
official or agency of a State, territory or the District of Columbia.
___ STATE OR LOCAL PLAN. The Buyer is a plan established and maintained by
a State, its political subdivisions, or any agency or instrumentality
of the State or its political subdivisions, for the benefit of its
employees.
___ ERISA PLAN. The Buyer is an employee benefit plan within the meaning
of Title I of the Employee Retirement Income Security Act of 1974.
___ INVESTMENT ADVISOR. The Buyer is an investment advisor registered
under the Investment Advisors Act of 1940.
___ SMALL BUSINESS INVESTMENT COMPANY. The Buyer is a small business
investment company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of
1958.
___ BUSINESS DEVELOPMENT COMPANY. The Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisors
Act of 1940.
___ TRUST FUND. The Buyer is a trust fund whose trustee is a bank or trust
company and whose participants are exclusively State or Local Plans or
ERISA Plans as defined above, and no participant of the Buyer is an
individual retirement account or an H.R. 10 (Xxxxx) plan.
___ EQUITY OWNERS. Buyer is an entity in which all of the equity owners
are qualified institutional buyers.
--------
1 Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless: Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities;
or Buyer is an entity in which all the owners are qualified institutional
buyers.
3. The term "SECURITIES" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer, (ii) securities that are part of an
unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) bank deposit notes and certificates of deposit, (iv) loan participations,
(v) repurchase agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
_______________________________
Name of Buyer
By: ________________________________
Name:
Title:
Date: _____________________________
ANNEX 2 TO EXHIBIT G
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "BUYER") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("RULE 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $____________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule
144A).
___ The Buyer is part of a Family of Investment Companies which owned in
the aggregate $__________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule
144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "SECURITIES" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) bank deposit notes and certificates of deposit, (iii)
loan participations, (iv) repurchase agreements, (v) securities owned but
subject to a repurchase agreement and (vi) currency, interest rate and commodity
swaps.
5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
_______________________________
Name of Buyer or Adviser
By: ________________________________
Name:
Title:
IF AN ADVISER:
_______________________________
Name of Buyer
Date: _________________________
EXHIBIT H
REQUEST FOR RELEASE OF DOCUMENTS
To: Xxxxx Fargo Bank Minnesota, National Association,
as Custodian
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: BSABS 2003-1
Re: Custodial Agreement (the "Agreement"), dated as of February 1, 2003,
among Bear Xxxxxxx Asset Backed Securities, Inc., EMC Mortgage
Corporation, as Servicer, Xxxxx Fargo Bank Minnesota, National
Association, as Master Servicer and Custodian, and JPMorgan Chase Bank,
as Trustee
In connection with the administration of the Mortgage Loans held by you as
Custodian pursuant to the above-captioned Agreement, we request the release, and
hereby acknowledge receipt, of the Mortgage File for the Mortgage Loan described
below, for the reason indicated
MORTGAGE LOAN NUMBER:
MORTGAGOR NAME, ADDRESS & ZIP CODE:
REASON FOR REQUESTING DOCUMENTS (CHECK ONE):
____ 1. Mortgage Paid in Full (and all amounts received or to be received in
connection with such payment have been or will be remitted to the
Master Servicer for deposit in the Certificate Account)
____ 2. Foreclosure
____ 3. Substitution
____ 4. Other Liquidation (Repurchases, etc.)
____ 5. Nonliquidation Reason:________________________________
Address to which Trustee should Deliver the _________________________________
Mortgage File: _________________________________
_________________________________
By: _______________________________
(authorized signer)
Issuer:_____________________________
Address:___________________________
Date:______________________________
Trustee
JPMorgan Chase Bank
Please acknowledge the execution of the above request by your signature and date
below:
------------------------------ -------------
Signature Date
Documents returned to Trustee
----------------------------- -------------
Trustee Date
Exhibit I
DTC LETTER OF REPRESENTATIONS
(See document at Tab No. 8)
Exhibit J
SCHEDULE OF MORTGAGE LOANS WITH LOST NOTES
(Delivered to Trustee)
EXHIBIT K
Pursuant to Section 3.19 of the Agreement, the EMC Servicer shall
administer and service the EMC Mortgage Loans as set forth herein. Capitalized
terms used herein and not otherwise defined shall have the meanings set forth in
the Agreement. References herein to "the Agreement" shall, unless the context
otherwise specifically requires, be deemed to refer to the Agreement as
supplemented by this Exhibit K.
ARTICLE I.
ADMINISTRATION AND SERVICING
OF EMC MORTGAGE LOANS
Section 1.01. EMC SERVICER TO SERVICE EMC MORTGAGE LOANS.
For and on behalf of the Certificateholders, the EMC Servicer shall service
and administer the EMC Mortgage Loans in accordance with customary and usual
standards of practice of prudent mortgage loan servicers in the respective
states in which the Mortgaged Properties are located. In connection with such
servicing and administration, the EMC Servicer shall have full power and
authority, acting alone and/or through subservicers as provided in Section 1.02
of this Exhibit K, to do or cause to be done any and all things that it may deem
necessary or desirable in connection with such servicing and administration,
including but not limited to, the power and authority, subject to the terms
hereof (i) to execute and deliver, on behalf of the Certificateholders and the
Trustee, customary consents or waivers and other instruments and documents, (ii)
to consent to transfers of any Mortgaged Property and assumptions of the
Mortgage Notes and related Mortgages (but only in the manner provided herein),
(iii) to collect any Insurance Proceeds and other Liquidation Proceeds, and (iv)
subject to Section 1.12(a) of this Exhibit K, to effectuate foreclosure or other
conversion of the ownership of the Mortgaged Property securing any EMC Mortgage
Loan; provided that the EMC Servicer shall take no action that is inconsistent
with or prejudices the interests of the Trust Fund or the Certificateholders in
any EMC Mortgage Loan or the rights and interests of the Depositor and the
Trustee under the Agreement. The EMC Servicer shall represent and protect the
interest of the Trust Fund in the same manner as it currently protects its own
interest in EMC Mortgage Loans in its own portfolio in any claim, proceeding or
litigation regarding an EMC Mortgage Loan and shall not make or permit any
modification, waiver or amendment of any term of any EMC Mortgage Loan which
would cause the Trust Fund to fail to qualify as a REMIC or result in the
imposition of any tax under the REMIC Provisions, but in any case not in any
manner that is a lesser standard than that provided in the first sentence of
this Section 1.01. Without limiting the generality of the foregoing, the EMC
Servicer, in its own name or in the name of the Trust, the Depositor or the
Trustee, is hereby authorized and empowered by the Trust, the Depositor and the
Trustee, when the EMC Servicer believes it appropriate in its reasonable
judgment, to execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the EMC Mortgage Loans, and with respect
to the Mortgaged Properties held for the benefit of the Certificateholders. The
EMC Servicer shall prepare and deliver to the Depositor and/or the Trustee such
documents requiring execution and delivery by any or all of them as are
necessary or appropriate to enable the EMC Servicer to service and administer
the EMC Mortgage Loans. Upon receipt of such documents, the Depositor and/or the
Trustee shall execute such documents and deliver them to the EMC Servicer.
