STRUCTURED ASSET MORTGAGE INVESTMENTS INC.,
SELLER
JPMORGAN CHASE BANK,
TRUSTEE
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
MASTER SERVICER AND SECURITIES ADMINISTRATOR
and
EMC MORTGAGE CORPORATION
____________________________________________
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 2003
____________________________________________
Prime Mortgage
Mortgage Pass-Through Certificates
Series 2003-1
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01 Conveyance of Mortgage Loans to Trustee........................35
Section 2.02 Acceptance of Mortgage Loans by Trustee........................37
Section 2.03 Assignment of Interest in the Mortgage Loan Purchase Agreement.39
Section 2.04 Substitution of Mortgage Loans.................................40
Section 2.05 Issuance of Certificates.......................................41
Section 2.06 Representations and Warranties Concerning the Seller...........42
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01 Master Servicer................................................44
Section 3.02 REMIC-Related Covenants........................................45
Section 3.03 Monitoring of Servicers........................................45
Section 3.04 Fidelity Bond..................................................46
Section 3.05 Power to Act; Procedures.......................................46
Section 3.06 Due-on-Sale Clauses; Assumption Agreements.....................47
Section 3.07 Release of Mortgage Files......................................47
Section 3.08 Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee................................48
Section 3.09 Standard Hazard Insurance and Flood Insurance Policies.........49
Section 3.10 Presentment of Claims and Collection of Proceeds...............49
Section 3.11 Maintenance of the Primary Mortgage Insurance Policies.........49
Section 3.12 Trustee to Retain Possession of Certain Insurance Policies
and Documents..................................................50
Section 3.13 Realization Upon Defaulted Mortgage Loans......................50
Section 3.14 Compensation for the Master Servicer...........................50
Section 3.15 REO Property...................................................51
Section 3.16 Annual Officer's Certificate as to Compliance..................51
Section 3.17 Annual Independent Accountant's Servicing Report...............52
Section 3.18 ...............................................................52
Section 3.19 EMC............................................................53
Section 3.20 UCC............................................................53
Section 3.21 Optional Purchase of Defaulted Mortgage Loans..................53
ARTICLE IV
Accounts
Section 4.01 Protected Accounts.............................................55
Section 4.02 Master Servicer Collection Account.............................56
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Section 4.03 Permitted Withdrawals and Transfers from the Master Servicer
Collection Account.............................................57
Section 4.04 Distribution Account...........................................58
Section 4.05 Permitted Withdrawals and Transfers from the Distribution
Account........................................................58
ARTICLE V
Certificates
Section 5.01 Certificates...................................................61
Section 5.02 Registration of Transfer and Exchange of Certificates..........67
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates..............71
Section 5.04 Persons Deemed Owners..........................................71
Section 5.05 Transfer Restrictions on Residual Certificates.................71
Section 5.06 Restrictions on Transferability of Certificates................72
Section 5.07 ERISA Restrictions.............................................73
Section 5.08 Rule 144A Information..........................................74
ARTICLE VI
Payments to Certificateholders
Section 6.01 Distributions on the Certificates..............................75
Section 6.02 Allocation of Losses...........................................79
Section 6.03 Payments.......................................................81
Section 6.04 Statements to Certificateholders...............................82
Section 6.05 Monthly Advances...............................................84
Section 6.06 Compensating Interest Payments.................................85
Policy Matters................................................................85
Reserve Fund..................................................................88
Rounding Account..............................................................88
Principal Distributions on the Insured Certificates...........................89
ARTICLE VII
The Master Servicer
Section 7.01 Liabilities of the Master Servicer.............................94
Section 7.02 Merger or Consolidation of the Master Servicer.................94
Section 7.03 Indemnification of the Trustee, the Master Servicer and the
Securities Administrator.......................................94
Section 7.04 Limitations on Liability of the Master Servicer and Others.....95
Section 7.05 Master Servicer Not to Resign..................................96
Section 7.06 Successor Master Servicer......................................96
Section 7.07 Sale and Assignment of Master Servicing........................96
ARTICLE VIII
Default
Section 8.01 Events of Default...........................................98
Section 8.02 Trustee to Act; Appointment of Successor...................100
Section 8.03 Notification to Certificateholders.........................101
Section 8.04 Waiver of Defaults.........................................101
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Section 8.05 List of Certificateholders....................................101
ARTICLE IX
Concerning the Trustee and the Securities Administrator
Section 9.01 Duties of Trustee.............................................102
Section 9.02 Certain Matters Affecting the Trustee and the Securities
Administrator.................................................104
Section 9.03 Trustee and Securities Administrator Not Liable for
Certificates or Mortgage Loans................................106
Section 9.04 Trustee and Securities Administrator May Own Certificates.....106
Section 9.05 Trustee's and Securities Administrator's Fees and Expenses....106
Section 9.06 Eligibility Requirements for Trustee and Securities
Administrator.................................................107
Section 9.07 Insurance.....................................................107
Section 9.08 Resignation and Removal of the Trustee and Securities
Administrator.................................................107
Section 9.09 Successor Trustee and Successor Securities Administrator......108
Section 9.10 Merger or Consolidation of Trustee or Securities
Administrator.................................................109
Section 9.11 Appointment of Co-Trustee or Separate Trustee.................109
Section 9.12 Federal Information Returns and Reports to Certificateholders;
REMIC Administration..........................................110
ARTICLE X
Termination
Section 10.01 Termination Upon Repurchase by the Seller or its Designee
or Liquidation of the Mortgage Loans..........................113
Section 10.02 Additional Termination Requirements...........................115
ARTICLE XI
Miscellaneous Provisions
Section 11.01 Intent of Parties.............................................117
Section 11.02 Amendment.....................................................117
Section 11.03 Recordation of Agreement......................................118
Section 11.04 Limitation on Rights of Certificateholders....................118
Section 11.05 Acts of Certificateholders....................................119
Section 11.06 Governing Law.................................................120
Section 11.07 Notices.......................................................120
Section 11.08 Severability of Provisions....................................121
Section 11.09 Successors and Assigns........................................121
Section 11.10 Article and Section Headings..................................121
Section 11.11 Counterparts..................................................121
Section 11.12 Notice to Rating Agencies.....................................121
Section 11.13 MBIA Rights...................................................121
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EXHIBITS
Exhibit A-1 - Form of Class [A-_][X] Certificates
Exhibit A-2 - Form of Class B Certificates
Exhibit A-3 - Form of Class R Certificates
Exhibit A-4 - Form of Class PO Certificates
Exhibit B - Mortgage Loan Schedule
Exhibit C - [Reserved]
Exhibit D - Request for Release of Documents
Exhibit E - Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1 - Form of Investment Letter
Exhibit F-2 - Form of Rule 144A and Related Matters Certificate
Exhibit G - Form of Custodial Agreement
Exhibit H-1 to H-3 - Servicing Agreements
Exhibit I - Assignment Agreements
Exhibit J - Mortgage Loan Purchase Agreement
Exhibit K - Certificate Guaranty Insurance Policy
Exhibit L - Planned Principal Amounts and Target Principal Amounts
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POOLING AND SERVICING AGREEMENT
-------------------------------
Pooling and Servicing Agreement dated as of May 1, 2003, among Structured
Asset Mortgage Investments Inc., a Delaware corporation, as seller (the
"Seller"), JPMorgan Chase Bank, a New York banking corporation, not in its
individual capacity but solely as trustee (the "Trustee"), Xxxxx Fargo Bank
Minnesota, National Association, as master servicer (in such capacity, the
"Master Servicer") and as securities administrator (in such capacity, the
"Securities Administrator"), and EMC Mortgage Corporation ("EMC").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Seller acquired the Mortgage Loans
from EMC. On the Closing Date, the Seller will sell the Mortgage Loans and
certain other property to the Trust Fund and receive in consideration therefor
Certificates evidencing the entire beneficial ownership interest in the Trust
Fund.
The Trustee on behalf of the Trust shall make an election for the assets
constituting REMIC I (excluding the Reserve Fund and the Rounding Account) to be
treated for federal income tax purposes as a REMIC. On the Startup Day, the
REMIC I Regular Interests will be designated "regular interests" in such REMIC
and the Class R-I Certificate will be designated the "residual interest" in such
REMIC.
The Trustee on behalf of the Trust shall make an election for the assets
constituting REMIC II to be treated for federal income tax purposes as a REMIC.
On the Startup Day, the REMIC II Regular Interests will be designated "regular
interests" in such REMIC and the Class R-II Certificate will be designated the
"residual interest" in such REMIC.
The Mortgage Loans will have an Outstanding Principal Balance as of the
Cut-off Date, after deducting all Scheduled Principal due on or before the
Cut-off Date, of approximately $347,452,706. The initial principal amount of the
Certificates will not exceed such Outstanding Principal Balance.
In consideration of the mutual agreements herein contained, the Seller, the
Master Servicer, the Securities Administrator, EMC and the Trustee agree as
follows:
ARTICLE I
Definitions
Whenever used in this Agreement, the following words and phrases, unless
otherwise expressly provided or unless the context otherwise requires, shall
have the meanings specified in this Article.
ACCEPTED MASTER SERVICING PRACTICES: With respect to any Mortgage Loan, as
applicable, either (x) 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 Trustee or the
Master Servicer (except in its capacity as successor to a Servicer), or (y) as
provided in the applicable Servicing Agreement, to the extent applicable to any
Servicer, but in no event below the standard set forth in clause (x).
ACCOUNT: The Master Servicer Collection Account and the Protected Account
as the context may require.
ACCRUED CERTIFICATE INTEREST: For any Certificate (other than a Principal
Only Certificate) for any Distribution Date, the interest accrued during the
related Interest Accrual Period at the applicable Pass-Through Rate on the
Current Principal Amount, or in the case of the Interest Only Certificates, the
Notional Amount of such Certificate immediately prior to such Distribution Date,
on the basis of a 360-day year consisting of twelve 30-day months, less (i) in
the case of an interest-bearing Senior Certificate, such Certificate's share of
any Net Interest Shortfall from the Mortgage Loans and, after the Cross-Over
Date, the interest portion of any Realized Losses on the Mortgage Loans
allocated thereto in accordance with Section 6.02(i) and (ii) in the case of a
Subordinate Certificate, such Certificate's share of any Net Interest Shortfall
from the Mortgage Loans and the interest portion of any Realized Losses on the
Mortgage Loans allocated thereto in accordance with Section 6.02(i).
ADJUSTABLE RATE CERTIFICATES: The Class A-2, Class A-4, Class A-8, Class
A-9, Class A-12 and Class A-13 Certificates.
ADJUSTMENT AMOUNT: The amount, if any, by which the Special Hazard Loss
Amount (without giving effect to the deduction of the Adjustment Amount for such
anniversary) exceeds the lesser of (A) an amount calculated by the Seller and
approved by the related Rating Agencies, which amount shall not be less than
$500,000, and (B) the greater of (x) 1.0% (or if greater than 1.0%, the highest
percentage of Mortgage Loans by principal balance secured by Mortgaged
Properties in any California zip code) of the outstanding principal balance of
all the Mortgage Loans on the Distribution Date immediately preceding such
anniversary and (y) twice the outstanding principal balance of the Mortgage Loan
which has the largest outstanding principal balance on the Distribution Date
immediately preceding such anniversary.
AFFILIATE: As to any Person, any other Person controlling, controlled by or
under common control with such Person. "Control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or
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otherwise. "Controlled" and "Controlling" have meanings correlative to the
foregoing. The Trustee may conclusively presume that a Person is not an
Affiliate of another Person unless a Responsible Officer of the Trustee has
actual knowledge to the contrary.
AGREEMENT: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
ALLOCABLE SHARE: With respect to each Class of Subordinate Certificates:
(a) as to any Distribution Date and amounts distributable pursuant to
clauses (i), (iv) and (vi) of the definition of Subordinate Optimal Principal
Amount, the fraction, expressed as a percentage, the numerator of which is the
Current Principal Amount of such Class and the denominator of which is the
aggregate Current Principal Amount of all Classes of the Subordinate
Certificates; and
(b) as to any Distribution Date and amounts distributable pursuant to
clauses (ii), (iii) and (v) of the definition of Subordinate Optimal Principal
Amount, and as to each Class of Subordinate Certificates (other than the Class
of Subordinate Certificates having the lowest numerical designation as to which
the Class Prepayment Distribution Trigger shall not be applicable) for which (x)
the Class Prepayment Distribution Trigger has been satisfied on such
Distribution Date, the fraction, expressed as a percentage, the numerator of
which is the Current Principal Amount of such Class and the denominator of which
is the aggregate Current Principal Amount of all such Classes of Subordinate
Certificates and (y) the Class Prepayment Distribution Trigger has not been
satisfied on such Distribution Date, 0%; provided that if on a Distribution
Date, the Current Principal Amount of any Class of Subordinate Certificates for
which the related Class Prepayment Distribution Trigger was satisfied on such
Distribution Date is reduced to zero, any amounts distributed pursuant to this
clause (b), to the extent of such Class's remaining Allocable Share, shall be
distributed to the remaining Classes of Subordinate Certificates which satisfy
the Class Prepayment Distribution Trigger and to the Class of Subordinate
Certificates having the lowest numerical designation in reduction of their
respective Current Principal Amounts in the order of their numerical Class
designations.
APPLICABLE CREDIT RATING: For any long-term deposit or security, a credit
rating of AAA in the case of S&P or Aaa in the case of Xxxxx'x. For any
short-term deposit or security, or a rating of A-l+ in the case of S&P or P-1 in
the case of Xxxxx'x.
APPLICABLE STATE LAW: For purposes of Section 9.12(d), the Applicable State
Law shall be (a) the law of the State of New York and (b) such other state law
whose applicability shall have been brought to the attention of the Securities
Administrator, MBIA and the Trustee by either (i) an Opinion of Counsel
reasonably acceptable to the Securities Administrator and the Trustee delivered
to it by the Master Servicer or the Seller, or (ii) written notice from the
appropriate taxing authority as to the applicability of such state law.
APPRAISED VALUE: For any Mortgaged Property related to a Mortgage Loan, the
amount set forth as the appraised value of such Mortgaged Property in an
appraisal made for the mortgage originator in connection with its origination of
the related Mortgage Loan.
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ASSIGNMENT AGREEMENTS: The agreements attached hereto as Exhibit I, whereby
the Servicing Agreements were assigned to the Trustee for the benefit of the
Certificateholders.
ASSUMED FINAL DISTRIBUTION DATE: June 25, 2033, or if such day is not a
Business Day, the next succeeding Business Day.
AVAILABLE FUNDS: With respect to any Distribution Date, an amount equal to
the aggregate of the following amounts with respect to the Mortgage Loans: (a)
all previously undistributed payments on account of principal (including the
principal portion of Scheduled Payments, Principal Prepayments and the principal
portion of Net Liquidation Proceeds) and all previously undistributed payments
on account of interest received after the Cut-off Date and on or prior to the
related Determination Date, (b) any Monthly Advances and Compensating Interest
Payments by the Servicers or the Master Servicer or payments made pursuant to
Sections 6.08 and 6.09 of this Agreement with respect to such Distribution Date
and (c) any reimbursed amount in connection with losses on investments of
deposits in an account, except:
(i) all payments that were due on or before the Cut-off Date;
(ii) all Principal Prepayments and Liquidation Proceeds received after
the applicable Prepayment Period;
(iii) all payments, other than Principal Prepayments, that represent
early receipt of Scheduled Payments due on a date or dates subsequent to
the related Due Date;
(iv) amounts received on particular Mortgage Loans as late payments of
principal or interest and respecting which, and to the extent that, there
are any unreimbursed Monthly Advances;
(v) amounts representing Monthly Advances determined to be
Nonrecoverable Advances;
(vi) any investment earnings on amounts on deposit in the Master
Servicer Collection Account and the Distribution Account and amounts
permitted to be withdrawn from the Master Servicer Collection Account and
the Distribution Account pursuant to related Servicing Agreement or this
Agreement;
(vii) to pay the Servicing Fees and Master Servicing Fees or to
reimburse any Servicer or the Master Servicer for such amounts as are due
under the applicable Servicing Agreement and this Agreement and have not
been retained by or paid to such Servicer or the Master Servicer; and
(viii) any expenses or other amounts reimbursable to the Trustee, the
Securities Adminstrator and the Custodian pursuant to Section 7.04(c) or
Section 9.05.
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AVERAGE LOSS SEVERITY: With respect to any period, the fraction obtained by
dividing (x) the aggregate amount of Realized Losses for the Mortgage Loans for
such period by (y) the number of Mortgage Loans which had Realized Losses for
such period.
BANK ONE: Bank One, N.A.
BANKRUPTCY CODE: The United States Bankruptcy Code, as amended as codified
in 11 U.S.C. ss.ss.101-1330.
BANKRUPTCY COVERAGE TERMINATION DATE: The Distribution Date upon which the
Bankruptcy Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
BANKRUPTCY LOSS AMOUNT: $100,000, minus the aggregate amount of previous
Bankruptcy Losses.
BANKRUPTCY LOSS: With respect to any Mortgage Loan, any Deficient Valuation
or Debt Service Reduction related to such Mortgage Loan as reported by the
applicable Servicer to the Master Servicer.
BOOK-ENTRY CERTIFICATES: Initially, all Classes of Certificates other than
the Private Certificates and the Residual Certificates.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a day
on which the New York Stock Exchange or Federal Reserve is closed or on which
banking institutions in New York City or in the jurisdiction in which the
Trustee, MBIA, the Master Servicer, any Servicer or the Securities Administrator
is located are authorized or obligated by law or executive order to be closed.
CALENDAR QUARTER: January 1 to March 31, April 1 to June 30, July 1 to
September 30, or October 1 to December 31, as applicable.
CERTIFICATE: Any mortgage pass-through certificate evidencing a beneficial
ownership interest in the Trust Fund signed and countersigned by the Trustee in
substantially the forms annexed hereto as Exhibits X-0, X-0, X-0 and A-4, with
the blanks therein appropriately completed.
CERTIFICATE OWNER: Any Person who is the beneficial owner of a Certificate
registered in the name of the Depository or its nominee.
CERTIFICATE REGISTER: The register maintained pursuant to Section 5.02.
CERTIFICATEHOLDER: A Holder of a Certificate.
CHL: Countrywide Home Loans, Inc.
CLASS: With respect to the Certificates, X-0, X-0, X-0, X-0, X-0, X-0, X-0,
X-0, X-0, X-00, X-00, X-00, X-00, X-00, X-00, X, XX, X-X, R-II, X-0, X-0, X-0,
X-0, B-5 and B-6.
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CLASS A-15 OPTIMAL PRINCIPAL AMOUNT: For any Distribution Date occurring
prior to the Distribution Date in June 2008, zero. For any Distribution Date
occurring after the first five years following the Closing Date will be as
follows: for any Distribution Date during the sixth, seventh, eighth and ninth
years after the Closing Date, 30%, 40%, 60% and 80%, respectively, of the Class
A-15 Pro Rata Optimal Principal Amount for such Distribution Date; and, for any
Distribution Date thereafter, 100% of the Class A-15 Pro Rata Optimal Principal
Amount for such Distribution Date.
CLASS A-15 PRO RATA OPTIMAL PRINCIPAL AMOUNT: For any Distribution Date, an
amount equal to the product of (x) the Senior Optimal Principal Amount for such
Distribution Date (without regard to the Senior Percentage or the Senior
Prepayment Percentage) multiplied by (y) a fraction, the numerator of which is
the Current Principal Amount of the Class A-15 Certificates immediately prior to
such Distribution Date and the denominator of which is the sum of the Non-PO
Percentages of the Scheduled Principal Balances of the Mortgage Loans.
CLASS PO CERTIFICATE CASH SHORTFALL: For any Distribution Date, the
difference between (i) principal distributable to the Principal Only
Certificates in accordance with priority FIFTH of clause (A) under subsection
6.01(a), and (ii) principal actually distributed to that class of Class PO
Certificates after giving effect to clause (C) under subsection 6.01(a).
CLASS PO CERTIFICATE DEFERRED AMOUNT: As to each Distribution Date prior to
and including the Cross-Over Date, the aggregate of all amounts allocable on
such dates to the Principal Only Certificates in respect of the principal
portion of Realized Losses in respect of Discount Mortgage Loans and the Class
PO Certificate Cash Shortfall and all amounts previously allocated in respect of
such losses and such shortfalls to the Principal Only Certificates, and not
distributed on prior Distribution Dates.
CLASS PO CERTIFICATE PRINCIPAL DISTRIBUTION AMOUNT: For the Class PO
Certificates with respect to each Distribution Date, an amount equal to the sum
of:
(i) the PO Percentage of all scheduled payments of principal due on
each Discount Mortgage Loan on the related Due Date as specified in the
amortization schedule at the time applicable thereto (after adjustment for
previous principal prepayments but before any adjustment to such
amortization schedule by reason of any bankruptcy or similar proceeding or
any moratorium or similar waiver or grace period);
(ii) the PO Percentage of the Scheduled Principal Balance of each
Discount Mortgage Loan which was the subject of a prepayment in full
received by the Master Servicer during the applicable Prepayment Period;
(iii) the PO Percentage of all partial prepayments of principal of
each Discount Mortgage Loan received during the applicable Prepayment
Period;
(iv) the lesser of (a) the PO Percentage of the sum of (A) all Net
Liquidation Proceeds allocable to principal on each Discount Mortgage Loan
which became a Liquidated Mortgage Loan during the related Prepayment
Period (other than a Discount Mortgage Loan described in clause (B)) and
(B) the Scheduled Principal Balance of each such Discount
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Mortgage Loan purchased by an insurer from the Trustee during the related
Prepayment Period pursuant to the related Primary Mortgage Insurance
Policy, if any, or otherwise; and (b) the PO Percentage of the sum of (A)
the Scheduled Principal Balance of each Discount Mortgage Loan which became
a Liquidated Mortgage Loan during the related Prepayment Period (other than
a Discount Mortgage Loan described in clause (B)) and (B) the Scheduled
Principal Balance of each such Mortgage Loan that was purchased by an
insurer from the Trustee during the related Prepayment Period pursuant to
the related Primary Mortgage Insurance Policy, if any, or otherwise; and
(v) the PO Percentage of the sum of (a) the Scheduled Principal
Balance of each Discount Mortgage Loan which was repurchased by the
Mortgage Loan Seller in connection with such Distribution Date and (b) the
difference, if any, between the Scheduled Principal Balance of a Discount
Mortgage Loan that has been replaced by the Mortgage Loan Seller with a
substitute Discount Mortgage Loan pursuant to the Agreement in connection
with such Distribution Date and the Scheduled Principal Balance of such
substitute Discount Mortgage Loan.
CLASS PREPAYMENT DISTRIBUTION TRIGGER: For a Class of Subordinate
Certificates for any Distribution Date, the Class Prepayment Distribution
Trigger is satisfied if the fraction (expressed as a percentage), the numerator
of which is the aggregate Current Principal Amount of such Class and each Class
of Subordinate Certificates subordinate thereto, if any, and the denominator of
which is the Scheduled Principal Balance of all of the Mortgage Loans as of the
related Due Date, equals or exceeds such percentage calculated as of the Closing
Date.
CLASS R CERTIFICATES: The Class R-I Certificates and Class R-II
Certificates.
CLOSING DATE: May 30, 2003.
CODE: The Internal Revenue Code of 1986, as amended.
COMPENSATING INTEREST PAYMENT: As defined in Section 6.06.
CORRESPONDING CLASS: With respect to (i) REMIC I Regular Xxxxxxxx XX-X0,
(ii) REMIC I Regular Xxxxxxxx XX-X0, (iii) REMIC I Regular Xxxxxxxx XX-X0, (iv)
REMIC I Regular Interest LT- A6, (v) REMIC I Regular Xxxxxxxx XX-X0, (vi) REMIC
I Regular Xxxxxxxx XX-X0, (vii) REMIC I Regular Interest LT-A10, (viii) REMIC I
Regular Interest LT-A11, (ix) REMIC I Regular Interest LT-A12, (x) REMIC I
Regular Interest LT-A13, (xi) REMIC I Regular Interest LT-A15, (xii) REMIC I
Regular Interest LT-AP, (xiii) REMIC I Regular Interest LT-AX, (xiv) REMIC I
Regular Interest LT-R, (xv) REMIC I Regular Interest LT-B1, (xvi) REMIC I
Regular Interest LT-B2, (xvii) REMIC I Regular Interest LT-B3, (xiii) REMIC I
Regular Interest LT-B4, (xix) REMIC I Regular Interest LT-B5, (xx) REMIC I
Regular Interest LT-B6, (i) the Class A-1 Certificates, (ii) the Class A-2
Certificates, (iii) the Class A-5 Certificates, (iv) the Class A-6 Certificates,
(v) the Class A-7 Certificates, (vi) the Class A-8 Certificates, (vii) the Class
A-10 Certificates, (viii) the Class A-11 Certificates, (ix) the Class A-12
Certificates, (x) the Class A-13 Certificates, (xi) the Class A-15 Certificates,
(xii) the Class PO Certificates, (xiii) the Class X Certificates, (xiv) the
Class R-II Certificates, (xv) the Class B-1 Certificates, (xvi) the Class B-2
Certificates, (xvii) the Class B-3
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Certificates, (xviii) the Class B-4 Certificates, (xix) the Class B-5
Certificates and (xx) the Class B-6 Certificates, respectively.
CORPORATE TRUST OFFICE: The office of the Trustee at which at any
particular time its corporate trust business is administered, which office, at
the date of the execution of this Agreement, is located at 0 Xxx Xxxx Xxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Institutional Trust
Services/Structured Finance Services, Attn: Prime Mortgage Trust, Series 2003-1.
For purposes of registration and transfer and exchange only, the Corporate Trust
Office shall be located at 0000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxx 00000,
Attn: ITS Transfer Dept. - Prime Mortgage Trust, Series 2003-1.
COUNTRYWIDE: Countrywide Home Loans Servicing LP.
COUNTRYWIDE SERVICING AGREEMENT: With respect to Mortgage Loans originated
by CHL, the Seller's Warranties and Servicing Agreement dated as of September 1,
2002, between the Seller and Countrywide, as attached hereto as Exhibit H-1 as
modified by the related Assignment Agreement.
CROSS-OVER DATE: The first Distribution Date on which the aggregate Current
Principal Amount of the Subordinate Certificates has been reduced to zero
(giving effect to all distributions on such Distribution Date).
CURRENT PRINCIPAL AMOUNT: With respect to any Certificate (other than an
Interest Only Certificate) as of any Distribution Date, the initial principal
amount of such Certificate, and reduced by (i) all amounts distributed on
previous Distribution Dates on such Certificate with respect to principal, (ii)
the principal portion of all Realized Losses (except for Debt Service
Reductions) allocated prior to such Distribution Date to such Certificate,
taking account of the Loss Allocation Limitation and (iii) in the case of a
Subordinate Certificate, such Certificate's pro rata share, if any, of the
Subordinate Certificate Writedown Amount for previous Distribution Dates. With
respect to any Class of Certificates (other than the Interest Only
Certificates), the Current Principal Amount thereof will equal the sum of the
Current Principal Amounts of all Certificates in such Class. Notwithstanding the
foregoing, solely for purposes of giving consents, directions, waivers,
approvals, requests and notices, the Class R-I Certificates and Class R-II
Certificates after the Distribution Date on which they each receive the
distribution of the last dollar of their respective original principal amount
shall be deemed to have Current Principal Amounts equal to their respective
Current Principal Amounts on the day immediately preceding such Distribution
Date. Exclusively for the purpose of determining any subrogation rights of MBIA
arising under Section 6.07 hereof, the Current Principal Amount of the Class
A-11 Certificates shall not be reduced by the amount of any payments made by
MBIA in respect of principal on such Certificates under the Policy, except to
the extent such payment shall have been reimbursed to MBIA pursuant to the
provisions of this Agreement.
CUSTODIAL AGREEMENT: An agreement, dated as of the Closing Date among the
Seller, the Master Servicer, the Trustee and the Custodian in substantially the
form of Exhibit G hereto.
CUSTODIAN: Xxxxx Fargo Bank Minnesota, National Association, or any
successor custodian appointed pursuant to the provisions hereof and of the
Custodial Agreement.
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CUT-OFF DATE: May 1, 2003.
CUT-OFF DATE BALANCE: $347,452,706.
DEBT SERVICE REDUCTION: Any reduction of the Scheduled Payments which a
Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of any
proceeding under the Bankruptcy Code or any other similar state law or other
proceeding.
DECEASED HOLDER: A Certificate Owner of an Insured Certificate who was a
natural person living at the time such interest was acquired and whose
authorized personal representative, surviving tenant by the entirety, surviving
joint tenant or surviving tenant in common or other person empowered to act on
behalf of a deceased Certificate Owner causes to be furnished to the Depository
Participant evidence of death satisfactory to the Depository Participant and any
tax waivers requested by the Depository Participant.
DEFICIENCY AMOUNT: As of any Distribution Date, an amount equal to the sum
of:
(a) any interest shortfall allocated to the Class A-11 Certificates,
except for (i) any Prepayment Interest Shortfalls allocated to the
Class A-11 Certificates and (ii) any Interest Shortfalls caused by the
application of the Relief Act allocated to the Class A-11
Certificates;
(b) the principal portion of any Realized Losses allocated to the
Class A-11 Certificates; and
(c) the Current Principal Amount of the Class A-11 Certificates to the
extent unpaid on the Assumed Final Distribution Date (after taking
into account all distributions on that date).
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation of the
Mortgaged Property by a court of competent jurisdiction in an amount less than
the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code or any other
similar state law or other proceeding.
DEPOSITORY: The Depository Trust Company, the nominee of which is Cede &
Co., or any successor thereto.
DEPOSITORY AGREEMENT: The meaning specified in Subsection 5.01(a) hereof.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DESIGNATED DEPOSITORY INSTITUTION: A depository institution (commercial
bank, federal savings bank, mutual savings bank or savings and loan association)
or trust company (which may include the Trustee), the deposits of which are
fully insured by the FDIC to the extent provided by law.
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DETERMINATION DATE: With respect to each Mortgage Loan, the Determination
Date as defined in the related Servicing Agreement.
DISCOUNT MORTGAGE LOAN: Any Mortgage Loan with a Net Rate less than 5.50%
per annum.
DISQUALIFIED ORGANIZATION: Any of the following: (i) the United States, any
State or political subdivision thereof, any possession of the United States, or
any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for the Xxxxxxx Mac or any successor thereto, a majority of its
board of directors is not selected by such governmental unit), (ii) any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the Code or (v) any
other Person so designated by the Trustee based upon an Opinion of Counsel that
the holding of an ownership interest in a Residual Certificate by such Person
may cause any REMIC contained in the Trust or any Person having an ownership
interest in the Residual Certificate (other than such Person) to incur a
liability for any federal tax imposed under the Code that would not otherwise be
imposed but for the transfer of an ownership interest in a Residual Certificate
to such Person. The terms "United States," "State" and "international
organization" shall have the meanings set forth in Section 7701 of the Code or
successor provisions.
DISTRIBUTION ACCOUNT: The trust account or accounts created and maintained
pursuant to Section 4.04, which shall be denominated "JPMorgan Chase Bank, as
Trustee f/b/o holders of Prime Mortgage Trust 2003-1., Mortgage Pass-Through
Certificates, Series 2003-1 - Distribution Account."
DISTRIBUTION ACCOUNT DEPOSIT DATE: The Business Day prior to each
Distribution Date.
DISTRIBUTION DATE: The 25th day of any month, beginning in the month
immediately following the month of the Closing Date, or, if such 25th day is not
a Business Day, the Business Day immediately following.
DTC CUSTODIAN: JPMorgan Chase Bank, or its successors in interest as
custodian for the Depository.
DUE DATE: With respect to each Mortgage Loan, the date in each month on
which its Scheduled Payment is due if such due date is the first day of a month
and otherwise is deemed to be the first day of the following month or such other
date specified in the related Servicing Agreement.
DUE PERIOD: With respect to any Distribution Date and each Mortgage Loan,
the period commencing on the second day of the month preceding the month in
which the Distribution Date occurs and ending at the close of business on the
first day of the month in which the Distribution Date occurs.
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ELIGIBLE ACCOUNT: Any of (i) a segregated account maintained with a federal
or state chartered depository institution (A) the short-term obligations of
which are rated A-1 or better by Standard & Poor's and P-1 by Moody's at the
time of any deposit therein or (B) insured by the FDIC (to the limits
established by such Corporation), the uninsured deposits in which account are
otherwise secured such that, as evidenced by an Opinion of Counsel (obtained by
the Person requesting that the account be held pursuant to this clause (i))
delivered to the Trustee prior to the establishment of such account, the
Certificateholders will have a claim with respect to the funds in such account
and a perfected first priority security interest against any collateral (which
shall be limited to Permitted Investments, each of which shall mature not later
than the Business Day immediately preceding the Distribution Date next following
the date of investment in such collateral or the Distribution Date if such
Permitted Investment is an obligation of the institution that maintains the
Distribution Account) securing such funds that is superior to claims of any
other depositors or general creditors of the depository institution with which
such account is maintained, (ii) a segregated trust account or accounts
maintained with a federal or state chartered depository institution or trust
company with trust powers acting in its fiduciary capacity or (iii) a segregated
account or accounts of a depository institution acceptable to the Rating
Agencies (as evidenced in writing by the Rating Agencies that use of any such
account as the Distribution Account will not have an adverse effect on the then-
current ratings assigned to the Classes of Certificates then rated by the Rating
Agencies determined without regard to the Policy). Eligible Accounts may bear
interest.
EMC: EMC Mortgage Corporation.
EMC SERVICING AGREEMENT: With respect to Mortgage Loans originated by Bank
One and Wachovia, the Servicing Agreement dated as of May 1, 2003, between the
Seller and EMC, as attached hereto as Exhibit H-2 as modified by the related
Assignment Agreement.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
EVENT OF DEFAULT: An event of default described in Section 8.01.
EXCESS BANKRUPTCY LOSS: Any Bankruptcy Loss, or portion thereof (i)
occurring after the Bankruptcy Coverage Termination Date or (ii) if on such
date, in excess of the then-applicable Bankruptcy Loss Amount.
EXCESS FRAUD LOSS: Any Fraud Loss or portion thereof (i) occurring after
the Fraud Coverage Termination Date with respect thereto or (ii) if on such
date, in excess of the then-applicable Fraud Loss Amount.
EXCESS LOSS: Any Excess Fraud Loss, Excess Bankruptcy Loss, Excess Special
Hazard Loss or Extraordinary Loss.
EXCESS LIQUIDATION PROCEEDS: To the extent that such amount is not required
by law to be paid to the related Mortgagor, the amount, if any, by which
Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the sum
of (i) the Outstanding Principal Balance of such Mortgage Loan and accrued but
unpaid interest at the related Mortgage Interest Rate through the last
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day of the month in which the related Liquidation Date occurs, plus (ii) related
Liquidation Expenses.
EXCESS SPECIAL HAZARD LOSS: Any Special Hazard Loss or portion thereof (i)
occurring after the Special Hazard Termination Date with respect thereto or (ii)
if on such date, in excess of the then-applicable Special Hazard Loss Amount.
EXTRAORDINARY LOSS: Any Realized Loss resulting from damage to a mortgaged
property that was occasioned by war, civil insurrection, certain governmental
actions, nuclear reaction and certain other risks.
XXXXXX XXX: Federal National Mortgage Association or any successor thereto.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FINAL CERTIFICATION: The certification substantially in the form of Exhibit
Three to the Custodial Agreement.
FRACTIONAL UNDIVIDED INTEREST: With respect to any Class of Certificates,
the fractional undivided interest evidenced by any Certificate of such Class the
numerator of which is the Current Principal Amount, or Notional Amount in the
case of the Interest Only Certificates, of such Certificate and the denominator
of which is the Current Principal Amount, or Notional Amount in the case of the
Interest Only Certificates, of such Class. With respect to the Certificates in
the aggregate, the fractional undivided interest evidenced by (i) a Residual
Certificate will be deemed to equal 0.25% multiplied by the percentage interest
of such Residual Certificate, and (ii) an Interest Only Certificate will be
deemed to equal 1.0% multiplied by a fraction, the numerator of which is the
Notional Amount of such Certificate and denominator of which is the aggregate
Notional Amount of such respective Class and (iii) a Certificate of any other
Class will be deemed to equal 94.50% multiplied by a fraction, the numerator of
which is the Current Principal Amount of such Certificate and the denominator of
which is the aggregate Current Principal Amount of all the Certificates.
FRAUD COVERAGE TERMINATION DATE: The Distribution Date upon which the Fraud
Loss Amount has been reduced to zero or a negative number (or the Cross-Over
Date, if earlier).
FRAUD LOSS: Any Realized Loss attributable to fraud in the origination of
the related Mortgage Loan, as reported by the applicable Servicer to the Master
Servicer.
FRAUD LOSS AMOUNT: Upon the initial issuance of the Certificates, the Fraud
Loss Amount will equal 1.0% of the aggregate Scheduled Principal Balances of the
Mortgage Loans. As of any Distribution Date prior to the first anniversary of
the Cut-off Date, the Fraud Loss Amount will equal the initial Fraud Loss
Amount, minus the aggregate amount of Fraud Losses that would have been
allocated to the Subordinate Certificates in the absence of the Loss Allocation
Limitation since the Cut-off Date.
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As of any Distribution Date(x) from the first through the second
anniversaries of the Cut-off Date, the Fraud Loss Amount will equal (1) the
lesser of (a) the applicable Fraud Loss Amount as of the most recent anniversary
of the Cut-off Date and (b) 1.0% of the aggregate outstanding principal balance
of the Mortgage Loans as of the most recent anniversary of the Cut-off Date
minus (2) the Fraud Losses that would have been allocated to the Subordinate
Certificates in the absence of the Loss Allocation Limitation since the most
recent anniversary of the Cut-off Date; and (y) after the second and through the
fifth anniversary of the Cut-off Date, the Fraud Loss Amount will equal (i) the
lesser of (a) the applicable Fraud Loss Amount as of the most recent anniversary
of the Cut-off Date and (b) 0.50% of the aggregate outstanding principal balance
of all Mortgage Loans as of the most recent anniversary of the Cut-off Date
minus (2) the Fraud Losses that would have been allocated to the Subordinate
Certificates in the absence of the Loss Allocation Limitation since the most
recent anniversary of the Cut-off Date.