In accordance with the standards of the preceding paragraph, the EMC
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 1.06 of this Exhibit
K, and further as provided in Section 1.08 of this Exhibit K. All costs incurred
by the EMC Servicer, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums shall
not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the Stated Principal Balance under the related
EMC Mortgage Loans, notwithstanding that the terms of such EMC Mortgage Loans so
permit.
The EMC Servicer shall deliver a list of Servicing Officers to the Master
Servicer and the Trustee by the Closing Date.
Section 1.02. SUBSERVICING; ENFORCEMENT OF THE OBLIGATIONS OF EMC SERVICER.
(a) The EMC Servicer may arrange for the subservicing of any EMC Mortgage
Loan by a subservicer (each, a "Subservicer") pursuant to a subservicing
agreement (each, a "Subservicing Agreement"); provided that such subservicing
arrangement and the terms of the related subservicing agreement must provide for
the servicing of such EMC Mortgage Loans in a manner consistent with the
servicing arrangements contemplated hereunder. Notwithstanding the provisions of
any subservicing agreement, any of the provisions herein relating to agreements
or arrangements between the EMC Servicer or a subservicer or reference to
actions taken through the EMC Servicer or otherwise, the EMC Servicer shall
remain obligated and liable to the Depositor, the Trust, the Trustee and the
Certificateholders for the servicing and administration of the EMC Mortgage
Loans in accordance with the provisions of the Agreement without diminution of
such obligation or liability by virtue of such subservicing agreements or
arrangements or by virtue of indemnification from the subservicer and to the
same extent and under the same terms and conditions as if the EMC Servicer alone
were servicing and administering the EMC Mortgage Loans, and neither the Master
Servicer nor the Trustee or any other party shall have any obligations, duties
or liabilities with respect to such subservicer including any obligation, duty
or liability of either the Master Servicer or the Trustee or any other party to
pay such subservicer's fees and expenses. For purposes of remittance to the
Master Servicer pursuant to the Agreement, the EMC Servicer shall be deemed to
have received a payment on an EMC Mortgage Loan when a subservicer has received
such payment. The EMC Servicer shall be entitled to enter into an agreement with
a subservicer to provide for the delivery of reports and for indemnification of
the EMC Servicer by the subservicer and nothing contained in the Agreement shall
be deemed to limit or modify such indemnification.
Every subservicing agreement entered into by the EMC Servicer shall contain
a provision giving the EMC Servicer the option to terminate such agreement and
at the EMC Servicer's option, service the related EMC Mortgage Loans itself
pursuant to the Agreement or arrange for any servicing responsibilities to be
performed pursuant to the applicable subservicing agreement by a successor
subservicer. Any costs and expenses relating to such termination and transfer of
servicing shall be the sole expense of the EMC Servicer, without any right to
reimbursement from the Protected Account, the Master Servicer Collection Account
or the Distribution Account. All actions of each subservicer performed pursuant
to the related subservicing agreement shall be performed as an agent of the EMC
Servicer with the same force and effect as if performed directly by the EMC
Servicer.
(b) For purposes of the Agreement, the EMC Servicer shall be deemed to have
received any collections, recoveries or payments with respect to the EMC
Mortgage Loans that are received by a subservicer regardless of whether such
payments are remitted by the subservicer to the EMC Servicer.
Section 1.03. RIGHTS OF THE DEPOSITOR, THE MASTER SERVICER AND THE TRUSTEE
IN RESPECT OF THE EMC SERVICER.
Neither the Trustee nor the Depositor nor the Master Servicer shall have
any responsibility or liability for any action or failure to act by the EMC
Servicer, and neither the Depositor nor the Trustee is obligated to supervise
the performance of the EMC Servicer hereunder or otherwise.
Section 1.04. RESERVED.
Section 1.05. COLLECTION OF EMC MORTGAGE LOAN PAYMENTS; PROTECTED ACCOUNT.
(a) The EMC Servicer shall make reasonable efforts in accordance with
customary and usual standards of practice of prudent mortgage lenders in the
respective states in which the Mortgaged Properties are located to collect all
payments called for under the terms and provisions of the EMC Mortgage Loans to
the extent such procedures shall be consistent with the Agreement and the terms
and provisions of any related Required Insurance Policy. Consistent with the
foregoing, the EMC Servicer may in its discretion (i) waive any late payment
charge or penalty interest in connection with the prepayment of an EMC Mortgage
Loan and (ii) extend the due dates for payments due on a Mortgage Note for a
period not greater than 125 days. In the event of any such arrangement, the EMC
Servicer shall make Advances on the related EMC Mortgage Loan (except with
respect to principal on Simple Interest Loans) during the scheduled period in
accordance with the amortization schedule of such EMC Mortgage Loan without
modification thereof by reason of such arrangements, and shall be entitled to
reimbursement therefor in accordance with Section 2.01 of this Exhibit K. The
EMC Servicer shall not be required to institute or join in litigation with
respect to collection of any payment (whether under a Mortgage, Mortgage Note or
otherwise or against any public or governmental authority with respect to a
taking or condemnation) if it reasonably believes that enforcing the provision
of the Mortgage or other instrument pursuant to which such payment is required
is prohibited by applicable law. In addition, if (x) an EMC Mortgage Loan is in
default or default is imminent or (y) the EMC Servicer delivers to the Master
Servicer and the Trustee a certification, based on the advice of counsel or
certified public accountants, in either case, that have a national reputation
with respect to taxation of REMICs, that a modification of such EMC Mortgage
Loan will not result in the imposition of taxes on or disqualify any REMIC
formed under the Agreement, the EMC Servicer may, (A) amend the related Mortgage
Note to reduce the Mortgage Rate applicable thereto, provided that such reduced
Mortgage Rate shall in no event be lower than 7.5% and (B) amend any Mortgage
Note to extend to the maturity thereof.
(b) The EMC Servicer shall establish and maintain an Eligible Account with
a depositary institution in the name of the EMC Servicer for the benefit of the
Trustee on behalf of the Certificateholders and designated "XX Xxxxxx Xxxxx
Bank, in trust for registered holders of Bear Xxxxxxx Asset Backed Securities,
Inc., Asset-Backed Certificates Series 2003-1" (the "Protected Account"). The
Protected Account shall not be a part of the Trust Fund. The EMC Servicer shall
deposit or cause to be deposited into the Protected Account on a daily basis
within one Business Day of receipt, except as otherwise specifically provided
herein, the following payments and collections remitted by Subservicers or
received by it in respect of EMC Mortgage Loans subsequent to the Cut-off Date
(other than in respect of principal and interest due on the EMC Mortgage Loans,
other than Simple Interest Loans, on or before the Cut-off Date) and the
following amounts required to be deposited hereunder:
(i) all payments on account of principal, including Principal
Prepayments, on the EMC Mortgage Loans;
(ii) all payments on account of interest (other than, in the case of a
Simple Interest Loan, interest paid in excess of 30 days interest) on the
EMC Mortgage Loans net of the related Servicing Fee permitted under Section
1.16 of this Exhibit K;
(iii) all Liquidation Proceeds and Insurance Proceeds, other than
proceeds to be applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the EMC Servicer's
normal servicing procedures;
(iv) [Reserved];
(v) any amount required to be deposited by the EMC Servicer pursuant
to Section 1.05(d) of this Exhibit K in connection with any losses on
Permitted Investments;
(vi) any amounts required to be deposited by the EMC Servicer pursuant
to Section 1.10 of this Exhibit K; and
(vii) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the EMC Servicer into the
Protected Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of
Prepayment Charges, late payment charges or assumption fees, if collected, need
not be remitted by the EMC Servicer. In the event that the EMC Servicer shall
remit any amount not required to be remitted and not otherwise subject to
withdrawal pursuant to Section 1.08 of this Exhibit K, it may at any time
withdraw or direct the institution maintaining the Protected Account, to
withdraw such amount from the Protected Account, any provision herein to the
contrary notwithstanding. Such withdrawal or direction may be accomplished by
delivering written notice thereof to the institution maintaining the Protected
Account, that describes the amounts deposited in error in the Protected Account.
The EMC Servicer shall maintain adequate records with respect to all withdrawals
made pursuant to this Section. All funds deposited in the Protected Account
shall be held in trust for the Certificateholders until withdrawn in accordance
with Section 1.08 of this Exhibit K.
(c) [Reserved.]
(d) The institution that maintains the Protected Account shall invest the
funds in the Protected Account, in the manner directed by the EMC Servicer, in
Permitted Investments which shall mature not later than the second Business Day
next preceding the related Servicer Remittance Date (except that if such
Permitted Investment is an obligation of the institution that maintains such
Protected Account, then such Permitted Investment shall mature not later than
the Business Day next preceding such Servicer Remittance Date) and shall not be
sold or disposed of prior to its maturity. All such Permitted Investments shall
be made in the name of the Trustee, for the benefit of the Certificateholders.
All income and gain net of any losses realized from any such investment shall be
for the benefit of the EMC Servicer as servicing compensation and shall be
remitted to it monthly as provided herein. The amount of any losses incurred in
the Protected Account in respect of any such investments shall be deposited by
the EMC Servicer into the Protected Account, out of the EMC Servicer's own
funds.
(e) The EMC Servicer shall give at least 30 days advance notice to the
Master Servicer of any proposed change of location of the Protected Account
prior to any change thereof.
Section 1.06. COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS; ESCROW
ACCOUNTS.
To the extent required by the related Mortgage Note, the EMC Servicer shall
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the EMC Servicer) for the payment of taxes, assessments, hazard insurance
premiums or comparable items for the account of the Mortgagors. Nothing herein
shall require the EMC Servicer to compel a Mortgagor to establish an Escrow
Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
condominium or PUD association dues, or comparable items, to reimburse the EMC
Servicer out of related collections for any payments made pursuant to Section
1.01 of this Exhibit K (with respect to taxes and assessments and insurance
premiums) and Section 1.10 of this Exhibit K (with respect to hazard insurance),
to refund to any Mortgagors any sums as may be determined to be overages, to pay
interest, if required by law or the terms of the related Mortgage or Mortgage
Note, to Mortgagors on balances in the Escrow Account or to clear and terminate
the Escrow Account at the termination of the Agreement in accordance with
Section 10.01 thereof. The Escrow Account shall not be a part of the Trust Fund.
Section 1.07. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE
EMC MORTGAGE LOANS.
The EMC Servicer shall afford the Master Servicer, the Depositor and the
Trustee reasonable access to all records and documentation regarding the EMC
Mortgage Loans and all accounts, insurance policies and other matters relating
to the Agreement, such access being afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the EMC
Servicer designated by it.
Section 1.08. PERMITTED WITHDRAWALS FROM THE PROTECTED ACCOUNT.
(a) The EMC Servicer may from time to time make withdrawals from the
Protected Account for the following purposes:
(i) to pay to the EMC Servicer (to the extent not previously paid to
or withheld by the EMC Servicer), as servicing compensation in accordance
with Section 1.16 of this Exhibit K, that portion of any payment of
interest that equals the Servicing Fee for the period with respect to which
such interest payment was made, and, as additional servicing compensation,
those other amounts set forth in Section 1.16 of this Exhibit K;
(ii) to reimburse the EMC Servicer for Advances made by it with
respect to the EMC Mortgage Loans, provided, however, that the EMC
Servicer's right of reimbursement pursuant to this subclause (ii) shall be
limited to amounts received on particular EMC Mortgage Loan(s) (including,
for this purpose, Liquidation Proceeds) that represent late recoveries of
payments of principal and/or interest on such particular EMC Mortgage
Loan(s) in respect of which any such Advance was made;
(iii) to reimburse the EMC Servicer for any previously made portion of
a Servicing Advance or an Advance made by the EMC Servicer that, in the
good faith judgment of the EMC Servicer, will not be ultimately recoverable
by it from the related Mortgagor, any related Liquidation Proceeds or
otherwise (a "Nonrecoverable Advance"), to the extent not reimbursed
pursuant to clause (ii) or clause (v);
(iv) to reimburse the EMC Servicer from Insurance Proceeds for Insured
Expenses covered by the related Insurance Policy;
(v) to pay the EMC Servicer any unpaid Servicing Fees and to reimburse
it for any unreimbursed Servicing Advances, PROVIDED, HOWEVER, that the EMC
Servicer's right to reimbursement for Servicing Advances pursuant to this
subclause (v) with respect to any EMC Mortgage Loan shall be limited to
amounts received on particular EMC Mortgage Loan(s) (including, for this
purpose, Liquidation Proceeds and purchase and repurchase proceeds) that
represent late recoveries of the payments for which such Servicing Advances
were made;
(vi) to pay to the Seller, the Depositor, the Master Servicer or
itself, as applicable, with respect to each EMC Mortgage Loan or property
acquired in respect thereof that has been purchased pursuant to Section
2.02, 2.03 or 3.20 of the Agreement, all amounts received thereon and not
taken into account in determining the related Stated Principal Balance of
such repurchased EMC Mortgage Loan;
(vii) to pay any expenses recoverable by the EMC Servicer pursuant to
Sections 3.03, 7.01, 7.03, 7.04 and 9.05 of the Agreement;
(viii) to withdraw pursuant to Section 1.05 of this Exhibit K any
amount deposited in the Protected Account and not required to be deposited
therein; and
(ix) to clear and terminate the Protected Account upon termination of
the Agreement pursuant to Section 10.01 thereof.