After the fifth anniversary of the Cut-off Date, the Fraud Loss Amount
shall be zero.
XXXXXXX MAC: Xxxxxxx Mac, formerly the Federal Home Loan Mortgage
Corporation, or any successor thereto.
GLOBAL CERTIFICATE: Any Private Certificate registered in the name of the
Depository or its nominee, beneficial interests in which are reflected on the
books of the Depository or on the books of a Person maintaining an account with
such Depository (directly or as an indirect participant in accordance with the
rules of such depository).
GROSS MARGIN: As to each Mortgage Loan, the fixed percentage set forth in
the related Mortgage Note and indicated on the Mortgage Loan Schedule which
percentage is added to the related Index on each Interest Adjustment Date to
determine (subject to rounding, the minimum and maximum Mortgage Interest Rate
and the Periodic Rate Cap) the Mortgage Interest Rate until the next Interest
Adjustment Date.
HOLDER: The Person in whose name a Certificate is registered in the
Certificate Register, except that, subject to Subsections 11.02(b) and 11.05(e),
solely for the purpose of giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Seller, the Master Servicer or the
Trustee or any Affiliate thereof shall be deemed not to be outstanding and the
Fractional Undivided Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Fractional Undivided
Interests necessary to effect any such consent has been obtained. With respect
to the Class A-11 Certificates, MBIA to the extent of any MBIA Reimbursement
Amount.
HSBC: HSBC Mortgage Corporation (USA).
HSBC SERVICING AGREEMENT: With respect to Mortgage Loans originated by
HSBC, the Seller's Warranties and Servicing Agreement dated as of May 1, 2002,
between the Seller and HSBC, as attached hereto as Exhibit H-3 as modified by
the related Assignment Agreement.
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INDEMNIFIED PERSONS: The Trustee, the Master Servicer, the Trust Fund, 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.
INDEPENDENT: When used with respect to any specified Person, this term
means that such Person (a) is in fact independent of the Seller or the Master
Servicer and of any Affiliate of the Seller or the Master Servicer, (b) does not
have any direct financial interest or any material indirect financial interest
in the Seller or the Master Servicer or any Affiliate of the Seller or the
Master Servicer and (c) is not connected with the Seller or the Master Servicer
or any Affiliate as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
INDEX: The index, if any, specified in a Mortgage Note by reference to
which the related Mortgage Interest Rate will be adjusted from time to time.
INDIRECT DEPOSITORY PARTICIPANT: An institution that is not a Depository
Participant but clears through or maintains a custodial relationship with a
Depository Participant and has access to the Depository's clearing system.
INDIVIDUAL CERTIFICATE: Any Private Certificate registered in the name of
the Holder other than the Depository or its nominee.
INDIVIDUAL INSURED CERTIFICATE: An Insured Certificate that evidences
$1,000 initial Current Principal Amount.
INITIAL CERTIFICATION: The certification substantially in the form of
Exhibit One to the Custodial Agreement.
INSTITUTIONAL ACCREDITED INVESTOR: Any Person meeting the requirements of
Rule 501(a)(l), (2), (3) or (7) of Regulation D under the Securities Act or any
entity all of the equity holders in which come within such paragraphs.
INSURANCE AGREEMENT: The Insurance Agreement dated as of May 1, 2003, among
the Insurer, the Seller, the Mortgage Loan Seller and the Trustee.
INSURANCE POLICY: With respect to any Mortgage Loan, any standard hazard
insurance policy, flood insurance policy or title insurance policy.
INSURANCE PROCEEDS: Amounts paid by the insurer under any Insurance Policy
covering any Mortgage Loan or Mortgaged Property other than amounts required to
be paid over to the Mortgagor pursuant to law or the related Mortgage Note or
Security Instrument and other than amounts used to repair or restore the
Mortgaged Property or to reimburse insured expenses.
INSURED CERTIFICATES: The Class A-11 Certificates.
INSURED PAYMENT: (a) As of any Distribution Date any Deficiency Amount and
(b) any Preference Amount.
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INSURER: MBIA Insurance Corporation.
INTEREST ACCRUAL PERIOD: With respect to each Distribution Date, for each
Class of Certificates (other than the Class A-2, Class A-4, Class A-8 and Class
A-9 Certificates), the calendar month preceding the month in which such
Distribution Date occurs, commencing in May 2003. With respect to each
Distribution Date and the Class A-2, Class A-4, Class A-8 and Class A-9
Certificates, the 25th day of the month preceding the month in which the
Distribution Date occurs and ending on the 24th day of the month in which the
Distribution Date occurs, commencing in May 2003.
INTEREST ADJUSTMENT DATE: With respect to a Mortgage Loan, the date, if
any, specified in the related Mortgage Note on which the Mortgage Interest Rate
is subject to adjustment.
INTEREST DETERMINATION DATE: With respect to each Distribution Date, the
second LIBOR Business Day immediately preceding the commencement of the related
Interest Accrual Period.
INTEREST ONLY CERTIFICATES: The Class A-3, Class A-4, Class A-9, Class A-14
and Class X Certificates.
INTEREST SHORTFALL: With respect to any Distribution Date and each Mortgage
Loan that during the related Prepayment Period was the subject of a Principal
Prepayment or constitutes a Relief Act Mortgage Loan, an amount determined as
follows:
(a) Partial principal prepayments received during the relevant Prepayment
Period: The difference between (i) one month's interest at the applicable Net
Rate on the amount of such prepayment and (ii) the amount of interest for the
calendar month of such prepayment (adjusted to the applicable Net Rate) received
at the time of such prepayment;
(c) Principal prepayments in full received during the relevant Prepayment
Period: The difference between (i) one month's interest at the applicable Net
Rate on the Scheduled Principal Balance of such Mortgage Loan immediately prior
to such prepayment and (ii) the amount of interest for the calendar month of
such prepayment (adjusted to the applicable Net Rate) received at the time of
such prepayment; and
(d) Relief Act Mortgage Loans: As to any Relief Act Mortgage Loan, the
excess of (i) 30 days' interest (or, in the case of a principal prepayment in
full, interest to the date of prepayment) on the Scheduled Principal Balance
thereof (or, in the case of a principal prepayment in part, on the amount so
prepaid) at the related Net Rate over (ii) 30 days' interest (or, in the case of
a principal prepayment in full, interest to the date of prepayment) on such
Scheduled Principal Balance (or, in the case of a Principal Prepayment in part,
on the amount so prepaid) at the Net Rate required to be paid by the Mortgagor
as limited by application of the Relief Act.
INTERIM CERTIFICATION: The certification substantially in the form of
Exhibit Two to the Custodial Agreement.
INVESTMENT LETTER: The letter to be furnished by each Institutional
Accredited Investor which
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purchases any of the Private Certificates in connection with such purchase,
substantially in the form set forth as Exhibit F-1 hereto.
LATE PAYMENT RATE: As defined in the Insurance Agreement.
LIBOR: With respect to any Distribution Date, the arithmetic mean of the
London interbank offered rate quotations for one-month U.S. Dollar deposits,
expressed on a per annum basis, determined in accordance with Section 1.02.
LIBOR BUSINESS DAY: Any day other than (i) a Saturday or Sunday or (ii) a
day on which banking institutions in London, England and New York City are
required or authorized to by law to be closed.
LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan as to which the
related Servicer or the Master Servicer has determined that all amounts it
expects to recover from or on account of such Mortgage Loan have been recovered.
LIQUIDATION DATE: With respect to any Liquidated Mortgage Loan, the date on
which the Master Servicer or the related Servicer has certified that such
Mortgage Loan has become a Liquidated Mortgage Loan.
LIQUIDATION EXPENSES: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the Master
Servicer or the related Servicers in connection with the liquidation of such
Mortgage Loan and the related Mortgage Property, such expenses including (a)
property protection expenses, (b) property sales expenses, (c) foreclosure and
sale costs, including court costs and reasonable attorneys' fees, and (d)
similar expenses reasonably paid or incurred in connection with liquidation.
LIQUIDATION PROCEEDS: Cash received in connection with the liquidation of a
defaulted Mortgage Loan, whether through trustee's sale, foreclosure sale,
Insurance Proceeds, condemnation proceeds or otherwise.
LIVING OWNER: A Certificate Owner of an Insured Certificate other than a
Deceased Holder.
LOAN-TO-VALUE RATIO: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the
Original Value of the related Mortgaged Property.
LOSS ALLOCATION LIMITATION: The meaning specified in Section 6.02(e)
hereof.
LOST NOTES: The original Mortgage Notes that have been lost, as indicated
on the Mortgage Loan Schedule.
MASTER SERVICER: As of the Closing Date, Xxxxx Fargo Bank Minnesota,
National Association and, thereafter, its respective successors in interest who
meet the qualifications of the Servicing Agreements and this Agreement.
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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 and the Seller following a negotiation in good faith to
determine how to comply with any such new requirements.
MASTER SERVICER COLLECTION ACCOUNT: The trust account or accounts created
and maintained pursuant to Section 4.02, which shall be denominated "JPMorgan
Chase Bank, as Trustee f/b/o holders of Prime Mortgage Trust 2003-1, Mortgage
Pass-Through Certificates, Series 2003-1 - Master Servicer Collection Account."
The Master Servicer Collection Account shall be an Eligible Account.
MASTER SERVICING COMPENSATION: The meaning specified in Section 3.14(a).
MASTER SERVICING FEE RATE: As to any Mortgage Loan, a per annum rate equal
to 0.01%.
MAXIMUM LIFETIME MORTGAGE RATE: The maximum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.
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.
MBIA: MBIA Insurance Corporation, a subsidiary of MBIA Inc., organized and
created under the laws of the State of New York, or any successor thereto.
MBIA CONTACT PERSON: The officer designated by the Master Servicer to
provide information to MBIA pursuant to Section 6.07(i).
MBIA DEFAULT: As defined in Section 6.07(l).
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MBIA PREMIUM AMOUNT: With respect to the Policy and each Distribution Date,
an amount equal to the product of the MBIA Premium Rate and the Current
Principal Amount of the Class A-11 Certificates immediately prior to such
Distribution Date.
MBIA PREMIUM RATE: A percentage equal to one twelfth (1/12) of the "premium
percentage" set forth in the Commitment Letter, dated May 29, 2003, between MBIA
and Bear, Xxxxxxx & Co. Inc., a copy of which shall be provided to the Master
Servicer on the Closing Date.
MBIA REIMBURSEMENT AMOUNT: Shall mean the sum of (a) the aggregate
unreimbursed amount of any payments made by MBIA under the Policy, together with
interest on such amount from the date of payment by MBIA until paid in full at a
rate of interest equal to the Late Payment Rate, (b) all costs and expenses of
MBIA in connection with any action, proceeding or investigation affecting the
Trust Fund or the rights or obligations of MBIA under this Agreement or under
the Policy, including any judgment or settlement entered into affecting MBIA or
MBIA's interests, together with interest thereon at a rate equal to the Late
Payment Rate and (c) any other amounts owed to MBIA under this Agreement or the
Insurance Agreement, together with interest thereon at a rate equal to the Late
Payment Rate.
MINIMUM LIFETIME MORTGAGE RATE: The minimum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.
MONTHLY ADVANCE: An advance of principal or interest required to be made by
the applicable Servicer pursuant to the related Servicing Agreement or the
Master Servicer pursuant to Section 6.05.
MOODY'S: Xxxxx'x Investor Service, Inc.
MORTGAGE FILE: The mortgage documents listed in Section 2.01(b) pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
MORTGAGE INTEREST RATE: The annual rate at which interest accrues from time
to time on any Mortgage Loan pursuant to the related Mortgage Note, which rate
is equal to the "Mortgage Interest Rate" set forth with respect thereto on the
Mortgage Loan Schedule.
MORTGAGE LOAN: A mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.04 and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule (which shall include, without
limitation, each related Mortgage Note, Mortgage and Mortgage File and all
rights appertaining thereto), including a mortgage loan the property securing
which has become an REO Property.
MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement
dated as of May 30, 2003, between EMC, as seller, and Structured Asset Mortgage
Investments Inc., as purchaser, and all amendments thereof and supplements
thereto, attached as Exhibit J.
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MORTGAGE LOAN SCHEDULE: The schedule, attached hereto as Exhibit B with
respect to the Mortgage Loans and as amended from time to time to reflect the
repurchase or substitution of Mortgage Loans pursuant to this Agreement.
MORTGAGE LOAN SELLER: EMC Mortgage Corporation, as mortgage loan seller
under the Mortgage Loan Purchase Agreement.
MORTGAGE NOTE: The originally executed note or other evidence of the
indebtedness of a Mortgagor under the related Mortgage Loan.
MORTGAGED PROPERTY: Land and improvements securing the indebtedness of a
Mortgagor under the related Mortgage Loan or, in the case of REO Property, such
REO Property.
MORTGAGOR: The obligor on a Mortgage Note.
NET INTEREST SHORTFALL: With respect to any Distribution Date, the Interest
Shortfall, if any, for such Distribution Date net of Compensating Interest
Payments made with respect to such Distribution Date.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan, Liquidation
Proceeds net of (i) Liquidation Expenses which are payable therefrom by the
related Servicer or the Master Servicer in accordance with the related Servicing
Agreement or this Agreement and (ii) unreimbursed advances by the related
Servicer or the Master Servicer and Monthly Advances.
NET RATE: With respect to each Mortgage Loan, the Mortgage Interest Rate in
effect from time to time less the Servicing Fee Rate and Master Servicing Fee
Rate (expressed as a per annum rate).
NON-PO PERCENTAGE: With respect to any Discount Mortgage Loan, the lesser
of (a) 100% and (b) the Net Rate thereof divided by 5.50%.
NON-PO REALIZED LOSSES: The Non-PO Percentage of the principal portion of
Realized Losses.
NONRECOVERABLE ADVANCE: Any advance or Monthly Advance (i) which was
previously made or is proposed to be made by the Master Servicer, the Trustee
(as successor Master Servicer) or applicable Servicer and (ii) which, in the
good faith judgment of the Master Servicer, the Trustee (as successor Master
Servicer) or applicable Servicer, will not or, in the case of a proposed advance
or Monthly Advance, would not, be ultimately recoverable by the Master Servicer,
the Trustee (as successor Master Servicer) or applicable Servicer from
Liquidation Proceeds, Insurance Proceeds or future payments on the Mortgage Loan
for which such advance or Monthly Advance was made.
NOTIONAL AMOUNT: The Notional Amount of the Class X Certificates, as of any
date of determination, is equal to the aggregate Scheduled Principal Balance of
the Mortgage Loans. The Notional Amount of the Class A-3 Certificates, as of any
date of determination, is equal to 61.6322367392% multiplied by the aggregate
Current Principal Amount of the Class A-1 Certificates and Class A-5
Certificates; for federal income tax purposes, the Notional Amount of the
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Class A-3 Certificates is equal to the sum of the Uncertificated Principal
Balances of (a) REMIC I Regular Interest LT-A1 and (b) REMIC I Regular Interest
LT-A5. The Notional Amount of the Class A-4 Certificates, as of any date of
determination, is equal to the Current Principal Amount of the Class A-2
Certificates; for federal income tax purposes, the Notional Amount of the Class
A-4 Certificates is equal to the Uncertificated Principal Balance of REMIC I
Regular Interest LT-A2. The Notional Amount of the Class A-9 Certificate, as of
any date of determination, is equal to the Current Principal Amount of the Class
A-8 Certificates; for federal income tax purposes, the Notional Amount of the
Class A-9 Certificates will equal the Uncertificated Principal Balance of REMIC
I Regular Interest LT-A8. The Notional Amount of the Class A-14 Certificates, as
of any date of determination, is equal to the Current Principal Amount of the
Class A-15 Certificates; for federal income tax purposes, the Notional Amount of
the Class A-14 Certificates will equal the Uncertificated Principal Balance of
REMIC I Regular Interest LT-A15.
OFFERED CERTIFICATE: Any Senior Certificate or Offered Subordinate
Certificate.
OFFERED SUBORDINATE CERTIFICATES: The Class X-x, Class B-2 and Class B-3
Certificates.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President or a Vice President or Assistant
Vice President or other authorized officer of the Master Servicer or the Seller,
as applicable, and delivered to the Trustee, as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel who is or are acceptable
to the Trustee or MBIA and who, unless required to be Independent (an "Opinion
of Independent Counsel"), may be internal counsel for EMC, the Master Servicer
or the Seller.
ORIGINAL SUBORDINATE PRINCIPAL BALANCE: The sum of the aggregate Current
Principal Amounts of each Class of Subordinate Certificates as of the Closing
Date.
ORIGINAL VALUE: The lesser of (i) the Appraised Value or (ii) the sales
price of a Mortgaged Property at the time of origination of a Mortgage Loan,
except in instances where either clauses (i) or (ii) is unavailable, the other
may be used to determine the Original Value, or if both clauses (i) and (ii) are
unavailable, Original Value may be determined from other sources reasonably
acceptable to the Seller.
OUTSTANDING MORTGAGE LOAN: With respect to any Due Date, a Mortgage Loan
which, prior to such Due Date, was not the subject of a Principal Prepayment in
full, did not become a Liquidated Mortgage Loan and was not purchased or
replaced.
OUTSTANDING PRINCIPAL BALANCE: As of the time of any determination, the
principal balance of a Mortgage Loan remaining to be paid by the Mortgagor, or,
in the case of an REO Property, the principal balance of the related Mortgage
Loan remaining to be paid by the Mortgagor at the time such property was
acquired by the Trust Fund less any Net Liquidation Proceeds with respect
thereto to the extent applied to principal.
PAC CERTIFICATES: The Class A-6, Class A-7 and Class A-8 Certificates.
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PASS-THROUGH RATE: As to each Class of Certificates and the REMIC I Regular
Interests and REMIC II Regular Interests, the rate of interest determined as
provided with respect thereto, in Section 5.01(c). Any monthly calculation of
interest at a stated rate shall be based upon annual interest at such rate
divided by twelve.
PERIODIC RATE CAP: With respect to each Mortgage Loan, the maximum
adjustment that can be made to the Mortgage Interest Rate on each Interest
Adjustment Date in accordance with its terms, regardless of changes in the
applicable Index.
PERMITTED INVESTMENTS: Any one or more of the following obligations or
securities held in the name of the Trustee for the benefit of the
Certificateholders:
(i) direct obligations of, and obligations the timely payment of which are
fully guaranteed by the United States of America or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America;
(ii) (a) demand or time deposits, federal funds or bankers' acceptances
issued by any depository institution or trust company incorporated under the
laws of the United States of America or any state thereof (including the Trustee
or the Master Servicer or its Affiliates acting in its commercial banking
capacity) and subject to supervision and examination by federal and/or state
banking authorities, provided that the commercial paper and/or the short-term
debt rating and/or the long-term unsecured debt obligations of such depository
institution or trust company at the time of such investment or contractual
commitment providing for such investment have the Applicable Credit Rating or
better from each Rating Agency and (b) any other demand or time deposit or
certificate of deposit that is fully insured by the Federal Deposit Insurance
Corporation;
(iii) repurchase obligations with respect to (a) any security described in
clause (i) above or (b) any other security issued or guaranteed by an agency or
instrumentality of the United States of America, the obligations of which are
backed by the full faith and credit of the United States of America, in either
case entered into with a depository institution or trust company (acting as
principal) described in clause (ii)(a) above where the Trustee holds the
security therefor;
(iv) securities bearing interest or sold at a discount issued by any
corporation (including the Trustee or the Master Servicer or its Affiliates)
incorporated under the laws of the United States of America or any state thereof
that have the Applicable Credit Rating or better from each Rating Agency at the
time of such investment or contractual commitment providing for such investment;
provided, however, that securities issued by any particular corporation will not
be Permitted Investments to the extent that investments therein will cause the
then outstanding principal amount of securities issued by such corporation and
held as part of the Trust to exceed 10% of the aggregate Outstanding Principal
Balances of all the Mortgage Loans and Permitted Investments held as part of the
Trust;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after
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the date of issuance thereof) having the Applicable Credit Rating or better from
each Rating Agency at the time of such investment;
(vi) a Reinvestment Agreement issued by any bank, insurance company or
other corporation or entity;
(vii) any other demand, money market or time deposit, obligation, security
or investment as may be acceptable to each Rating Agency as evidenced in writing
by each Rating Agency to the Trustee; and
(viii) any money market or common trust fund having the Applicable Credit
Rating or better from each Rating Agency, including any such fund for which the
Trustee or Master Servicer or any affiliate of the Trustee or Master Servicer
acts as a manager or an advisor; provided, however, that no instrument or
security shall be a Permitted Investment if such instrument or security
evidences a right to receive only interest payments with respect to the
obligations underlying such instrument or if such security provides for payment
of both principal and interest with a yield to maturity in excess of 120% of the
yield to maturity at par or if such instrument or security is purchased at a
price greater than par.
PERMITTED TRANSFEREE: Any Person other than a Disqualified Organization or
an "electing large partnership" (as defined by Section 775 of the Code).
PERSON: Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
PHYSICAL CERTIFICATES: The Residual Certificates and the Private
Certificates.
PLANNED PRINCIPAL AMOUNT: With respect to each Class of PAC Certificates
and each Distribution Date, the amount set forth for such Class in Exhibit L
hereto for the respective Distribution Date.
POLICY: The irrevocable Certificate Guaranty Insurance Policy, No. 41412,
including any endorsements thereto, issued by MBIA with respect to the Class
A-11 Certificates, in the form attached hereto as Exhibit K.
PO PERCENTAGE: With respect to any Discount Mortgage Loan, the greater of
(a) 0% and (b) the fraction, expressed as a percentage, equal to 5.50% minus the
Net Rate thereof divided by 5.50%.
PREFERENCE AMOUNT: Any amount previously distributed to Holders of the
Class A-11 Certificates that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
PREMIUM LOANS: All Mortgage Loans having Pass-Through Rates in excess of
5.50%.
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PREPAYMENT CHARGE: With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof.
PREPAYMENT INTEREST SHORTFALL: With respect to any Distribution Date, the
aggregate shortfall, if any, in collections of interest (adjusted to the related
Net Rates) on Mortgage Loans resulting from (a) prepayments in full received
during the related Prepayment Period and (b) the partial prepayments received
during the related Prepayment Period to the extent applied prior to the Due Date
in the month of the Distribution Date.
PREPAYMENT PERIOD: With respect to any Mortgage Loan and any Distribution
Date, the calendar month preceding the month in which such Distribution Date
occurs.
PRINCIPAL ONLY CERTIFICATES: The Class PO Certificates.
PRINCIPAL PREPAYMENT: Any payment (whether partial or full) or other
recovery of principal on a Mortgage Loan which is received in advance of its
scheduled Due Date to the extent that it is not accompanied by an amount as to
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment, including Insurance Proceeds
and Repurchase Proceeds, but excluding the principal portion of Net Liquidation
Proceeds.
PRIVATE CERTIFICATES: Any Class B-4, Class B-5 and Class B-6.
PROTECTED ACCOUNT: An account established and maintained for the benefit of
Certificateholders by each Servicer with respect to the related Mortgage Loans
and with respect to REO Property pursuant to the respective Servicing
Agreements.
QIB: A Qualified Institutional Buyer as defined in Rule 144A promulgated
under the Securities Act.
QUALIFIED INSURER: Any insurance company duly qualified as such under the
laws of the state or states in which the related Mortgaged Property or Mortgaged
Properties is or are located, duly authorized and licensed in such state or
states to transact the type of insurance business in which it is engaged and
approved as an insurer by the Master Servicer, so long as the claims paying
ability of which is acceptable to the Rating Agencies for pass-through
certificates having the same rating as the Certificates rated by the Rating
Agencies as of the Closing Date.
RANDOM LOT: With respect to any Distribution Date, the method by which the
Depository will determine which Insured Certificates will be paid, using its
established random lot procedures or, if the Insured Certificates are no longer
represented by a Book-Entry Certificate, using the Trustee's procedures.
RATING AGENCIES: S&P and Xxxxx'x.
REALIZED LOSS: Any (i) Bankruptcy Loss or (ii) as to any Liquidated
Mortgage Loan, (x) the Outstanding Principal Balance of such Liquidated Mortgage
Loan plus accrued and unpaid interest
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thereon at the Mortgage Interest Rate through the last day of the month of such
liquidation, less (y) the related Net Liquidation Proceeds with respect to such
Mortgage Loan and the related Mortgage Property.
RECORD DATE: With respect to any Distribution Date, for each Class of
Certificates (other than the Class A-2, Class A-4, Class A-8 and Class A-9
Certificates), the close of business on the last Business Day of the month
immediately preceding the month of such Distribution Date. With respect to any
Distribution Date and the Class A-2, Class A-4, Class A-8 and Class A-9
Certificates, the Business Day prior to such Distribution Date.
REINVESTMENT AGREEMENTS: One or more reinvestment agreements, acceptable to
the Rating Agencies, from a bank, insurance company or other corporation or
entity (including the Trustee).
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, or similar state law.
RELIEF ACT MORTGAGE LOAN: Any Mortgage Loan as to which the Scheduled
Payment thereof has been reduced due to the application of the Relief Act.
REMIC: A real estate mortgage investment conduit, as defined in the Code.
REMIC I: That group of assets contained in the Trust Fund designated as a
REMIC consisting of (i) the Mortgage Loans, (ii) the Master Servicer Collection
Account, (iii) any REO Property relating to the Mortgage Loans, (iv) the rights
with respect to any related Servicing Agreement, (v) the rights with respect to
any related Assignment Agreement and (vi) any proceeds of the foregoing.
Notwithstanding the foregoing, the REMIC election specifically excludes the
Rounding Account and the Reserve Fund.
REMIC I INTERESTS: The REMIC I Regular Interests and the Class R-I
Certificates.
REMIC I REGULAR INTERESTS: The REMIC I Regular Interests, with such terms
as described in Section 5.01(c).
REMIC II: That group of assets contained in the Trust Fund designated as a
REMIC consisting of the REMIC I Regular Interests. The REMIC election with
respect to REMIC II specifically excludes the Rounding Account and the Reserve
Fund.
REMIC II CERTIFICATES: The REMIC II Regular Interests and the Class R-II
Certificates.
REMIC II REGULAR CERTIFICATES: As defined in Section 5.01(c).
REMIC OPINION: An Opinion of Independent Counsel, to the effect that the
proposed action described therein would not, under the REMIC Provisions, (i)
cause REMIC I or REMIC II to fail to qualify as a REMIC while any regular
interest in such REMIC is outstanding, (ii) result in a tax on prohibited
transactions with respect to any REMIC or (iii) constitute a taxable
contribution to any REMIC after the Startup Day.
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REMIC PROVISIONS: The provisions of the federal income tax law relating to
the REMIC, which appear at Sections 860A through 860G of the Code, and related
provisions and regulations promulgated thereunder, as the foregoing may be in
effect from time to time.
REO PROPERTY: A Mortgaged Property acquired in the name of the Trustee, for
the benefit of Certificateholders, by foreclosure or deed-in-lieu of foreclosure
in connection with a defaulted Mortgage Loan.
REPURCHASE PRICE: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased by the Mortgage Loan
Seller pursuant to the Mortgage Loan Purchase Agreement or Article II of this
Agreement, an amount equal to the sum of (i)(a) 100% of the Outstanding
Principal Balance of such Mortgage Loan as of the date of repurchase (or if the
related Mortgaged Property was acquired with respect thereto, 100% of the
Outstanding Principal Balance at the date of the acquisition), plus (b) accrued
but unpaid interest on the Outstanding Principal Balance at the related Mortgage
Interest Rate, through and including the last day of the month of repurchase,
and reduced by (c) any portion of the Master Servicing Compensation and
unreimbursed Monthly Advances and servicing advances payable to the Servicer of
the Mortgage Loan or to the Master Servicer and (ii) any costs and damages (if
any) incurred by the Trust in connection with any violation of such Mortgage
Loan of any predatory or abusive lending laws.
REPURCHASE PROCEEDS: the Repurchase Price in connection with any repurchase
of a Mortgage Loan by the Mortgage Loan Seller and any cash deposit in
connection with the substitution of a Mortgage Loan.
REQUEST FOR RELEASE: A request for release in the form attached hereto as
Exhibit D.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any insurance
policy which is required to be maintained from time to time under this Agreement
with respect to such Mortgage Loan.
RESERVE FUND: A fund established at the time of the issuance of the
Certificates solely for the benefit of the Class A-11 Certificates by an initial
deposit into the Reserve Fund of $20,000 by Bear, Xxxxxxx & Co. Inc.
RESIDUAL CERTIFICATES: Any of the Class R Certificates.
RESPONSIBLE OFFICER: Any officer assigned to the Corporate Trust Office (or
any successor thereto), including any Vice President, Assistant Vice President,
Trust Officer, any Assistant Secretary, any trust officer or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and having direct responsibility for the
administration of this Agreement, and any other officer of the Trustee to whom a
matter arising hereunder may be referred.
ROUNDING ACCOUNT: With respect to the Insured Certificates, the account
created and maintained for such Insured Certificates pursuant to Section 6.09.
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XXXXXXXX XXXXXX: With respect to the Rounding Account, the amount of funds,
if any, needed to be withdrawn and used to round the amount of any distributions
in reduction of the Current Principal Amount of the Insured Certificates upward
to the next higher integral multiple of $1,000.
RULE 144A CERTIFICATE: The certificate to be furnished by each purchaser of
a Private Certificate (which is also a Physical Certificate) which is a
Qualified Institutional Buyer as defined under Rule 144A promulgated under the
Securities Act, substantially in the form set forth as Exhibit F-2 hereto.
S&P: Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc., and
its successors in interest.
SENIOR CERTIFICATES: The Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11, Class
A-12, Class A-13, Class A-14, Class A-15, Class X, Class PO, Class R-I and Class
R-II Certificates.
SENIOR OPTIMAL PRINCIPAL AMOUNT: With respect to the Senior Certificates
(other than the Interest Only Certificates and Principal Only Certificates) each
Distribution Date, an amount equal to the sum, without duplication, of the
following (but in no event greater than the aggregate Current Principal Amounts
of the Senior Certificates Interest Only Certificates and Principal Only
Certificates, other than the immediately prior to such Distribution Date):
(i) the Senior Percentage of the Non-PO Percentage of all scheduled
payments of principal allocated to the Scheduled Principal Balance due on
each Outstanding Mortgage Loan on the related Due Date as specified in the
amortization schedule at the time applicable thereto (after adjustments for
previous Principal Prepayments but before any adjustment to such
amortization schedule by reason of any bankruptcy or similar proceeding or
any moratorium or similar waiver or grace period);
(ii) the Senior Prepayment Percentage of the Non-PO Percentage of the
Scheduled Principal Balance of each Mortgage Loan which was the subject of
a Principal Prepayment in full received by the Master Servicer during the
related Prepayment Period;
(iii) the Senior Prepayment Percentage of the Non-PO Percentage of all
Principal Prepayments in part received by the Master Servicer during the
related Prepayment Period;
(iv) the lesser of (a) the Senior Prepayment Percentage of the Non-PO
Percentage of the sum of (A) all Net Liquidation Proceeds allocable to
principal received in respect of each Mortgage Loan which became a
Liquidated Mortgage Loan during the related Prepayment Period (other than
Mortgage Loans described in the immediately following clause (B)) and (B)
the Scheduled Principal Balance of each such Mortgage Loan purchased by an
insurer from the Trustee during the related Prepayment Period pursuant to
the related Primary Mortgage Insurance Policy, if any, or otherwise; and
(b) the Senior Percentage of the Non-PO Percentage of the sum of (A) the
Scheduled Principal Balance of each Mortgage Loan which became a Liquidated
Mortgage Loan during the related Prepayment Period
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(other than the Mortgage Loans described in the immediately following
clause (B)) and (B) the Scheduled Principal Balance of each such Mortgage
Loan that was purchased by an insurer from the Trustee during the related
Prepayment Period pursuant to the related Primary Mortgage Insurance
Policy, if any or otherwise; and
(v) the Senior Prepayment Percentage of the Non-PO Percentage of the
sum of (a) the Scheduled Principal Balance of each Mortgage Loan which was
repurchased by the Mortgage Loan Seller in connection with such
Distribution Date and (b) the excess, if any, of the Scheduled Principal
Balance of a Mortgage Loan that has been replaced by the Mortgage Loan
Seller with a substitute Mortgage Loan pursuant to the Mortgage Loan
Purchase Agreement in connection with such Distribution Date over the
Scheduled Principal Balance of such substitute Mortgage Loan.
SENIOR PERCENTAGE: Initially, 96.94%. On any Distribution Date, the lesser
of (i) 100% and (ii) the percentage (carried to six places rounded up) obtained
by dividing the aggregate Current Principal Amount of the Senior Certificates
(other than the Principal Only and Interest Only Certificates) immediately
preceding such Distribution Date by the aggregate Scheduled Principal Balance of
the Mortgage Loans as of the beginning of the related Due Period.
SENIOR PREPAYMENT PERCENTAGE: On any Distribution Date occurring during the
periods set forth below, as follows:
Period (dates inclusive) Group 1 Senior Prepayment Percentage
--------------------------------------------------------------------------------
June 25, 2003 - May 25, 2008 100%
June 25, 2008 - May 25, 2009 Senior Percentage plus 70% of the Subordinate
Percentage
June 25, 2009 - May 25, 2010 Senior Percentage plus 60% of the Subordinate
Percentage
June 25, 2010 - May 25, 2011 Senior Percentage plus 40% of the Subordinate
Percentage
June 25, 2011 - May 25, 2012 Senior Percentage plus 20% of the Subordinate
Percentage
June 25, 2012 and thereafter Senior Percentage
In addition, no reduction of the Senior Prepayment Percentage shall occur
on any Distribution Date unless, as of the last day of the month preceding such
Distribution Date, (A) the aggregate Scheduled Principal Balance of the Mortgage
Loans delinquent 60 days or more (including for this purpose any such Mortgage
Loans in foreclosure and Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust), averaged over the last six
months, as a percentage of the sum of the aggregate Current Principal Amount of
the Subordinate Certificates does not exceed 50%; and (B) cumulative Realized
Losses on the Mortgage Loans do not exceed (a) 30% of the aggregate Current
Principal Amounts of the Subordinate Certificates as of the Cut-off Date (the
"Original Subordinate Principal Balance") if such Distribution Date occurs
between and including June 2008 and May 2009, (b) 35% of the Original
Subordinate Principal Balance if such Distribution Date occurs between and
including June 2009 and May 2010, (c) 40% of the Original
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Subordinate Principal Balance if such Distribution Date occurs between and
including June 2010 and May 2011, (d) 45% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including June 2011 and May
2012, and (e) 50% of the Original Subordinate Principal Balance if such
Distribution Date occurs during or after June 2012.
Notwithstanding the foregoing, if on any Distribution Date, the percentage,
the numerator of which is the aggregate Current Principal Amount of the Senior
Certificates (other than the Interest Only Certificates and Principal Only
Certificates) immediately preceding such Distribution Date, and the denominator
of which is the Non-PO Percentage of the Scheduled Principal Balances of the
Mortgage Loans as of the beginning of the related Due Period, exceeds such
percentage as of the Cut-off Date, then the Senior Prepayment Percentages for
such Distribution Date will equal 100%.
SCHEDULED PAYMENT: With respect to any Mortgage Loan and any month, the
scheduled payment or payments of principal and interest due during such month on
such Mortgage Loan which either is payable by a Mortgagor in such month under
the related Mortgage Note or, in the case of REO Property, would otherwise have
been payable under the related Mortgage Note.
SCHEDULED PRINCIPAL: The principal portion of any Scheduled Payment.
SCHEDULED PRINCIPAL BALANCE: With respect to any Mortgage Loan on any
Distribution Date, (i) the unpaid principal balance of such Mortgage Loan as of
the close of business on the related Due Date (i.e., taking account of the
principal payment to be made on such Due Date and irrespective of any
delinquency in its payment), as specified in the amortization schedule at the
time relating thereto (before any adjustment to such amortization schedule by
reason of any bankruptcy or similar proceeding occurring after the Cut-off Date
(other than a Deficient Valuation) or any moratorium or similar waiver or grace
period) and less (ii) any Principal Prepayments (including the principal portion
of Net Liquidation Proceeds) received during or prior to the related Prepayment
Period; provided that the Scheduled Principal Balance of a Liquidated Mortgage
Loan is zero.
SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITIES ADMINISTRATOR: Xxxxx Fargo Bank Minnesota, National Association,
or its successor in interest, or any successor securities administrator
appointed as herein provided.
SECURITIES LEGEND: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN
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EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR"
WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D
UNDER THE ACT OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM
PROVIDED IN THE AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER
EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER
IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH
CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND
ANY OTHER APPLICABLE JURISDICTION. THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY
OR INDIRECTLY BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, AND SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED [in the case of a Residual Certificate or a Private
Certificate] UNLESS THE OPINION OF COUNSEL REQUIRED BY SECTION 5.02 OF THE
POOLING AND SERVICING
AGREEMENT IS PROVIDED [in the case of the Class B-4, Class B-5 and Class B-6
Certificates]:, UNLESS THE PROPOSED TRANSFER AND HOLDING OF A CERTIFICATE AND
THE SERVICING, MANAGEMENT AND OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL
NOT RESULT IN ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN
INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED
TO, PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, XXX 00-00, XXX 00-0, XXX
95-60 OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY
DUTIES ON THE PART OF THE SELLER, THE SECURITIES ADMINISTRATOR, THE MASTER
SERVICER, ANY SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN
OWNER OF A BOOK- ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE EVIDENCED
BY A REPRESENTATION OR AN OPINION OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF
AN INSTITUTIONAL ACCREDITED INVESTOR."
SECURITY INSTRUMENT: A written instrument creating a valid first lien on a
Mortgaged Property securing a Mortgage Note, which may be any applicable form of
mortgage, deed of trust, deed to secure debt or security deed, including any
riders or addenda thereto.
SELLER: Structured Asset Mortgage Investments Inc., a Delaware corporation,
or its successors in interest.