(b) In addition, no later than 1:00 p.m. Central time on the Servicer
Remittance Date for the EMC Servicer, the EMC Servicer shall withdraw from the
Protected Account and remit to the Master Servicer the amount of Interest Funds
and Principal Funds collected, to the extent on deposit, and the Master Servicer
shall deposit such amount in the Master Servicer Collection Account.
The EMC Servicer shall keep and maintain separate accounting, on an EMC
Mortgage Loan by EMC Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Protected Account pursuant to subclauses (i), (ii), (iv),
(v) and (vi) above. Prior to making any withdrawal from the Protected Account
pursuant to subclause (iii), the EMC Servicer shall deliver to the Master
Servicer an Officer's Certificate of a Servicing Officer indicating the amount
of any previous Advance or Servicing Advance determined by the EMC Servicer to
be a Nonrecoverable Advance and identifying the related EMC Mortgage Loan(s),
and their respective portions of such Nonrecoverable Advance.
(c) [Reserved]
Section 1.09. [RESERVED.]
Section 1.10. MAINTENANCE OF HAZARD INSURANCE.
The EMC Servicer shall cause to be maintained, for each EMC Mortgage Loan,
hazard insurance on buildings upon, or comprising part of, the Mortgaged
Property against loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where the Mortgaged Property is located
with an insurer which is licensed to do business in the state where the
Mortgaged Property is located. Each such policy of standard hazard insurance
shall contain, or have an accompanying endorsement that contains, a standard
mortgagee clause. The EMC Servicer shall also cause flood insurance to be
maintained on property acquired upon foreclosure or deed in lieu of foreclosure
of any EMC Mortgage Loan, to the extent described below. Pursuant to Section
1.05 of this Exhibit K, any amounts collected by the EMC Servicer under any such
policies (other than the amounts to be applied to the restoration or repair of
the related Mortgaged Property or property thus acquired or amounts released to
the Mortgagor in accordance with the EMC Servicer's normal servicing procedures)
shall be deposited in the Protected Account. Any cost incurred by the EMC
Servicer in maintaining any such insurance shall not, for the purpose of
calculating monthly distributions to the Certificateholders or remittances to
the Trustee for their benefit, be added to the principal balance of the EMC
Mortgage Loan, notwithstanding that the terms of the EMC Mortgage Loan so
permit. Such costs shall be recoverable by the EMC Servicer out of late payments
by the related Mortgagor or out of Liquidation Proceeds to the extent permitted
by Section 1.08 of this Exhibit K. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor or
maintained on property acquired in respect of a Mortgage other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If the Mortgaged Property is located at
the time of origination of the EMC Mortgage Loan in a federally designated
special flood hazard area and such area is participating in the national flood
insurance program, the EMC Servicer shall cause flood insurance to be maintained
with respect to such EMC Mortgage Loan. Such flood insurance shall be in an
amount equal to the least of (i) the Stated Principal Balance of the related EMC
Mortgage Loan, (ii) minimum amount required to compensate for damage or loss on
a replacement cost basis or (iii) the maximum amount of such insurance available
for the related Mortgaged Property under the Flood Disaster Protection Act of
1973, as amended.
In the event that the EMC Servicer shall obtain and maintain a blanket
policy insuring against hazard losses on all of the EMC Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 1.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the EMC Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 1.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
Protected Account the amount not otherwise payable under the blanket policy
because of such deductible clause. Such deposit shall be from the EMC Servicer's
own funds without reimbursement therefor. In connection with its activities as
administrator and servicer of the EMC Mortgage Loans, the EMC Servicer agrees to
present, on behalf of itself, the Depositor and the Trustee for the benefit of
the Certificateholders, claims under any such blanket policy.
Section 1.11. ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.
(a) Except as otherwise provided in this Section 1.11(a), when any property
subject to a Mortgage has been or is about to be conveyed by the Mortgagor, the
EMC Servicer shall to the extent that it has knowledge of such conveyance,
enforce any due-on-sale clause contained in any Mortgage Note or Mortgage, to
the extent permitted under applicable law and governmental regulations, but only
to the extent that such enforcement will not adversely affect or jeopardize
coverage under any Required Insurance Policy. Notwithstanding the foregoing, the
EMC Servicer is not required to exercise such rights with respect to an EMC
Mortgage Loan if the Person to whom the related Mortgaged Property has been
conveyed or is proposed to be conveyed satisfies the terms and conditions
contained in the Mortgage Note and Mortgage related thereto and the consent of
the mortgagee under such Mortgage Note or Mortgage is not otherwise so required
under such Mortgage Note or Mortgage as a condition to such transfer. In the
event that the EMC Servicer is prohibited by law from enforcing any such
due-on-sale clause, or if coverage under any Required Insurance Policy would be
adversely affected, or if nonenforcement is otherwise permitted hereunder, the
EMC Servicer is authorized, subject to Section 1.11(b) of this Exhibit K, to
take or enter into an assumption and modification agreement from or with the
person to whom such property has been or is about to be conveyed, pursuant to
which such person becomes liable under the Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that the
EMC Mortgage Loan shall continue to be covered (if so covered before the EMC
Servicer enters such agreement) by the applicable Required Insurance Policies.
The EMC Servicer, subject to Section 1.11(b) of this Exhibit K, is also
authorized with the prior approval of the insurers under any Required Insurance
Policies to enter into a substitution of liability agreement with such Person,
pursuant to which the original Mortgagor is released from liability and such
Person is substituted as Mortgagor and becomes liable under the Mortgage Note.
Notwithstanding the foregoing, the EMC Servicer shall not be deemed to be in
default under this Section 1.11(a) by reason of any transfer or assumption that
the EMC Servicer reasonably believes it is restricted by law from preventing.