SERVICER: With respect to each Mortgage Loan, EMC, Countrywide or HSBC, as
applicable.
SERVICER REMITTANCE DATE: With respect to each Mortgage Loan, the date set
forth in the related Servicing Agreement.
SERVICING AGREEMENTS: The EMC Servicing Agreement, Countrywide Servicing
Agreement, and HSBC Servicing Agreement.
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SERVICING FEE: As to any Mortgage Loan and Distribution Date, an amount
equal to the product of (i) the Scheduled Principal Balance of such Mortgage
Loan as of the Due Date in the preceding calendar month and (ii) the applicable
Servicing Fee Rate.
SERVICING FEE RATE: As to any Mortgage Loan, a per annum rate as set forth
in the Mortgage Loan Schedule.
SPECIAL HAZARD LOSS: (i) A Realized Loss suffered by a Mortgaged Property
on account of direct physical loss, exclusive of (a) any loss covered by a
hazard policy or a flood insurance policy required to be maintained in respect
of such Mortgaged Property under Section 3.10 and (b) any loss caused by or
resulting from:
(1) normal wear and tear;
(2) conversion or other dishonest act on the part of the
Trustee, a Master Servicer or any of their agents or
employees; or
(3) errors in design, faulty workmanship or faulty
materials, unless the collapse of the property or a
part thereof ensues;
or (ii) any Realized Loss suffered by the Trust Fund arising from or related to
the presence or suspected presence of hazardous wastes or hazardous substances
on a Mortgage Property as reported by a Master Servicer unless such loss to a
Mortgaged Property is covered by a hazard policy or a flood insurance policy
required to be maintained in respect of such Mortgage Property under Section
3.09.
SPECIAL HAZARD LOSS AMOUNT: Upon the initial issuance of the Certificates,
the Special Hazard Loss Amount will equal $3,474,527.06. As of any Distribution
Date, the Special Hazard Loss Amount will equal the initial Special Hazard Loss
Amount, minus the sum of (i)the aggregate amount of Special Hazard Losses that
would have been previously allocated to the Subordinate Certificates in the
absence of the Loss Allocation Limitation and (ii) the Adjustment Amount.
SPECIAL HAZARD TERMINATION DATE: The Distribution Date upon which the
Special Hazard Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
STARTUP DAY: May 30, 2003.
SUBORDINATE CERTIFICATES: The Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6 Certificates.
SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: As to any Distribution Date, the
amount by which (a) the sum of the Current Principal Amounts of all the
Certificates (after giving effect to the distribution of principal and the
allocation of applicable Realized Losses in reduction of the Current Principal
Amounts of such Certificates on such Distribution Date) exceeds (b) the
aggregate
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Scheduled Principal Balances of the Mortgage Loans on the Due Date related to
such Distribution Date.
SUBORDINATE OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date, an
amount equal to the sum of the following for the Mortgage Loans (but in no event
greater than the aggregate Current Principal Amount of the Subordinate
Certificates immediately prior to such Distribution Date):
(i) the Subordinate Percentage of the Non-PO Percentage of the
principal portion of all Monthly Payments due on each Mortgage Loan on the
related Due Date, as specified in the amortization schedule at the time
applicable thereto (after adjustment for previous principal prepayments but
before any adjustment to such amortization schedule by reason of any
bankruptcy or similar proceeding or any moratorium or similar waiver or
grace period);
(ii) the Subordinate Prepayment Percentage of the Non-PO Percentage of
the Scheduled Principal Balance of each Mortgage Loan which was the subject
of a prepayment in full received by the Master Servicer during the
applicable Prepayment Period;
(iii) the Subordinate Prepayment Percentage of the Non-PO Percentage
of all partial prepayments of principal received during the applicable
Prepayment Period;
(iv) the excess, if any, of (a) the Net Liquidation Proceeds allocable
to principal received during the related Prepayment Period in respect of
each Liquidated Mortgage Loan over (b) the sum of the amounts distributable
to the Senior Certificateholders pursuant to clause (iv) of the definition
of "Senior Optimal Principal Amount" and "Class PO Certificate Principal
Distribution Amount" on such Distribution Date;
(v) the Subordinate Prepayment Percentage of the Non-PO Percentage of
the sum of (a) the Scheduled Principal Balance of each Mortgage Loan which
was repurchased by the Mortgage Loan Seller in connection with such
Distribution Date and (b) the difference, if any, between the Scheduled
Principal Balance of a Mortgage Loan that has been replaced by the Mortgage
Loan Seller with a substitute Mortgage Loan pursuant to the Mortgage Loan
Purchase Agreement in connection with such Distribution Date and the
Scheduled Principal Balance of such substitute Mortgage Loan; and
(vi) on the Distribution Date on which the Current Principal Amounts
of the Senior Certificates (other than the related Interest Only
Certificates and Principal Only Certificates) have all been reduced to
zero, 100% of any applicable Senior Optimal Principal Amount.
SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus the Senior
Percentage.
SUBORDINATE PREPAYMENT PERCENTAGE: With respect to the Mortgage Loans, on
any Distribution Date, 100% minus the Senior Prepayment Percentage, except that
on any Distribution Date after the Current Principal Amounts of the Senior
Certificates have each been reduced to zero, the Subordinate Prepayment
Percentage will equal 100%.
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SUBSTITUTE MORTGAGE LOAN: A mortgage loan tendered to the Trustee pursuant
to the related Servicing Agreement, the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, in each case, (i) which has an
Outstanding Principal Balance not greater nor materially less than the Mortgage
Loan for which it is to be substituted; (ii) which has a Mortgage Interest Rate
and Net Rate not less than, and not materially greater than, such Mortgage Loan;
(iii) which has a maturity date not materially earlier or later than such
Mortgage Loan and not later than the latest maturity date of any Mortgage Loan;
(iv) which is of the same property type and occupancy type as such Mortgage
Loan; (v) which has a Loan-to-Value Ratio not greater than the Loan-to-Value
Ratio of such Mortgage Loan; (vi) which is current in payment of principal and
interest as of the date of substitution; (vii) as to which the payment terms do
not vary in any material respect from the payment terms of the Mortgage Loan for
which it is to be substituted; and (viii) which has a Gross Margin, Periodic
Rate Cap and Maximum Lifetime Mortgage Rate no less than those of such Mortgage
Loan, has the same Index and interval between Interest Adjustment Dates as such
Mortgage Loan, and a Minimum Lifetime Mortgage Rate no lower than that of such
Mortgage Loan.
TAC CERTIFICATES: The Class A-10 Certificates.
TARGETED PRINCIPAL AMOUNT: With respect to the TAC Certificates and each
Distribution Date, the amount set forth for such Class in Exhibit L hereto for
the respective Distribution Date.
TAX ADMINISTRATION AND TAX MATTERS PERSON: The Securities Administrator or
any successor thereto or assignee thereof shall serve as tax administrator
hereunder and as agent for the Tax Matters Person. The Holder of each Class of
Residual Certificates shall be the Tax Matters Person for the related REMIC, as
more particularly set forth in Section 9.12 hereof.
TERMINATION 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.
TRUST FUND OR TRUST: The corpus of the trust created by this Agreement,
consisting of the Mortgage Loans and the other assets described in Section
2.01(a).
TRUSTEE: JPMorgan Chase Bank, or its successor in interest, or any
successor trustee appointed as herein provided.
UNCERTIFICATED PRINCIPAL BALANCE: With respect to any REMIC I Regular
Interest as of any Distribution Date, the initial principal amount of such REMIC
I Regular Interest, reduced by (i) all amounts distributed on previous
Distribution Dates on such REMIC I Regular Interest with respect to principal,
(ii) the principal portion of all Realized Losses allocated prior to such
Distribution Date to such REMIC I Regular Interest, taking account of the Loss
Allocation Limitation and (iii) in the case of a REMIC I Regular Interest for
which the Corresponding Certificate is a Subordinate Certificate, such REMIC I
Regular Interest's pro rata share, if any, of the applicable Subordinate
Certificate Writedown Amount allocated to such Corresponding Certificate for
previous Distribution Dates.
UNDERLYING SELLER: With respect to each Mortgage Loan, Bank One, Wachovia,
CHL and HSBC, as indicated on the Mortgage Loan Schedule.
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UNINSURED CAUSE: Any cause of damage to a Mortgaged Property or related REO
Property such that the complete restoration of such Mortgaged Property or
related REO Property is not fully reimbursable by the hazard insurance policies
required to be maintained pursuant the related Servicing Agreement, without
regard to whether or not such policy is maintained.
UNITED STATES PERSON: A citizen or resident of the United States, a
corporation or partnership (including an entity treated as a corporation or
partnership for federal income tax purposes) created or organized in, or under
the laws of, the United States or any state thereof or the District of Columbia
(except, in the case of a partnership, to the extent provided in regulations),
provided that, for purposes solely of the Class R Certificates, no partnership
or other entity treated as a partnership for United States federal income tax
purposes shall be treated as a United States Person unless all persons that own
an interest in such partnership either directly or through any entity that is
not a corporation for United States federal income tax purposes are United
States Persons, or an estate whose income is subject to United States federal
income tax regardless of its source, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more such United States Persons have the authority to control
all substantial decisions of the trust. To the extent prescribed in regulations
by the Secretary of the Treasury, which have not yet been issued, a trust which
was in existence on August 20, 1996 (other than a trust treated as owned by the
grantor under subpart E of part I of subchapter J of chapter 1 of the Code), and
which was treated as a United States person on August 20, 1996 may elect to
continue to be treated as a United States person notwithstanding the previous
sentence.
WACHOVIA: Wachovia Mortgage Corporation.
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Section 1.02. CALCULATION OF LIBOR.
LIBOR applicable to the calculation of the Pass-Through Rate on the
Adjustable Rate Certificates for any Interest Accrual Period will be determined
on each Interest Determination Date. On each Interest Determination Date, LIBOR
shall be established by the Securities Administrator and, as to any Interest
Accrual Period, will equal the rate for one month United States dollar deposits
that appears on the Telerate Screen Page 3750 as of 11:00 a.m., London" time, on
such Interest Determination Date. "Telerate Screen Page 3750" means the display
designated as page 3750 on the Telerate Service (or such other page as may
replace page 3750 on that service for the purpose of displaying London interbank
offered rates of major banks). If such rate does not appear on such page (or
such other page as may replace that page on that service, or if such service is
no longer offered, LIBOR shall be so established by use of such other service
for displaying LIBOR or comparable rates as may be reasonably selected by the
Securities Administrator), the rate will be the Reference Bank Rate. The
"Reference Bank Rate" will be determined on the basis of the rates at which
deposits in U.S. Dollars are offered by the reference banks (which shall be any
three major banks that are engaged in transactions in the London interbank
market, selected by the Securities Administrator) as of 11:00 a.m., London time,
on the Interest Determination Date to prime banks in the London interbank market
for a period of one month in amounts approximately equal to the aggregate
Current Principal Amount of the Adjustable Rate Certificates then outstanding.
The Securities Administrator will request the principal London office of each of
the reference banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate will be the arithmetic mean of the quotations
rounded up to the nearest whole multiple of 0.03125%. If on such date fewer than
two quotations are provided as requested, the rate will be the arithmetic mean
of the rates quoted by one or more major banks in New York City, selected by the
Securities Administrator, as of 11:00 a.m., New York City time, on such date for
loans in U.S. Dollars to leading European banks for a period of one month in
amounts approximately equal to the aggregate Current Principal Amount of the
Adjustable Rate Certificates then outstanding. If no such quotations can be
obtained, the rate will be LIBOR for the prior Distribution Date; PROVIDED
HOWEVER, if, under the priorities described above, LIBOR for a Distribution Date
would be based on LIBOR for the previous Distribution Date for the third
consecutive Distribution Date, the Securities Administrator shall select an
alternative comparable index (over which the Securities Administrator e has no
control), used for determining one-month Eurodollar lending rates that is
calculated and published (or otherwise made available) by an independent party.
The establishment of LIBOR by the Securities Administrator on any Interest
Determination Date and the Securities Administrator's subsequent calculation of
the Pass- Through Rate applicable to the Adjustable Rate Certificates for the
relevant Interest Accrual Period, in the absence of manifest error, will be
final and binding. Promptly following each Interest Determination Date the
Securities Administrator shall supply the Master Servicer with the results of
its determination of LIBOR on such date.
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ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01 CONVEYANCE OF MORTGAGE LOANS TO TRUSTEE. (a) The Seller
concurrently with the execution and delivery of this Agreement, sells, transfers
and assigns to the Trust without recourse all its right, title and interest in
and to (i) the Mortgage Loans identified in the Mortgage Loan Schedule,
including all interest and principal due with respect to the Mortgage Loans
after the Cut-off Date, but excluding any payments of principal and interest due
on or prior to the Cut-off Date; (ii) such assets as shall from time to time be
credited or are required by the terms of this Agreement to be credited to the
Master Servicer Collection Account, (iii) such assets relating to the Mortgage
Loans as from time to time may be held by the Servicers in Protected Accounts,
the Master Servicer in the Master Servicer Collection Account and the Trustee in
the Distribution Account for the benefit of the Trustee on behalf of the
Certificateholders, (iv) any REO Property, (v) the Required Insurance Policies
and any amounts paid or payable by the insurer under any Insurance Policy (to
the extent the mortgagee has a claim thereto), (vi) the Mortgage Loan Purchase
Agreement to the extent provided in Subsection 2.03(a), (vii) the rights with
respect to the Servicing Agreements as assigned to the Trustee on behalf of the
Certificateholders by the Assignment Agreements, (viii) the Policy, the Class
A-11 Policy Payments Account, the Rounding Account and the Reserve Fund and (ix)
any proceeds of the foregoing. Although it is the intent of the parties to this
Agreement that the conveyance of the Seller's right, title and interest in and
to the Mortgage Loans and other assets in the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan, in the event that
such conveyance is deemed to be a loan, it is the intent of the parties to this
Agreement that the Seller shall be deemed to have granted to the Trustee a first
priority perfected security interest in all of the Seller's right, title and
interest in, to and under the Mortgage Loans and other assets in the Trust Fund,
and that this Agreement shall constitute a security agreement under applicable
law.
(b) In connection with the above transfer and assignment, the Seller hereby
deposits with the Trustee or the Custodian, as its agent, with respect to each
Mortgage Loan:
(i) the original Mortgage Note, endorsed without recourse to the order
of the Trustee and showing an unbroken chain of endorsements from the original
payee thereof to the Person endorsing it to the Trustee, or lost note affidavit
together with a copy of the related Mortgage Note,
(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 a MOM Loan, a certified copy of the
assignment (which may be in the form of a blanket assignment if permitted in the
jurisdiction in which the Mortgaged Property is located) to "JPMorgan Chase
Bank, as Trustee", with evidence of recording with respect to each Mortgage Loan
in the name of the Trustee thereon (or if clause (x) in the proviso below
applies or for Mortgage Loans with respect to which the related Mortgaged
Property is located
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in a state other than Maryland or an Opinion of Counsel has been provided as set
forth in this Section 2.01(b), shall be in recordable form),
(iv) all intervening assignments of the Security Instrument, if
applicable and only to the extent available to the Seller with evidence of
recording thereon,
(v) the original or a copy of the policy or certificate of primary
mortgage guaranty insurance, to the extent available, if any,
(vi) the original policy of title insurance or mortgagee's certificate
of title insurance or commitment or binder for title insurance, and
(vii) originals of all modification agreements, if applicable and
available;
PROVIDED, HOWEVER, that in lieu of the foregoing, the Seller may deliver the
following documents, under the circumstances set forth below: (x) in lieu of the
original Security Instrument, assignments to the Trustee or intervening
assignments thereof which have been delivered, are being delivered or will, upon
receipt of recording information relating to the Security Instrument required to
be included thereon, be delivered to recording offices for recording and have
not been returned to the Seller in time to permit their delivery as specified
above, the Seller may deliver a true copy thereof with a certification by the
Seller, on the face of such copy, substantially as follows: "Certified to be a
true and correct copy of the original, which has been transmitted for
recording"; (y) in lieu of the Security Instrument, assignment to the Trustee or
intervening assignments thereof, if the applicable jurisdiction retains the
originals of such documents (as evidenced by a certification from the Seller to
such effect) the Seller may deliver photocopies of such documents containing an
original certification by the judicial or other governmental authority of the
jurisdiction where such documents were recorded; and (z) the Seller shall not be
required to deliver intervening assignments or Mortgage Note endorsements
between the related Underlying Seller and EMC Mortgage Corporation, between EMC
Mortgage Corporation and the Seller, and between the Seller and the Trustee; and
provided, further, however, that in the case of Mortgage Loans which have been
prepaid in full after the Cut-off Date and prior to the Closing Date, the
Seller, in lieu of delivering the above documents, may deliver to the Trustee or
the Custodian, as its agent, a certification to such effect and shall deposit
all amounts paid in respect of such Mortgage Loans in the Master Servicer
Collection Account on the Closing Date. The Seller shall deliver such original
documents (including any original documents as to which certified copies had
previously been delivered) to the Trustee or the Custodian, as its agent,
promptly after they are received. The Seller shall cause, at its expense, the
assignment of the Security Instrument to the Trustee to be recorded not later
than 180 days after the Closing Date, unless (a) such recordation is not
required by the Rating Agencies or an Opinion of Counsel addressed to the
Trustee and MBIA has been provided to the Trustee and MBIA (with a copy to the
Custodian) which states that recordation of such Security Instrument is not
required to protect the interests of the Certificateholders in the related
Mortgage Loans or (b) MERS is identified on the Mortgage or on a properly
recorded assignment of the Mortgage as the mortgagee of record solely as nominee
for Seller and its successor and assigns; provided, however, that each
assignment shall be submitted for recording by the Seller in the manner
described above, at no expense to the Trust or the Trustee or the Custodian, as
its agent, upon the earliest to occur of: (i) reasonable direction by the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not
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less than 25% of the Trust, (ii) the occurrence of an Event of Default, (iii)
the occurrence of a bankruptcy, insolvency or foreclosure relating to the Seller
and (iv) the occurrence of a servicing transfer as described in Section 8.02
hereof. Notwithstanding the foregoing, if the Seller fails to pay the cost of
recording the assignments, such expense will be paid by the Trustee and the
Trustee shall be reimbursed for such expenses by the Trust in accordance with
Section 9.05.
Section 2.02 ACCEPTANCE OF MORTGAGE LOANS BY TRUSTEE. (a) The Trustee
acknowledges the sale, transfer and assignment of the Trust Fund to it by the
Seller and receipt of, subject to further review and the exceptions which may be
noted pursuant to the procedures described below, and declares that it holds,
the documents (or certified copies thereof) delivered to it pursuant to Section
2.01, and declares that it will continue to hold those documents and any
amendments, replacements or supplements thereto and all other assets of the
Trust Fund delivered to it as Trustee in trust for the use and benefit of all
present and future Holders of the Certificates and MBIA. On the Closing Date,
the Custodian, with respect to the Mortgage Loans, shall acknowledge with
respect to each Mortgage Loan by delivery to the Seller, the Trustee and MBIA of
an Initial Certification receipt of the Mortgage File, but without review of
such Mortgage File, except to the extent necessary to confirm that such Mortgage
File contains the related Mortgage Note or lost note affidavit. No later than 90
days after the Closing Date (or, with respect to any Substitute Mortgage Loan,
within five Business Days after the receipt by the Trustee or Custodian
thereof), the Trustee agrees, for the benefit of the Certificateholders and
MBIA, to review or cause to be reviewed by the Custodian on its behalf (under
the Custodial Agreement), each Mortgage File delivered to it and to execute and
deliver, or cause to be executed and delivered, to the Seller and the Trustee
and MBIA an Interim Certification. In conducting such review, the Trustee or
Custodian will ascertain whether all required documents have been executed and
received, and based on the Mortgage Loan Schedule, whether those documents
relate, determined on the basis of the Mortgagor name, original principal
balance and loan number, to the Mortgage Loans it has received, as identified in
the Mortgage Loan Schedule. In performing any such review, the Trustee or the
Custodian, as its agent, may conclusively rely on the purported due execution
and genuineness of any such document and on the purported genuineness of any
signature thereon. If the Trustee or the Custodian, as its agent, finds any
document constituting part of the Mortgage File not to have been executed or
received, or to be unrelated to the Mortgage Loans identified in Exhibit B or to
appear to be defective on its face, the Trustee or the Custodian, as its agent,
shall promptly notify the Mortgage Loan Seller. In accordance with the Mortgage
Loan Purchase Agreement, the Mortgage Loan Seller shall correct or cure any such
defect within ninety (90) days from the date of notice from the Trustee or the
Custodian, as its agent, of the defect and if the Mortgage Loan Seller fails to
correct or cure the defect within such period, and such defect materially and
adversely affects the interests of the Certificateholders in the related
Mortgage Loan, the Trustee or the Custodian, as its agent, shall enforce the
Mortgage Loan Seller's obligation pursuant to the Mortgage Loan Purchase
Agreement, within 90 days from the Trustee's or the Custodian's notification, to
purchase such Mortgage Loan at the Repurchase Price; provided that, if such
defect would cause the Mortgage Loan to be other than a "qualified mortgage" as
defined in Section 860G(a)(3) of the Code, any such cure or repurchase must
occur within 90 days from the date such breach was discovered; provided,
however, that if such defect relates solely to the inability of the Mortgage
Loan Seller to deliver the original Security Instrument or intervening
assignments thereof, or a certified copy because the originals of such
documents, or a certified copy have not been returned by the applicable
jurisdiction, the Mortgage Loan Seller shall not be required to purchase such
Mortgage Loan if the Mortgage Loan Seller delivers such original documents or
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certified copy promptly upon receipt, but in no event later than 360 days after
the Closing Date. The foregoing repurchase obligation shall not apply in the
event that the Mortgage Loan Seller cannot deliver such original or copy of any
document submitted for recording to the appropriate recording office in the
applicable jurisdiction because such document has not been returned by such
office; provided that the Mortgage Loan Seller shall instead deliver a recording
receipt of such recording office or, if such receipt is not available, a
certificate confirming that such documents have been accepted for recording, and
delivery to the Trustee or the Custodian, as its agent, shall be effected by the
Mortgage Loan Seller within thirty days of its receipt of the original recorded
document.
(b) No later than 180 days after the Closing Date, the Trustee or the
Custodian, as its agent, will review, for the benefit of the Certificateholders
and MBIA, the Mortgage Files delivered to it and will execute and deliver or
cause to be executed and delivered to the Seller, the Trustee and MBIA, a Final
Certification. In conducting such review, the Trustee or the Custodian, as its
agent, will ascertain whether an original of each document required to be
recorded has been returned from the recording office with evidence of recording
thereon or a certified copy has been obtained from the recording office. If the
Trustee or the Custodian, as its agent, finds any document constituting part of
the Mortgage File has not been received, or to be unrelated, determined on the
basis of the Mortgagor name, original principal balance and loan number, to the
Mortgage Loans identified in Exhibit B or to appear defective on its face (a
"Material Defect"), the Trustee or the Custodian, as its agent, shall promptly
notify the Mortgage Loan Seller (provided, however, that with respect to those
documents described in subsection (b)(iv), (v) and (vii) of Section 2.01, the
Trustee's obligations shall extend only to the documents actually delivered
pursuant to such subsections). In accordance with the Mortgage Loan Purchase
Agreement, the Mortgage Loan Seller shall correct or cure any such defect or EMC
shall deliver to the Trustee and MBIA an Opinion of Counsel to the effect that
such defect does not materially or adversely affect the interests of
Certificateholders in such Mortgage Loan (such determination to be made without
regard to the Policy) within 90 days from the date of notice from the Trustee or
the Custodian, as its agent, of the Material Defect and if the Mortgage Loan
Seller is unable to cure such defect within such period, and if such defect
materially and adversely affects the interests of the Certificateholders in the
related Mortgage Loan, the Trustee shall enforce the Mortgage Loan Seller's
obligation under the Mortgage Loan Purchase Agreement to provide a Substitute
Mortgage Loan (if within two years of the Closing Date) or purchase such
Mortgage Loan at the Repurchase Price, provided that, if such defect would cause
the Mortgage Loan to be other than a "qualified mortgage" as defined in Section
860G(a)(3) of the Code, any such cure, repurchase or substitution must occur
within 90 days from the date such breach was discovered, provided, however, that
if such defect relates solely to the inability of the Mortgage Loan Seller to
deliver the original Security Instrument or intervening assignments thereof, or
a certified copy, because the originals of such documents or a certified copy,
have not been returned by the applicable jurisdiction, the Mortgage Loan Seller
shall not be required to purchase such Mortgage Loan, if the Mortgage Loan
Seller delivers such original documents or certified copy promptly upon receipt,
but in no event later than 360 days after the Closing Date. The foregoing
repurchase obligation shall not apply in the event that the Mortgage Loan Seller
cannot deliver such original or copy of any document submitted for recording to
the appropriate recording office in the applicable jurisdiction because such
document has not been returned by such office; provided that the Mortgage Loan
Seller shall instead deliver a recording receipt of such recording office or, if
such receipt is not available, a certificate confirming that such documents have
been accepted for recording, and
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delivery to the Trustee or the Custodian, as its agent, shall be effected by the
Mortgage Loan Seller within thirty days of its receipt of the original recorded
document.
(c) In the event that a Mortgage Loan is purchased by the Mortgage Loan
Seller in accordance with Subsections 2.02(a) or (b) above, the Mortgage Loan
Seller shall remit to the Master Servicer the Repurchase Price for deposit in
the Master Servicer Collection Account and the Mortgage Loan Seller shall
provide to the Trustee and MBIA written notification detailing the components of
the Repurchase Price. Upon deposit of the Repurchase Price in the Master
Servicer Collection Account, the Seller shall notify the Trustee and the Trustee
or the Custodian, as its agent (upon receipt of a Request for Release in the
form of Exhibit D attached hereto with respect to such Mortgage Loan), shall
release to the Mortgage Loan 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 Mortgage Loan
Seller as are necessary to vest in the Mortgage Loan Seller title to and rights
under the Mortgage Loan. Such purchase shall be deemed to have occurred on the
date on which the Repurchase Price in available funds is received by the
Trustee. The Master Servicer shall amend the Mortgage Loan Schedule, which was
previously delivered to it by Seller in a form agreed to between the Seller and
the Master Servicer, to reflect such repurchase and shall promptly notify the
Rating Agencies, Master Servicer and MBIA of such amendment. The obligation of
the Mortgage Loan Seller to repurchase any Mortgage Loan as to which such a
defect in a constituent document exists shall be the sole remedy respecting such
defect available to the Certificateholders and MBIA or to the Trustee on their
behalf.
Section 2.03 ASSIGNMENT OF INTEREST IN THE MORTGAGE LOAN PURCHASE
AGREEMENT. (a) The Seller hereby assigns to the Trustee, on behalf of the
Certificateholders, all of its right, title and interest in the Mortgage Loan
Purchase Agreement, including but not limited to the Seller's rights and
obligations pursuant to the Servicing Agreements (noting that the Mortgage Loan
Seller has retained the right in the event of breach of the representations,
warranties and covenants, if any, with respect to the related Mortgage Loans of
the related Servicer under the related Servicing Agreement to enforce the
provisions thereof and to seek all or any available remedies). The obligations
of the Mortgage Loan Seller to substitute or repurchase, as applicable, a
Mortgage Loan shall be the Trustee's and the Certificateholders' sole remedy for
any breach thereof. At the request of the Trustee, the Seller shall take such
actions as may be necessary to enforce the above right, title and interest on
behalf of the Trustee, the Certificateholders and MBIA or shall execute such
further documents as the Trustee may reasonably require in order to enable the
Trustee to carry out such enforcement.
(b) If the Seller, the Securities Administrator or the Trustee discovers a
breach of any of the representations and warranties set forth in the Mortgage
Loan Purchase Agreement, which breach materially and adversely affects the value
of the interests of Certificateholders or the Trustee in the related Mortgage
Loan, the party discovering the breach shall give prompt written notice of the
breach to the other parties. The Mortgage Loan Seller, within 90 days of its
discovery or receipt of notice that such breach has occurred (whichever occurs
earlier), shall cure the breach in all material respects or, subject to the
Mortgage Loan Purchase Agreement or Section 2.04 of this Agreement, as
applicable, shall purchase the Mortgage Loan or any property acquired with
respect thereto from the Trustee; provided, however, that if there is a breach
of any representation set forth in the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, and the
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Mortgage Loan or the related property acquired with respect thereto has been
sold, then the Mortgage Loan Seller shall pay, in lieu of the Repurchase Price,
any excess of the Repurchase Price over the Net Liquidation Proceeds received
upon such sale. (If the Net Liquidation Proceeds exceed the Repurchase Price,
any excess shall be paid to the Mortgage Loan Seller to the extent not required
by law to be paid to the borrower.) Any such purchase by the Mortgage Loan
Seller shall be made by providing an amount equal to the Repurchase Price to the
Master Servicer for deposit in the Master Servicer Collection Account and
written notification detailing the components of such Repurchase Price. The
Seller shall notify the Trustee and submit to the Trustee or the Custodian, as
its agent, a Request for Release, and the Trustee shall release, or the Trustee
shall cause the Custodian to release, to the Mortgage Loan Seller the related
Mortgage File and the Trustee shall execute and deliver all instruments of
transfer or assignment furnished to it by the Mortgage Loan Seller, without
recourse, representation or warranty as are necessary to vest in the Mortgage
Loan Seller title to and rights under the Mortgage Loan or any property acquired
with respect thereto. Such purchase shall be deemed to have occurred on the date
on which the Repurchase Price in available funds is received by the Trustee. The
Master Servicer shall amend the Mortgage Loan Schedule to reflect such
repurchase and shall promptly notify the Trustee, MBIA and the Rating Agencies
of such amendment. Enforcement of the obligation of the Mortgage Loan Seller to
purchase (or substitute a Substitute Mortgage Loan for) any Mortgage Loan or any
property acquired with respect thereto (or pay the Repurchase Price as set forth
in the above proviso) as to which a breach has occurred and is continuing shall
constitute the sole remedy respecting such breach available to the
Certificateholders or the Trustee on their behalf.
Section 2.04 SUBSTITUTION OF MORTGAGE LOANS. Notwithstanding anything to
the contrary in this Agreement, in lieu of purchasing a Mortgage Loan pursuant
to the Mortgage Loan Purchase Agreement or Sections 2.02 or 2.03 of this
Agreement, the Mortgage Loan Seller may, no later than the date by which such
purchase by the Mortgage Loan Seller would otherwise be required, tender to the
Trustee a Substitute Mortgage Loan accompanied by a certificate of an authorized
officer of the Mortgage Loan Seller that such Substitute Mortgage Loan conforms
to the requirements set forth in the definition of "Substitute Mortgage Loan" in
the Mortgage Loan Purchase Agreement or this Agreement, as applicable; provided,
however, that substitution pursuant to the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, in lieu of purchase shall not be
permitted after the termination of the two-year period beginning on the Startup
Day; provided, further, that if the breach would cause the Mortgage Loan to be
other than a "qualified mortgage" as defined in Section 860G(a)(3) of the Code,
any such cure or substitution must occur within 90 days from the date the breach
was discovered. The Trustee or the Custodian, as its agent, shall examine the
Mortgage File for any Substitute Mortgage Loan in the manner set forth in
Section 2.02(a) and the Trustee or the Custodian, as its agent, shall notify the
Mortgage Loan Seller, in writing, within five Business Days after receipt,
whether or not the documents relating to the Substitute Mortgage Loan satisfy
the requirements of the fourth sentence of Subsection 2.02(a). Within two
Business Days after such notification, the Mortgage Loan Seller shall provide to
the Trustee for deposit in the Distribution Account the amount, if any, by which
the Outstanding Principal Balance as of the next preceding Due Date of the
Mortgage Loan for which substitution is being made, after giving effect to
Scheduled Principal due on such date, exceeds the Outstanding Principal Balance
as of such date of the Substitute Mortgage Loan, after giving effect to the
Scheduled Principal due on such date, which amount shall be treated for the
purposes of this Agreement as if it were the payment by the Mortgage Loan Seller
of the Repurchase Price for the
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purchase of a Mortgage Loan by the Mortgage Loan Seller. After such notification
to the Mortgage Loan Seller and, if any such excess exists, upon receipt of such
deposit, the Trustee shall accept such Substitute Mortgage Loan which shall
thereafter be deemed to be a Mortgage Loan hereunder. In the event of such a
substitution, accrued interest on the Substitute Mortgage Loan for the month in
which the substitution occurs and any Principal Prepayments made thereon during
such month shall be the property of the Trust Fund and accrued interest for such
month on the Mortgage Loan for which the substitution is made and any Principal
Prepayments made thereon during such month shall be the property of the Mortgage
Loan Seller. The Scheduled Principal on a Substitute Mortgage Loan due on the
Due Date in the month of substitution shall be the property of the Mortgage Loan
Seller and the Scheduled Principal on the Mortgage Loan for which the
substitution is made due on such Due Date shall be the property of the Trust
Fund. Upon acceptance of the Substitute Mortgage Loan (and delivery to the
Trustee or Custodian of a Request for Release for such Mortgage Loan), the
Trustee shall release to the Mortgage Loan Seller the related Mortgage File
related to any Mortgage Loan released pursuant to the Mortgage Loan Purchase
Agreement or Section 2.04 of this Agreement, as applicable, and shall execute
and deliver all instruments of transfer or assignment, without recourse,
representation or warranty in form as provided to it as are necessary to vest in
the Mortgage Loan Seller title to and rights under any Mortgage Loan released
pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of this
Agreement, as applicable. The Mortgage Loan Seller shall deliver the documents
related to the Substitute Mortgage Loan in accordance with the provisions of the
Mortgage Loan Purchase Agreement or Subsections 2.01(b) and 2.02(b) of this
Agreement, as applicable, with the date of acceptance of the Substitute Mortgage
Loan deemed to be the Closing Date for purposes of the time periods set forth in
those Subsections. The representations and warranties set forth in the Mortgage
Loan Purchase Agreement shall be deemed to have been made by the Mortgage Loan
Seller with respect to each Substitute Mortgage Loan as of the date of
acceptance of such Mortgage Loan by the Trustee. The Master Servicer shall amend
the Mortgage Loan Schedule to reflect such substitution and shall provide a copy
of such amended Mortgage Loan Schedule to the Trustee, MBIA and the Rating
Agencies.
Section 2.05 ISSUANCE OF CERTIFICATES.
(a) The Trustee acknowledges the assignment to it of the Mortgage Loans and
the other assets comprising the Trust Fund and, concurrently therewith, has
signed, and countersigned and delivered to the Seller, in exchange therefor,
Certificates in such authorized denominations representing such Fractional
Undivided Interests as the Seller has requested. The Trustee agrees that it will
hold the Mortgage Loans and such other assets as may from time to time be
delivered to it segregated on the books of the Trustee in trust for the benefit
of the Certificateholders.
(b) The Seller, concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey in trust to the Trustee
without recourse all the right, title and interest of the Seller in and to the
REMIC I Regular Interests and the other assets of REMIC II for the benefit of
the holders of the REMIC II Regular Certificates and the Class R-II
Certificates. The Trustee acknowledges receipt of the REMIC I Regular Interests
(which are uncertificated) and the other assets of REMIC II and declares that it
holds and will hold the same in trust for the exclusive use and benefit of the
holders of the REMIC II Regular Certificates and the Class R-II Certificates.
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Section 2.06 REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLER. The
Seller hereby represents and warrants to the Trustee, the Master Servicer and
the Securities Administrator as follows:
(i) the Seller (a) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and (b) is
qualified and in good standing as a foreign corporation to do business in
each jurisdiction where such qualification is necessary, except where the
failure so to qualify would not reasonably be expected to have a material
adverse effect on the Seller's business as presently conducted or on the
Seller's ability to enter into this Agreement and to consummate the
transactions contemplated hereby;
(ii) the Seller has full corporate power to own its property, to carry
on its business as presently conducted and to enter into and perform its
obligations under this Agreement;
(iii) the execution and delivery by the Seller of this Agreement have
been duly authorized by all necessary corporate action on the part of the
Seller; and neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor compliance with
the provisions hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any law, governmental
rule, regulation, judgment, decree or order binding on the Seller or its
properties or the articles of incorporation or by-laws of the Seller,
except those conflicts, breaches or defaults which would not reasonably be
expected to have a material adverse effect on the Seller's ability to enter
into this Agreement and to consummate the transactions contemplated hereby;
(iv) the execution, delivery and performance by the Seller of this
Agreement and the consummation of the transactions contemplated hereby do
not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
state, federal or other governmental authority or agency, except those
consents, approvals, notices, registrations or other actions as have
already been obtained, given or made;
(v) this Agreement has been duly executed and delivered by the Seller
and, assuming due authorization, execution and delivery by the other
parties hereto, constitutes a valid and binding obligation of the Seller
enforceable against it in accordance with its terms (subject to applicable
bankruptcy and insolvency laws and other similar laws affecting the
enforcement of the rights of creditors generally);
(vi) there are no actions, suits or proceedings pending or, to the
knowledge of the Seller, threatened against the Seller, before or by any
court, administrative agency, arbitrator or governmental body (i) with
respect to any of the transactions contemplated by this Agreement or (ii)
with respect to any other matter which in the judgment of the Seller will
be determined adversely to the Seller and will if determined adversely to
the Seller materially and adversely affect the Seller's ability to enter
into this Agreement or perform its obligations under this Agreement; and
the Seller is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to materially
and adversely affect the transactions contemplated by this Agreement; and
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(vii) immediately prior to the transfer and assignment to the Trustee,
each Mortgage Note and each Mortgage were not subject to an assignment or
pledge, and the Seller had good and marketable title to and was the sole
owner thereof and had full right to transfer and sell such Mortgage Loan to
the Trustee free and clear of any encumbrance, equity, lien, pledge,
charge, claim or security interest.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01 MASTER SERVICER. The Master Servicer shall supervise, monitor
and oversee the obligation of the Servicers to service and administer their
respective Mortgage Loans in accordance with the terms of the applicable
Servicing Agreements and shall have full power and authority to do any and all
things which it may deem necessary or desirable in connection with such master
servicing and administration. In performing its obligations hereunder, the
Master Servicer shall act in a manner consistent with Accepted Master Servicing
Practices. Furthermore, the Master Servicer shall oversee and consult with each
Servicer as necessary from time-to-time to carry out the Master Servicer's
obligations hereunder, shall receive, review and evaluate all reports,
information and other data provided to the Master Servicer by each Servicer and
shall cause each Servicer to perform and observe the covenants, obligations and
conditions to be performed or observed by such Servicer under the its Servicing
Agreement. The Master Servicer shall independently and separately monitor each
Servicer's servicing activities with respect to each related Mortgage Loan,
reconcile the results of such monitoring with such information provided in the
previous sentence on a monthly basis and coordinate corrective adjustments to
the Servicers' and Master Servicer's records, and based on such reconciled and
corrected information, the Master Servicer shall provide such information to the
Securities Administrator as shall be necessary in order for it to prepare the
statements specified in Section 6.04, and prepare any other information and
statements required to be forwarded by the Master Servicer hereunder. The Master
Servicer shall reconcile the results of its Mortgage Loan monitoring with the
actual remittances of the Servicers to the Protected Account pursuant to the
applicable Servicing Agreements.
The Trustee shall furnish the Servicers and the Master Servicer with any
powers of attorney and other documents in form as provided to it necessary or
appropriate to enable the Servicers and the Master Servicer to service and
administer the related Mortgage Loans and REO Property.
The Trustee shall provide access to the records and documentation in
possession of the Trustee regarding the related Mortgage Loans and REO Property
and the servicing thereof to the Certificateholders, MBIA, the FDIC, and the
supervisory agents and examiners of the FDIC, such access being afforded only
upon reasonable prior written request and during normal business hours at the
office of the Trustee; provided, however, that, unless otherwise required by
law, the Trustee shall not be required to provide access to such records and
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor. The Trustee shall allow representatives of the above entities
to photocopy any of the records and documentation and shall provide equipment
for that purpose at a charge that covers the Trustee's actual costs.
The Trustee shall execute and deliver to the related Servicer and the
Master Servicer any court pleadings, requests for trustee's sale or other
documents necessary or desirable to (i) the foreclosure or trustee's sale with
respect to a Mortgaged Property; (ii) any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Security Instrument;
(iii) obtain a deficiency judgment against the Mortgagor; or (iv) enforce any
other rights or remedies provided by the Mortgage Note or Security Instrument or
otherwise available at law or equity.
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Section 3.02 REMIC-RELATED COVENANTS. For as long as each REMIC shall
exist, the Trustee and the Securities Administrator shall act in accordance
herewith to assure continuing treatment of such REMIC as a REMIC, and the
Trustee and the Securities Administrator shall comply with any directions of the
Seller, the related 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 and MBIA have received a REMIC Opinion
addressed to the Trustee and MBIA prepared at the expense of the Trust Fund; and
(b) other than with respect to a substitution pursuant to the Mortgage Loan
Purchase Agreement or Section 2.04 of this Agreement, as applicable, accept any
contribution to any REMIC after the Startup Day without receipt of a REMIC
Opinion addressed to the Trustee and MBIA.
Section 3.03 MONITORING OF SERVICERS. (a) The Master Servicer shall be
responsible for reporting to the Trustee and the Seller the compliance by each
Servicer with its duties under the related Servicing Agreement. In the review of
each Servicer's activities, the Master Servicer may rely upon an officer's
certificate of the Servicer (or similar document signed by an officer of the
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 a 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, MBIA
and the Trustee thereof and the Master Servicer shall issue such notice or take
such other action as it deems appropriate.
(b) The Master Servicer, for the benefit of the Trustee, the
Certificateholders and MBIA, shall enforce the obligations of each Servicer
under the related Servicing Agreement, and shall, in the event that a Servicer
fails to perform its obligations in accordance with the related Servicing
Agreement, subject to the preceding paragraph, terminate the rights and
obligations of such Servicer thereunder and act as servicer of the related
Mortgage Loans or to cause the Trustee to enter in to a new Servicing Agreement
with a successor Servicer selected by the Master Servicer; provided, however, it
is understood and acknowledged by the parties hereto that there will be a period
of transition (not to exceed 90 days) before the actual servicing functions can
be fully transferred to such successor Servicer. Such enforcement, including,
without limitation, the legal prosecution of claims, termination of 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. The Master Servicer shall pay the costs of such enforcement at
its own expense, provided that the Master Servicer shall not be required to
prosecute or defend any legal action except to the extent that the Master
Servicer shall have received reasonable indemnity for its costs and expenses in
pursuing such action.
(c) To the extent that the costs and expenses of the Master Servicer
related to any termination of a Servicer, appointment of a successor Servicer or
the transfer and assumption of servicing by the Master Servicer with respect to
any Servicing Agreement (including, without limitation, (i) all legal costs and
expenses and all due diligence costs and expenses associated with an evaluation
of the potential termination of the Servicer as a result of an event of default
by such Servicer and (ii) all costs and expenses associated with the complete
transfer of servicing, including
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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 service to service the Mortgage Loans in accordance with
the related Servicing Agreement) are not fully and timely reimbursed by the
terminated Servicer, the Master Servicer shall be entitled to reimbursement of
such costs and expenses from the 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.
(e) If the Master Servicer acts as Servicer, it will not assume liability
for the representations and warranties of the Servicer, if any, that it
replaces.
Section 3.04 FIDELITY BOND. The Master Servicer, at its expense, shall
maintain in effect a blanket fidelity bond and an errors and omissions insurance
policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Servicer's behalf, and covering errors
and omissions in the performance of the Master Servicer's obligations hereunder.
The errors and omissions insurance policy and the fidelity bond shall be in such
form and amount generally acceptable for entities serving as master servicers or
trustees.
Section 3.05 POWER TO ACT; PROCEDURES. The Master Servicer shall master
service the Mortgage Loans and shall have full power and authority, subject to
the REMIC Provisions and the provisions of Article X hereof, to do any and all
things that it may deem necessary or desirable in connection with the master
servicing and administration of the Mortgage Loans, including but not limited to
the power and authority (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages, (iii) to
collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Mortgage Loan, in each case, in accordance with the provisions of
this Agreement and the related Servicing Agreement, as applicable; provided,
however, that the Master Servicer shall not (and, consistent with its
responsibilities under Section 3.03, shall not permit any Servicer to) knowingly
or intentionally take any action, or fail to take (or fail to cause to be taken)
any action reasonably within its control and the scope of duties more
specifically set forth herein, that, under the REMIC Provisions, if taken or not
taken, as the case may be, would cause REMIC I or REMIC II to fail to qualify as
a REMIC or result in the imposition of a tax upon the Trust Fund (including but
not limited to the tax on prohibited transactions as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code) unless the Master Servicer and MBIA have received
an Opinion of Counsel (but not at the expense of the Master Servicer) to the
effect that the contemplated action will not would cause any REMIC to fail to
qualify as a REMIC or result in the imposition of a tax upon any REMIC. The
Trustee shall furnish the Master Servicer, upon written request from a Servicing
Officer, with any powers of attorney empowering the Master Servicer 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
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execute and deliver such other documents, as the Master Servicer may request, to
enable the Master Servicer to master service and administer the Mortgage Loans
and carry out its duties hereunder, in each case in accordance with Accepted
Master Servicing Practices (and the Trustee shall have no liability for misuse
of any such powers of attorney by the Master Servicer or 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.
Section 3.06 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. To the extent
provided in the applicable Servicing Agreement, to the extent Mortgage Loans
contain enforceable due-on-sale clauses, the Master Servicer shall cause the
Servicers 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 the 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 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 D hereto signed by a
Servicing Officer or in a mutually agreeable electronic format which will, in
lieu of a signature on its face, originate from a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payment that are required to be deposited in the
Protected Account maintained by the applicable Servicer pursuant to Section 4.01
or by the applicable Servicer pursuant to its Servicing Agreement have been or
will be so deposited) and shall request that the Custodian, on behalf of the
Trustee, deliver to the applicable Servicer the related Mortgage File. Upon
receipt of such certification and request, the Custodian, on behalf of the
Trustee, shall promptly release the related Mortgage File to the applicable
Servicer and the Trustee and Custodian shall have no further responsibility with
regard to such Mortgage File. Upon any such payment in full, 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
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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 D (or in a mutually agreeable
electronic format which will, in lieu of a signature on its face, originate from
a Servicing Officer), release the related Mortgage File held in its possession
or control to the Servicer or the Master Servicer, as applicable. Such trust
receipt shall obligate the Servicer or the Master Servicer to return the
Mortgage File to the Custodian on behalf of the Trustee, when the need therefor
by the Servicer or the Master Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate 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 MASTER SERVICER
TO BE HELD FOR TRUSTEE.
(a) The Master Servicer shall transmit 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, the applicable Servicing Agreement, to
be delivered to the Trustee or Custodian. Any funds received by the Master
Servicer or by a Servicer in respect of any Mortgage Loan or which otherwise are
collected by the Master Servicer or by 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 the Master Servicer's right
to retain or withdraw from the Master Servicer Collection Account the Master
Servicing Compensation 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, its agents and accountants at any time upon reasonable request
and during normal business hours, MBIA 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, the Certificateholders and MBIA 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.
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Section 3.09 STANDARD HAZARD INSURANCE AND FLOOD INSURANCE POLICIES.
(a) For each Mortgage Loan, the Master Servicer shall enforce any
obligation of the Servicers under the related Servicing Agreements to maintain
or cause to be maintained standard fire and casualty insurance and, where
applicable, flood insurance, all in accordance with the provisions of the
related Servicing Agreements. It is understood and agreed that such insurance
shall be with insurers meeting the eligibility requirements set forth in the
applicable Servicing Agreement and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance.
(b) Pursuant to Section 4.01 and 4.02, any amounts collected by the
Servicers or 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
4.02 and 4.03. Any cost incurred by the Master Servicer or any 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 4.02 and 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,
MBIA and the Certificateholders all claims under the Insurance Policies and take
such actions (including the negotiation, settlement, compromise or enforcement
of the insured's claim) as shall be necessary to realize recovery under such
policies. Any proceeds disbursed to the Master Servicer (or disbursed to a
Servicer and remitted to the Master Servicer) in respect of such policies, bonds
or contracts shall be promptly deposited in the 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 reasonable efforts to cause each Servicer (to the
extent required under the related Servicing Agreement) to keep in force and
effect (to the extent that the Mortgage Loan requires the Mortgagor to maintain
such insurance), primary mortgage insurance applicable to each Mortgage Loan in
accordance with the provisions of this Agreement and the related Servicing
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Agreement, as applicable. 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 this
Agreement and the related Servicing Agreement, as applicable.
(b) The Master Servicer agrees to present, or to cause each Servicer (to
the extent required under the related Servicing Agreement) to present, on behalf
of the Trustee, the Certificateholders and MBIA, 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
and 4.02, any amounts collected by the Master Servicer or any Servicer under any
Primary Mortgage Insurance Policies shall be deposited in the Master Servicer
Collection Account, subject to withdrawal pursuant to Sections 4.02 and 4.03.
Section 3.12 TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE POLICIES AND
DOCUMENTS.
The Trustee (or the Custodian, as directed by the Trustee), shall retain
possession and custody of the originals (to the extent available) of any Primary
Mortgage Insurance Policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates have been distributed in full and the Master Servicer otherwise
has fulfilled its obligations under this Agreement, the Trustee (or its
Custodian, if any, as directed by the Trustee) shall also retain possession and
custody of each Mortgage File in accordance with and subject to the terms and
conditions of this Agreement. The Master Servicer shall promptly deliver or
cause to be delivered to the Trustee (or the Custodian, as directed by the
Trustee), upon the execution or receipt thereof the originals of any Primary
Mortgage Insurance Policies, any certificates of renewal, and such other
documents or instruments that constitute portions of the Mortgage File that come
into the possession of the Master Servicer from time to time.
Section 3.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS. The Master Servicer
shall cause each Servicer (to the extent required under the related Servicing
Agreement) to foreclose 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
applicable Servicing Agreement.
Section 3.14 COMPENSATION FOR THE MASTER SERVICER.
The Master Servicer will be entitled to all income and gain realized from
any investment of funds in the Distribution Account and the Master Servicer
Collection Account, pursuant to Article IV, for the performance of its
activities hereunder. The Master Servicer shall also be entitled to the Master
Servicing Fee. Servicing compensation in the form of assumption fees, if any,
late payment charges, as collected, if any, or otherwise (but not including any
prepayment premium or penalty) shall be retained by the applicable Servicer and
shall not be deposited in the Protected Account. The
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Master Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as provided in this Agreement.
Section 3.15 REO PROPERTY.
(a) In the event the Trust Fund acquires ownership of any REO Property in
respect of any related Mortgage Loan, the deed or certificate of sale shall be
issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders and MBIA. 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, as applicable.
Pursuant to its efforts to sell such REO Property, the Master Servicer shall
cause the applicable Servicer to protect and conserve, such REO Property in the
manner and to the extent required by the applicable Servicing Agreement, in
accordance with the REMIC Provisions and in a manner that does not result in a
tax on "net income from foreclosure property" or cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code.
(b) The Master Servicer shall, to the extent required by the related
Servicing Agreement, cause the applicable Servicer to deposit all funds
collected and received in connection with the operation of any REO Property in
the Protected Account.
(c) The Master Servicer and the applicable Servicer, upon the final
disposition of any REO Property, shall be entitled to reimbursement for any
related unreimbursed Monthly Advances and other unreimbursed advances as well as
any unpaid Servicing Fees from Liquidation Proceeds received in connection with
the final disposition of such REO Property; provided, that any such unreimbursed
Monthly Advances as well as any unpaid Servicing Fees may be reimbursed or paid,
as the case may be, prior to final disposition, out of any net rental income or
other net amounts derived from such REO Property.
(d) To the extent provided in the related Servicing Agreement, the
Liquidation Proceeds from the final disposition of the REO Property, net of any
payment to the Master Servicer and the applicable Servicer as provided above
shall be deposited in the Protected Account on or prior to the Determination
Date in the month following receipt thereof and be remitted by wire transfer in
immediately available funds to the Master Servicer for deposit into the related
Master Servicer Collection Account on the next succeeding Servicer Remittance
Date.
Section 3.16 ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
(a) The Master Servicer shall deliver to the Trustee, MBIA and the Rating
Agencies on or before March 1 of each year, commencing on March 1, 2004, an
Officer's Certificate, certifying that with respect to the period ending
December 31 of the prior year: (i) such Servicing Officer has reviewed the
activities of such Master Servicer during the preceding calendar year or portion
thereof and its performance under this Agreement, (ii) to the best of such
Servicing Officer's knowledge, based on such review, such Master Servicer has
performed and fulfilled its duties, responsibilities and obligations under this
Agreement in all material respects throughout such year, or, if there has been a
default in the fulfillment of any such duties, responsibilities or obligations,
specifying each
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such default known to such Servicing Officer and the nature and status thereof,
(iii) nothing has come to the attention of such Servicing Officer to lead such
Servicing Officer to believe that 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 to any Certificateholder
upon request, by the Master Servicer or by the Trustee at the Master Servicer's
expense if the Master Servicer failed to provide such copies (unless (i) the
Master Servicer shall have failed to provide the Trustee with such statement or
(ii) the Trustee shall be unaware of the Master Servicer's failure to provide
such statement).
Section 3.17 ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT. If the
Master Servicer has, during the course of any fiscal year, directly serviced any
of the Mortgage Loans, then the Master Servicer at its expense shall cause a
nationally recognized firm of independent certified public accountants to
furnish a statement to the Trustee, MBIA, the Rating Agencies and the Seller on
or before March 1 of each year, commencing on March 1, 2004 to the effect that,
with respect to the most recently ended fiscal year, such firm has examined
certain records and documents relating to the Master Servicer's performance of
its servicing obligations under this Agreement and pooling and servicing and
trust agreements in material respects similar to this Agreement and to each
other and that, on the basis of such examination conducted substantially in
compliance with the audit program for mortgages serviced for Xxxxxxx Mac or the
Uniform Single Attestation Program for Mortgage Bankers, such firm is of the
opinion that the Master Servicer's activities have been conducted in compliance
with this Agreement, or that such examination has disclosed no material items of
noncompliance except for (i) such exceptions as 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
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 make available 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 Seller, 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 the related Servicing Agreement, and,
if applicable,
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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, or such earlier filing date as may be
required by the Commission, and (ii) unless and until a Form 15 Suspension
Notice shall have been filed, March 31 of each year thereafter, or such earlier
filing date as may be required by the Commission, the Securities Administrator
shall 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 Seller hereby grants to the Securities
Administrator a limited power of attorney to execute and file each such document
on behalf of the Seller. Such power of attorney shall continue until either the
earlier of (i) receipt by the Securities Administrator from the Seller of
written termination of such power of attorney and (ii) the termination of the
Trust Fund. The Seller agrees to promptly furnish to the Securities
Administrator, from time to time upon request, such further information, reports
and financial statements within its control related to this Agreement and the
Mortgage Loans as the Securities Administrator reasonably deems appropriate to
prepare and file all necessary reports with the Commission. The Securities
Administrator shall have no responsibility to file any items other than those
specified in this Section 3.18; provided, however, the Securities Administrator
will cooperate with the Seller in connection with any additional filings with
respect to the Trust Fund as the Seller deems necessary under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). 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 EMC. On the Closing Date, EMC will receive from the Seller a
payment of $5,000.
Section 3.20 UCC. The Seller shall inform the Trustee in writing of any
Uniform Commercial Code financing statements that were filed on the Closing Date
in connection with the Trust with stamped recorded copies of such financing
statements to be delivered to the Trustee promptly upon receipt by the Seller.
The Trustee agrees to monitor and notify the Seller if any continuation
statements for such Uniform Commercial Code financing statements need to be
filed. If directed by the Seller in writing, the Trustee will file any such
continuation statements solely at the expense of the Seller. The Seller shall
file any financing statements or amendments thereto required by any change in
the Uniform Commercial Code.
Section 3.21 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.
(a) With respect to any Mortgage Loan which as of the first day of a
Calendar Quarter is delinquent in payment by 90 days or more or is an REO
Property, EMC shall have the right to purchase such Mortgage Loan from the Trust
at a price equal to the Repurchase Price; provided however (i) that such
Mortgage Loan is still 90 days or more delinquent or is an REO Property as of
the date of such purchase and (ii) this purchase option, if not theretofore
exercised, shall terminate on the date prior to the last day of the related
Calendar Quarter. This purchase option, if not exercised, shall not be
thereafter reinstated unless the delinquency is cured and the Mortgage Loan
thereafter again becomes 90 days or more delinquent or becomes an REO Property,
in which case the option shall again become exercisable as of the first day of
the related Calendar Quarter.
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(b) If at any time EMC remits to the Master Servicer a payment for deposit
in the Master Servicer Collection Account covering the amount of the Repurchase
Price for such a Mortgage Loan, and EMC provides to the Trustee a certification
signed by a Servicing Officer stating that the amount of such payment has been
deposited in the Master Servicer Collection Account, then the Trustee shall
execute the assignment of such Mortgage Loan to EMC at the request of EMC
without recourse, representation or warranty and EMC shall succeed to all of the
Trustee's right, title and interest in and to such Mortgage Loan, and all
security and documents relative thereto. Such assignment shall be an assignment
outright and not for security. EMC will thereupon own such Mortgage, and all
such security and documents, free of any further obligation to the Trustee or
the Certificateholders with respect thereto.
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ARTICLE IV
Accounts
Section 4.01 PROTECTED ACCOUNTS. (a) The Master Servicer shall enforce the
obligation of each 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 accounts
shall be deposited within 48 hours (or as of such other time specified in the
related Servicing Agreement) of receipt, all collections of principal and
interest on any Mortgage Loan and 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 compensation as
permitted by the applicable Servicing Agreement in the case of any Servicer) and
all other amounts to be deposited in the Protected Account. The Servicer is
hereby authorized to make withdrawals from and deposits to the related Protected
Account for purposes required or permitted by this Agreement. To the extent
provided in the related Servicing Agreement, the Protected Account shall be held
by a Designated Depository Institution and segregated on the books of such
institution in the name of the Trustee for the benefit of Certificateholders and
MBIA.
(b) To the extent provided in the related Servicing Agreement, amounts on
deposit in a Protected Account may be invested in Permitted Investments in the
name of the Trustee for the benefit of Certificateholders and, except as
provided in the preceding paragraph, not commingled with any other funds. Such
Permitted Investments shall mature, or shall be subject to redemption or
withdrawal, no later than the date on which such funds are required to be
withdrawn for deposit in the Master Servicer Collection Account, and shall be
held until required for such deposit. The income earned from Permitted
Investments made pursuant to this Section 4.01 shall be paid to the related
Servicer under the applicable Servicing Agreement, and the risk of loss of
moneys required to be distributed to the Certificateholders resulting from such
investments shall be borne by and be the risk of the related Servicer. The
related Servicer (to the extent provided in the Servicing Agreement) shall
deposit the amount of any such loss in the Protected Account within two Business
Days of receipt of notification of such loss but not later than the second
Business Day prior to the Distribution Date on which the moneys so invested are
required to be distributed to the Certificateholders.
(c) To the extent provided in the related Servicing Agreement and subject
to this Article IV, on or before each Servicer Remittance Date, the related
Servicer shall withdraw or shall cause to be withdrawn from its Protected
Accounts and shall immediately deposit or cause to be deposited in 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):
(i) Scheduled Payments on the Mortgage Loans received or any related
portion thereof advanced by such Servicer pursuant to its Servicing
Agreement which were due on or before the related Due Date, net of the
amount thereof comprising the Servicing Fees or any fees with respect to
any lender-paid primary mortgage insurance policy;
(ii) Full Principal Prepayments and any Liquidation Proceeds received
by such Servicer with respect to the Mortgage Loans in the related
Prepayment Period, with interest
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to the date of prepayment or liquidation, net of the amount thereof
comprising its Servicing Fee;
(iii) Partial Principal Prepayments received by such Servicer for the
Mortgage Loans in the related Prepayment Period; and
(iv) Any amount to be used as an Advance.
(d) Withdrawals may be made from an Account only to make remittances as
provided in Section 4.01(c), 4.02 and 4.03; to reimburse the Master Servicer or
a Servicer for Monthly Advances which have been recovered by subsequent
collections from the related Mortgagor; to remove amounts deposited in error; to
remove fees, charges or other such amounts deposited on a temporary basis; or to
clear and terminate the account at the termination of this Agreement in
accordance with Section 10.01. As provided in Sections 4.01(c) and 4.02(b)
certain amounts otherwise due to the Servicers may be retained by them and need
not be deposited in the Master Servicer Collection Account.
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 and MBIA, the Master Servicer Collection Account as a
segregated trust account or accounts. The Master Servicer Collection Account
shall be an Eligible Account. 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 amounts:
(i) Any amounts withdrawn from a Protected Account;
(ii) Any Monthly Advance and any Compensating Interest Payments;
(iii) Any Insurance Proceeds or Net Liquidation Proceeds received by
or on behalf of the Master Servicer or which were not deposited in a
Protected Account;
(iv) The Repurchase Price with respect to any Mortgage Loans purchased
by the Mortgage Loan Seller pursuant to the Mortgage Loan Purchase
Agreement or Sections 2.02 or 2.03 hereof, any amounts which are to be
treated pursuant to Section 2.04 of this Agreement as the payment of a
Repurchase Price in connection with the tender of a Substitute Mortgage
Loan by the Mortgage Loan Seller, the Repurchase Price with respect to any
Mortgage Loans purchased by EMC pursuant to Section 3.21, and all proceeds
of any Mortgage Loans or property acquired with respect thereto repurchased
by the Seller or its designee pursuant to Section 10.01;
(v) Any amounts required to be deposited with respect to losses on
investments of deposits in an Account; and
(vi) Any other amounts received by or on behalf of the Master Servicer
and required to be deposited in the Master Servicer Collection Account
pursuant to this Agreement.
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(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 and MBIA 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), (v), (vi), (vii), (viii), (ix), (x), (xi) and
(xii), need not be credited by the Master Servicer or the related Servicer to
the Distribution Account or the Master Servicer Collection Account, as
applicable. 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 may be invested, in the name of the Trustee, or its nominee, for the
benefit of the Certificateholders, in Permitted Investments as directed by
Master Servicer or may be held uninvested. 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 on amounts on deposit in the Master Servicer Account from
time to time shall be for the account of the Master Servicer. The Master
Servicer from time to time shall be permitted to withdraw or receive
distribution of any and all investment earnings from the Master Servicer
Account. 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.
Section 4.03 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE MASTER SERVICER
COLLECTION ACCOUNT. (a) The Master Servicer will, from time to time on demand of
a Servicer or 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 this
Agreement and the related Servicing Agreement. The Master Servicer 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, the Master Servicer shall withdraw from the Master
Servicer Collection Account (i) any expenses recoverable by the Trustee, the
Master Servicer, the Securities Administrator or the Custodian pursuant to
Sections 3.03, 7.01, 7.04 and 9.05 and (ii) any amounts payable to the Master
Servicer as set forth in Section 3.14.
(c) In addition, on or before each Distribution Account Deposit Date, the
Master Servicer shall deposit in the Distribution Account (or remit to the
Trustee for deposit therein) any Monthly Advances required to be made by the
Master Servicer with respect to the Mortgage Loans.
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(d) No later than 3:00 p.m. New York time on each Distribution Account
Deposit Date, the Master Servicer will transfer all Available Funds on deposit
in the Master Servicer Collection Account with respect to the related
Distribution Date to the Trustee for deposit in 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
and MBIA, 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 and MBIA in accordance with the terms and provisions of this
Agreement.
(c) The Distribution Account shall constitute a trust account of the Trust
Fund segregated on the books of the Trustee and held by the Trustee in trust in
its Corporate Trust Office, 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 Distribution Account shall be an
Eligible Account. The amount at any time credited to the Distribution Account
shall be (i) held in cash and fully insured by the FDIC to the maximum coverage
provided thereby or (ii) invested in the name of the Trustee, in such Permitted
Investments selected by the Master Servicer or deposited in demand deposits with
such depository institutions as selected by the Master Servicer, provided that
time deposits of such depository institutions would be a Permitted Investment.
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 remit the amount of the loss to the Trustee
who shall deposit such amount 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.
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 this Agreement and
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):
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(i) to reimburse the Master Servicer or any Servicer for any Monthly
Advance of its own funds, the right of the Master Servicer or a Servicer to
reimbursement pursuant to this subclause (i) being limited to amounts
received on a particular Mortgage Loan (including, for this purpose, the
Repurchase Price therefor, Insurance Proceeds and Liquidation Proceeds)
which represent late payments or recoveries of the principal of or interest
on such Mortgage Loan respecting which such Monthly Advance 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 by an Uninsured Cause 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 4.03 (a) to the Master Servicer; and (ii) such Liquidation
Expenses were not included in the computation of such Excess Liquidation
Proceeds;
(iv) to pay the Master Servicer or 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 (ix) 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 Repurchase
Price for any Mortgage Loan, the amount which it or such Servicer would
have been entitled to receive under subclause (ix) of this Subsection 4.03
(a) as servicing compensation;
(vi) to reimburse the Master Servicer or any Servicer for advances of
funds (other than Monthly Advances) made with respect to the Mortgage
Loans, and the right to reimbursement pursuant to this subclause being
limited to amounts received on the related Mortgage Loan (including, for
this purpose, the Repurchase Price therefor, Insurance Proceeds and
Liquidation Proceeds) which represent late recoveries of the payments for
which such advances were made;
(vii) to reimburse the Master Servicer or any Servicer for any Monthly
Advance or advance, after a Realized Loss has been allocated with respect
to the related Mortgage
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Loan if the Monthly Advance or advance has not been reimbursed pursuant to
clauses (i) and (vi);
(viii) to pay the Master Servicer as set forth in Section 3.14;
(ix) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Sections 3.03,
7.04(c) and (d);
(x) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds to the extent not retained by
the related Servicer;
(xi) to reimburse or pay any 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, the Securities Administrator or the
Custodian 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
(vi), inclusive, and (viii) 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, the Trustee shall distribute the Available
Funds to the extent on deposit in the Distribution Account to the Holders of the
Certificates and MBIA in accordance with distribution instructions provided to
it by the Securities Administrator no later than 11:00 a.m. (New York City Time)
of the day that is three Business Days prior to such Distribution Date and
determined by the Securities Administrator in accordance with Section 6.01.
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ARTICLE V
Certificates
Section 5.01 CERTIFICATES. (a) The Depository, the Seller and the Trustee
have entered into a Depository Agreement dated as of the Closing Date (the
"Depository Agreement"). Except for the Residual Certificates, the Private
Certificates and the Individual Certificates and as provided in Subsection
5.01(b), the Certificates shall at all times remain registered in the name of
the Depository or its nominee and at all times: (i) registration of such
Certificates may not be transferred by the Trustee except to a successor to the
Depository; (ii) ownership and transfers of registration of such Certificates on
the books of the Depository shall be governed by applicable rules established by
the Depository; (iii) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (iv) the Trustee shall
deal with the Depository as representative of such Certificate Owners of the
respective Class of Certificates for purposes of exercising the rights of
Certificateholders under this Agreement, and requests and directions for and
votes of such representative shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners; and (v) the Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants.
The Residual Certificates and the Private Certificates are initially
Physical Certificates. If at any time the Holders of all of the Certificates of
one or more such Classes request that the Trustee cause such Class to become
Global Certificates, the Trustee and the Seller will take such action as may be
reasonably required to cause the Depository to accept such Class or Classes for
trading if it may legally be so traded.
All transfers by Certificate Owners of such respective Classes of
Book-Entry Certificates and any Global Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owners. Each Depository Participant shall only
transfer Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures.
(b) If (i)(A) the Seller advises the Trustee in writing that the Depository
is no longer willing or able to properly discharge its responsibilities as
Depository and (B) the Trustee or the Seller is unable to locate a qualified
successor within 30 days or (ii) the Seller at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall request that the Depository notify all Certificate
Owners of the occurrence of any such event and of the availability of
definitive, fully registered Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of the Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall issue the definitive Certificates. Neither the Seller nor the
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
(c) (i) REMIC I will be evidenced by (x) the REMIC I Regular Interests
(designated below), which will be uncertificated and non-transferable and are
hereby designated as the "regular interests" in REMIC I and have the principal
balances and accrue interest at the Pass-Through Rates
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equal to those set forth in this Section 5.01(c)(i) and (y) the Class R-I
Certificates, which is hereby designated as the single "residual interest" in
REMIC I..
The REMIC I Regular Interests and the Class R-I Interest will have the
following designations, initial balances and pass-through rates:
Initial
REMIC I Uncertificated
Interest Principal Balance Pass-Through Rate
LT-A1 $4,750,000.00 5.21224177554%
LT-A2 $13,250,000.00 8.00%
LT-A5 $110,364,000.00 5.21224177554%
LT-A6 $23,373,000.00 5.50%
LT-A7 $70,775,143.00 5.00%
LT-A8 $11,795,857.00 8.50%
LT-A10 $50,000,000.00 5.50%
LT-A11 $13,375,000.00 5.50%
LT-A12 $15,655,750.00 (1)
LT-A13 $7,116,250.00 (2)
LT-A15 $15,700,000.00 5.50%
LT-AP $699,845.00 0.00%
LT-X (3) (4)
LT-R $50,00 5.50%
LT-B1 $5,385,000.00 5.50%
LT-B2 $1,911,000.00 5.50%
LT-B3 $1,390,000.00 5.50%
LT-B4 $695,000.00 5.50%
LT-B5 $521,000.00 5.50%
LT-B6 $695,761.00 5.50%
(1) REMIC I Regular Interest LT-A12 bears interest at a Pass-Through Rate equal
to 1.2000% per annum plus LIBOR, subject to a minimum rate of 1.2000% per annum
and a maximum rate equal to approximately 8.0000% per annum.
(2) REMIC I Regular Interest LT-A13 bears interest at a Pass-Through Rate equal
to 14.960% per annum minus (2.20 times LIBOR), subject to a minimum rate of
0.0000% per annum and a maximum rate equal to approximately 14.960% per annum.
(3) REMIC I Regular Interest LT-X will not have a Uncertificated Principal
Balance, but will accrue interest on a Notional Amount equal to the aggregate
Stated Principal Balance of the Mortgage Loans.
(4) REMIC I Regular Interest LT-X will bear interest at a Pass-Through Rate
equal to the weighted average of the excess of (a) the Net Rates on the Mortgage
Loans over (b) 5.50% per annum.
Interest distributions on REMIC I Regular Interest LT-X shall be deemed
made from the Premium Loans so that such REMIC I Regular Interest receives
interest in excess of 5.50% of such Loans. Interest on REMIC I Regular Interests
other than REMIC I Regular Interest LT-X shall be deemed distributed at the
Pass-Through Rate specified above.
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Principal shall be payable to, and shortfalls, losses and prepayments are
allocable to, the REMIC I Regular Interests as such amounts are payable and
allocable to the Corresponding Certificates.
(ii) REMIC II will be evidenced by (x) the REMIC II Regular Interests
(designated below), which will be uncertificated and non-transferable and are
hereby designated as the "regular interests" in REMIC II and have the principal
balances and accrue interest at the Pass-Through Rates equal to those set forth
in this Section 5.01(c)(ii) and (y) the Class R-II Certificate, which is hereby
designated as the single "residual interest" in REMIC II.
The REMIC II Regular Certificates, the Class R-I Certificates and Class
R-II Certificates will have the following designations, initial balances and
pass-through rates:
REMIC II
Certificates Initial Balance Pass-Through Rate
-------------------- ----------------------- ----------------------
Class A-1 $4,750,000 4.750%
Class A-2 $13,250,000 (1)
Class A-3 $ 70,947,333(2) 0.750%
Class A-4 $13,250,000(3) Variable Rate(4)
Class A-5 $110,364,000 4.750%
Class A-6 $23,373,000 5.500%
Class A-7 $70,775,143 5.000%
Class A-8 $11,795,857 Variable Rate(5)
Class A-9 $11,795,857(6) Variable Rate(7)
Class A-10 $ 50,000,000 5.500%
Class A-11 $13,375,000 5.450%
Class A-12 $15,655,750 Variable Rate(8)
Class A-13 $7,116,250 Variable Rate(9)
Class A-14 $15,700,000(10) 0.250%
Class A-15 $15,700,000 5.250%
Class PO $699,845 (11)
Class X $347,452,706(12) Variable Rate(13)
Class R-I $50 5.500%
Class R-II $50 5.500%
Class B-1 $5,385,000 5.500%
Class B-2 $1,911,000 5.500%
Class B-3 $1,390,000 5.500%
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Class B-4 $695,000 5.500%
Class B-5 $521,000 5.500%
Class B-6 $695,761 5.500%
___________________________
(1) The Class A-2 Certificates bear interest at a Pass-Through Rate equal to
approximately 1.8150% per annum for the first Distribution Date, and
thereafter at an adjustable pass-through rate equal to approximately
0.5000% per annum plus LIBOR, subject to a minimum rate of approximately
0.5000% per annum and a maximum rate equal to approximately 8.0000% per
annum.
(2) The Notional Amount of the Class A-3 Certificates as of any Date of
Determination is equal to 61.6322367392% multiplied by the aggregate
Current Principal Amount of the Class A-1 Certificates and Class A-5
Certificates.
(3) The Notional Amount of the Class A-4 Certificate as of any Date of
Determination is equal to the Current Principal Amount of the Class A-2
Certificates.
(4) The Class A-4 Certificates bear interest at a Pass-Through Rate equal to
approximately 6.1850% per annum for the first Distribution Date, and
thereafter at an adjustable pass-through rate equal to approximately
7.5000% per annum minus LIBOR, subject to a minimum rate of 0.0000% per
annum and a maximum rate equal to approximately 7.5000% per annum.
(5) The Class A-8 Certificates bear interest at a Pass-Through Rate equal to
approximately 1.8850% per annum for the first Distribution Date, and
thereafter at an adjustable pass-through rate equal to approximately
0.5700% per annum plus LIBOR, subject to a minimum rate of approximately
0.5700% per annum and a maximum rate equal to approximately 8.0000% per
annum.
(6) The Notional Amount of the Class A-9 Certificate as of any Date of
Determination is equal to the Current Principal Amount of the Class A-8
Certificates.
(7) The Class A-9 Certificates bear interest at a Pass-Through Rate equal to
approximately 6.6150% per annum for the first Distribution Date, and
thereafter at an adjustable pass-through rate equal to approximately
7.9300% per annum minus LIBOR, subject to a minimum rate of 0.5000% per
annum and a maximum rate equal to approximately 7.9300% per annum.
(8) The Class A-12 Certificates bear interest at a Pass-Through Rate equal to
approximately 2.5150% per annum for the first Distribution Date, and
thereafter at an adjustable pass-through rate equal to approximately
1.2000% per annum plus LIBOR, subject to a minimum rate of 1.2000% per
annum and a maximum rate equal to approximately 8.0000% per annum.
(9) The Class A-13 Certificates bear interest at a Pass-Through Rate equal to
approximately 12.0670% per annum for the first Distribution Date, and
thereafter at an adjustable pass-through rate equal to approximately
14.960% per annum minus (2.20 times LIBOR), subject to a minimum rate of
0.0000% per annum and a maximum rate equal to approximately 14.960% per
annum.
(10) The Notional Amount of the Class A-14 Certificate as of any Date of
Determination is equal to the Current Principal Amount of the Class A-15
Certificates.
(11) The Class PO Certificates pay only principal and are not entitled to
distributions of interest.
(12) The Notional Amount of the Class X Certificates, as of any Date of
Determination, is equal to the aggregate Stated Principal Balance of the
Mortgage Loans.
(13) The Class X Certificates bear interest on their Notional Amount (equal to
the aggregate Scheduled Principal Balance of the mortgage loans) at a
variable pass-through rate equal to the weighted average of the excess of
(a) the Net Rates on the mortgage loans over (b) 5.50% per annum. The
initial Notional Amount for the Class X Certificates is approximately
$347,452,706 and the Pass-Through Rate for the initial Interest Accrual
Period is approximately 0.2815% per annum.