(b) Subject to the EMC Servicer's duty to enforce any due-on-sale clause to
the extent set forth in Section 1.11(a) of this Exhibit K, in any case in which
a Mortgaged Property has been conveyed to a Person by a Mortgagor, and such
Person is to enter into an assumption agreement or modification agreement or
supplement to the Mortgage Note or Mortgage that requires the signature of the
Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the EMC Mortgage Loan, the EMC
Servicer shall prepare and deliver or cause to be prepared and delivered to the
Trustee for signature and shall direct, in writing, the Trustee to execute the
assumption agreement with the Person to whom the Mortgaged Property is to be
conveyed and such modification agreement or supplement to the Mortgage Note or
Mortgage or other instruments as are reasonable or necessary to carry out the
terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged Property
to such Person. In connection with any such assumption, no material term of the
Mortgage Note (including, but not limited to, the Mortgage Rate, the amount of
the Scheduled Payment and any other term affecting the amount or timing of
payment on the EMC Mortgage Loan) may be changed. In addition, the substitute
Mortgagor and the Mortgaged Property must be acceptable to the EMC Servicer in
accordance with its servicing standards as then in effect. The EMC Servicer
shall notify the Trustee that any such substitution or assumption agreement has
been completed by forwarding to the Trustee the original of such substitution or
assumption agreement, which in the case of the original shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Any fee collected by the EMC Servicer for entering
into an assumption or substitution of liability agreement will be retained by
the EMC Servicer as additional servicing compensation.
Section 1.12. REALIZATION UPON DEFAULTED EMC MORTGAGE LOANS; DETERMINATION
OF EXCESS LIQUIDATION PROCEEDS AND REALIZED LOSSES;
REPURCHASE OF CERTAIN EMC MORTGAGE LOANS.
(a) The EMC Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
EMC Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the EMC Servicer shall
follow such practices and procedures as it shall deem necessary or advisable and
as shall be normal and usual in its general mortgage servicing activities and
the requirements of the insurer under any Required Insurance Policy; provided
that the EMC Servicer shall not be required to expend its own funds in
connection with any foreclosure or towards the restoration of any property
unless it shall determine (i) that such restoration and/or foreclosure will
increase the proceeds of liquidation of the EMC Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Protected Account pursuant to
Section 1.08 of this Exhibit K). If the EMC Servicer reasonably believes that
Liquidation Proceeds with respect to any such EMC Mortgage Loan would not be
increased as a result of such foreclosure or other action, such EMC Mortgage
Loan will be charged-off and will become a Liquidated Loan. The EMC Servicer
will give notice of any such charge-off to the Master Servicer, the Trustee and
the Securities Administrator. The EMC Servicer shall be responsible for all
other costs and expenses incurred by it in any such proceedings; provided that
such costs and expenses shall be Servicing Advances and that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property, as contemplated in Section 1.08 of this Exhibit K.
If the EMC Servicer has knowledge that a Mortgaged Property that the EMC
Servicer is contemplating acquiring in foreclosure or by deed-in-lieu of
foreclosure is located within a one-mile radius of any site with environmental
or hazardous waste risks known to the EMC Servicer, the EMC Servicer will, prior
to acquiring the Mortgaged Property, consider such risks and only take action in
accordance with its established environmental review procedures.
With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee for the benefit of the Certificateholders (or
the Trustee's nominee on behalf of the Certificateholders). The Trustee's name
shall be placed on the title to such REO Property solely as the Trustee
hereunder and not in its individual capacity. The EMC Servicer shall ensure that
the title to such REO Property references the Agreement and the Trustee's
capacity thereunder. Pursuant to its efforts to sell such REO Property, the EMC
Servicer shall either itself or through an agent selected by the EMC Servicer
protect and conserve such REO Property in the same manner and to such extent as
is customary in the locality where such REO Property is located and may,
incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the EMC Servicer
deems to be in the best interest of the EMC Servicer and the Certificateholders
for the period prior to the sale of such REO Property. The EMC Servicer shall
prepare for and deliver to the Master Servicer, the Securities Administrator and
the Trustee a statement with respect to each REO Property that has been rented
showing the aggregate rental income received and all expenses incurred in
connection with the management and maintenance of such REO Property at such
times as is necessary to enable the Master Servicer, the Securities
Administrator or the Trustee to comply with the reporting requirements of the
REMIC Provisions. The net monthly rental income, if any, from such REO Property
shall be deposited in the Protected Account no later than the close of business
on each Determination Date. The EMC Servicer shall perform the tax reporting and
withholding related to foreclosures, abandonments and cancellation of
indebtedness income as specified by Sections 1445, 6050J and 6050P of the Code
by preparing and filing such tax and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on an
EMC Mortgage Loan, the EMC Servicer shall dispose of such Mortgaged Property
prior to three years after its acquisition by the Trust Fund or, at the expense
of the Trust Fund, request more than 60 days prior to the day on which such
three-year period would otherwise expire, an extension of the three-year grace
period unless the Trustee shall have been supplied with an Opinion of Counsel
(such opinion not to be an expense of the Trustee) to the effect that the
holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of REMIC I, REMIC II or REMIC III as defined in section 860F of
the Code or cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a
REMIC at any time that any Certificates are outstanding, in which case the Trust
Fund may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel). Notwithstanding any other provision of
the Agreement, no Mortgaged Property acquired by the Trust Fund shall be rented
(or allowed to continue to be rented) or otherwise used for the production of
income by or on behalf of the Trust Fund in such a manner or pursuant to any
terms that would (i) cause such Mortgaged Property to fail to qualify as
"foreclosure property" within the meaning of section 860G(a)(8) of the Code or
(ii) subject any of REMIC I, REMIC II or REMIC III to the imposition of any
federal, state or local income taxes on the income earned from such Mortgaged
Property under section 860G(c) of the Code or otherwise, unless the EMC Servicer
has agreed to indemnify and hold harmless the Trust Fund with respect to the
imposition of any such taxes.
The decision of the EMC Servicer to foreclose on a defaulted EMC Mortgage
Loan shall be subject to a determination by the EMC Servicer that the proceeds
of such foreclosure would exceed the costs and expenses of bringing such a
proceeding. The income earned from the management of any Mortgaged Properties
acquired through foreclosure or other judicial proceeding, net of reimbursement
to the EMC Servicer for expenses incurred (including any property or other
taxes) in connection with such management and net of unreimbursed Servicing
Fees, Advances, Servicing Advances and any management fee paid or to be paid
with respect to the management of such Mortgaged Property, shall be applied to
the payment of principal of, and interest on, the related defaulted EMC Mortgage
Loans (with interest accruing as though such EMC Mortgage Loans were still
current) and all such income shall be deemed, for all purposes in the Agreement,
to be payments on account of principal and interest on the related Mortgage
Notes and shall be deposited into the Protected Account. To the extent the
income received during a Prepayment Period is in excess of the amount
attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related EMC Mortgage Loan, such excess shall be considered
to be a partial Principal Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of an EMC Mortgage Loan, net
of any payment to the EMC Servicer as provided above, shall be deposited in the
Protected Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date, except that any
Excess Liquidation Proceeds shall be retained by the EMC Servicer as additional
servicing compensation.