All interest payments with respect to REMIC II Regular Interest I-X shall
be considered to have been made solely from the interest payments of the REMIC I
Regular Interest 1-IO. All interest payments with respect to REMIC II Regular
Interest II-X shall be considered to have been made solely from the interest
payments of the REMIC I Regular Interest 2-IO. All interest payments with
respect to REMIC II Regular Interest III-X shall be considered to have been made
solely from the interest payments of the REMIC I Regular Interest 3-IO.
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Principal shall be payable, and shortfalls, losses and prepayments are
allocable to, the REMIC II Regular Interests as such amounts are payable and
allocable to the Corresponding Class.]
(d) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date for
the Mortgage Loan with the latest maturity date in the Trust Fund has been
designated as the "latest possible maturity date" for the REMIC I Regular
Interests and the Certificates.
(e) With respect to each Distribution Date, each Class of Certificates
shall accrue interest during the related Interest Accrual Period. With respect
to each Distribution Date and each such Class of Certificates, interest shall be
calculated, on the basis of a 360-day year comprised of twelve 30-day months,
based upon the respective Pass-Through Rate set forth, or determined as
provided, above and the Current Principal Amount (or Notional Amount in the case
of the Interest Only Certificates) of such Class applicable to such Distribution
Date.
(f) The Certificates shall be substantially in the forms set forth in
Exhibits X-0, X-0, X-0 and A-4. On original issuance, the Trustee shall sign,
countersign and shall deliver them at the direction of the Seller. Pending the
preparation of definitive Certificates of any Class, the Trustee may sign and
countersign temporary Certificates that are printed, lithographed or
typewritten, in authorized denominations for Certificates of such Class,
substantially of the tenor of the definitive Certificates in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers or authorized signatories executing such
Certificates may determine, as evidenced by their execution of such
Certificates. If temporary Certificates are issued, the Seller will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office of the Trustee, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Certificates, the
Trustee shall sign and countersign and deliver in exchange therefor a like
aggregate principal amount, in authorized denominations for such Class, of
definitive Certificates of the same Class. Until so exchanged, such temporary
Certificates shall in all respects be entitled to the same benefits as
definitive Certificates.
(g) Each Class of Book-Entry Certificates will be registered as a single
Certificate of such Class held by a nominee of the Depository or the DTC
Custodian, and beneficial interests will be held by investors through the
book-entry facilities of the Depository in minimum denominations of (i) in the
case of the Senior Certificates (other than the Residual Certificates), $1,000
and in each case increments of $1.00 in excess thereof, and (ii) in the case of
the Offered Subordinate Certificates, $25,000 and increments of $1.00 in excess
thereof, except that one Certificate of each such Class may be issued in a
different amount so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Current Principal Amount of such
Class on the Closing Date. On the Closing Date, the Trustee shall execute and
countersign Physical Certificates all in an aggregate principal amount that
shall equal the Current Principal Amount of such Class on the Closing Date. The
Private Certificates shall be issued in certificated fully-registered form in
minimum dollar denominations of $25,000 and integral multiples of $1.00 in
excess thereof, except that one Private Certificate of each Class may be issued
in a different amount so that the sum of the
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denominations of all outstanding Private Certificates of such Class shall equal
the Current Principal Amount of such Class on the Closing Date. The Residual
Certificates shall each be issued in certificated fully-registered form in the
denomination of $50 and $50, respectively. Each Class of Global Certificates, if
any, shall be issued in fully registered form in minimum dollar denominations of
$50,000 and integral multiples of $1.00 in excess thereof, except that one
Certificate of each Class may be in a different denomination so that the sum of
the denominations of all outstanding Certificates of such Class shall equal the
Current Principal Amount of such Class on the Closing Date. On the Closing Date,
the Trustee shall execute and countersign (i) in the case of each Class of
Offered Certificates, the Certificate in the entire Current Principal Amount of
the respective Class and (ii) in the case of each Class of Private Certificates,
Individual Certificates all in an aggregate principal amount that shall equal
the Current Principal Amount of each such respective Class on the Closing Date.
The Certificates referred to in clause (i) and if at any time there are to be
Global Certificates, the Global Certificates shall be delivered by the Seller to
the Depository or pursuant to the Depository's instructions, shall be delivered
by the Seller on behalf of the Depository to and deposited with the DTC
Custodian. The Trustee shall sign the Certificates by facsimile or manual
signature and countersign them by manual signature on behalf of the Trustee by
one or more authorized signatories, each of whom shall be Responsible Officers
of the Trustee or its agent. A Certificate bearing the manual and facsimile
signatures of individuals who were the authorized signatories of the Trustee or
its agent at the time of issuance shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to hold such positions prior to the
delivery of such Certificate.
(h) No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate the
manually executed countersignature of the Trustee or its agent, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates issued on the Closing Date shall be dated the Closing Date. All
Certificates issued thereafter shall be dated the date of their
countersignature.
(i) The Closing Date is hereby designated as the "startup" day of each
REMIC within the meaning of Section 860G(a)(9) of the Code.
(j) For federal income tax purposes, each REMIC shall have a tax year that
is a calendar year and shall report income on an accrual basis.
(k) The Trustee on behalf of the Trust shall cause each REMIC to timely
elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of any
Trust established hereby shall be resolved in a manner that preserves the
validity of such elections.
(l) The following legend shall be placed on the Residual Certificates and
Private Certificates, whether upon original issuance or upon issuance of any
other Certificate of any such Class in exchange therefor or upon transfer
thereof:
THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY,
OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER
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RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED,
AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, UNLESS THE PROPOSED TRANSFEREE PROVIDES THE TRUSTEE, THE
MASTER SERVICER AND THE SECURITIES ADMINISTRATOR WITH AN OPINION
OF COUNSEL THAT THE PURCHASE AND HOLDING OF CERTIFICATES ON
BEHALF OF SUCH WILL NOT RESULT IN OR CONSTITUTE A NONEXEMPT
PROHIBITED TRANSACTION, IS PERMISSIBLE UNDER APPLICABLE LAW AND
WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY OBLIGATIONS ON THE
PART OF THE SELLER, THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR, ANY SERVICER OR THE TRUSTEE.
The following legend shall be placed upon the Private Certificates, whether upon
original issuance or upon issuance of any other Certificate of any such Class in
exchange therefor or upon transfer thereof:
THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, AND SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE TRANSFEREE CERTIFIES OR REPRESENTS THAT THE PROPOSED TRANSFER AND
HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND OPERATION OF THE
TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED TRANSACTION WHICH IS
NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION,
INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14,
XXX 00-00, XXX 00-0, XXX 95-60 OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY
ADDITIONAL FIDUCIARY OBLIGATIONS ON THE PART OF THE SELLER, THE SECURITIES
ADMINISTRATOR, THE MASTER SERVICER, ANY SERVICER OR THE TRUSTEE, WHICH WILL BE
DEEMED REPRESENTED BY AN OWNER OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL
CERTIFICATE OR UNLESS THE OPINION SPECIFIED IN SECTION 5.07 OF THE AGREEMENT IS
PROVIDED.
Section 5.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES. (a) The
Trustee shall maintain at its Corporate Trust Office a Certificate Register in
which, subject 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.
(b) Subject to Subsection 5.01(a) and, in the case of any Global
Certificate or Physical Certificate upon the satisfaction of the conditions set
forth below, upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purpose, the Trustee
shall sign, countersign and shall deliver, in the name of the designated
transferee or transferees, a new Certificate of a like Class and aggregate
Fractional Undivided Interest, but bearing a different number.
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(c) By acceptance of an Individual Certificate, whether upon original
issuance or subsequent transfer, each holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth in the Securities
Legend and agrees that it will transfer such a Certificate only as provided
herein. In addition to the provisions of Subsection 5.02(h), the following
restrictions shall apply with respect to the transfer and registration of
transfer of an Individual Certificate to a transferee that takes delivery in the
form of an Individual Certificate:
(i) The Trustee shall register the transfer of an Individual
Certificate if the requested transfer is being made to a transferee who has
provided the Trustee with a Rule 144A Certificate or comparable evidence as
to its QIB status.
(ii) The Trustee shall register the transfer of any Individual
Certificate if (x) the transferor has advised the Trustee in writing that
the Certificate is being transferred to an Institutional Accredited
Investor; and (y) prior to the transfer the transferee furnishes to the
Trustee an Investment Letter (and the Trustee shall be fully protected in
so doing), provided that, if based upon an Opinion of Counsel addressed to
the Trustee to the effect that the delivery of (x) and (y) above are not
sufficient to confirm that the proposed transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and other applicable laws, the Trustee
shall as a condition of the registration of any such transfer require the
transferor to furnish such other certifications, legal opinions or other
information prior to registering the transfer of an Individual Certificate
as shall be set forth in such Opinion of Counsel.
(d) Subject to Subsection 5.02(h), so long as a Global Certificate of such
Class is outstanding and is held by or on behalf of the Depository, transfers of
beneficial interests in such Global Certificate, or transfers by holders of
Individual Certificates of such Class to transferees that take delivery in the
form of beneficial interests in the Global Certificate, may be made only in
accordance with this Subsection 5.02(d) and in accordance with the rules of the
Depository:
(i) In the case of a beneficial interest in the Global Certificate
being transferred to an Institutional Accredited Investor, such transferee
shall be required to take delivery in the form of an Individual Certificate
or Certificates and the Trustee shall register such transfer only upon
compliance with the provisions of Subsection 5.02(c)(ii).
(ii) In the case of a beneficial interest in a Class of Global
Certificates being transferred to a transferee that takes delivery in the
form of an Individual Certificate or Certificates of such Class, except as
set forth in clause (i) above, the Trustee shall register such transfer
only upon compliance with the provisions of Subsection 5.02(c)(i).
(iii) In the case of an Individual Certificate of a Class being
transferred to a transferee that takes delivery in the form of a beneficial
interest in a Global Certificate of such Class, the Trustee shall register
such transfer if the transferee has provided the Trustee with a Rule 144A
Certificate or comparable evidence as to its QIB status.
(iv) No restrictions shall apply with respect to the transfer or
registration of transfer of a beneficial interest in the Global Certificate
of a Class to a transferee that takes
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delivery in the form of a beneficial interest in the Global Certificate of
such Class; provided that each such transferee shall be deemed to have made
such representations and warranties contained in the Rule 144A Certificate
as are sufficient to establish that it is a QIB.
(e) Subject to Subsection 5.02(h), an exchange of a beneficial interest in
a Global Certificate of a Class for an Individual Certificate or Certificates of
such Class, an exchange of an Individual Certificate or Certificates of a Class
for a beneficial interest in the Global Certificate of such Class and an
exchange of an Individual Certificate or Certificates of a Class for another
Individual Certificate or Certificates of such Class (in each case, whether or
not such exchange is made in anticipation of subsequent transfer, and, in the
case of the Global Certificate of such Class, so long as such Certificate is
outstanding and is held by or on behalf of the Depository) may be made only in
accordance with this Subsection 5.02(e) and in accordance with the rules of the
Depository:
(i) A holder of a beneficial interest in a Global Certificate of a
Class may at any time exchange such beneficial interest for an Individual
Certificate or Certificates of such Class.
(ii) A holder of an Individual Certificate or Certificates of a Class
may exchange such Certificate or Certificates for a beneficial interest in
the Global Certificate of such Class if such holder furnishes to the
Trustee a Rule 144A Certificate or comparable evidence as to its QIB
status.
(iii) A holder of an Individual Certificate of a Class may exchange
such Certificate for an equal aggregate principal amount of Individual
Certificates of such Class in different authorized denominations without
any certification.
(f) (i) Upon acceptance for exchange or transfer of an Individual
Certificate of a Class for a beneficial interest in a Global Certificate of such
Class as provided herein, the Trustee shall cancel such Individual Certificate
and shall (or shall request the Depository to) endorse on the schedule affixed
to the applicable Global Certificate (or on a continuation of such schedule
affixed to the Global Certificate and made a part thereof) or otherwise make in
its books and records an appropriate notation evidencing the date of such
exchange or transfer and an increase in the certificate balance of the Global
Certificate equal to the certificate balance of such Individual Certificate
exchanged or transferred therefor.
(ii) Upon acceptance for exchange or transfer of a beneficial interest
in a Global Certificate of a Class for an Individual Certificate of such
Class as provided herein, the Trustee shall (or shall request the
Depository to) endorse on the schedule affixed to such Global Certificate
(or on a continuation of such schedule affixed to such Global Certificate
and made a part thereof) or otherwise make in its books and records an
appropriate notation evidencing the date of such exchange or transfer and a
decrease in the certificate balance of such Global Certificate equal to the
certificate balance of such Individual Certificate issued in exchange
therefor or upon transfer thereof.
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(g) The Securities Legend shall be placed on any Individual Certificate
issued in exchange for or upon transfer of another Individual Certificate or of
a beneficial interest in a Global Certificate.
(h) Subject to the restrictions on transfer and exchange set forth in this
Section 5.02, the holder of any Individual Certificate may transfer or exchange
the same in whole or in part (in an initial certificate balance equal to the
minimum authorized denomination set forth in Section 5.01(h) above or any
integral multiple of $1.00 in excess thereof) by surrendering such Certificate
at the Corporate Trust Office, or at the office of any transfer agent, together
with an executed instrument of assignment and transfer satisfactory in form and
substance to the Trustee in the case of transfer and a written request for
exchange in the case of exchange. The holder of a beneficial interest in a
Global Certificate may, subject to the rules and procedures of the Depository,
cause the Depository (or its nominee) to notify the Trustee in writing of a
request for transfer or exchange of such beneficial interest for an Individual
Certificate or Certificates. Following a proper request for transfer or
exchange, the Trustee shall, within five Business Days of such request made at
the Corporate Trust Office, sign, countersign and deliver at the Corporate Trust
Office, to the transferee (in the case of transfer) or holder (in the case of
exchange) or send by first class mail at the risk of the transferee (in the case
of transfer) or holder (in the case of exchange) to such address as the
transferee or holder, as applicable, may request, an Individual Certificate or
Certificates, as the case may require, for a like aggregate Fractional Undivided
Interest and in such authorized denomination or denominations as may be
requested. The presentation for transfer or exchange of any Individual
Certificate shall not be valid unless made at the Corporate Trust Office by the
registered holder in person, or by a duly authorized attorney-in-fact.
(i) At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of authorized denominations of a like Class and aggregate
Fractional Undivided Interest, upon surrender of the Certificates to be
exchanged at the Corporate Trust Office; provided, however, that no Certificate
may be exchanged for new Certificates unless the original Fractional Undivided
Interest represented by each such new Certificate (i) is at least equal to the
minimum authorized denomination or (ii) is acceptable to the Seller as indicated
to the Trustee in writing. Whenever any Certificates are so surrendered for
exchange, the Trustee shall sign and countersign and the Trustee shall deliver
the Certificates which the Certificateholder making the exchange is entitled to
receive.
(j) If the Trustee so requires, every Certificate presented or surrendered
for transfer or exchange shall be duly endorsed by, or be accompanied by a
written instrument of transfer, with a signature guarantee, in form satisfactory
to the Trustee, duly executed by the holder thereof or his or her attorney duly
authorized in writing.
(k) No service charge shall be made for any transfer or exchange of
Certificates, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
(l) The Trustee shall cancel all Certificates surrendered for transfer or
exchange but shall retain such Certificates in accordance with its standard
retention policy or for such further time as is required by the record retention
requirements of the Securities Exchange Act of 1934, as amended, and thereafter
may destroy such Certificates.
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Section 5.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. (a) If (i)
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 (ii) there is delivered to the Trustee (and with respect to any
Class A-11 Certificates, to MBIA) such security or indemnity as it may require
to save it harmless, and (iii) the Trustee has not received notice that such
Certificate has been acquired by a third Person, the Trustee shall sign,
countersign and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
Fractional Undivided Interest but in each case bearing a different number. The
mutilated, destroyed, lost or stolen Certificate shall thereupon be canceled of
record by the Trustee and shall be of no further effect and evidence no rights.
(b) Upon the issuance of any new Certificate under this Section 5.03, the
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 duplicate Certificate issued pursuant to this Section 5.03 shall constitute
complete and indefeasible evidence of ownership in the Trust Fund, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04 PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Seller, the Trustee or MBIA and
any agent of the Seller, the Trustee or MBIA may treat the Person in whose name
any Certificate is registered as the owner of such Certificate for the purpose
of receiving distributions pursuant to Section 6.01 and for all other purposes
whatsoever. Neither the Seller, MBIA, the Trustee nor any agent of the Seller or
the Trustee shall be affected by notice to the contrary. No Certificate shall be
deemed duly presented for a transfer effective on any Record Date unless the
Certificate to be transferred is presented no later than the close of business
on the third Business Day preceding such Record Date.
Section 5.05 TRANSFER RESTRICTIONS ON RESIDUAL CERTIFICATES. (a) Residual
Certificates, or interests therein, may not be transferred without the prior
express written consent of the Tax Matters Person and the Seller. As a
prerequisite to such consent, the proposed transferee must provide the Tax
Matters Person, the Seller and the Trustee with an affidavit that the proposed
transferee is a Permitted Transferee (and, unless the Tax Matters Person and the
Seller consent to the transfer to a person who is not a U.S. Person, an
affidavit that it is a U.S. Person) as provided in Subsection 5.05(b).
(b) No transfer, sale or other disposition of a Residual Certificate
(including a beneficial interest therein) may be made unless, prior to the
transfer, sale or other disposition of a Residual Certificate, the proposed
transferee (including the initial purchasers thereof) delivers to the Tax
Matters Person, the Trustee and the Seller an affidavit in the form attached
hereto as Exhibit E stating, among other things, that as of the date of such
transfer (i) such transferee is a Permitted Transferee and that (ii) such
transferee is not acquiring such Residual Certificate for the account of any
person who is not a Permitted Transferee. The Tax Matters Person shall not
consent to a transfer of a Residual Certificate if it has actual knowledge that
any statement made in the affidavit issued pursuant to the preceding sentence is
not true. Notwithstanding any transfer, sale or other disposition of a Residual
Certificate to any Person who is not a Permitted Transferee, such transfer, sale
or other
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disposition shall be deemed to be of no legal force or effect whatsoever and
such Person shall not be deemed to be a Holder of a Residual Certificate for any
purpose hereunder, including, but not limited to, the receipt of distributions
thereon. If any purported transfer shall be in violation of the provisions of
this Subsection 5.05(b), then the prior Holder thereof shall, upon discovery
that the transfer of such Residual Certificate was not in fact permitted by this
Subsection 5.05(b), be restored to all rights as a Holder thereof retroactive to
the date of the purported transfer. None of the Trustee, the Tax Matters Person
or the Seller shall be under any liability to any Person for any registration or
transfer of a Residual Certificate that is not permitted by this Subsection
5.05(b) or for making payments due on such Residual Certificate to the purported
Holder thereof or taking any other action with respect to such purported Holder
under the provisions of this Agreement so long as the written affidavit referred
to above was received with respect to such transfer, and the Tax Matters Person,
the Trustee and the Seller, as applicable, had no knowledge that it was untrue.
The prior Holder shall be entitled to recover from any purported Holder of a
Residual Certificate that was in fact not a permitted transferee under this
Subsection 5.05(b) at the time it became a Holder all payments made on such
Residual Certificate. Each Holder of a Residual Certificate, by acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this Subsection 5.05(b) and to any amendment of this Agreement deemed necessary
(whether as a result of new legislation or otherwise) by counsel of the Tax
Matters Person or the Seller to ensure that the Residual Certificates are not
transferred to any Person who is not a Permitted Transferee and that any
transfer of such Residual Certificates will not cause the imposition of a tax
upon the Trust or cause any REMIC to fail to qualify as a REMIC.
(c) The Residual Certificates (including a beneficial interest therein) may
not be purchased by or transferred to any person who is not a United States
Person.
(d) By accepting a Residual Certificate, the purchaser thereof agrees to be
a Tax Matters Person, and appoints the Securities Administrator to act as its
agent with respect to all matters concerning the tax obligations of the Trust.
Section 5.06 RESTRICTIONS ON TRANSFERABILITY OF CERTIFICATES. (a) No offer,
sale, transfer or other disposition (including pledge) of any Certificate shall
be made by any Holder thereof unless registered under the Securities Act, or an
exemption from the registration requirements of the Securities Act and any
applicable state securities or "Blue Sky" laws is available and the prospective
transferee (other than the Seller) of such Certificate signs and delivers to the
Trustee an Investment Letter, if the transferee is an Institutional Accredited
Investor, in the form set forth as Exhibit F-l hereto, or a Rule 144A
Certificate, if the transferee is a QIB, in the form set forth as Exhibit F-2
hereto. Notwithstanding the provisions of the immediately preceding sentence, no
restrictions shall apply with respect to the transfer or registration of
transfer of a beneficial interest in any Certificate that is a Global
Certificate of a Class to a transferee that takes delivery in the form of a
beneficial interest in the Global Certificate of such Class provided that each
such transferee shall be deemed to have made such representations and warranties
contained in the Rule 144A Certificate as are sufficient to establish that it is
a QIB. In the case of a proposed transfer of any Certificate to a transferee
other than a QIB, the Trustee may require an Opinion of Counsel addressed to the
Trustee that such transaction is exempt from the registration requirements of
the Securities Act. The cost of such opinion shall not be an expense of the
Trustee or the Trust Fund.
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(b) The Private Certificates shall each bear a Securities Legend.
Section 5.07 ERISA RESTRICTIONS. (a) Subject to the provisions of
subsection (b), no Residual Certificates or Private Certificates may be acquired
directly or indirectly by, or on behalf of, an employee benefit plan or other
retirement arrangement which is subject to Title I of ERISA and Section 4975 of
the Code, unless the proposed transferee provides either (i) the Trustee with an
Opinion of Counsel addressed to the Trustee, the Master Servicer and the
Securities Administrator and on which they may rely that is satisfactory to the
Trustee, which opinion will not be at the expense of the Trustee, the Master
Servicer or the Securities Administrator, that the purchase and holding of such
Certificates by or on behalf of such Plan is permissible under applicable law,
will not constitute or result in a nonexempt prohibited transaction under ERISA
or Section 4975 of the Code and will not subject the Trustee, the Master
Servicer or the Securities Administrator to any obligation in addition to those
undertaken in the Agreement or (ii) in the case of the Class B-4, Class B-5 and
Class B-6 Certificates, a representation or certification to the Trustee (upon
which the Trustee is authorized to rely) to the effect that the proposed
transfer and holding of such a Certificate and the servicing, management and
operation of the Trust: (I) will not result in a prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code which is not covered under an
individual or class prohibited transaction exemption including but not limited
to Department of Labor Prohibited Transaction Exemption ("PTE") 84-14 (Class
Exemption for Plan Asset Transactions Determined by Independent Qualified
Professional Asset Managers); PTE 91-38 (Class Exemption for Certain
Transactions Involving Bank Collective Investment Funds); PTE 90-1 (Class
Exemption for Certain Transactions Involving Insurance Company Pooled Separate
Accounts), PTE 95-60 (Class Exemption for Certain Transactions Involving
Insurance Company General Accounts), and PTCE 96-23 (Class Exemption for Plan
Asset Transactions Determined by In-House Asset Managers and (II) will not
subject the Seller, the Securities Administrator, the Master Servicer or the
Trustee to any obligation in addition to those undertaken in the Agreement.
(b) Any Person acquiring an interest in a Global Certificate which is a
Private Certificate, by acquisition of such Certificate, shall be deemed to have
represented to the Trustee that in the case of the Class B-4, Class B-5 and
Class B-6 Certificates, either: (i) it is not acquiring an interest in such
Certificate directly or indirectly by, or on behalf of, an employee benefit plan
or other retirement arrangement which is subject to Title I of ERISA and Section
4975 of the Code, or (ii) the transfer and holding of an interest in such
Certificate to that Person and the subsequent servicing, management and
operation of the Trust and its assets: (I) will not result in any prohibited
transaction which is not covered under an individual or class prohibited
transaction exemption, including, but not limited to, XXX 00-00, XXX 00-00, XXX
00-0, XXX 95-60 or PTE 96-23 and (II) will not subject the Seller, the
Securities Administrator, the Master Servicer or the Trustee to any obligation
in addition to those undertaken in the Agreement.
(c) Neither the Trustee, the Master Servicer nor the Securities
Administrator will be required to monitor, determine or inquire as to compliance
with the transfer restrictions with respect to the Global Certificates. Any
attempted or purported transfer of any Certificate in violation of the
provisions of Subsections (a) or (b) above shall be void ab initio and such
Certificate shall be considered to have been held continuously by the prior
permitted Certificateholder. Any transferor of any Certificate in violation of
such provisions, shall indemnify and hold harmless the Trustee, the Securities
Administrator and the Master Servicer from and against any and all liabilities,
claims,
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costs or expenses incurred by the Trustee, the Securities Administrator or the
Master Servicer as a result of such attempted or purported transfer. The Trustee
shall have no liability for transfer of any such Global Certificates in or
through book-entry facilities of any Depository or between or among Depository
Participants or Certificate Owners made in violation of the transfer
restrictions set forth herein.
Section 5.08 RULE 144A INFORMATION. For so long as any Certificates are
outstanding and are "restricted securities" within the meaning of Rule 144(a)(3)
of the Securities Act, (1) the Seller will provide or cause to be provided to
any holder of such Certificates and any prospective purchaser thereof designated
by such a holder, upon the request of such holder or prospective purchaser, the
information required to be provided to such holder or prospective purchaser by
Rule 144A(d)(4) under the Securities Act; and (2) the Seller shall update such
information from time to time in order to prevent such information from becoming
false and misleading and will take such other actions as are necessary to ensure
that the safe harbor exemption from the registration requirements of the
Securities Act under Rule 144A is and will be available for resales of such
Certificates conducted in accordance with Rule 144A.
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ARTICLE VI
Payments to Certificateholders
Section 6.01 DISTRIBUTIONS ON THE CERTIFICATES. (a) Interest and principal
on the Certificates will be distributed monthly on each Distribution Date,
commencing in June 2003, in an amount equal to the Available Funds for such
Distribution Date. On each Distribution Date, the Available Funds shall be
distributed as follows:
(A) on each Distribution Date, the Available Funds will be distributed
to the Senior Certificates as follows:
FIRST, to the Insurer, the MBIA Premium Amount (including any
unpaid premium from previous Distribution Dates) and then to the
interest-bearing Classes of Senior Certificates, the Accrued
Certificate Interest on such Class for such Distribution Date. As
described below, Accrued Certificate Interest on the Senior
Certificates is subject to reduction in the event of certain Net
Interest Shortfalls allocable thereto;
SECOND, to the interest-bearing Classes of Senior Certificates,
any Accrued Certificate Interest thereon remaining undistributed from
previous Distribution Dates, to the extent of remaining Available
Funds;
THIRD, to the Class R-I Certificates and Class R-II Certificates,
concurrently on a pro rata basis, in reduction of its Current
Principal Amount, until the Current Principal Amount thereof has been
reduced to zero;
FOURTH, to the Senior Certificates (other than the Class A-3,
Class A-4, Class A-9, Class A-14, Class PO and Class X Certificates),
in reduction of the Current Principal Amount thereof, concurrently as
follows:
(i) 45.19908970564% of the Senior Optimal Principal Amount in
the following manner and order of priority:
(a) to the Class A-15 Certificates, in reduction of the
Current Principal Amount thereof, until the Current
Principal Amount thereof has been reduced to zero, in
an amount equal to the Class A-15 Optimal Principal
Amount;
(b) up to an amount of $7,875, to the Class A-11
Certificates, commencing on the Distribution Date in
June 2006, in reduction of the Current Principal Amount
thereof, until the Current Principal Amount thereof has
been reduced by $7,875,000 pursuant to this clause and
clause (i)(d) below;
(c) concurrently as follows:
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(x) 00.00000000000%, sequentially, to the Class A-1
Certificates and Class A-5 Certificates, in that
order, in reduction of the Current Principal
Amounts thereof, until the Current Principal
Amounts thereof has been reduced to zero; and
(y) 10.32220871896% to the Class A-2 Certificates, in
reduction of the Current Principal Amount thereof,
until the Current Principal Amount thereof has
been reduced to zero;
(d) to the Class A-11 Certificates, in reduction of the
Current Principal Amount thereof, until the Current
Principal Amount thereof has been reduced by $7,875,000
pursuant to this clause and clause (i)(b) above; and
(e) to the Class A-15 Certificates, in reduction of the
Current Principal Amount thereof, until the Current
Principal Amount thereof has been reduced to zero;
(ii) 54.80091029436% of the Senior Optimal Principal Amount in
the following manner and order of priority:
(a) up to an amount of $5,500, to the Class A-11
Certificates, commencing on the Distribution Date in
June 2006, in reduction of the Current Principal Amount
thereof, until the Current Principal Amount thereof has
been reduced to zero;
(b) to the Class A-6 Certificates, in reduction of the
Current Principal Amount thereof, until the Current
Principal Amount thereof has been reduced to its
Planned Principal Amount;
(c) to the Class A-7 Certificates and Class A-8
Certificates, concurrently on a pro rata basis, in
reduction of the Current Principal Amounts thereof,
until the Current Principal Amounts thereof have been
reduced to their respective Planned Principal Amounts;
(d) to the Class A-10 Certificates, in reduction of the
Current Principal Amount thereof, until the Current
Principal Amount thereof has been reduced to its
Targeted Principal Amount;
(e) to the Class A-12 Certificates and Class A-13
Certificates, concurrently on a pro rata basis, in
reduction of the Current Principal Amounts thereof,
until the Current Principal Amounts thereof have been
reduced to zero;
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(f) to the Class A-10 Certificates, in reduction of the
Current Principal Amount thereof, until the Current
Principal Amount thereof has been reduced to zero;
(g) to the Class A-6 Certificates, in reduction of the
Current Principal Amount thereof, until the Current
Principal Amount thereof has been reduced to zero;
(h) to the Class A-7 Certificates and Class A-8
Certificates, concurrently on a pro rata basis, in
reduction of the Current Principal Amounts thereof,
until the Current Principal Amounts thereof have been
reduced to zero; and
(i) to the Class A-11 Certificates, in reduction of the
Current Principal Amount thereof, until the Current
Principal Amount thereof has been reduced to zero.
FIFTH, to the Class PO Certificates, the Class PO Certificate
Principal Distribution Amount for such Distribution Date to the extent
of remaining Available Funds, until the Current Principal Amount
thereof has been reduced to zero;
SIXTH, to the Class PO Certificates, the Class PO Certificate
Deferred Amount, provided, that (i) on any Distribution Date,
distributions pursuant to this priority FIFTH shall not exceed the
excess, if any, of (x) Available Funds remaining after giving effect
to distributions pursuant to priority FIRST through FOURTH above over
(y) the sum of the amount of Accrued Certificate Interest for such
Distribution Date and Accrued Certificate Interest remaining
undistributed from previous Distribution Dates on all classes of
Subordinate Certificates then outstanding, (ii) such distributions
shall not reduce the Current Principal Amount of the Class PO
Certificates and (iii) no distribution will be made in respect of the
Class PO Certificate Deferred Amount on or after the Cross-Over Date;
SEVENTH, to the Insurer, the MBIA Reimbursement Amount.
(B) On each Distribution Date on or prior to the Distribution Date on
which the Current Principal Amounts of the Subordinate Certificates are
reduced to zero, an amount equal to the remaining Available Funds after the
distributions in clause (A) above will be distributed sequentially, in the
following order, to the Class B-1, Class B-2, Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates, in each case up to an amount equal to and
in the following order: (a) the Accrued Certificate Interest thereon for
such Distribution Date, (b) any Accrued Certificate Interest thereon
remaining undistributed from previous Distribution Dates and (c) such
Class's Allocable Share for such Distribution Date, in each case, to the
extent of the sum of the remaining Available Funds;
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(C) If, after distributions have been made pursuant to priorities
FIRST and SECOND of clause (A) above on any Distribution Date, the
remaining Available Funds is less than the Senior Optimal Principal Amount
and the Class PO Principal Distribution Amount, such amount shall be
reduced, and such remaining funds will be distributed to the Senior
Certificates (other than the Interest Only Certificates) on the basis of
such reduced amount. Notwithstanding any reduction in principal
distributable to the Principal Only Certificates pursuant to this
paragraph, the principal balance of the Principal Only Certificates shall
be reduced not only by principal so distributed but also by the Class PO
Certificate Cash Shortfall. The Class PO Certificate Cash Shortfall for any
Principal Only Certificate with respect to any Distribution Date will be
added to the related Class PO Certificate Deferred Amount.
(b) On each Distribution Date, any Available Funds remaining after payment
of interest and principal to the Classes of Certificates entitled thereto and
payment of amounts due and owing to the Insurer as described above, will be
distributed to the Class R-II Certificates; provided, that if on any
Distribution Date there is any Available Funds remaining after payment of
interest and principal to a Class or Classes of Certificates entitled thereto
and payment of amounts due and owing to the Insurer, such amounts will be
distributed to the other Classes of Senior Certificates, pro rata, based upon
their Current Principal Amounts, until all amounts due to all Classes of Senior
Certificates have been paid in full, before any amounts are distributed to the
Class R-II Certificates.
(c) "Pro rata" distributions among Classes of Certificates will be made in
proportion to the then Current Principal Amount of such Classes.
(d) No Accrued Certificate Interest will be payable with respect to any
Class of Certificates after the Distribution Date on which the Current Principal
Amount of such Certificate has been reduced to zero.
(e) If on any Distribution Date the Available Funds for the Senior
Certificates is less than the Accrued Certificate Interest on the Senior
Certificates for such Distribution Date prior to reduction for Net Interest
Shortfall and the interest portion of Realized Losses, the shortfall will be
allocated among the holders of each Class of Senior Certificates in proportion
to the respective amounts of Accrued Certificate Interest that would have been
allocated thereto in the absence of such Net Interest Shortfall and/or Realized
Losses for such Distribution Date. In addition, the amount of any interest
shortfalls will constitute unpaid Accrued Certificate Interest and will be
distributable to holders of the Certificates of the Classes entitled to such
amounts on subsequent Distribution Dates, to the extent of the applicable
Available Funds after current interest distributions as required herein. Any
such amounts so carried forward will not bear interest. Shortfalls in interest
payments will not be offset by a reduction in the servicing compensation of the
Master Servicer or otherwise, except to the extent of applicable Compensating
Interest Payments.
(f) The expenses and fees of the Trust shall be paid by each of the REMICs,
to the extent that such expenses relate to the assets of each of such respective
REMICs, and all other expenses and fees of the Trust shall be paid pro rata by
each of the REMICs.
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(g) Notwithstanding the priorities relating to distributions of principal
among the Insured Certificates described above, on any Distribution Date,
distributions in respect of principal on the Insured Certificates will be
allocated among the Holders of the Insured Certificates as set forth in Section
6.10. On each Distribution Date on which amounts are available for distributions
in reduction of the Current Principal Amount of the Insured Certificates
(including, for purposes of this paragraph, the portion of any Insured Payment
allocable to principal) the aggregate amount available for such distributions
will be rounded upward by the Rounding Amount. Such rounding will be
accomplished on the first Distribution Date on which distributions in reduction
of the Current Principal Amount of the Insured Certificates are made by
withdrawing from the Rounding Account the Rounding Amount for deposit into the
Distribution Account, and such Rounding Amount will be added to the amount that
is available for distributions in reduction of the Current Principal Amount of
the Insured Certificates. On each succeeding Distribution Date on which
distributions in reduction of the Current Principal Amount of the Insured
Certificates are made, first, the aggregate amount available for distribution in
reduction of the Current Principal Amount of the Insured Certificates will be
applied to repay the Rounding Amount withdrawn from the Rounding Account on the
prior Distribution Date and then, the remainder of such allocable amount, if
any, will be similarly rounded upward through another withdrawal from the
Rounding Account and such determined Rounding Amount will be added to the amount
that is available for distribution in reduction of the Current Principal Amount
of the Insured Certificates. Any funds remaining in the Rounding Account after
the Current Principal Amount of the Insured Certificates is reduced to zero
shall be distributed to the Class R-II Certificateholders.
Section 6.02 ALLOCATION OF LOSSES. (a) On or prior to each Determination
Date, the Master Servicer shall determine the amount of any Realized Loss in
respect of each Mortgage Loan that occurred during the immediately preceding
calendar month.
(b) Realized Losses with respect to a Mortgage Loan will be allocated on a
pro rata basis between the PO Percentage of the Scheduled Principal Balance of
such Mortgage Loan and the Non-PO Percentage of such Scheduled Principal
Balance.
(c) On each Distribution Date, the PO Percentage of the principal portion
of any Realized Loss on a Discount Mortgage Loan and any Class PO Cash Shortfall
will be allocated to the Principal Only Certificates until the Current Principal
Amount of the Principal Only Certificates is reduced to zero. With respect to
any Distribution Date through the Cross-Over Date, the aggregate of all amounts
so allocable to the Principal Only Certificates on such date in respect of any
Realized Losses and any Class PO Cash Shortfalls and all amounts previously
allocated in respect of such Realized Losses or Class PO Cash Shortfalls and not
distributed on prior Distribution Dates will be the applicable "Class PO
Certificate Deferred Amount." To the extent funds are available therefore on any
Distribution Date through the Cross-Over Date, distributions in respect of the
Class PO Certificate Deferred Amount will be made in accordance with priority
SIXTH of Section 6.01(a)(A). No interest will accrue on any Class PO Certificate
Deferred Amount. On each Distribution Date through the Cross-Over Date, the
Current Principal Amount of the lowest ranking Class of Subordinate Certificates
then outstanding will be reduced by the amount of any distributions in respect
of the Class PO Certificate Deferred Amount on such Distribution Date in
accordance with the priorities set forth above, through the operation of the
Subordinate Certificate Writedown Amount. After the Cross-Over Date, no more
distributions will be made in respect of, and applicable
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Realized Losses and Class PO Cash Shortfalls allocable to the Principal Only
Certificates will not be added to, the Class PO Certificate Deferred Amount.