The proceeds of any Liquidated Loan, as well as any recovery resulting from
a partial collection of Liquidation Proceeds or any income from an REO Property,
will be applied in the following order of priority: first, to reimburse the EMC
Servicer for any related unreimbursed Servicing Advances and Servicing Fees,
pursuant to Section 1.08(a)(v) of this Exhibit K or this Section 1.12; second,
to reimburse the EMC Servicer for any unreimbursed Advances, pursuant to Section
1.08(a)(ii) of this Exhibit K or this Section 1.12; third, to accrued and unpaid
interest (to the extent no Advance has been made for such amount) on the EMC
Mortgage Loan or related REO Property, at the Net Mortgage Rate to the first day
of the month in which such amounts are required to be distributed; and fourth,
as a recovery of principal of the EMC Mortgage Loan.
(b) On each Determination Date, the EMC Servicer shall determine the
respective aggregate amounts of Excess Liquidation Proceeds and Realized Losses,
if any, for the related Prepayment Period.
(c) [Reserved].
(d) The EMC Servicer has no intent to foreclose on any EMC Mortgage Loan
based on the delinquency characteristics as of the Closing Date; provided, that
the foregoing does not prevent the EMC Servicer from initiating foreclosure
proceedings on any date hereafter if the facts and circumstances of such EMC
Mortgage Loans including delinquency characteristics in the EMC Servicer's
discretion so warrant such action.
Section 1.13. REO PROPERTY.
(a) In the event the Trust Fund acquires ownership of any REO Property in
respect of any EMC Mortgage Loan, the deed or certificate of sale shall be
issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The EMC Servicer shall sell any such REO Property as
expeditiously as possible and in accordance with the provisions of this
Agreement. Pursuant to its efforts to sell such REO Property, the EMC Servicer
shall protect and conserve such REO Property in the manner and to the extent
required herein, subject to the REMIC Provisions.
(b) The EMC Servicer shall deposit all funds collected and received in
connection with the operation of any such REO Property into the Protected
Account.
(c) The EMC Servicer, upon the final disposition of any such REO Property,
shall be entitled to reimbursement for any related unreimbursed Advances,
unreimbursed Servicing Advances or Servicing Fees from Liquidation Proceeds
received in connection with the final disposition of such REO Property;
provided, that any such unreimbursed Advances or Servicing Fees as well as any
unpaid Servicing Fees may be reimbursed or paid, as the case may be, prior to
final disposition, out of any net rental income or other net amounts derived
from such REO Property.
Section 1.14. PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.
The EMC Servicer shall prepare and present on behalf of the Trustee and the
Certificateholders all claims under the Insurance Policies, including the
Supplemental Primary Mortgage Insurance Policy, relating to the EMC 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 Insurance Policies. Any proceeds disbursed to the EMC Servicer in
respect of such Insurance Policies shall be promptly deposited in the Protected
Account upon receipt, except that any amounts realized that are to be applied to
the repair or restoration of the related Mortgaged Property as a condition
precedent to the presentation of claims on the related Mortgage Loan to the
insurer under any applicable Insurance Policy need not be so deposited.
Section 1.15. DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF EMC SERVICER TO
BE HELD FOR THE TRUSTEE.
Notwithstanding any other provisions of the Agreement, the EMC Servicer
shall transmit to the Custodian on behalf of the Trustee as required by the
Agreement all documents and instruments in respect of an EMC Mortgage Loan
coming into the possession of the EMC Servicer from time to time and shall
account fully to the Trustee for any funds received by the EMC Servicer or that
otherwise are collected by the EMC Servicer as Liquidation Proceeds or Insurance
Proceeds in respect of any EMC Mortgage Loan. All Mortgage Files and funds
collected or held by, or under the control of, the EMC Servicer in respect of
any EMC Mortgage Loans, whether from the collection of principal and interest
payments or from Liquidation Proceeds, including but not limited to, any funds
on deposit in the Protected Account, shall be held by the EMC Servicer for and
on behalf of the Trustee and shall be and remain the sole and exclusive property
of the Trustee, subject to the applicable provisions of the Agreement. The EMC
Servicer also agrees that it shall not create, incur or subject any Mortgage
File or any funds that are deposited in the Protected Account or the Master
Servicer Collection Account or in any Escrow Account, or any funds that
otherwise are or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, an EMC Mortgage Loan, except, however, that the EMC
Servicer shall be entitled to set off against and deduct from any such funds any
amounts that are properly due and payable to the EMC Servicer under the
Agreement.
Section 1.16. SERVICING COMPENSATION.
As compensation for its activities hereunder, the EMC Servicer shall be
entitled to retain or withdraw from the Protected Account out of each payment of
interest on an EMC Mortgage Loan included in the Trust Fund an amount equal to
its Servicing Fee at the per annum rate set forth on the Mortgage Loan Schedule
(the "Servicing Fee Rate") on the Stated Principal Balance of the related EMC
Mortgage Loan for the period covered by such interest payment.
Additional servicing compensation in the form of any Excess Liquidation
Proceeds, assumption fees, late payment charges, Prepayment Charges, all income
and gain net of any losses realized from Permitted Investments with respect to
funds in or credited to the Protected Account shall be retained by the EMC
Servicer to the extent not required to be deposited in the Protected Account
pursuant to Section 1.05 or 1.12(a) of this Exhibit K, and with respect to any
Due Date, any interest paid on Simple Interest Loans in excess of 30 days
interest. The EMC Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder (including payment of any
premiums for hazard insurance, as required by Section 1.10 of this Exhibit K and
maintenance of the other forms of insurance coverage required by Section 1.10 of
this Exhibit K) and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 1.08 and 1.12 of this Exhibit K.
Section 1.17. ACCESS TO CERTAIN DOCUMENTATION.
The EMC Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to any documentation as may be held by the EMC Servicer regarding the EMC
Mortgage Loans required by applicable regulations of the OTS and the FDIC. Such
access shall be afforded without charge, but only upon reasonable and prior
written request and during normal business hours at the offices of the EMC
Servicer designated by it. Nothing in this Section shall limit the obligation of
the EMC Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors and the failure of the EMC Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
Section 1.18. MAINTENANCE OF PRIMARY MORTGAGE INSURANCE POLICIES.
(a) The EMC Servicer shall not take any action that would result in
noncoverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of the EMC Servicer, would have been covered
thereunder. The EMC Servicer shall use its best efforts to keep in force and
effect (to the extent that the Mortgage Loan requires the Mortgagor to maintain
such insurance), each Primary Mortgage Insurance Policy applicable to any
Mortgage Loan. The EMC Servicer shall not cancel or refuse to renew any such
Primary Mortgage Insurance Policy that is in effect at the date of the initial
issuance of a Mortgage Note and is required to be kept in force hereunder.
Notwithstanding the foregoing, the EMC Servicer shall not be required to keep in
force any Primary Mortgage Insurance Policy beyond the period required by the
Xxxxxx Xxx Servicing Guide for residential mortgage loans.
(b) The EMC Servicer agrees to present, on behalf of the Trustee and the
Certificateholders, claims to the insurer under any Primary Mortgage Insurance
Policy and, in this regard, to take such reasonable action as shall be necessary
to permit recovery under any Primary Mortgage Insurance Policy respecting
defaulted Mortgage Loans. Pursuant to Section 1.08 of this Exhibit K, any
amounts collected by the EMC Servicer under any Primary Mortgage Insurance
Policies shall be deposited in the Protected Account, subject to withdrawal
pursuant to Section 1.08 of this Exhibit K. The Trustee shall provide the EMC
Servicer with any powers of attorney and or other documentation as it may
request in order enable it to perform its obligations pursuant to this Section
1.18.
Section 1.19. FIDELITY BOND, ERRORS AND OMISSIONS INSURANCE.
The EMC Servicer shall maintain, at its own expense, a blanket fidelity
bond and an errors and omissions insurance policy, with broad coverage with
responsible companies on all officers, employees or other persons acting in any
capacity with regard to the EMC Mortgage Loans and who handle funds, money,
documents and papers relating to the EMC Mortgage Loans. The fidelity bond and
errors and omissions insurance shall be in the form of the Mortgage Banker's
Blanket Bond and shall protect and insure the EMC Servicer against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons. Such fidelity bond shall also protect and insure
the EMC Servicer against losses in connection with the failure to maintain any
insurance policies required pursuant to the Agreement and the release or
satisfaction of an EMC Mortgage Loan which is not serviced in accordance with
the requirements of Section 1.01. No provision on this Section 1.19 requiring
the fidelity bond and errors and omissions insurance shall diminish or relieve
the EMC Servicer from its duties and obligations as set forth in the Agreement.
The minimum coverage under any such bond and insurance policy shall be at least
equal to the coverage acceptable to Xxxxxx Xxx or Xxxxxxx Mac for persons
performing servicing for loans purchased by Xxxxxx Mae or Xxxxxxx Mac. The EMC
Servicer shall notify the Master Servicer and the Trustee within five business
days of receipt of notice that such fidelity bond or insurance policy will be,
or has been, materially modified or terminated. The Trustee for the benefit of
the Certificateholders must be named as loss payee on the fidelity bond and as
additional insured on the errors and omissions policy.
ARTICLE II.
ADVANCES BY THE EMC SERVICER
Section 2.01. ADVANCES.
The EMC Servicer shall make an Advance and deposit such Advance in the
Protected Account. Each such Advance shall be remitted to the Master Servicer
Collection Account no later than 1:00 p.m. Central time on the related Servicer
Remittance Date in immediately available funds. The EMC Servicer shall be
obligated to make any such Advance only to the extent that such advance would
not be a Nonrecoverable Advance. If the EMC Servicer shall have determined that
it has made a Nonrecoverable Advance or that a proposed Advance or a lesser
portion of such Advance would constitute a Nonrecoverable Advance, the EMC
Servicer shall deliver to the Master Servicer (i) funds constituting the
remaining portion of such Advance, if applicable, and (ii) an Officer's
Certificate setting forth the basis for such determination.
In lieu of making all or a portion of such Advance from its own funds, the
EMC Servicer may (i) cause to be made an appropriate entry in its records
relating to the Protected Account that any Amount Held for Future Distributions
has been used by the EMC Servicer in discharge of its obligation to make any
such Advance and (ii) transfer such funds from the Protected Account to the
Master Servicer Collection Account. Any funds so applied and transferred shall
be replaced by the EMC Servicer by deposit in the Protected Account no later
than the close of business on the Business Day immediately preceding the
Servicer Remittance Date on which such funds are required to be remitted to the
Master Servicer for deposit into the Master Servicer Collection Account. The EMC
Servicer shall be entitled to be reimbursed from the Protected Account for all
Advances of its own funds made pursuant to this Section as provided in Section
1.08 of this Exhibit K. The obligation to make Advances with respect to any EMC
Mortgage Loan shall continue until such EMC Mortgage Loan is paid in full or the
related Mortgaged Property or related REO Property has been liquidated or until
the purchase or repurchase thereof (or substitution therefor) from the Trust
Fund pursuant to any applicable provision of the Agreement, except as otherwise
provided in this Section 2.01.
Section 2.02. REDUCTION OF SERVICING COMPENSATION IN CONNECTION WITH
PREPAYMENT INTEREST SHORTFALLS.
In the event that, for any Prepayment Period, there is a Prepayment
Interest Shortfall arising from a voluntary Principal Prepayment in part or in
full by a Mortgagor, the EMC Servicer shall, to the extent of its Servicing Fee
and in reduction thereof, remit to the Master Servicer, for deposit into the
Master Servicer Collection Account, no later than 1:00 p.m. Central time on the
Servicer Remittance Date, an amount equal to the Prepayment Interest Shortfall;
and in case of such deposit, the EMC Servicer shall not be entitled to any
recovery or reimbursement from the Depositor, the Trustee, the Seller, the
Securities Administrator, the Master Servicer, any other Servicer, the Trust
Fund or the Certificateholders.
ARTICLE III.
REPORTING REQUIREMENTS
Section 3.01. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
(a) The EMC Servicer shall deliver to the Master Servicer by March 1, 2004,
and by March 1 of each year thereafter, an Officer's Certificate, certifying
that with respect to the most recently ended calendar year: (i) such Servicing
Officer has reviewed the activities of the EMC Servicer during the preceding
calendar year or portion thereof and its performance under the Agreement and
(ii) to the best of such Servicing Officer's knowledge, based on such review,
the EMC Servicer has performed and fulfilled its duties, responsibilities and
obligations under the 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.