(d) The Non-PO Percentage of the principal portion of Realized Losses will
be allocated as follows:
first, to the Class B-6 Certificates until the Current Principal
Amount thereof has been reduced to zero;
second, to the Class B-5 Certificates until the Current Principal
Amount thereof has been reduced to zero;
third, to the Class B-4 Certificates until the Current Principal
Amount thereof has been reduced to zero;
fourth, to the Class B-3 Certificates until the Current Principal
Amount thereof has been reduced to zero;
fifth, to the Class B-2 Certificates until the Current Principal
Amount thereof has been reduced to zero; and
sixth, to the Class B-1 Certificates until the Current Principal
Amount thereof has been reduced to zero;
Commencing on the Cross-Over Date, the Non-PO Percentage of the principal
portion of Realized Losses (other than Excess Losses) will be allocated among
the outstanding Classes of Senior Certificates (other than the Interest Only
Certificates and Principal Only Certificates), pro rata based upon their
respective Current Principal Amounts. The applicable Non-PO Percentage of the
principal portion of any Excess Loss for any Distribution Date will be allocated
pro rata among all outstanding Classes of Certificates (other than the Principal
Only Certificates and the Interest Only Certificates) based on their Current
Principal Amounts.
(e) Notwithstanding the foregoing clause (d), no such allocation of any
Realized Loss shall be made on a Distribution Date to any Class of Certificates
to the extent that such allocation would result in the reduction of the
aggregate Current Principal Amounts of all the Certificates as of such
Distribution Date, after giving effect to all distributions and prior
allocations of Realized Losses on such date but not taking into consideration
any reductions in the Current Principal Amount of the Insured Certificates due
to a withdrawal of funds from the Rounding Account, to an amount less than the
aggregate Scheduled Principal Balance of all of the Mortgage Loans as of the
first day of the month of such Distribution Date (such limitation, the "Loss
Allocation Limitation").
(f) Any Realized Losses allocated to a Class of Certificates shall be
allocated among the Certificates of such Class in proportion to their respective
Current Principal Amounts. Any allocation of Realized Losses (except for Debt
Service Reductions) shall be accomplished by reducing the Current Principal
Amount of the related Certificates on the related Distribution Date.
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(g) Realized Losses shall be allocated on the Distribution Date in the
month following the month in which such loss was incurred and, in the case of
the principal portion thereof, after giving effect to distributions made on such
Distribution Date.
(h) On each Distribution Date, the Securities Administrator shall determine
and notify the Trustee of the Subordinate Certificate Writedown Amount. Any such
Subordinate Certificate Writedown Amount shall effect a corresponding reduction
in the Current Principal Amount of (i) if prior to the Cross-Over Date, the
Current Principal Amounts of the Subordinate Certificates, in the reverse order
of their numerical Class designations and (ii) from and after the Cross-Over
Date, the Senior Certificates which reduction shall occur on such Distribution
Date after giving effect to distributions made on such Distribution Date.
(i) Any Net Interest Shortfall will be allocated among the Classes of
Certificates in proportion to the respective amounts of Accrued Certificate
Interest that would have been allocated thereto in the absence of such Net
Interest Shortfall for such Distribution Date. The interest portion of any
Realized Losses with respect to the Mortgage Loans occurring on or prior to the
Cross-Over Date will be allocated sequentially in the following order, to the
Class B-6, Class B-5, Class B-4, Class B-3, Class B-2 and Class B-1
Certificates. Following the Cross-Over Date, the interest portion of Realized
Losses on the Mortgage Loans will be allocated to the Senior Certificates (other
than the Principal Only Certificates) to the extent not covered, with respect to
the Class A-11 Certificates, by the Reserve Account.
Section 6.03 PAYMENTS. (a) On each Distribution Date, other than the final
Distribution Date, the Trustee shall distribute to each Certificateholder of
record on the directly preceding Record Date the Certificateholder's pro rata
share of its Class (based on the aggregate Fractional Undivided Interest
represented by such Holder's Certificates) of all amounts required to be
distributed on such Distribution Date to such Class, based on information
provided to the Securities Administrator by the Master Servicer. The Securities
Administrator shall calculate the amount to be distributed to each Class and,
based on such amounts, the Securities Administrator shall determine the amount
to be distributed to each Certificateholder. All of the Securities
Administrator's calculations of payments shall be based solely on information
provided to the Securities Administrator by the Master Servicer. The Securities
Administrator shall not be required to confirm, verify or recompute any such
information but shall be entitled to rely conclusively on such information.
(b) Payment of the above amounts to each Certificateholder shall be made
(i) by check mailed to each Certificateholder entitled thereto at the address
appearing in the Certificate Register or (ii) upon receipt by the Trustee on or
before the fifth Business Day preceding the Record Date of written instructions
from a Certificateholder by wire transfer to a United States dollar account
maintained by the payee at any United States depository institution with
appropriate facilities for receiving such a wire transfer; provided, however,
that the final payment in respect of each Class of Certificates will be made
only upon presentation and surrender of such respective Certificates at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final payment.
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Section 6.04 STATEMENTS TO CERTIFICATEHOLDERS. (a) Concurrently with each
distribution to Certificateholders, the Securities Administrator shall make
available to the parties hereto, MBIA and each Certificateholder via the
Securities Administrator's internet website as set forth below, the following
information, expressed with respect to clauses (i) through (vii) in the
aggregate and as a Fractional Undivided Interest representing an initial Current
Principal Amount of $1,000, or in the case of each Class of Residual
Certificates, an initial Current Principal Amount of $50:
(i) the Current Principal Amount or Notional Amount of each Class of
Certificates immediately prior to such Distribution Date;
(ii) the amount of the distribution allocable to principal on each
applicable Class of Certificates;
(iii) the aggregate amount of interest accrued at the related
Pass-Through Rate with respect to each Class during the related Interest
Accrual Period;
(iv) the Net Interest Shortfall and any other adjustments to interest
at the related Pass-Through Rate necessary to account for any difference
between interest accrued and aggregate interest distributed with respect to
each Class of Certificates;
(v) the amount of the distribution allocable to interest on each Class
of Certificates;
(vi) the Pass-Through Rates for each Class of Certificates with
respect to such Distribution Date;
(vii) the Current Principal Amount or Notional Amount of each Class of
Certificates after such Distribution Date;
(viii) the amount of any Monthly Advances, Compensating Interest
Payments and outstanding unreimbursed advances by the Master Servicer or
the Servicer included in such distribution;
(ix) the aggregate amount of any Realized Losses during the related
Prepayment Period and cumulatively since the Cut-off Date and the amount
and source (separately identified) of any distribution in respect thereof
included in such distribution;
(x) with respect to each Mortgage Loan which incurred a Realized Loss
during the related Prepayment Period, (i) the loan number, (ii) the
Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
(ii) the Scheduled Principal Balance of such Mortgage Loan as of the
beginning of the related Due Period, (iii) the Net Liquidation Proceeds
with respect to such Mortgage Loan and (iv) the amount of the Realized Loss
with respect to such Mortgage Loan;
(xi) the amount of Scheduled Principal and Principal Prepayments,
(including but separately identifying the principal amount of principal
prepayments, Insurance Proceeds,
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the purchase price in connection with the purchase of Mortgage Loans, cash
deposits in connection with substitutions of Mortgage Loans and Net
Liquidation Proceeds) and the number and principal balance of Mortgage
Loans purchased or substituted for during the relevant period and
cumulatively since the Cut-off Date;
(xii) the number of Mortgage Loans (excluding REO Property) remaining
in the Trust Fund as of the end of the related Prepayment Period;
(xiii) information regarding any Mortgage Loan delinquencies as of the
end of the related Prepayment Period, including the aggregate number and
aggregate Outstanding Principal Balance of Mortgage Loans (a) delinquent 30
to 59 days on a contractual basis, (b) delinquent 60 to 89 days on a
contractual basis, and (c) delinquent 90 or more days on a contractual
basis, in each case as of the close of business on the last Business Day of
the immediately preceding month;
(xiv) the number of Mortgage Loans in the foreclosure process as of
the end of the related Due Period and the aggregate Outstanding Principal
Balance of such Mortgage Loans;
(xv) the number and aggregate Outstanding Principal Balance of all
Mortgage Loans as to which the Mortgaged Property was REO Property as of
the end of the related Due Period;
(xvi) the book value (the sum of (A) the Outstanding Principal Balance
of the Mortgage Loan, (B) accrued interest through the date of foreclosure
and (C) foreclosure expenses) of any REO Property; provided that, in the
event that such information is not available to the Securities
Administrator on the Distribution Date, such information shall be furnished
promptly after it becomes available;
(xvii) the amount of Realized Losses allocated to each Class of
Certificates since the prior Distribution Date and in the aggregate for all
prior Distribution Dates; and
(xviii) the Average Loss Severity for the prior calendar month;
(xix) the amount of Special Hazard Losses, Fraud Losses, Bankruptcy
Losses and Extraordinary Losses on such Distribution Date and in the
aggregate for all prior Distribution Dates; and
(xx) the Senior Percentage, Senior Prepayment Percentage, Subordinate
Percentage and Subordinate Prepayment Percentage.
The information set forth above shall be calculated or reported, as the
case may be, by the Securities Administrator, based solely on, and to the extent
of, information provided to the Securities Administrator by the Master Servicer.
The Securities Administrator may conclusively rely on such information and shall
not be required to confirm, verify or recalculate any such information.
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The Securities Administrator may make available each month, to any
interested party , the monthly statement to Certificateholders via the
Securities Administrator's website initially located at "xxx.xxxxxxx.xxx."
Assistance in using the website can be obtained by calling the Securities
Administrator's customer service desk at (000) 000-0000. Parties that are unable
to use the above distribution option are entitled to have a paper copy mailed to
them via first class mail by calling the Securities Administrator's customer
service desk and indicating such. The Securities Administrator shall have the
right to change the way such reports are distributed in order to make such
distribution more convenient and/or more accessible to the parties, and the
Securities Administrator shall provide timely and adequate notification to all
parties regarding any such change.
To the extent timely received from the Securities Administrator, the
Trustee will also make monthly statements available each month to
Certificateholders and MBIA 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 (000) 000-0000.
(b) By April 30 of each year beginning in 2004, the Trustee will furnish
such report to each Holder of the Certificates of record at any time during the
prior calendar year as to the aggregate of amounts reported pursuant to
subclauses (a)(ii) and (a)(v) above with respect to the Certificates, plus
information with respect to the amount of servicing compensation and such other
customary information as the Securities Administrator may determine and advises
the Trustee to be necessary and/or to be required by the Internal Revenue
Service or by a federal or state law or rules or regulations to enable such
Holders to prepare their tax returns for such calendar year. Such obligations
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Securities Administrator or the
Trustee pursuant to the requirements of the Code.
Section 6.05 MONTHLY ADVANCES. 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 which will be used for an
advance with respect to such Mortgage Loan, the Master Servicer will deposit in
the Master Servicer Collection Account not later than the Distribution Account
Deposit Date immediately preceding the related Distribution Date an amount equal
to such deficiency, net of the Servicing Fee for such Mortgage Loan except to
the extent the Master Servicer determines any such advance to be a
Nonrecoverable Advance. Subject to the foregoing, the Master Servicer shall
continue to make such advances through the date that the related Servicer is
required to do so under its Servicing Agreement. If the Master Servicer deems an
advance to be a Nonrecoverable Advance, on the Distribution Account Deposit
Date, the Master Servicer shall present an Officer's Certificate to the Trustee
and MBIA (i) stating that the Master Servicer elects not to make a Monthly
Advance in a stated amount and (ii) detailing the reason it deems the advance to
be a Nonrecoverable Advance.
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Section 6.06 COMPENSATING INTEREST PAYMENTS. The Master Servicer shall
deposit in the Master Servicer Collection Account not later than each
Distribution Account Deposit Date an amount equal to the aggregate amounts
required to be paid by the Servicers under the Servicing Agreements with respect
to subclauses (a) and (b) of the definition of Interest Shortfall with respect
to the Mortgage Loans for the related Distribution Date, and not so paid by the
related Servicers (such amount, the "Compensating Interest Payment"). The Master
Servicer shall not be entitled to any reimbursement of any Compensating Interest
Payment.
Section 6.07 POLICY MATTERS.
(a) If, on the third Business Day before any Distribution Date, the
Securities Administrator notifies the Trustee that a Deficiency Amount exists on
such Distribution Date, the Trustee shall give notice to MBIA and the Fiscal
Agent (as defined in the Policy), if any, by telephone or telecopy of the amount
of such Deficiency Amount, confirmed in writing by notice substantially in the
form of Exhibit A to the Policy by 12:00 noon, New York City time on such third
Business Day. The Trustee's responsibility for delivering the notice to MBIA as
provided in the preceding sentence is contingent upon its receipt of available,
timely and accurate information from the Master Servicer.
(b) In the event the Trustee receives a certified copy of an order of
the appropriate court regarding any Preference Amount (as defined in the
Policy), the Trustee shall (i) promptly notify MBIA and the Fiscal Agent, if
any, and (ii) comply with the provisions of the Policy to obtain payment by MBIA
of such Preference Amount. In addition, the Trustee shall mail notice to all
Holders of the Class A-11 Certificates so affected that, in the event that any
such Holder's scheduled payment is a Preference Amount, such Holder will be
entitled to payment pursuant to the terms of the Policy, a copy of which shall
be made available to such Holders by the Trustee. The Trustee shall furnish to
MBIA and the Fiscal Agent, if any, its records listing the payments on the
affected Class A-11 Certificates, if any, that have been made by the Trustee and
subsequently recovered from the affected Holders, and the dates on which such
payments were made by the Trustee.
(c) At the time of the execution hereof, and for the purposes hereof,
the Trustee shall establish a separate special purpose trust account in the name
of the Trustee for the benefit of Holders of the Class A-11 Certificates (the
"Class A-11 Policy Payments Account") over which the Trustee shall have
exclusive control and sole right of withdrawal. The Class A-11 Policy Payments
Account shall be an Eligible Account. The Trustee shall deposit any amount paid
under the Policy into the Class A-11 Policy Payments Account and distribute such
amount only for the purposes of making the payments to Holders of the Class A-11
Certificates in respect of the Insured Payment for which the related claim was
made under the Policy. Such amounts shall be allocated by the Trustee to Holders
of Class A-11 Certificates affected by such shortfalls in the same manner as
interest and principal payments are to be allocated with respect to such
Certificates pursuant to Section 6.01. It shall not be necessary for such
payments to be made by checks or wire transfers separate from the checks or wire
transfers used to make regular payments hereunder with funds withdrawn from the
Distribution Account. However, any payments made on the Class A-11 Certificates
from funds in the Policy Payments Account shall be noted as provided in
subsection (e) below. Funds held in the Class A-11 Policy Payments Account shall
not be invested by the Trustee.
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(d) Any funds received from MBIA for deposit into the Class A-11
Policy Payments Account pursuant to the Policy in respect of a Distribution Date
or otherwise as a result of any claim under the Policy shall be applied by the
Trustee directly to the payment in full (i) of the Deficiency Amount due on such
Distribution Date on the Class A-11 Certificates, or (ii) of other amounts
payable under the Policy. Funds received by the Trustee as a result of any claim
under the Policy shall be used solely for payment to the Holders of the Class
A-11 Certificates and may not be applied for any other purpose, including,
without limitation, satisfaction of any costs, expenses or liabilities of the
Trustee, the Mortgage Loan Seller, the Seller, any Servicer, the Securities
Administrator, the Master Servicer or the Trust Fund. Any funds remaining in the
Class A-11 Policy Payments Account on the first Business Day after each
Distribution Date shall be remitted promptly to MBIA pursuant to the written
instruction of MBIA.
(e) The Trustee shall keep complete and accurate records in respect of
(i) all funds remitted to it by MBIA and deposited into the Class A-11 Policy
Payments Account and (ii) the allocation of such funds to (A) payments of
interest on and principal in respect of any Class A-11 Certificates and (B) the
amount of funds available to make distributions on the Class A-11 Certificates
pursuant to Section 6.01. MBIA shall have the right to inspect such records at
reasonable times during normal business hours upon three Business Days' prior
notice to the Trustee.
(f) The Trustee acknowledges, and each Holder of a Class A-11
Certificate by its acceptance of the Class A-11 Certificate agrees, that,
without the need for any further action on the part of MBIA or the Trustee to
the extent MBIA makes payments, directly or indirectly, on account of principal
of or interest on any Class A-11 Certificates, MBIA will be fully subrogated to
the rights of the Holders of such Class A-11 Certificates to receive such
principal and interest from the Trust Fund. The Holders of the Class A-11
Certificates, by acceptance of the Class A-11 Certificates, assign their rights
as Holders of the Class A-11 Certificates to the extent of MBIA's interest with
respect to amounts paid under the Policy. Anything herein to the contrary
notwithstanding, solely for purposes of determining MBIA's rights, as
applicable, as subrogee for payments distributable pursuant to Section 6.01, any
payment with respect to distributions to the Class A-11 Certificates which is
made with funds received pursuant to the terms of the Policy, shall not be
considered payment of the Class A-11 Certificates from the Trust Fund and shall
not result in the distribution or the provision for the distribution in
reduction of the Current Principal Amount of the Class A-11 Certificates as
described in this Article VI.
The Trustee, the Seller, the Mortgage Loan Seller and the Master Servicer
shall cooperate in all respects with any reasonable request by MBIA for action
to preserve or enforce MBIA's rights or interests under this Agreement without
limiting the rights or affecting the interests of the Holders as otherwise set
forth herein.
(g) Upon a Responsible Officer of the Trustee becoming aware of the
occurrence of an Event of Default, the Trustee shall promptly notify MBIA of
such Event of Default.
(h) The Trustee shall promptly notify MBIA of either of the following
as to which a Responsible Officer has actual knowledge: (A) the commencement of
any proceeding by or against the Seller commenced under the United States
bankruptcy code or any other applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (an "Insolvency Proceeding") and (B) the
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making of any claim in connection with any proceeding seeking the avoidance as a
preferential transfer (a "Preference Claim") of any distribution made with
respect to the Class A-11 Certificates as to which it has actual knowledge. Each
Holder of a Class A-11 Certificate, by its purchase of Class A-11 Certificates,
and the Trustee hereby agrees that MBIA (so long as no MBIA Default exists) may
at any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to such Preference Claim, including, without
limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal. In addition and without limitation of the
foregoing, MBIA shall be subrogated to the rights of the Trustee and each Holder
of a Class A-11 Certificate in the conduct of any Preference Claim, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Preference
Claim.
(i) The Master Servicer shall designate an MBIA Contact Person who
shall be available to MBIA to provide reasonable access to information regarding
the Mortgage Loans. The initial MBIA Contact Person is to the attention of
Secondary Marketing.
(j) The Trustee shall promptly surrender the Policy to MBIA for
cancellation upon the reduction of the Current Principal Amount of the Class
A-11 Certificates to zero.
(k) The Trustee shall send to MBIA any statements or communications
sent by the Trustee to Holders of the Class A-11 Certificates, in each case at
the same time such reports, statements and communications are otherwise sent.
(l) For so long as there is not a continuing default by MBIA under its
obligations under the Policy (an "MBIA Default"), each Holder of a Class A-11
Certificate agrees that MBIA shall be treated by the Seller, the Mortgage Loan
Seller, the Master Servicer, the Securities Administrator and the Trustee as if
MBIA were the Holder of all Class A-11 Certificates for the purpose (and solely
for the purpose) of the giving of any consent, the making of any direction or
the exercise of any voting or other control rights otherwise given the Holders
of the Class A-11 Certificates hereunder without any further consent of the
Holders of the Class A-11 Certificates and such holders shall not exercise such
rights without the prior written consent of MBIA.
With respect to this Section 6.07, (i) the terms "Receipt" and "Received"
shall mean actual delivery to MBIA and MBIA's Fiscal Agent, if any, received
prior to 12:00 noon, New York City time, on a Business Day; delivery either on a
day that is not a Business Day or after 12:00 noon, New York City time, shall be
deemed to be Received on the next succeeding Business Day. If any notice or
certificate given under the Policy by the Trustee is not in proper form or is
not properly completed, executed or delivered, it shall be deemed not to have
been Received. MBIA or its Fiscal Agent, if any, shall promptly so advise the
Trustee and the Trustee may submit an amended notice and (ii) "Business Day"
means any day other than (A) a Saturday or Sunday, (B) a day on which MBIA is
closed or (C) a day on which banking institutions in the City of New York, New
York, or in which the Corporate Trust Office of the Trustee is located, are
authorized or obligated by law or executive order to be closed.
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(m) Unless otherwise designated in writing by the President or a
Managing Director of MBIA to the Trustee, the MBIA Premium Amount to be paid
pursuant to clause first of Section 6.01(a)(A) shall be paid by the Trustee to
MBIA by wire transfer with the following details specifically stated in the wire
transfer:
Account Name: MBIA Insurance Corporation
Account Number: 000-0-000000
Bank: JPMorgan Chase Bank
4 Chase Metro Tech Center
Xxxxxxxx, XX 00000
ABA Number: 000-000-000
Policy No.: 41412
Section 6.08 RESERVE FUND. The Reserve Fund will be maintained by the
Trustee in a separate account. The Reserve Fund will be beneficially owned by
Bear, Xxxxxxx & Co. Inc. and will not be an asset of the REMICs. The Trustee
shall make a withdrawal on each Distribution Date from amounts on deposit in the
Reserve Fund, to the extent funds are available therein, to cover any Prepayment
Interest Shortfalls allocated to the Class A-11 Certificates that were not
offset by Compensating Interest Payments and any Interest Shortfalls relating to
the application of the Relief Act allocated to the Insured Certificates. The
Trustee shall distribute such amounts withdrawn from the Reserve Fund to the
Class A-11 Certificateholders on such Distribution Date in the same manner as
interest payments are to be allocated with respect to the Class A-11
Certificates pursuant to Section 6.01. The balance of any amount remaining in
the Reserve Fund on the Distribution Date on which the Current Principal Amount
of the Class A-11 Certificates has been reduced to zero will be distributed to
Bear, Xxxxxxx & Co. Inc.
Section 6.09 ROUNDING ACCOUNT.
(a) No later than the Closing Date, the Trustee will establish and maintain
with itself a segregated trust account that is an Eligible Account, which shall
be titled "Rounding Account, JPMorgan Chase Bank, as trustee for the registered
holders of Prime Mortgage Trust 2003-1, Mortgage Pass-Through Certificates,
Series 2003-1, Class A-11." On the Closing Date, Bear, Xxxxxxx & Co. Inc. shall
deposit with the Trustee, and the Trustee shall deposit into the Rounding
Account, cash in an amount equal to $999.99.
(b) The Trustee on each Distribution Date shall, based upon information
provided to it by the Master Servicer for the related Distribution Date,
withdraw funds from the Rounding Account to pay the Rounding Amount to the
Certificate Owners of the Insured Certificates pursuant to Section 6.01(g). In
addition, the Trustee on each Distribution Date shall, based upon information
provided to it by the Master Servicer for the related Distribution Date,
withdraw funds from the Distribution Account to repay to the Rounding Account
the Rounding Amount from the prior Distribution Date as contemplated in Section
6.01(g).
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Section 6.10 PRINCIPAL DISTRIBUTIONS ON THE INSURED CERTIFICATES.
Distributions in reduction of the Current Principal Amount of the Insured
Certificates will be made in integral multiples of $1,000 at the request of the
appropriate representatives of Deceased Holders of such Insured Certificates and
at the request of Living Owners of such Insured Certificates or by mandatory
distributions by Random Lot, pursuant to clauses (a) and (d) below, or on a pro
rata basis pursuant to clause (e) below.
(a) On each Distribution Date on which distributions in reduction of the
Current Principal Amount of the Insured Certificates are made , such
distributions will be made in the following priority among the Certificate
Owners of the Insured Certificates:
(i) any request by the personal representatives of a Deceased Holder
or by a surviving tenant by the entirety, by a surviving joint tenant or by a
surviving tenant in common, but not exceeding an aggregate amount of $100,000
per request; and
(ii) any request by a Living Owner, but not exceeding an aggregate
amount of $10,000 per request.
Thereafter, distributions will be made, with respect to the Insured
Certificates, as provided in clauses (i) and (ii) above up to a second $100,000
and $10,000, respectively. This sequence of priorities will be repeated for each
request for principal distributions made by the Certificate Owners of the
Insured Certificates until all such requests have been honored.
Requests for distributions in reduction of the Current Principal Amount of
the Insured Certificates presented on behalf of Deceased Holders in accordance
with the provisions of clause (i) above will be accepted in order of their
receipt by the Depository. Requests for distributions in reduction of the
Current Principal Amount of the Insured Certificate presented in accordance with
the provisions of clause (ii) above will be accepted in the order of their
receipt by the Depository after all requests presented in accordance with clause
(i) above have been honored. All requests for distributions in reduction of the
Current Principal Amount of the Insured Certificates will be accepted in
accordance with the provisions set forth in Section 6.10(c). All requests for
distributions in reduction of the Current Principal Amount of the Insured
Certificates with respect to any Distribution Date must be received by the
Depository and on the Depository's "participant terminal system" and received by
the Trustee no later than the close of business on the related Record Date.
Requests for distributions that are on the Depository's participant terminal
system and received by the Trustee after the related Record Date and requests,
in either case, for distributions not accepted with respect to any Distribution
Date, will be treated as requests for distributions in reduction of the Current
Principal Amount of Insured Certificates on the next succeeding Distribution
Date, and each succeeding Distribution Date thereafter, until such request is
accepted or is withdrawn as provided in Section 6.10(c). Such requests as are
not so withdrawn shall retain their order of priority without the need for any
further action on the part of the appropriate Certificate Owner of the related
Insured Certificate, all in accordance with the procedures of the Depository and
the Trustee. Upon the transfer of the beneficial ownership of the Insured
Certificate, any distribution request previously submitted with respect to such
Certificate will be deemed to have been withdrawn only upon the receipt by the
Trustee on or before the Record Date for such Distribution Date of notification
of such
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withdrawal in the manner set forth in Section 6.10(c) on the Depository's
participant terminal system.
Distributions in reduction of the Current Principal Amount of the Insured
Certificates will be applied in an amount equal to the Senior Optimal Principal
Amount allocable to such Class pursuant to Section 6.01(a)(A), plus, with
respect to the Insured Certificates, any amounts available for distribution from
the Rounding Account established as provided in Section 6.09, provided that the
aggregate distribution in reduction of the Current Principal Amount of the
Insured Certificates on any Distribution Date shall be made in an integral
multiple of $1,000.
To the extent that the portion of the Senior Optimal Principal Amount
allocable to distributions in reduction of the Current Principal Amount of the
Insured Certificates on any Distribution Date exceeds the aggregate Current
Principal Amount of the Insured Certificates with respect to which distribution
requests, as set forth above, have been received (plus any amounts required to
be distributed pursuant to the Rounding Account with respect to the Insured
Certificates), distributions in reduction of the Current Principal Amount of the
Insured Certificates will be made by mandatory distribution pursuant to Section
6.10(d).
(b) An Insured Certificate shall be deemed to be held by a Deceased Holder
for purposes of this Section 6.10 if the death of the Certificate Owner thereof
is deemed to have occurred. Insured Certificates beneficially owned by tenants
by the entirety, joint tenants or tenants in common will be considered to be
beneficially owned by a single owner. The death of a tenant by the entirety,
joint tenant or tenant in common will be deemed to be the death of the
Certificate Owner, and the Insured Certificates so beneficially owned will be
eligible for priority with respect to distributions in reduction of the Current
Principal Amount thereof, subject to the limitations stated above. Insured
Certificates beneficially owned by a trust will be considered to be beneficially
owned by each beneficiary of the trust to the extent of such beneficiary's
beneficial interest therein, but in no event will a trust's beneficiaries
collectively be deemed to be Certificate Owners of a number of Individual
Insured Certificates of which such trust is the owner. The death of a
beneficiary of a trust will be deemed to be the death of a Certificate Owner of
the Insured Certificates, as applicable, owned by the trust to the extent of
such beneficiary's beneficial interest in such trust. The death of an individual
who was a tenant by the entirety, joint tenant or tenant in common in a tenancy
which is the beneficiary of a trust will be deemed to be the death of the
beneficiary of such trust. The death of a person who, during his or her
lifetime, was entitled to substantially all of the beneficial ownership
interests in Individual Insured Certificates will be deemed to be the death of
the Certificate Owner of the Insured Certificates regardless of the registration
of ownership, if such beneficial interest can be established to the satisfaction
of the Depository Participant. Such beneficial interest will be deemed to exist
in typical cases of street name or nominee ownership, ownership by a trustee,
ownership under the Uniform Gifts to Minors Act and community property or other
joint ownership arrangements between a husband and wife. Certificate beneficial
interests shall include the power to sell, transfer or otherwise dispose of an
Insured Certificate and the right to receive the proceeds therefrom, as well as
interest and distributions in reduction of the Current Principal Amount of the
Insured Certificates, as applicable, payable with respect thereto. The Trustee
shall not be under any duty to determine independently the occurrence of the
death of any deceased Certificate Owner. The Trustee may rely entirely upon
documentation delivered to it pursuant to Section 6.10(c)
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in establishing the eligibility of any Certificate Owner to receive the priority
accorded Deceased Holders in Section 6.10(a).
(c) Requests for distributions in reduction of the Current Principal Amount
of Insured Certificates must be made by delivering a written request therefor to
the Depository Participant or Indirect Depository Participant that maintains the
account evidencing such Certificate Owner's interest in Insured Certificates. In
the case of a request on behalf of a Deceased Holder, appropriate evidence of
death and any tax waivers are required to be forwarded to the Depository
Participant under separate cover. The Depository Participant shall forward a
certification, satisfactory to the Trustee, certifying the death of the Deceased
Holder and the receipt of the appropriate death and tax waivers. The Depository
Participant should in turn make the request of the Depository (or, in the case
of an Indirect Depository Participant, such Indirect Depository Participant must
notify the related Depository Participant of such request, which Depository
Participant should make the request of the Depository) on the Depository's
participant terminal system. The Depository may establish such procedures as it
deems fair and equitable to establish the order of receipt of requests for such
distributions received by it on the same day. None of the Company, the Master
Servicer, MBIA or the Trustee shall be liable for any delay in delivery of
requests for distributions or withdrawals of such requests by the Depository, a
Depository Participant or any Indirect Depository Participant.
The Depository shall maintain a list of those Depository Participants
representing the appropriate Certificate Owners of Insured Certificates that
have submitted requests for distributions in reduction of the Current Principal
Amount of Insured Certificates, together with the order of receipt and the
amounts of such requests on the Depository's participant terminal system. The
Depository will honor requests for distributions in the order of their receipt
(subject to the priorities described in Section 6.10(a) above). The Trustee
shall notify the Depository as to which requests should be honored on each
Distribution Date at least two Business Days prior to such Distribution Date
based on the report received by the Trustee pursuant to Section 4.05(c) and
shall notify the Depository as to the amount of the Senior Optimal Principal
Amount to be distributed to the Insured Certificates by Random Lot pursuant to
Section 6.10(d). Requests shall be honored by the Depository in accordance with
the procedures, and subject to the priorities and limitations, described in this
Section 6.10. The exact procedures to be followed by the Trustee and the
Depository for purposes of determining such priorities and limitations will be
those established from time to time by the Trustee or the Depository, as the
case may be. The decisions of the Trustee and the Depository concerning such
matters will be final and binding on all affected persons.
Individual Insured Certificates that have been accepted for a distribution
shall be due and payable on the applicable Distribution Date. Such Certificates
shall cease to bear interest after the last day of the month preceding the month
in which such Distribution Date occurs.
Any Certificate Owner of an Insured Certificate that has requested a
distribution may withdraw its request by so notifying in writing the Depository
Participant or Indirect Depository Participant that maintains such Certificate
Owner's account. In the event that such account is maintained by an Indirect
Depository Participant, such Indirect Depository Participant must notify the
related Depository Participant which in turn must forward the withdrawal of such
request on the Depository's participant terminal system. If such withdrawal of a
request for distribution has not been received on the Depository's participant
terminal system on or before the Record Date for the
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next Distribution Date, the previously made request for distribution will be
irrevocable with respect to the making of distributions in reduction of the
Current Principal Amount of the Insured Certificates on such Distribution Date.
In the event any requests for distributions in reduction of the Current
Principal Amount of the Insured Certificates are rejected by the Trustee for
failure to comply with the requirements of this Section 6.10, the Trustee shall
return such request to the appropriate Depository Participant with a copy to the
Depository with an explanation as to the reason for such rejection.
(d) To the extent, if any, that distributions in reduction of the Current
Principal Amount of the Insured Certificates on a Distribution Date exceed the
outstanding Current Principal Amount of the Insured Certificates with respect to
which distribution requests have been received by the related Record Date, as
provided in Section 6.10(a) above, the additional distributions in reduction of
the Current Principal Amount of the Insured Certificates will be made by
mandatory distributions in reduction thereof. Such mandatory distributions on
Individual Insured Certificates will be made by Random Lot in accordance with
the then-applicable Random Lot procedures of the Depository, the Depository
Participants and the Indirect Depository Participants representing the
Certificate Owners. The Trustee shall notify the Depository of the aggregate
amount of the mandatory distribution in reduction of the Current Principal
Amount of the Insured Certificates to be made on any such Distribution Date. The
Depository shall then allocate such aggregate amount among its Depository
Participants on a Random Lot basis. Each Depository Participant and, in turn,
each Indirect Depository Participant will then select, in accordance with its
own procedures, Individual Insured Certificates from among those held in its
accounts to receive mandatory distributions in reduction of the Current
Principal Amount of the Insured Certificates, such that the total amount so
selected is equal to the aggregate amount of such mandatory distributions
allocated to such Depository Participant by the Depository and to such Indirect
Depository Participant by its related Depository Participant, as the case may
be. Depository Participants and Indirect Depository Participants that hold
Insured Certificates selected for mandatory distributions in reduction of the
Current Principal Amount thereof are required to provide notice of such
mandatory distributions to the affected Certificate Owners. The Master Servicer
agrees to notify the Trustee of the amount of distributions in reduction of the
Current Principal Amount of the Insured Certificates to be made on each
Distribution Date in a timely manner such that the Trustee may fulfill its
obligations pursuant to the letter of representations dated the Closing Date
among the Company, the Trustee and the Depository.
(e) Notwithstanding any provisions herein to the contrary, on any
Distribution Date on which (i) any Realized Losses are allocated to the Insured
Certificates and (ii) a MBIA Default has occurred and/or is continuing,
distributions in reduction of the Current Principal Amount of the Insured
Certificates will be made pro rata on the basis of their respective percentage
interests with the respect to the Insured Certificates among the Certificate
Owners of the Insured Certificates and will not be made in integral multiples of
$1,000 nor pursuant to requests for distribution as permitted by this Section
6.10 or mandatory distributions by Random Lot.
(f) In the event that Definitive Certificates representing the Insured
Certificates are issued pursuant to Section 5.01, an amendment to this
Agreement, which may be approved without the consent of any Certificateholders,
shall establish procedures relating to the manner in which
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distributions in reduction of the Current Principal Amount of such Insured
Certificates are to be made; provided that such procedures shall be consistent,
to the extent practicable and customary for certificates similar to the Insured
Certificates, with the provisions of this Section 6.10.
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ARTICLE VII
The Master Servicer
Section 7.01 LIABILITIES OF THE MASTER SERVICER. The Master Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it herein.
Section 7.02 MERGER OR CONSOLIDATION OF THE MASTER SERVICER.
(a) The Master Servicer will keep in full force and effect its existence,
rights and franchises as a corporation under the laws of the state of its
incorporation, and will obtain and preserve its qualification to do business as
a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement,
the Certificates or any of the Mortgage Loans and to perform its duties under
this Agreement.
(b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 7.03 INDEMNIFICATION OF THE TRUSTEE, THE MASTER SERVICER AND THE
SECURITIES ADMINISTRATOR. (a) The Master Servicer agrees to indemnify the
Indemnified Persons for, and to hold them harmless against, any loss, liability
or expense (including reasonable legal fees and disbursements of counsel)
incurred on their part that may be sustained in connection with, arising out of,
or relating to, any claim or legal action (including any pending or threatened
claim or legal action) relating to this Agreement, the Servicing Agreements, the
Assignment Agreements or the Certificates or the powers of attorney delivered by
the Trustee hereunder (i) related to the Master Servicer's failure to perform
its duties in compliance with this Agreement (except as any such loss, liability
or expense shall be otherwise reimbursable pursuant to this Agreement) or (ii)
incurred by reason of the Master Servicer's willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder, provided, in each case, that with
respect to any such claim or legal action (or pending or threatened claim or
legal action), the Trustee shall have given the Master Servicer and the Seller
written notice thereof promptly after the Trustee shall have with respect to
such claim or legal action knowledge thereof. The Master Servicer's failure to
receive any such notice shall not affect the Trustee's right to indemnification
hereunder, except to the extent the Master Servicer is materially prejudiced by
such failure to give notice. This indemnity shall survive the resignation or
removal of the Trustee, Master Servicer or the Securities Administrator and the
termination of this Agreement.
(b) The Seller will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise covered by the
Master Servicer's indemnification pursuant to Subsection (a) above.
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Section 7.04 LIMITATIONS ON LIABILITY OF THE MASTER SERVICER AND OTHERS.
Subject to the obligation of the Master Servicer to indemnify the Indemnified
Persons pursuant to Section 7.03:
(a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Indemnified Persons, the Seller, the Trust Fund or the Certificateholders for
taking any action or for refraining from taking any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such Person against
any breach of warranties or representations made herein or any liability which
would otherwise be imposed by reason of such Person's willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.
(b) The Master Servicer and any director, officer, employee or agent of the
Master Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.
(c) The Master Servicer, the Custodian and any director, officer, employee
or agent of the Master Servicer or the Custodian shall be indemnified by the
Trust and held harmless thereby against any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or related to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to this Agreement, the Certificates or any Servicing Agreement
(except to the extent that the Master Servicer is indemnified by the Servicer
thereunder), other than (i) any such loss, liability or expense related to the
Master Servicer's failure to perform its duties in compliance with this
Agreement (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement), or to the Custodian's failure to
perform its duties under the Custodial Agreement, respectively, or (ii) any such
loss, liability or expense incurred by reason of the Master Servicer's or the
Custodian's willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or under the Custodial Agreement, as applicable,
or by reason of reckless disregard of obligations and duties hereunder or under
the Custodial Agreement, as applicable.
(d) The Master Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties under
this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, the Master Servicer may in its discretion, with
the consent of the Trustee (which consent shall not be unreasonably withheld),
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Master Servicer shall
be entitled to be reimbursed therefor out of the Master Servicer Collection
Account as provided by Section 4.03. Nothing in this Subsection 7.04(d) shall
affect the Master Servicer's obligation to supervise, or to take such actions as
are necessary to ensure, the servicing and administration of the Mortgage Loans
pursuant to Subsection 3.01(a).
(e) In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement, the
Master Servicer shall not be required
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to investigate or make recommendations concerning potential liabilities which
the Trust might incur as a result of such course of action by reason of the
condition of the Mortgaged Properties but shall give notice to the Trustee if it
has notice of such potential liabilities.
(f) The Master Servicer shall not be liable for any acts or omissions of
any Servicer, except as otherwise expressly provided herein.
Section 7.05 MASTER SERVICER NOT TO RESIGN. Except as provided in Section
7.07, the Master Servicer shall not resign from the obligations and duties
hereby imposed on it except upon a determination that any such duties hereunder
are no longer permissible under applicable law and such impermissibility cannot
be cured. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Independent Counsel addressed to
the Trustee and MBIA to such effect delivered to the Trustee and MBIA. No such
resignation by the Master Servicer shall become effective until EMC or the
Trustee or a successor to the Master Servicer reasonably satisfactory to the
Trustee shall have assumed the responsibilities and obligations of the Master
Servicer in accordance with Section 8.02 hereof. The Trustee shall notify the
Rating Agencies and MBIA of the resignation of the Master Servicer.
Section 7.06 SUCCESSOR MASTER SERVICER. In connection with the appointment
of any successor master servicer or the assumption of the duties of the Master
Servicer, EMC or the Trustee may make such arrangements for the compensation of
such successor master servicer out of payments on the Mortgage Loans as EMC or
the Trustee and such successor master servicer shall agree. If the successor
master servicer does not agree that such market value is a fair price, such
successor master servicer shall obtain two quotations of market value from third
parties actively engaged in the servicing of single-family mortgage loans.
Notwithstanding the foregoing, the compensation payable to a successor master
servicer may not exceed the compensation which the Master Servicer would have
been entitled to retain if the Master Servicer had continued to act as Master
Servicer hereunder.
Section 7.07 SALE AND ASSIGNMENT OF MASTER SERVICING. The Master Servicer
may sell and assign its rights and delegate its duties and obligations in its
entirety as Master Servicer under this Agreement and EMC may terminate the
Master Servicer without cause and select a new Master Servicer; provided,
however, that: (i) the purchaser or transferee accepting such assignment and
delegation (a) shall be a Person which shall be qualified to service mortgage
loans for Xxxxxx Xxx or Xxxxxxx Mac; (b) shall have a net worth of not less than
$10,000,000 (unless otherwise approved by each Rating Agency pursuant to clause
(ii) below); (c) shall be reasonably satisfactory to the Trustee (as evidenced
in a writing signed by the Trustee); and (d) shall execute and deliver to the
Trustee an agreement, in form and substance reasonably satisfactory to the
Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement, any custodial agreement
from and after the effective date of such agreement; (ii) each Rating Agency and
MBIA shall be given prior written notice of the identity of the proposed
successor to the Master Servicer and each Rating Agency's rating of the
Certificates (determined without regard to the Policy) in effect immediately
prior to such assignment, sale and delegation will not be downgraded, qualified
or withdrawn as a result of such assignment, sale and delegation, as evidenced
by a letter to such effect delivered to the Master Servicer and the Trustee;
(iii) the Master Servicer assigning
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and selling the master servicing shall deliver to the Trustee and MBIA an
Officer's Certificate and an Opinion of Independent Counsel addressed to the
Trustee and MBIA, each stating that all conditions precedent to such action
under this Agreement have been completed and such action is permitted by and
complies with the terms of this Agreement; and (iv) in the event the Master
Servicer is terminated without cause by EMC, EMC shall pay, from its own funds
and without any right of reimbursement, the terminated Master Servicer a
termination fee equal to 0.25% of the aggregate Scheduled Principal Balance of
the Mortgage Loans at the time the master servicing of the Mortgage Loans is
transferred to the successor Master Servicer. No such assignment or delegation
shall affect any liability of the Master Servicer arising prior to the effective
date thereof.
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ARTICLE VIII
Default
Section 8.01 EVENTS OF DEFAULT. "Event of Default," wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and
only with respect to the defaulting Master Servicer:
(i) The Master Servicer fails to cause to be deposited in the
Distribution Account any amount so required to be deposited pursuant to
this Agreement (other than a Monthly Advance), and such failure continues
unremedied for a period of three Business Days after the date upon which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Master Servicer; or
(ii) The Master Servicer fails to observe or perform in any material
respect any other material covenants and agreements set forth in this
Agreement to be performed by it, which covenants and agreements materially
affect the rights of Certificateholders (without regard to the Policy), and
such failure continues unremedied for a period of 60 days after the date on
which written notice of such failure, properly requiring the same to be
remedied, shall have been given to the Master Servicer by the Trustee or to
the Master Servicer and the Trustee by the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 25% of
the Trust Fund; or
(iii) There is entered against the Master Servicer a decree or order
by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or liquidator in
any insolvency, readjustment of debt, marshaling of assets and liabilities
or similar proceedings, or for the winding up or liquidation of its
affairs, and the continuance of any such decree or order is unstayed and in
effect for a period of 60 consecutive days, or an involuntary case is
commenced against the Master Servicer under any applicable insolvency or
reorganization statute and the petition is not dismissed within 60 days
after the commencement of the case; or
(iv) The Master Servicer consents to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating
to the Master Servicer or substantially all of its property; or the Master
Servicer admits in writing its inability to pay its debts generally as they
become due, files a petition to take advantage of any applicable insolvency
or reorganization statute, makes an assignment for the benefit of its
creditors, or voluntarily suspends payment of its obligations;
(v) The Master Servicer assigns or delegates its duties or rights
under this Agreement in contravention of the provisions permitting such
assignment or delegation under Sections 7.05 or 7.07; or
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(vi) The Master Servicer fails to deposit, or cause to be deposited,
in the Distribution Account any Monthly Advance (other than a
Nonrecoverable Advance) by 5:00 p.m. New York City time on the Distribution
Account Deposit Date.
In each and every such case, so long as such Event of Default with respect to
the Master Servicer shall not have been remedied, either the Trustee or the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the principal of the Trust Fund, by notice in writing to
the Master Servicer (and to the Trustee if given by such Certificateholders),
with a copy to the Rating Agencies and MBIA, and with the consent of EMC, may
terminate all of the rights and obligations (but not the liabilities) of the
Master Servicer under this Agreement and in and to the Mortgage Loans and/or the
REO Property serviced by the Master Servicer and the proceeds thereof. Upon the
receipt by the Master Servicer of the written notice, all authority and power of
the Master Servicer under this Agreement, whether with respect to the
Certificates, the Mortgage Loans, REO Property or under any other related
agreements (but only to the extent that such other agreements relate to the
Mortgage Loans or related REO Property) shall, subject to Section 8.02,
automatically and without further action pass to and be vested in the Trustee
pursuant to this Section 8.01; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's rights and
obligations hereunder, including, without limitation, the transfer to the
Trustee of (i) the property and amounts which are then or should be part of the
Trust or which thereafter become part of the Trust; and (ii) originals or copies
of all documents of the Master Servicer reasonably requested by the Trustee to
enable it to assume the Master Servicer's duties thereunder. In addition to any
other amounts which are then, or, notwithstanding the termination of its
activities under this Agreement, may become payable to the Master Servicer under
this Agreement, the Master Servicer shall be entitled to receive, out of any
amount received on account of a Mortgage Loan or related REO Property, that
portion of such payments which it would have received as reimbursement under
this Agreement if notice of termination had not been given. The termination of
the rights and obligations of the Master Servicer shall not affect any
obligations incurred by the Master Servicer prior to such termination.
Notwithstanding the foregoing, if an Event of Default described in clause
(vi) of this Section 8.01 shall occur, the Trustee shall, by notice in writing
to the Master Servicer, which may be delivered by telecopy, immediately
terminate all of the rights and obligations of the Master Servicer thereafter
arising under this Agreement, but without prejudice to any rights it may have as
a Certificateholder or to reimbursement of Monthly Advances and other advances
of its own funds, and the Trustee shall act as provided in Section 8.02 to carry
out the duties of the Master Servicer, including the obligation to make any
Monthly Advance the nonpayment of which was an Event of Default described in
clause (vi) of this Section 8.01. Any such action taken by the Trustee must be
prior to the distribution on the relevant Distribution Date.
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Section 8.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a) Upon the receipt
by the Master Servicer of a notice of termination pursuant to Section 8.01 or an
Opinion of Independent Counsel pursuant to Section 7.05 to the effect that the
Master Servicer is legally unable to act or to delegate its duties to a Person
which is legally able to act, the Trustee shall automatically become the
successor in all respects to the Master Servicer in its capacity under this
Agreement and the transactions set forth or provided for herein and shall
thereafter be subject to all the responsibilities, duties, liabilities and
limitations on liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof; provided, however, that EMC shall have the right to
either (a) immediately assume the duties of the Master Servicer or (b) select a
successor Master Servicer; provided further, however, that the Trustee shall
have no obligation whatsoever with respect to any liability (other than advances
deemed recoverable and not previously made) incurred by the Master Servicer at
or prior to the time of termination. As compensation therefor, but subject to
Section 7.06, the Trustee shall be entitled to compensation which the Master
Servicer would have been entitled to retain if the Master Servicer had continued
to act hereunder, except for those amounts due the Master Servicer as
reimbursement permitted under this Agreement for advances previously made or
expenses previously incurred. Notwithstanding the above, the Trustee may, if it
shall be unwilling so to act, or shall, if it is legally unable so to act,
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution which is a Xxxxxx Mae- or
Xxxxxxx Mac-approved servicer, and with respect to a successor to the Master
Servicer only, having a net worth of not less than $10,000,000, as the successor
to the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder;
provided, that the Trustee shall obtain a letter from each Rating Agency that
the ratings, if any, on each of the Certificates (without regard to the Policy)
will not be lowered as a result of the selection of the successor to the Master
Servicer. Pending appointment of a successor to the Master Servicer hereunder,
the Trustee shall act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on the Mortgage Loans as it
and such successor shall agree; provided, however, that the provisions of
Section 7.06 shall apply, the compensation shall not be in excess of that which
the Master Servicer would have been entitled to if the Master Servicer had
continued to act hereunder, and that such successor shall undertake and assume
the obligations of the Trustee to pay compensation to any third Person acting as
an agent or independent contractor in the performance of master servicing
responsibilities hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
(b) If the Trustee shall succeed to any duties of the Master Servicer
respecting the Mortgage Loans as provided herein, it shall do so in a separate
capacity and not in its capacity as Trustee and, accordingly, the provisions of
Article IX shall be inapplicable to the Trustee in its duties as the successor
to the Master Servicer in the servicing of the Mortgage Loans (although such
provisions shall continue to apply to the Trustee in its capacity as Trustee);
the provisions of Article VII, however, shall apply to it in its capacity as
successor master servicer.
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Section 8.03 NOTIFICATION TO CERTIFICATEHOLDERS. Upon any termination or
appointment of a successor to the Master Servicer, the Trustee shall give prompt
written notice thereof to Certificateholders at their respective addresses
appearing in the Certificate Register and to the Rating Agencies and MBIA.
Section 8.04 WAIVER OF DEFAULTS. The Trustee shall transmit by mail to all
Certificateholders, within 60 days after the occurrence of any Event of Default
actually known to a Responsible Officer of the Trustee, unless such Event of
Default shall have been cured, notice of each such Event of Default. The Holders
of Certificates evidencing Fractional Undivided Interests aggregating not less
than 51% of the Trust Fund may, on behalf of all Certificateholders, waive any
default by the Master Servicer in the performance of its obligations hereunder
and the consequences thereof, except a default in the making of or the causing
to be made any required distribution on the Certificates, which default may only
be waived by Holders of Certificates evidencing Fractional Undivided Interests
aggregating 100% of the Trust Fund. Upon any such waiver of a past default, such
default shall be deemed to cease to exist, and any Event of Default arising
therefrom shall be deemed to have been timely remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
The Trustee shall give notice of any such waiver to the Rating Agencies and
MBIA.
Section 8.05 LIST OF CERTIFICATEHOLDERS. Upon written request of three or
more Certificateholders of record, for purposes of communicating with other
Certificateholders with respect to their rights under this Agreement, the
Trustee will afford such Certificateholders access during business hours to the
most recent list of Certificateholders held by the Trustee.
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ARTICLE IX
Concerning the Trustee and the Securities Administrator
Section 9.01 DUTIES OF TRUSTEE. (a) The Trustee, prior to the occurrence of
an Event of Default and after the curing or waiver of all Events of Default
which may have occurred, and the Securities Administrator each undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement as duties of the Trustee and the Securities Administrator,
respectively. If an Event of Default has occurred and has not been cured or
waived, the Trustee shall exercise such of the rights and powers vested in it by
this Agreement, and subject to Section 8.02(b) use the same degree of care and
skill in their exercise, as a prudent person would exercise under the
circumstances in the conduct of his own affairs.
(b) Upon receipt of all resolutions, certificates, statements, opinions,
reports, documents, orders or other instruments which are specifically required
to be furnished to the Trustee and the Securities Administrator pursuant to any
provision of this Agreement, the Trustee and the Securities Administrator,
respectively, shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that neither the Trustee nor the
Securities Administrator shall be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished hereunder; 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 6.01 and 10.01 herein based solely
on the report of the Securities Administrator.
(d) No provision of this Agreement shall be construed to relieve the
Trustee or the Securities Administrator from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing or waiver of all such Events of Default which may have occurred, the
duties and obligations of the Trustee and the Securities Administrator
shall be determined solely by the express provisions of this Agreement,
neither the Trustee nor the Securities Administrator shall be liable except
for the performance of their respective duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee or the
Securities Administrator and, in the absence of bad faith on the part of
the Trustee or the Securities Administrator, respectively, the Trustee or
the Securities Administrator, respectively, may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee or the
Securities Administrator, respectively, and conforming to the requirements
of this Agreement;
(ii) Neither the Trustee nor the Securities Administrator shall be
liable in its individual capacity for an error of judgment made in good
faith by a Responsible Officer or
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Responsible Officers of the Trustee or an officer 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 Fractional Undivided Interests aggregating not less
than 25% of the Trust Fund, if such action or non-action relates to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee or the Securities Administrator, respectively, or
exercising any trust or other power conferred upon the Trustee or the
Securities Administrator, respectively, under this Agreement;
(iv) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default or Event of Default unless a
Responsible Officer of the Trustee's Corporate Trust Office shall have
actual knowledge thereof. In the absence of such notice, the Trustee may
conclusively assume there is no such default or Event of Default;
(v) The Trustee shall not in any way be liable by reason of any
insufficiency in any Account held by or in the name of Trustee unless it is
determined by a court of competent jurisdiction that the Trustee's gross
negligence or willful misconduct was the primary cause of such
insufficiency (except to the extent that the Trustee is obligor and has
defaulted thereon);
(vi) Anything in this Agreement to the contrary notwithstanding, in no
event shall the Trustee or the Securities Administrator be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Trustee or the
Securities Administrator, respectively, has been advised of the likelihood
of such loss or damage and regardless of the form of action;
(vii) None of the Securities Administrator, the Seller, EMC or the
Trustee shall be responsible for the acts or omissions of the other, it
being understood that this Agreement shall not be construed to render them
partners, joint venturers or agents of one another; and
(viii) Neither the Trustee nor the Securities Administrator shall be
required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it, and none of the
provisions contained in this Agreement shall in any event require the
Trustee or the Securities Administrator to perform, or be responsible for
the manner of performance of, any of the obligations of the Master Servicer
under the Servicing Agreements, except during such time, if any, as the
Trustee shall be the successor to, and be vested with the rights, duties,
powers and privileges of, the Master Servicer in accordance with the terms
of this Agreement.
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(e) All funds received by the Master Servicer and the Trustee and required
to be deposited in the Master Servicer Collection Account or Distribution
Account pursuant to this Agreement will be promptly so deposited by the Master
Servicer and the Trustee.
(f) Except for those actions that the Trustee or the Securities
Administrator is required to take hereunder, neither the Trustee nor the
Securities Administrator shall have any obligation or liability to take any
action or to refrain from taking any action hereunder in the absence of written
direction as provided hereunder.
Section 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE AND THE SECURITIES
ADMINISTRATOR. Except as otherwise provided in Section 9.01:
(i) The Trustee and the Securities Administrator may rely and shall be
protected in acting or refraining from acting in reliance on any
resolution, certificate of the Seller, the Master Servicer or a Servicer,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(ii) The Trustee and the Securities Administrator may consult with
counsel and any advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection with respect to any action
taken or suffered or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel:
(iii) Neither the Trustee nor the Securities Administrator shall be
under any obligation to exercise any of the trusts or powers vested in it
by this Agreement, other than its obligation to give notices pursuant to
this Agreement, or to institute, conduct or defend any litigation hereunder
or in relation hereto at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement, unless
such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may
be incurred therein or thereby. Nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the occurrence of an Event of
Default of which a Responsible Officer of the Trustee has actual knowledge
(which has not been cured or waived), subject to Section 8.02(b), to
exercise such of the rights and powers vested in it by this Agreement, and
to use the same degree of care and skill in their exercise, as a prudent
person would exercise under the circumstances in the conduct of his own
affairs;
(iv) Prior to the occurrence of an Event of Default hereunder and
after the curing or waiver of all Events of Default which may have
occurred, neither the Trustee nor the Securities Administrator shall be
liable in its individual capacity for any action taken, suffered or omitted
by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement;
(v) Neither the Trustee nor the Securities Administrator shall be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement,
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instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 25% of the Trust Fund and provided that the
payment within a reasonable time to the Trustee or the Securities
Administrator, as applicable, of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the opinion
of the Trustee or the Securities Administrator, as applicable, reasonably
assured to the Trustee or the Securities Administrator, as applicable, by
the security afforded to it by the terms of this Agreement. The Trustee or
the Securities Administrator may require reasonable indemnity against such
expense or liability as a condition to taking any such action. The
reasonable expense of every such examination shall be paid by the
Certificateholders requesting the investigation;
(vi) The Trustee and the Securities Administrator may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or through Affiliates, agents or attorneys; provided, however,
that the Trustee may not appoint any agent to perform its custodial
functions with respect to the Mortgage Files or paying agent functions
under this Agreement without the express written consent of the Master
Servicer, which consent will not be unreasonably withheld. Neither the
Trustee nor the Securities Administrator shall be liable or responsible for
the misconduct or negligence of any of the Trustee's or the Securities
Administrator's agents or attorneys or a custodian or paying agent
appointed hereunder by the Trustee or the Securities Administrator with due
care and, when required, with the consent of the Master Servicer;
(vii) Should the Trustee or the Securities Administrator deem the
nature of any action required on its part, other than a payment or transfer
under Subsection 4.01(b) or Section 4.02, to be unclear, the Trustee or the
Securities Administrator, respectively, may require prior to such action
that it be provided by the Seller with reasonable further instructions;
(viii) The right of the Trustee or the Securities Administrator to
perform any discretionary act enumerated in this Agreement shall not be
construed as a duty, and neither the Trustee nor the Securities
Administrator shall be accountable for other than its negligence or willful
misconduct in the performance of any such act;
(ix) Neither the Trustee nor the Securities Administrator shall be
required to give any bond or surety with respect to the execution of the
trust created hereby or the powers granted hereunder, except as provided in
Subsection 9.07; and
(x) Neither the Trustee nor the Securities Administrator shall have
any duty to conduct any affirmative investigation as to the occurrence of
any condition requiring the repurchase of any Mortgage Loan by the Mortgage
Loan Seller pursuant to this Agreement or the Mortgage Loan Purchase
Agreement, as applicable, or the eligibility of any Mortgage Loan for
purposes of this Agreement.
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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 Seller, and neither
the Trustee nor the Securities Administrator shall have any responsibility for
their correctness. Neither the Trustee nor the Securities Administrator makes
any representation as to the validity or sufficiency of the Certificates (other
than the signature and countersignature of the Trustee on the Certificates) or
of any Mortgage Loan except as expressly provided in Sections 2.02 and 2.05
hereof; provided, however, that the foregoing shall not relieve the Trustee of
the obligation to review the Mortgage Files pursuant to Sections 2.02 and 2.04.
The Trustee's signature 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 Seller of any of the Certificates or of the proceeds
of such Certificates, or for the use or application of any funds paid to the
Seller with respect to the Mortgage Loans. Subject to the provisions of Section
2.05, neither the Trustee nor the Securities Administrator shall not be
responsible for the legality or validity of this Agreement or any document or
instrument relating to this Agreement, the validity of the execution of this
Agreement or of any supplement hereto or instrument of further assurance, or the
validity, priority, perfection or sufficiency of the security for the
Certificates issued hereunder or intended to be issued hereunder. Neither the
Trustee nor the Securities Administrator shall at any time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Fund or its ability to
generate the payments to be distributed to Certificateholders, under this
Agreement. Neither the Trustee nor the Securities Administrator shall have any
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to record this Agreement
other than any continuation statements filed by the Trustee pursuant to Section
3.20.
Section 9.04 TRUSTEE AND SECURITIES ADMINISTRATOR MAY OWN CERTIFICATES. The
Trustee and the Securities Administrator in its individual capacity or in any
capacity other than as Trustee hereunder may become the owner or pledgee of any
Certificates with the same rights it would have if it were not Trustee or the
Securities Administrator, as applicable, and may otherwise deal with the parties
hereto.
Section 9.05 TRUSTEE'S AND SECURITIES ADMINISTRATOR'S FEES AND EXPENSES.
The fees and expenses of the Trustee and the Securities Administrator shall be
paid in accordance with a side letter agreement between the Trustee and the
Master Servicer. In addition, the Trustee and the Securities Administrator will
be entitled to recover from the Master Servicer Collection Account pursuant to
Section 4.03(b) all reasonable out-of-pocket expenses, disbursements and
advances and the expenses of the Trustee and the Securities Administrator,
respectively, in connection with any Event of Default, any breach of this
Agreement or any claim or legal action (including any pending or threatened
claim or legal action) incurred or made by the Trustee or the Securities
Administrator, respectively, in the administration of the trusts hereunder
(including the reasonable compensation, expenses and disbursements of its
counsel) except any such expense, disbursement or advance as may arise from its
negligence or intentional misconduct or which is the responsibility of the
Certificateholders. If funds in the Master Servicer Collection Account are
insufficient therefor, the
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Trustee and the Securities Administrator shall recover such expenses from the
Seller. Such compensation and reimbursement obligation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust.
Section 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE 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 such state or
the United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus and undivided profits of at
least $40,000,000 or, in the case of a successor Trustee, $50,000,000, subject
to supervision or examination by federal or state authority and, in the case of
the Trustee, rated "BBB" or higher by S&P with respect to their long-term rating
and rated "BBB" or higher by S&P and "Baa2" or higher by Xxxxx'x with respect to
any outstanding long-term unsecured unsubordinated debt, and, in the case of a
successor Trustee or successor Securities Administrator other than pursuant to
Section 9.10, rated in one of the two highest long-term debt categories of, or
otherwise acceptable to, each of the Rating Agencies. If the Trustee publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section 9.06 the combined capital and surplus of such corporation shall be
deemed to be its total equity capital (combined capital and surplus) as set
forth in its most recent report of condition so published. In case at any time
the Trustee or the Securities Administrator 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 THE TRUSTEE AND SECURITIES
ADMINISTRATOR. (a) The Trustee and the Securities Administrator may at any time
resign and be discharged from the Trust hereby created by giving written notice
thereof to the Seller and the Master Servicer, with a copy to the Rating
Agencies. Upon receiving such notice of resignation, the Seller 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, the successor Trustee or Securities Administrator, as applicable.
If no successor Trustee or Securities Administrator shall have been so appointed
and have accepted appointment within 30 days after the giving of such 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.
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(b) If at any time the Trustee or the Securities Administrator shall cease
to be eligible in accordance with the provisions of Section 9.06 and shall fail
to resign after written request therefor by the Seller or if at any time the
Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or the
Securities Administrator, as applicable, or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or the
Securities Administrator, as applicable, or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Seller shall
promptly remove the Trustee, or shall be entitled to remove the Securities
Administrator, as applicable, and appoint a successor Trustee or Securities
Administrator, as applicable, by written instrument, in triplicate, one copy of
which instrument shall be delivered to each of the Trustee or Securities
Administrator, as applicable, so removed, the successor Trustee or Securities
Administrator, as applicable.
(c) The Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Trust Fund may at any time remove the
Trustee or the Securities Administrator and appoint a successor Trustee or
Securities Administrator by written instrument or instruments, in quadruplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Seller, the Master Servicer,
the Securities Administrator (if the Trustee is removed), the Trustee (if the
Securities Administrator is removed), and the Trustee or Securities
Administrator so removed and the successor so xxxxxxxxx.Xx the event that the
Trustee or Securities Administrator is removed by the Holders of Certificates in
accordance with this Section 9.08(c), the Holders of such Certificates shall be
responsible for paying any compensation payable to a successor Trustee or
successor Securities Administrator, in excess of the amount paid to the
predecessor Trustee or predecessor Securities Administrator, as applicable.
(d) No resignation or removal of the Trustee or the 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
except upon appointment of and acceptance of such appointment by the successor
Trustee or Securities Administrator as provided in Section 9.09.
Section 9.09 SUCCESSOR TRUSTEE AND SUCCESSOR SECURITIES ADMINISTRATOR. (a)
Any successor Trustee or Securities Administrator appointed as provided in
Section 9.08 shall execute, acknowledge and deliver to the Seller and to its
predecessor Trustee or Securities Administrator an instrument accepting such
appointment hereunder. The resignation or removal of the predecessor Trustee or
Securities Administrator shall then 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 like effect as if originally named as Trustee or
Securities Administrator herein. The predecessor Trustee or Securities
Administrator shall after payment of its outstanding fees and expenses promptly
deliver to the successor Trustee or Securities Administrator, as applicable, all
assets and records of the Trust held by it hereunder, and the Seller and the
predecessor Trustee or Securities Administrator, as applicable, shall execute
and deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
Trustee or Securities Administrator, as applicable, all such rights, powers,
duties and obligations.
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(b) 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 9.06.
(c) 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 Certificateholders at their addresses
as shown in the Certificate Register and to the Rating Agencies and MBIA. EMC
shall pay the cost of any mailing by the successor Trustee or Securities
Administrator.
Section 9.10 MERGER OR CONSOLIDATION OF TRUSTEE OR SECURITIES
ADMINISTRATOR. Any state bank or trust company or national banking association
into which the Trustee or the Securities Administrator may be merged or
converted or with which it may be consolidated or any state bank or trust
company or national banking association resulting from any merger, conversion or
consolidation to which the Trustee or the Securities Administrator,
respectively, shall be a party, or any state bank or trust company or national
banking association succeeding to all or substantially all of the corporate
trust business of the Trustee or the Securities Administrator, respectively,
shall be the successor of the Trustee or the Securities Administrator,
respectively, hereunder, provided such state bank or trust company or national
banking association shall be eligible under the provisions of Section 9.06. Such
succession shall be valid without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 9.11 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust or property constituting the same may at the time be located, the Seller
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
and the Seller to act as cotrustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust, and to
vest in such Person or Persons, in such capacity, such title to the Trust, or
any part thereof, and, subject to the other provisions of this Section 9.11,
such powers, duties, obligations, rights and trusts as the Seller and the
Trustee may consider necessary or desirable.
(b) If the Seller shall not have joined in such appointment within 15 days
after the receipt by it of a written request so to do, the Trustee shall have
the power to make such appointment without the Seller.
(c) No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor Trustee under Section 9.06 hereunder and
no notice to Certificateholders of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 9.08 hereof.
(d) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred on such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be
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incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be exercised and
performed by such separate trustee or co-trustee at the direction of the
Trustee.
(e) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(f) To the extent not prohibited by law, any separate trustee or co-trustee
may, at any time, request the Trustee, its agent or attorney-in-fact, with full
power and authority, to do any lawful act under or with respect to this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
(g) No trustee under this Agreement shall be personally liable by reason of
any act or omission of another trustee under this Agreement. The Seller and the
Trustee acting jointly may at any time accept the resignation of or remove any
separate trustee or co-trustee.
Section 9.12 FEDERAL INFORMATION RETURNS AND REPORTS TO CERTIFICATEHOLDERS;
REMIC ADMINISTRATION. (a) For federal income tax purposes, the taxable year of
each REMIC shall be a calendar year and the Securities Administrator shall
maintain or cause the maintenance of the books of each such REMIC on the accrual
method of accounting.
(b) The Securities Administrator shall prepare and file or cause to be
filed with the Internal Revenue Service, and the Trustee shall sign, Federal tax
information returns or elections required to be made hereunder with respect to
each REMIC, the Trust Fund, if applicable, and the Certificates containing such
information and at the times and in the manner as may be required by the Code or
applicable Treasury regulations, and shall furnish to each Holder of
Certificates at any time during the calendar year for which such returns or
reports are made such statements or information at the times and in the manner
as may be required thereby, including, without limitation, reports relating to
interest, original issue discount and market discount or premium (using a
constant prepayment assumption of 25% CPR). The Securities Administrator will
apply for an Employee Identification Number from the IRS under Form SS-4 or any
other acceptable method for all tax entities. In connection with the foregoing,
the Securities Administrator shall timely prepare and file, and the Trustee
shall sign, IRS Form 8811, which shall provide the name and address of the
person who can be contacted to obtain information required to be reported to the
holders of regular interests in each REMIC (the "REMIC Reporting Agent"). The
Trustee shall make elections to treat each REMIC as a REMIC (which elections
shall apply to the taxable period ending December 31, 2003
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and each calendar year thereafter) in such manner as the Code or applicable
Treasury regulations may prescribe, and as described by the Securities
Administrator. The Trustee shall sign all tax information returns filed pursuant
to this Section and any other returns as may be required by the Code. The Holder
of the Class R-I Certificate is hereby designated as the "Tax Matters Person"
(within the meaning of Treas. Reg. ss.ss.1.860F-4(d)) for REMIC I and the Holder
of the Class R-II Certificate is hereby designated as the "Tax Matters Person"
for REMIC II. The Securities Administrator is hereby designated and appointed as
the agent of each such Tax Matters Person. Any Holder of a Residual Certificate
will by acceptance thereof appoint the Securities Administrator as agent and
attorney-in- fact for the purpose of acting as Tax Matters Person for each REMIC
during such time as the Securities Administrator does not own any such Residual
Certificate. In the event that the Code or applicable Treasury regulations
prohibit the Trustee from signing tax or information returns or other
statements, or the Securities Administrator from acting as agent for the Tax
Matters Person, the Trustee and the Securities Administrator shall take whatever
action that in its sole good faith judgment is necessary for the proper filing
of such information returns or for the provision of a tax matters person,
including designation of the Holder of a Residual Certificate to sign such
returns or act as tax matters person. Each Holder of a Residual Certificate
shall be bound by this Section.
(c) The Securities Administrator shall provide upon request and receipt of
reasonable compensation, such information as required in Section 860D(a)(6)(B)
of the Code to the Internal Revenue Service, to any Person purporting to
transfer a Residual Certificate to a Person other than a transferee permitted by
Section 5.05(b), and to any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate, organization described in
Section 1381 of the Code, or nominee holding an interest in a pass-through
entity described in Section 860E(e)(6) of the Code, any record holder of which
is not a transferee permitted by Section 5.05(b) (or which is deemed by statute
to be an entity with a disqualified member).
(d) The Securities Administrator shall prepare and file or cause to be
filed, and the Trustee shall sign, any state income tax returns required under
Applicable State Law with respect to each REMIC or the Trust Fund.
(e) Notwithstanding any other provision of this Agreement, the Trustee and
the Securities Administrator shall comply with all federal withholding
requirements respecting payments to Certificateholders of interest or original
issue discount on the Mortgage Loans, that the Trustee or the Securities
Administrator reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee or the Securities Administrator withholds any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trustee or the Securities
Administrator shall, together with its monthly report to such
Certificateholders, indicate such amount withheld.
(f) The Trustee and the Securities Administrator agree to indemnify the
Trust Fund and the Seller for any taxes and costs including, without limitation,
any reasonable attorneys fees imposed on or incurred by the Trust Fund, the
Seller or the Master Servicer, as a result of a breach of the Trustee's
covenants and the Securities Administrator's covenants, respectively, set forth
in this Section 9.12; provided, however, such liability and obligation to
indemnify in this paragraph shall not be joint and several and neither the
Trustee nor the Securities Administrator shall be liable
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or be obligated to indemnify the Trust Fund for the failure by the other to
perform any duty under this Agreement or the breach by the other of any covenant
in this Agreement.
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ARTICLE X
Termination
Xxxxxxx 00.00 XXXXXXXXXXX XXXX XXXXXXXXXX BY THE SELLER OR ITS DESIGNEE OR
LIQUIDATION OF THE MORTGAGE LOANS.
(a) Subject to Section 10.03, the respective obligations and
responsibilities of the Seller, the Trustee, the Master Servicer and the
Securities Administrator created hereby, other than the obligation of the
Trustee to make payments to Certificateholders as hereinafter set forth shall
terminate upon:
(i) the repurchase by or at the direction of the Seller or its
designee of all Mortgage Loans and all related REO Property remaining in
the Trust at a price (the "Termination Purchase Price") equal to the sum of
(a) 100% of the Outstanding Principal Balance of each Mortgage Loan (other
than a Mortgage Loan related to REO Property) as of the date of repurchase,
net of the principal portion of any unreimbursed Monthly Advances made by
the purchaser, together with interest at the applicable Mortgage Interest
Rate accrued but unpaid to, but not including, the first day of the month
of repurchase, (b) the appraised value of any related REO Property, less
the good faith estimate of the Seller of liquidation expenses to be
incurred in connection with its disposal thereof (but not more than the
Outstanding Principal Balance of the related Mortgage Loan, together with
interest at the applicable Mortgage Interest Rate accrued on that balance
but unpaid to, but not including, the first day of the month of
repurchase), such appraisal to be calculated by an appraiser mutually
agreed upon by the Seller and the Trustee at the expense of the Seller plus
payment due MBIA of all MBIA Reimbursement Amounts, (c) unreimbursed out-of
pocket costs of the Master Servicer, including unreimbursed servicing
advances and the principal portion of any unreimbursed Monthly Advances,
made on the Mortgage Loans prior to the exercise of such repurchase right
and (d) any unreimbursed costs and expenses of the Trustee, the Custodian
and the Securities Administrator payable pursuant to Section 9.05 and the
Custodial Agreement; or
(ii) the later of the making of the final payment or other
liquidation, or any advance with respect thereto, of the last Mortgage Loan
remaining in the Trust Fund or the disposition of all property acquired
with respect to any Mortgage Loan; provided, however, that in the event
that an advance has been made, but not yet recovered, at the time of such
termination, the Person having made such advance shall be entitled to
receive, notwithstanding such termination, any payments received subsequent
thereto with respect to which such advance was made; or
(iii) the payment to Certificateholders and MBIA of all amounts
required to be paid to them pursuant to this Agreement.
(b) In no event, however, shall the Trust created hereby continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to
the Court of St. James's, living on the date of this Agreement.
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(c) The right of the Seller or its designee to repurchase all the assets of
the Trust Fund described in Subsection 10.01(a)(i) above shall be exercisable
only if (i) the aggregate Scheduled Principal Balance of the Mortgage Loans at
the time of any such repurchase is less than 5% of the Cut-off Date Balance or
(ii) the Seller, based upon an Opinion of Counsel, has determined that the REMIC
status of the REMIC I or REMIC II has been lost or that a substantial risk
exists that such REMIC status will be lost for the then-current taxable year. At
any time thereafter, in the case of (i) or (ii) above, the Seller may elect to
terminate REMIC I and REMIC II at any time, and upon such election, the Seller
or its designee, shall repurchase all the assets of the Trust Fund described in
Subsection 10.01(a)(i) above.
(d) The Trustee shall give notice of any termination to the
Certificateholders, with a copy to the Master Servicer, the Securities
Administrator, MBIA and the Rating Agencies, upon which the Certificateholders
shall surrender their Certificates to the Trustee for payment of the final
distribution and cancellation. Such notice shall be given by letter, mailed not
earlier than the l5th day and not later than the 25th day of the month next
preceding the month of such final distribution, and shall specify (i) the
Distribution Date upon which final payment of the Certificates will be made upon
presentation and surrender of the Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Certificates at
the office of the Trustee therein specified.
(e) If the option of the Seller to repurchase or cause the repurchase of
all the assets in the Trust Fund as described Subsection 10.01(a)(i) above is
exercised, the Seller and/or its designee shall deliver to the Trustee for
deposit in the Distribution Account, by the Business Day prior to the applicable
Distribution Date, an amount equal to the Termination Purchase Price. Upon
presentation and surrender of the Certificates by the Certificateholders, the
Trustee shall distribute, in accordance with written directions of the
Securities Administrator, to the Certificateholders an amount determined as
follows: with respect to each Certificate (other than the Class R Certificates),
the outstanding Current Principal Amount, plus with respect to each Certificate
(other than the Class R Certificates), one month's interest thereon at the
applicable Pass-Through Rate; and with respect to the Class R Certificates, the
percentage interest evidenced thereby multiplied by the difference, if any,
between the above described repurchase price and the aggregate amount to be
distributed to the Holders of the Certificates (other than the Class R
Certificates). If the proceeds with respect to the Mortgage Loans are not
sufficient to pay all of the Certificates in full, any such deficiency will be
allocated first, to the Subordinate Certificates, in inverse order of their
numerical designation, and then to the Senior Certificates on a pro rata basis.