(b) ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT. The EMC Servicer, at
its expense, shall cause a nationally recognized firm of independent certified
public accountants to furnish a statement to the Master Servicer by March 1,
2004, and by March 1 of each year thereafter, to the effect that, with respect
to the most recently ended calendar year, such firm has examined certain records
and documents relating to the EMC Servicer's performance of its servicing
obligations under this Agreement and pooling and servicing and trust agreements
in material respects similar to this Agreement and to each other and that, on
the basis of such examination conducted substantially in compliance with the
audit program for mortgages serviced for Xxxxxxx Mac or the Uniform Single
Attestation Program for Mortgage Bankers, such firm is of the opinion that the
EMC Servicer's activities have been conducted in compliance with the Agreement,
or that such examination has disclosed no material items of noncompliance except
for (i) such exceptions as such firm believes to be immaterial, (ii) such other
exceptions as are set forth in such statement and (iii) such exceptions that the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages Serviced by Xxxxxxx Mac requires it to report. If any such report
discloses exceptions that are material, the EMC Servicer shall advise the Master
Servicer whether such exceptions have been or are susceptible of cure, and will
take prompt action to do so.
(c) ANNUAL CERTIFICATION. (i) The EMC Servicer will deliver to the Master
Servicer, on or before March 1 of each year beginning March 1, 2004 (or, if any
such day is not a Business Day, the immediately preceding Business Day), or on
any alternative date specified by the Master Servicer upon thirty (30) days
written request, a certification containing the information set forth in
Attachment 1 to this Exhibit K. Such certification shall be signed by the senior
officer in charge of servicing of the EMC Servicer. In addition, the EMC
Servicer shall provide such other information with respect to the EMC Mortgage
Loans and the servicing and administration thereof within the control of the EMC
Servicer which shall be required to enable the Master Servicer to comply with
the reporting requirements of the Securities and Exchange Act of 1934, as
amended.
(ii) The EMC Servicer shall indemnify and hold harmless the Master
Servicer and its 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 EMC Servicer or any of its
officers, directors, agents or affiliates of its obligations under this
Section 3.01(c) or the EMC Servicer's negligence, bad faith or willful
misconduct in connection therewith. If the indemnification provided for
herein is unavailable or insufficient to hold harmless the Master Servicer,
then the EMC Servicer 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 EMC Servicer on the other in connection with a breach of the EMC
Servicer's obligations under this Section 3.01(c).
Section 3.02. LIQUIDATION REPORTS.
Upon the foreclosure of any Mortgaged Property relating to an EMC Mortgage
Loan or the acquisition thereof by the Trust Fund pursuant to a deed-in-lieu of
foreclosure, the EMC Servicer shall submit a liquidation report to the Master
Servicer containing such information as shall be mutually acceptable to the EMC
Servicer and the Master Servicer with respect to such Mortgaged Property.
Section 3.03. BOOKS AND RECORDS.
The EMC Servicer shall be responsible for maintaining, and shall maintain,
a complete set of books and records for the EMC Mortgage Loans which shall be
appropriately identified in the EMC Servicer's computer system to clearly
reflect the ownership of the EMC Mortgage Loans by the Trust. In particular, the
EMC Servicer shall maintain in its possession, available for inspection by the
Master Servicer and the Trustee and shall deliver to the Master Servicer and the
Trustee upon demand, evidence of compliance with all federal, state and local
laws, rules and regulations. To the extent that original documents are not
required for purposes of realization of Liquidation Proceeds or Insurance
Proceeds, documents maintained by the EMC Servicer may be in the form of
microfilm or microfiche or such other reliable means of recreating original
documents, including, but not limited to, optical imagery techniques so long as
the EMC Servicer complies with the servicing requirements of Section 1.01 of
this Exhibit K.
The EMC Servicer shall maintain with respect to each EMC Mortgage Loan and
shall make available for inspection by the Master Servicer and the Trustee the
related servicing file during the time such EMC Mortgage Loan is subject to the
Agreement and thereafter in accordance with applicable law.
ARTICLE IV.
INDEMNIFICATION
Section 4.01. INDEMNIFICATION OF THE MASTER SERVICER.
(a) To the extent not covered by the provisions of Section 3.01(c)(ii) of
this Exhibit K, the EMC Servicer shall indemnify and hold harmless the Master
Servicer from any loss, liability or expense (except as otherwise provided
herein with respect to expenses) (including reasonable legal fees and
disbursements of counsel) incurred on its part that may be sustained in
connection with, arising out of, or relating to enforcement of the EMC
Servicer's obligations under the Agreement (i) related to the EMC Servicer's
failure to perform its duties in compliance with the Agreement or (ii) incurred
by reason of the EMC Servicer's willful misfeasance, bad faith or gross
negligence in the performance of its duties under the Agreement or by reason of
its reckless disregard of its obligations and duties under the Agreement,
provided, in each case, that with respect to any such claim or legal action (or
pending or threatened claim or legal action), the Master Servicer shall have
given the EMC Servicer written notice thereof promptly after a Responsible
Officer of the Master Servicer shall have with respect to such claim or legal
action actual knowledge thereof. The Master Servicer's failure to give such
notice shall not affect its right to indemnification hereunder. This indemnity
shall survive the resignation or removal of the Trustee, the Master Servicer,
the EMC Servicer or the Securities Administrator and the termination of the
Agreement.
(b) The Trust Fund will indemnify the Master Servicer for any loss,
liability or expense of the Master Servicer referred to in Subsection (a) above
that has not otherwise been paid by the EMC Servicer.
ATTACHMENT 1 TO EXHIBIT K
This certificate is being delivered pursuant to Section 3.01(c) of Exhibit
K to the Pooling and Servicing Agreement, dated as of February 1, 2003 (the
"Agreement"), among Bear Xxxxxxx Asset Backed Securities, Inc,. as depositor,
EMC Mortgage Corporation (the "Company"), as seller and servicer, Xxxxx Fargo
Bank, National Association, as master servicer and securities administrator, and
JPMorgan Chase Bank, as trustee. Capitalized terms used herein and not otherwise
defined have the meanings set forth in the Agreement.
I certify that:
(i) I am a _______________ of the Company.
(ii) Based on my knowledge, the information in the annual statement of
compliance furnished in March 20__ pursuant to Section 3.01(a) of Exhibit K of
the Agreement and the annual independent certified public accountants' servicing
report delivered pursuant to Section 3.01(b) thereof (collectively, the
"Reports"), and all servicing reports, office's certificates and other
information relating to the EMC 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 date of this certification.
(iii) The servicing information required to be provided to the Master
Servicer by the Company under the Agreement has been provided to the Master
Servicer.
(iv) I am responsible for reviewing the servicing activities performed by
the Company pursuant to the Agreement, and except as disclosed in the Reports,
the Company has, as of the date of this Certification, fulfilled its obligations
under the Agreement.
(v) I have disclosed to the Master Servicer all significant deficiencies
relating to the Company'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
Agreement.
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Dated: March __, 20__