Upon deposit of the required repurchase price and following such final
Distribution Date, the Trustee shall release promptly to the Seller and/or its
designee the Mortgage Files for the remaining applicable Mortgage Loans, and the
Accounts with respect thereto shall terminate, subject to the Trustee's
obligation to hold any amounts payable to Certificateholders in trust without
interest pending final distributions pursuant to Subsection 10.01(g). Any other
amounts remaining in the Accounts will belong to the Seller. Upon deposit of the
required repurchase price and following such final Distribution Date, the
Trustee shall release promptly to the Seller and/or its designee, as the case
may be, the Mortgage Files for the remaining Mortgage Loans, and the Accounts
with respect thereto shall terminate, subject to the Trustee's obligation to
hold any amounts payable to Certificateholders in trust without interest pending
final distributions pursuant to Subsection 10.01(g).
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(f) In the event that this Agreement is terminated by reason of the payment
or liquidation of all Mortgage Loans or the disposition of all property acquired
with respect to all Mortgage Loans under Subsection 10.01(a)(ii) above, the
Master Servicer shall deliver to the Trustee for deposit in the Distribution
Account all distributable amounts remaining in the Master Servicer Collection
Account. Upon the presentation and surrender of the Certificates, the Trustee
shall distribute to the remaining Certificateholders pursuant to the written
direction of the Securities Administrator and in accordance with their
respective interests, all distributable amounts remaining in the Distribution
Account. Upon deposit by the Master Servicer of such distributable amounts, and
following such final Distribution Date, the Trustee shall release promptly to
the Seller or its designee the Mortgage Files for the remaining Mortgage Loans,
and the Master Servicer Collection Account and the Distribution Account shall
terminate, subject to the Trustee's obligation to hold any amounts payable to
the Certificateholders in trust without interest pending final distributions
pursuant to this Subsection 10.01(g).
(g) If not all of the Certificateholders shall surrender their Certificates
for cancellation within six months after the time specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, not all the Certificates shall have been
surrendered for cancellation, the Trustee may take appropriate steps, or appoint
any agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets which remain subject to this Agreement.
Section 10.02 ADDITIONAL TERMINATION REQUIREMENTS. (a) If the option of the
Seller to repurchase all the Mortgage Loans under Subsection 10.01(a)(i) above
is exercised, the Trust Fund and each REMIC shall be terminated in accordance
with the following additional requirements, unless the Trustee and MBIA have
been furnished with an Opinion of Counsel addressed to the Trustee and MBIA to
the effect that the failure of the Trust to comply with the requirements of this
Section 10.02 will not (i) result in the imposition of taxes on "prohibited
transactions" as defined in Section 860F of the Code on any REMIC or (ii) cause
any REMIC to fail to qualify as a REMIC at any time that any Regular
Certificates are outstanding:
(i) within 90 days prior to the final Distribution Date, at the
written direction of the Seller, the Trustee, as agent for the respective
Tax Matters Persons, shall adopt a plan of complete liquidation of each
REMIC in the case of a termination under Subsection 10.01(a)(i), or a plan
of complete liquidation of REMIC I in the case of a termination under
Subsection 10.01(c), provided to it by the Seller meeting the requirements
of a "qualified liquidation" under Section 860F of the Code and any
regulations thereunder.
(ii) the Seller shall notify the Trustee at the commencement of such
90-day liquidation period and, at or prior to the time of making of the
final payment on the Certificates, the Trustee shall sell or otherwise
dispose of all of the remaining assets of the Trust Fund in accordance with
the terms hereof; and
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(iii) at or after the time of adoption of such a plan of complete
liquidation of any of REMIC I and REMIC II, and at or prior to the final
Distribution Date relating thereto, the Trustee shall sell for cash all of
the assets of the Trust to or at the direction of the Seller, and REMIC I
and REMIC II, as applicable, shall terminate at such time.
(b) By their acceptance of the Residual Certificates, the Holders thereof
hereby (i) agree to adopt such a plan of complete liquidation of the related
REMIC upon the written request of the Seller, and to take such action in
connection therewith as may be reasonably requested by the Seller and (ii)
appoint the Seller as their attorney-in-fact, with full power of substitution,
for purposes of adopting such a plan of complete liquidation. The Trustee shall
adopt such plan of liquidation by filing the appropriate statement on the final
tax return of each REMIC. Upon complete liquidation or final distribution of all
of the assets of the Trust Fund, the Trust Fund and each REMIC shall terminate.
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ARTICLE XI
Miscellaneous Provisions
Section 11.01 INTENT OF PARTIES. The parties intend that each of REMIC I
and REMIC II shall be treated as a REMIC for federal income tax purposes and
that the provisions of this Agreement should be construed in furtherance of this
intent.
Section 11.02 AMENDMENT. (a) This Agreement may be amended from time to
time by EMC, the Seller, the Master Servicer, the Securities Administrator and
the Trustee, and the Servicing Agreements may be amended from time to time by
EMC, the Master Servicer and the Trustee, with the consent of MBIA but without
notice to or the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
defective or inconsistent with any other provisions herein or therein, to comply
with any changes in the Code or to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
action shall not, as evidenced by an Opinion of Independent Counsel, addressed
to the Trustee and MBIA, adversely affect in any material respect the interests
of any Certificateholder (determined without regard to the Policy).
(b) This Agreement may also be amended from time to time by EMC, the Master
Servicer, the Seller, the Securities Administrator and the Trustee (with the
consent of MBIA), and the Servicing Agreements may also be amended from time to
time by the Master Servicer and the Trustee, with the consent of the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund or of the applicable Class or Classes, if such amendment
affects only such Class or Classes, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) reduce the aforesaid percentage of Certificates the Holders of
which are required to consent to any such amendment, without the consent of the
Holders of all Certificates then outstanding, or (iii) cause any REMIC to fail
to qualify as a REMIC for federal income tax purposes, as evidenced by an
Opinion of Independent Counsel addressed to the Trustee and MBIA which shall be
provided to the Trustee and MBIA other than at the Trustee's or MBIA's expense.
Notwithstanding any other provision of this Agreement, for purposes of the
giving or withholding of consents pursuant to this Section 11.02(b),
Certificates registered in the name of or held for the benefit of the Seller,
the Securities Administrator, the Master Servicer, or the Trustee or any
Affiliate thereof shall be entitled to vote their Fractional Undivided Interests
with respect to matters affecting such Certificates.
(c) Promptly after the execution of any such amendment, the Trustee shall
furnish a copy of such amendment or written notification of the substance of
such amendment to each Certificateholder, with a copy to the Rating Agencies and
MBIA.
(d) In the case of an amendment under Subsection 11.02(b) above, it shall
not be necessary for the Certificateholders to approve the particular form of
such an amendment. Rather,
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it shall be sufficient if the Certificateholders approve the substance of the
amendment. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel addressed to
the Trustee stating that the execution of such amendment is authorized or
permitted by this Agreement. The Trustee and the Securities Administrator may,
but shall not be obligated to, enter into any such amendment which affects the
Trustee's or the Securities Administrator's own respective rights, duties or
immunities under this Agreement.
(f) Notwithstanding the foregoing clauses (a) through (e) of this Section
11.02, EMC, the Seller, the Master Servicer, the Securities Administrator and
the Trustee may amend Section 3.18 of this Agreement without an Opinion of
Counsel or the consent of the Certificateholders in connection with the matters
contained in that Section.
Section 11.03 RECORDATION OF AGREEMENT. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. The Seller shall
effect such recordation, at the expense of the Trust upon the request in writing
of a Certificateholder, but only if such direction is accompanied by an Opinion
of Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.
Section 11.04 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The death or
incapacity of any Certificateholder shall not terminate this Agreement or the
Trust, nor entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) Except as expressly provided in this Agreement, no Certificateholders
shall have any right to vote or in any manner otherwise control the operation
and management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Certificates, be
construed so as to establish the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholders be under
any liability to any third Person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon, under or with respect to this Agreement against the Seller, the Securities
Administrator, the Master Servicer or any successor to any such parties unless
(i) such Certificateholder previously shall have given to the Trustee a written
notice of a continuing default, as herein provided, (ii) the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require
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against the costs and expenses and liabilities to be incurred therein or
thereby, and (iii) the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding.
(d) No one or more Certificateholders shall have any right by virtue of any
provision of this Agreement to affect the rights of any other Certificateholders
or to obtain or seek to obtain priority or preference over any other such
Certificateholder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 11.04, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 11.05 ACTS OF CERTIFICATEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is expressly required, to the Seller. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Seller,
if made in the manner provided in this Section 11.05.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his or her individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his or her
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the individual executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Securities Administrator, the Seller, the Master Servicer nor any
successor to any such parties shall be affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action of the holder of any Certificate shall bind every future holder
of the same Certificate and the holder of every Certificate issued upon the
registration of transfer or exchange thereof, if applicable, or in lieu thereof
with respect to anything done, omitted or suffered to be done by the Trustee,
the Securities Administrator, the Seller, the Master Servicer or any successor
to any such party in reliance thereon, whether or not notation of such action is
made upon such Certificates.
(e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Fractional Undivided Interests have given any request,
demand, authorization, direction,
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notice, consent or waiver hereunder, Certificates owned by the Trustee, the
Securities Administrator, the Seller, the Master Servicer or any Affiliate
thereof shall be disregarded, except as otherwise provided in Section 11.02(b)
and except that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent
or waiver, only Certificates which a Responsible Officer of the Trustee actually
knows to be so owned shall be so disregarded. Certificates which have been
pledged in good faith to the Trustee, the Securities Administrator, the Seller,
the Master Servicer or any Affiliate thereof may be regarded as outstanding if
the pledgor establishes to the satisfaction of the Trustee the pledgor's right
to act with respect to such Certificates and that the pledgor is not an
Affiliate of the Trustee, the Securities Administrator, the Seller, or the
Master Servicer, as the case may be.
Section 11.06 GOVERNING LAW. THIS AGREEMENT AND THE CERTIFICATES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO ITS CONFLICT OF LAWS RULES (OTHER THAN SECTION 5- 1401 OF THE GENERAL
OBLIGATIONS LAW, WHICH THE PARTIES HERETO EXPRESSLY RELY UPON IN THE CHOICE OF
SUCH LAW AS THE GOVERNING LAW HEREUNDER) AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 11.07 NOTICES. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at (including delivery by
facsimile) or mailed by registered mail, return receipt requested, postage
prepaid, or by recognized overnight courier, to (i) in the case of the Seller,
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Vice
President-Servicing, telecopier number: (000) 000-0000, or to such other address
as may hereafter be furnished to the other parties hereto in writing; (ii) in
the case of the Trustee, at its Corporate Trust Office, or such other address as
may hereafter be furnished to the other parties hereto in writing; (iii) in the
case of the EMC, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Vice
President-Servicing, telecopier number: (000) 000-0000, or to such other address
as may hereafter be furnished to the other parties hereto in writing; (iv) in
the case of the Master Servicer or Securities Administrator, Xxxxx Fargo Bank
Minnesota, National Association, X.X. Xxx 00, Xxxxxxxx Xxxxxxxx 00000 (or, in
the case of overnight deliveries, 0000 Xxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx
21045) (Attention: Prime Mortgage Trust 2003-1), facsimile no.: (000) 000-0000,
or such other address as may hereafter be furnished to the other parties hereto
in writing; (v) in the case of MBIA, MBIA Insurance Corporation, 000 Xxxx
Xxxxxx, Xxxxxx, Xxx Xxxx 00000, Attention: Insured Portfolio Management -
Structured Finance (Prime Mortgage Trust 2003-1) or such other address as
hereafter may be furnished to the other parties in writing or (vi) in the case
of the Rating Agencies, Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, Inc., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and Xxxxx'x Investors
Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Any notice delivered
to the Seller, the Master Servicer, the Securities Administrator or the Trustee
under this Agreement shall be effective only upon receipt. Any notice required
or permitted to be mailed to a Certificateholder, unless otherwise provided
herein, shall be given by first-class mail, postage prepaid, at the address of
such Certificateholder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given when mailed, whether or not the
Certificateholder receives such notice.
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Section 11.08 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severed from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
Section 11.09 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto.
Section 11.10 ARTICLE AND SECTION HEADINGS. The article and section
headings herein are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof.
Section 11.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts each of which when so executed and delivered shall be an original
but all of which together shall constitute one and the same instrument.
Section 11.12 NOTICE TO RATING AGENCIES. The article and section headings
herein are for convenience of reference only, and shall not limited or otherwise
affect the meaning hereof. The Trustee shall promptly provide notice to each
Rating Agency and MBIA with respect to each of the following of which a
Responsible Officer of the Trustee has actual knowledge:
1. Any material change or amendment to this Agreement or the Servicing
Agreements;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Master Servicer, the Trustee or
the Securities Administrator;
4. The repurchase or substitution of Mortgage Loans;
5. The final payment to Certificateholders; and
6. Any change in the location of the Master Servicer Collection Account or
the Distribution Account.
Section 11.13 MBIA RIGHTS.
(a) All notices, statements, reports, certificates, lists or opinions
required by this Agreement to be sent to the parties hereto, the Rating Agencies
or the Class A-11 Certificateholders shall also be sent at such time to MBIA at
the notice address set forth in Section 11.07.
(b) MBIA shall be an express third party beneficiary of this Agreement
for the purpose of enforcing the provisions hereof to the extent of MBIA's
rights explicitly specified herein as if a party hereto.
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(c) All references herein to the ratings assigned to the Certificates and
to the interests of any Certificateholders shall be without regard to the
Policy.
* * *
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IN WITNESS WHEREOF, the Seller, the Trustee, the Master Servicer and the
Securities Administrator have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first above
written.
STRUCTURED ASSET MORTGAGE
INVESTMENTS INC., as Seller
By:
Name: Xxxxx Xxxxxxxxxxx
Title: Managing Director
JPMORGAN CHASE BANK, as Trustee
By:
Name:
Title:
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Master
Servicer
By:
Name: Xxxxxx Xxxxxxxxxx
Title: Assistant Vice President
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Securities
Administrator
By:
Name: Xxxxxx Xxxxxxxxxx
Title: Assistant Vice President
EMC MORTGAGE CORPORATION
By:
Name: Xxxxxx Xxxxxxxxx
Title: Executive Vice President
Accepted and Agreed as to Sections 2.01, 2.02, 2.03, 2.04 and 9.09(c) in its
capacity as Mortgage Loan Seller
EMC MORTGAGE CORPORATION
By:
Name: Xxxxxx Xxxxxxxxx
Title: Executive Vice President
STATE OF NEW YORK ) ) ss.:
COUNTY OF NEW YORK )
On the 30th day of May, 2003 before me, a notary public in and for said
State, personally appeared Xxxxx Xxxxxxxxxxx, known to me to be a(n) Managing
Director of Structured Asset Mortgage Investments Inc., the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of May, 2003 before me, a notary public in and for said
State, personally appeared ______________, known to me to be a(n) Authorized
Officer of JPMorgan Chase Bank, the entity that executed the within instrument,
and also known to me to be the person who executed it on behalf of said entity,
and acknowledged to me that such entity executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
STATE OF MARYLAND )
) ss.:
COUNTY OF XXXXXX )
On the 30th day of May, 2003 before me, a notary public in and for said
State, personally appeared Xxxxxx Xxxxxxxxxx, known to me to be a(n) Assistant
Vice President of Xxxxx Fargo Bank Minnesota, National Association, the entity
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said entity, and acknowledged to me that such entity
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
STATE OF MARYLAND )
) ss.:
COUNTY OF XXXXXX )
On the 30th day of May, 2003 before me, a notary public in and for said
State, personally appeared Xxxxxx Xxxxxxxxxx, known to me to be a(n) Assistant
Vice President of Xxxxx Fargo Bank Minnesota, National Association, the entity
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said entity, and acknowledged to me that such entity
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of May, 2003 before me, a notary public in and for said
State, personally appeared Xxxxxx Xxxxxxxxx, known to me to be Executive Vice
President of EMC Mortgage Corporation, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of May, 2003 before me, a notary public in and for said
State, personally appeared Xxxxxx Xxxxxxxxx, known to me to be Executive Vice
President of EMC Mortgage Corporation, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
[Notarial Seal]
EXHIBIT A-1
CLASS A-[__] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
[THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT
PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED WILL
BE REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT WILL
BE MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
A-1-1
Certificate No.1 [____%] [Variable] Pass-Through Rate
Class A-[__] Senior
Date of Pooling and Servicing Agreement and Aggregate Initial [Current Principal] [Notional]
Cut-off Date: Amount of this Senior Certificate as of the
May 1, 2003 Cut-off Date:
$[__________]
First Distribution Date: Initial [Current Principal] [Notional] Amount
June 25, 2003 of this Senior Certificate as of the Cut-off
Date:
$[__________]
Master Servicer:
Xxxxx Fargo Bank Minnesota, National
Association CUSIP: [____________]
Assumed Final Distribution Date:
June 25, 2033
PRIME MORTGAGE TRUST 2003-1
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2003-1
evidencing a fractional undivided interest in the distributions
allocable to the Class A-[__] Certificates with respect to a Trust Fund
consisting primarily of a pool of fixed rate mortgage loans secured by
first liens on one-to-four family residential properties and sold by
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Structured
Asset Mortgage Investments Inc., the Master Servicer, the Securities
Administrator or the Trustee referred to below or any of their affiliates or any
other person. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental entity or by Structured Asset Mortgage
Investments Inc., the Master Servicer, the Securities Administrator or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer, the Trustee or the Securities
Administrator or any of their affiliates will have any obligation with respect
to any certificate or other obligation secured by or payable from payments on
the Certificates.
This certifies that Cede & Co. is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust Fund") primarily consisting of fixed rate mortgage loans secured by first
liens on one- to four- family residential properties (collectively, the
"Mortgage Loans") sold by
A-1-2
Structured Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were
sold by EMC Mortgage Corporation ("EMC") to SAMI. Xxxxx Fargo Bank Minnesota,
National Association ("Xxxxx Fargo") will act as master servicer of the Mortgage
Loans (the "Master Servicer," which term includes any successors thereto under
the Agreement referred to below). The Trust Fund was created pursuant to the
Pooling and Servicing Agreement dated as of the Cut-off Date specified above
(the "Agreement"), among SAMI, as seller (the "Seller"), Xxxxx Fargo Bank
Minnesota, National Association as master servicer and securities administrator
(the "Securities Administrator"), EMC Mortgage Corporation and JPMorgan Chase
Bank, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue [during the month
prior to the month in which a Distribution Date (as hereinafter defined)]
[beginning on the 25th day of the month preceding the month in which the
Distribution Date occurs and ending on the 24th day of the month in which the
Distribution Date] occurs on the [Current Principal] [Notional] Amount hereof at
a per annum rate equal to the Pass-Through Rate set forth above and as further
described in the Agreement. The Trustee will distribute on the 25th day of each
month, or, if such 25th day is not a Business Day, the immediately following
Business Day (each, a "Distribution Date"), commencing on the First Distribution
Date specified above, to the Person in whose name this Certificate is registered
at the close of business [on the last Business Day (or if such last day is not a
Business Day, the Business Day immediately preceding such last day) of the
calendar month preceding the month of such Distribution Date] [on the Business
Day immediately preceding such Distribution Date], an amount equal to the
product of the Fractional Undivided Interest evidenced by this Certificate and
the amount (of interest and principal, if any) required to be distributed to the
Holders of Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the Distribution Date in the month immediately following
the month of the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the [Current Principal] [Notional] Amount of this
Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee
by check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice. The
Initial [Current Principal] [Notional] Amount of this Certificate is set forth
above. [The Current Principal Amount hereof will be reduced to the extent of
distributions allocable to principal hereon and any Realized Losses allocable
hereto.]
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in twenty-five Classes. The Certificates, in the aggregate, evidence the
entire beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
A-1-3
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein
provided; (i) the amendment thereof and the modification of the rights and
obligations of the Seller, the Master Servicer and the Trustee and the rights of
the Certificateholders under the Agreement from time to time by EMC, the Seller,
the Master Servicer, the Securities Administrator and the Trustee, and (ii) the
amendment of the Servicing Agreements by the Mater Servicer and the Trustee with
the consent of the Holders of Certificates, evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund (or in certain cases,
Holders of Certificates of affected Classes evidencing such percentage of the
Fractional Undivided Interests thereof). Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in lieu hereof whether or not notation of such consent is made upon
this Certificate. The Agreement also permits the amendment thereof and of the
Servicing Agreements in certain limited circumstances, without the consent of
the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Trustee upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee for such purposes, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations representing a like aggregate Fractional Undivided
Interest will be issued to the designated transferee.
The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Fractional Undivided Interest, as requested
by the Holder surrendering the same.
No service charge will be made to the Certificateholders for
any such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the
A-1-4
Agreement) shall terminate upon the earlier of (i) the later of the (A) final
payment or other liquidation (or Advance with respect thereto) of the last
Mortgage Loan remaining in the Trust Fund and (B) disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan
and the remittance of all funds due under the Agreement, or (ii) the optional
repurchase by the party named in the Agreement of all the Mortgage Loans and
other assets of the Trust Fund in accordance with the terms of the Agreement.
Such optional repurchase may be made only on or after the Distribution Date on
which the aggregate unpaid principal balance of the Mortgage Loans is less than
the percentage of the aggregate Outstanding Principal Balance specified in the
Agreement of the Mortgage Loans at the Cut-off Date. The exercise of such right
will effect the early retirement of the Certificates. In no event, however, will
the Trust Fund created by the Agreement continue beyond the expiration of 21
years after the death of certain persons identified in the Agreement.
Unless this Certificate has been countersigned by an
authorized signatory of the Trustee by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement, or be valid for any purpose.
A-1-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: May __, 2003 JPMORGAN CHASE BANK
Not in its individual capacity but
solely as Trustee
By:____________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[__] Certificates referred to in
the within-mentioned Agreement.
JPMORGAN CHASE BANK
Authorized signatory of JPMorgan
Chase Bank, not in its individual
capacity but solely as Trustee
By:_______________________________
Authorized Signatory
A-1-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Fractional
Undivided Interest evidenced by the within Mortgage Pass-Through Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated: ______________________________________________
Signature by or on behalf of assignor
______________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
X-0-0
XXXXXXX X-0
CLASS B-[__] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO
THE SENIOR CERTIFICATES [AND THE] [AND THE CLASS B-_ CERTIFICATES] AS
DESCRIBED IN THE AGREEMENT (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND ANY REALIZED LOSSES ALLOCABLE
HERETO. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE
CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE
DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS
CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
[FOR CLASS B-1, CLASS B-2 AND CLASS B-3] [UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED WILL BE REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT WILL BE MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[FOR CLASS B-4, CLASS B-5 AND CLASS B-6] [THIS CERTIFICATE HAS
NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF,
BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN
A-2-1
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR"
WITHIN THE MEANING THEREOF IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE ACT OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM
PROVIDED IN THE AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER
EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER
IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH
CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND
ANY OTHER APPLICABLE JURISDICTION.]
[FOR CLASS B-4, CLASS B-5 AND CLASS B-6] [THIS CERTIFICATE MAY
NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT
PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, UNLESS THE TRANSFEREE CERTIFIES OR
REPRESENTS THAT THE PROPOSED TRANSFER AND HOLDING OF A CERTIFICATE AND THE
SERVICING, MANAGEMENT AND OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT
RESULT IN ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR
CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO,
PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, XXX 00-00, XXX 00-0, XXX 95-60
OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL OBLIGATIONS ON THE
PART OF THE SELLER, THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER OR THE
TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER OF A BOOK-ENTRY
CERTIFICATE OR A GLOBAL CERTIFICATE OR UNLESS THE OPINION SPECIFIED IN SECTION
5.07 OF THE AGREEMENT IS PROVIDED.]
A-2-2
Certificate No.1 [____]% Pass-Through Rate
Class B-[__] Subordinate
Date of Pooling and Servicing Agreement and Aggregate Initial Current Principal Amount of
Cut-off Date: this Subordinate Certificate as of the Cut-off
May 1, 2003 Date: $[_________]
Initial Current Principal Amount of this
First Distribution Date: Subordinate Certificate as of the Cut-off Date:
June 25, 2003 $[_________]
Master Servicer:
Xxxxx Fargo Bank Minnesota, National
Association CUSIP: [___________]
Assumed Final Distribution Date:
June 25, 2033
PRIME MORTGAGE TRUST 2003-1
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2003-1
evidencing a fractional undivided interest in the distributions
allocable to the Class B-[__] Certificates with respect to a Trust Fund
consisting primarily of a pool of fixed rate mortgage loans secured by
first liens on one-to-four family residential properties sold by
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Structured
Asset Mortgage Investments Inc., the Master Servicer, the Securities
Administrator or the Trustee referred to below or any of their affiliates or any
other person. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental entity or by Structured Asset Mortgage
Investments Inc., the Master Servicer, the Securities Administrator or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer, the Trustee or the Securities
Administrator or any of their affiliates will have any obligation with respect
to any certificate or other obligation secured by or payable from payments on
the Certificates.
This certifies that Cede & Co. is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust Fund") primarily consisting of fixed rate mortgage loans secured by first
liens on one- to four- family residential properties (collectively, the
"Mortgage Loans") sold by Structured Asset Mortgage Investments Inc. ("SAMI").
The Mortgage Loans were sold by EMC Mortgage Corporation ("EMC") to SAMI. Xxxxx
Fargo Bank Minnesota, National Association
A-2-3
("Xxxxx Fargo") will act as master servicer of the Mortgage Loans (the "Master
Servicer," which term includes any successors thereto under the Agreement
referred to below). The Trust Fund was created pursuant to the Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement"), among SAMI, as seller (the "Seller"), Xxxxx Fargo Bank Minnesota,
National Association as master servicer and securities administrator (the
"Securities Administrator"), EMC Mortgage Corporation and JPMorgan Chase Bank,
as trustee (the "Trustee") , a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, capitalized
terms used herein shall have the meaning ascribed to them in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of its acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Current Principal Amount hereof at a per annum rate equal to the
Pass-Through Rate set forth above and as further described in the Agreement. The
Trustee will distribute on the 25th day of each month, or, if such 25th day is
not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day (or if such last day is not a Business Day,
the Business Day immediately preceding such last day) of the calendar month
preceding the month of such Distribution Date, an amount equal to the product of
the Fractional Undivided Interest evidenced by this Certificate and the amount
(of interest and principal, if any) required to be distributed to the Holders of
Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the Distribution Date in the month immediately following
the month of the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee
by check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice. The
Initial Current Principal Amount of this Certificate is set forth above. The
Current Principal Amount hereof will be reduced to the extent of distributions
allocable to principal hereon and any Realized Losses allocable hereto.
[For the Class X-0, X-0 and B-6 Certificates] [No transfer of
this Class B-[__] certificate will be made unless such transfer is (i) exempt
from the registration requirements of the Securities act of 1933, as amended,
and any applicable state securities laws or is made in accordance with said Act
and laws and (ii) made in accordance with Section 5.02 of the Agreement. In the
event that such transfer is to be made the Trustee shall register such transfer
if, (i) made to a transferee who has provided the Trustee with evidence as to
its QIB status; or (ii) (A) the transferor has advised the Trustee in writing
that the Certificate is being transferred to an Institutional Accredited
Investor and (B) prior to such transfer the transferee furnishes to the Trustee
an Investment Letter; provided that if based upon an Opinion of Counsel to the
effect that (A) and (B) above are met sufficient to
A-2-4
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
and other applicable laws.]
[For the Class X-0, X-0 and B-6 Certificates] [This
Certificate may not be acquired directly or indirectly by, or on behalf of, an
employee benefit plan or other retirement arrangement which is subject to Title
I of the Employee Retirement Income Security Act of 1974, as amended, or Section
4975 of the Internal Revenue Code of 1986, as amended, unless the transferee
certifies or represents that the proposed transfer and holding of a Certificate
and the servicing, management and operation of the trust and its assets: (i)
will not result in any prohibited transaction which is not covered under an
individual or class prohibited transaction exemption, including, but not limited
to, Prohibited Transaction Exemption ("PTE") 84-14, XXX 00-00, XXX 00-0, XXX
00-00 or PTE 96-23 and (ii) will not give rise to any additional obligations on
the part of the Seller, the Securities Administrator, the Master Servicer or the
Trustee, which will be deemed represented by an owner of a Book-Entry
Certificate or a Global Certificate or unless the opinion specified in section
5.07 of the Agreement is provided.]
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in twenty-five Classes. The Certificates, in the aggregate, evidence the
entire beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein
provided; (i) the amendment thereof and the modification of the rights and
obligations of the Seller, the Master Servicer and the Trustee and the rights of
the Certificateholders under the Agreement from time to time by EMC, the Seller,
the Master Servicer, the Securities Administrator and the Trustee, and (ii) the
amendment of the Servicing Agreements by the Mater Servicer and the Trustee with
the consent of the Holders of Certificates, evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund (or in certain cases,
Holders of Certificates of affected Classes evidencing such percentage of the
Fractional Undivided Interests thereof). Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in lieu hereof whether or not notation of such consent is made upon
this Certificate. The Agreement also permits the amendment thereof and of the
Servicing Agreements in certain limited circumstances, without the consent of
the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Trustee upon surrender of this Certificate for
A-2-5
registration of transfer at the offices or agencies maintained by the Trustee
for such purposes, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the Holder hereof
or such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates in authorized denominations representing a like aggregate
Fractional Undivided Interest will be issued to the designated transferee.
The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Fractional Undivided Interest, as requested
by the Holder surrendering the same.
No service charge will be made to the Certificateholders for
any such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the earlier of (i) the later of the (A) final payment or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and (B) disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate unpaid principal balance of the Mortgage Loans is less than the
percentage of the aggregate Outstanding Principal Balance specified in the
Agreement of the Mortgage Loans at the Cut-off Date. The exercise of such right
will effect the early retirement of the Certificates. In no event, however, will
the Trust Fund created by the Agreement continue beyond the expiration of 21
years after the death of certain persons identified in the Agreement.
Unless this Certificate has been countersigned by an
authorized signatory of the Trustee by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement, or be valid for any purpose.
A-2-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: May __, 2003 JPMORGAN CHASE BANK
Not in its individual capacity
but solely as Trustee
By:____________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class B-[__] Certificates referred to in the
within-mentioned Agreement.
JPMORGAN CHASE BANK
Authorized signatory of
JPMorgan Chase Bank, not in its
individual capacity but solely
as Trustee
By:____________________________
Authorized Signatory
A-2-7
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Fractional
Undivided Interest evidenced by the within Mortgage Pass-Through Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated: ____________________________________________
Signature by or on behalf of assignor
____________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to ______________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
X-0-0
XXXXXXX X-0
CLASS R-[__] CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A
NON-UNITED STATES PERSON, A PUBLICLY TRADED PARTNERSHIP OR A
DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY
BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT
WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, UNLESS THE PROPOSED TRANSFEREE PROVIDES THE TRUSTEE WITH AN OPINION OF
COUNSEL THAT IS SATISFACTORY TO THE TRUSTEE, THE MASTER SERVICER AND THE
SECURITIES ADMINISTRATOR THAT THE PURCHASE OF CERTIFICATES ON BEHALF OF SUCH
PERSON WILL NOT RESULT IN OR CONSTITUTE A NONEXEMPT PROHIBITED TRANSACTION, IS
PERMISSIBLE UNDER APPLICABLE LAW AND WILL NOT GIVE RISE TO ANY ADDITIONAL
OBLIGATIONS ON THE PART OF THE SELLER, THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR OR THE TRUSTEE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE
MASTER SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED
STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE, (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OR
A-3-1
ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED
ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL
BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT
BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT
NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF
THIS CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE
CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
A-3-2
Certificate No.1 [__]% Pass-Through Rate
Class R-[__]
Date of Pooling and Servicing Agreement and Aggregate Initial Current Principal Amount of
Cut-off Date: May 1, 2003 this Certificate as of the Cut-off Date:
$[____]
First Distribution Date: Initial Current Principal Amount of this
June 25, 2003 Certificate as of the Cut-off Date: $[_____]
Master Servicer:
Xxxxx Fargo Bank Minnesota, National
Association CUSIP: [__________]
Assumed Final Distribution Date:
June 25, 2033
PRIME MORTGAGE TRUST 2003-1
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2003-1
evidencing a fractional undivided interest in the distributions
allocable to the Class R-[__] Certificates with respect to a Trust Fund
consisting primarily of a pool of fixed rate mortgage loans secured by
first liens on one-to-four family residential properties sold by
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Structured
Asset Mortgage Investments Inc., the Master Servicer, the Securities
Administrator or the Trustee referred to below or any of their affiliates or any
other person. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental entity or by Structured Asset Mortgage
Investments Inc., the Master Servicer, the Securities Administrator or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments Inc., the Master Servicer, the Trustee, the Securities
Administrator or any of their affiliates will have any obligation with respect
to any certificate or other obligation secured by or payable from payments on
the Certificates.
This certifies that Bear, Xxxxxxx Securities Corp. is the
registered owner of the Fractional Undivided Interest evidenced hereby in the
beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust Fund") primarily consisting of conventional
fixed rate mortgages loans secured by first liens on one- to four- family
residential properties (collectively, the "Mortgage Loans") sold by Structured
Asset Mortgage Investments Inc. ("SAMI"). The Mortgage Loans were sold by EMC
Mortgage Corporation ("EMC") to SAMI. Xxxxx Fargo Bank Minnesota, National
Association ("Xxxxx Fargo") will act as master servicer of the Mortgage
A-3-3
Loans (the "Master Servicer," which term includes any successors thereto under
the Agreement referred to below). The Trust Fund was created pursuant to the
Pooling and Servicing Agreement dated as of the Cut-off Date specified above
(the "Agreement'), among SAMI, as seller (the "Seller"), Xxxxx Fargo Bank
Minnesota, National Association as master servicer and securities administrator
(the "Securities Administrator"), EMC Mortgage Corporation and JPMorgan Chase
Bank, as trustee (the "Trustee") , a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Current Principal Amount hereof at a per annum rate equal to the
Pass-Through Rate set forth above and as further described in the Agreement. The
Trustee will distribute on the 25th day of each month, or, if such 25th day is
not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day (or if such last day is not a Business Day,
the Business Day immediately preceding such last day) of the calendar month
preceding the month of such Distribution Date, an amount equal to the product of
the Fractional Undivided Interest evidenced by this Certificate and the amount
(of interest and principal, if any) required to be distributed to the Holders of
Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the Distribution Date in the month immediately following
the month of the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee
by check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice. The Initial Current Principal
Amount of this Certificate is set forth above. The Current Principal Amount
hereof will be reduced to the extent of distributions allocable to principal
hereon and any Realized Losses allocable hereto.
Each Holder of this Certificate will be deemed to have agreed
to be bound by the restrictions set forth in the Agreement to the effect that
(i) each person holding or acquiring any Ownership Interest in this Certificate
must be a United States Person and a Permitted Transferee, (ii) the transfer of
any Ownership Interest in this Certificate will be conditioned upon the delivery
to the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Seller will have the right, in its
sole discretion and without notice to the Holder of this
A-3-4
Certificate, to sell this Certificate to a purchaser selected by the Company,
which purchaser may be the Seller, or any affiliate of the Seller, on such terms
and conditions as the Seller may choose.
This certificate may not be acquired directly or indirectly
by, or on behalf of, an employee benefit plan or other retirement arrangement
which is subject to title I of the Employee Retirement Income Security Act of
1974, as amended, and/or section 4975 of the Internal Revenue Code of 1986, as
amended, unless the proposed transferee provides the Trustee with an opinion of
counsel addressed to the Trustee, Master Servicer and Securities Adminidtrator
and on which they may rely (which shall not be at the expense of the Trustee,
Master Servicer or the Securities Administrator) which is acceptable to such
entities, that the purchase of this certificate will not result in or constitute
a nonexempt prohibited transaction, is permissible under applicable law and will
not give rise to any additional fiduciary obligations on the part of the Seller,
the Master Servicer or the Trustee.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in twenty-five Classes. The Certificates, in the aggregate, evidence the
entire beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein
provided; (i) the amendment thereof and the modification of the rights and
obligations of the Seller, the Master Servicer and the Trustee and the rights of
the Certificateholders under the Agreement from time to time by EMC, the Seller,
the Master Servicer, the Securities Administrator and the Trustee, and (ii) the
amendment of the Servicing Agreements by the Mater Servicer and the Trustee with
the consent of the Holders of Certificates, evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund (or in certain cases,
Holders of Certificates of affected Classes evidencing such percentage of the
Fractional Undivided Interests thereof). Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in lieu hereof whether or not notation of such consent is made upon
this Certificate. The Agreement also permits the amendment thereof and of the
Servicing Agreements in certain limited circumstances, without the consent of
the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Trustee upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee for such purposes, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee
A-3-5
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates in authorized denominations
representing a like aggregate Fractional Undivided Interest will be issued to
the designated transferee.
The Certificates are issuable only as registered Certificates
without coupons in the Classes and denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate Fractional Undivided Interest, as requested
by the Holder surrendering the same.
No service charge will be made to the Certificateholders for
any such registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Seller, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Seller, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby (other than the obligations to make payments to
Certificateholders with respect to the termination of the Agreement) shall
terminate upon the earlier of (i) the later of the (A) final payment or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and (B) disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate unpaid principal balance of the Mortgage Loans is less than the
percentage of the aggregate Outstanding Principal Balance specified in the
Agreement of the Mortgage Loans at the Cut-off Date. The exercise of such right
will effect the early retirement of the Certificates. In no event, however, will
the Trust Fund created by the Agreement continue beyond the expiration of 21
years after the death of certain persons identified in the Agreement.
Unless this Certificate has been countersigned by an
authorized signatory of the Trustee by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement, or be valid for any purpose.
A-3-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: May __, 2003 JPMORGAN CHASE BANK
Not in its individual capacity but
solely as Trustee
By:____________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class R-[__] Certificates referred to in
the within-mentioned Agreement.
JPMORGAN CHASE BANK
Authorized signatory of JPMorgan
Chase Bank, not in its individual
capacity but solely as Trustee
By:_______________________________
Authorized Signatory
A-3-7
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Fractional
Undivided Interest evidenced by the within Mortgage Pass-Through Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated: ______________________________________________
Signature by or on behalf of assignor
______________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
A-3-8
EXHIBIT B
MORTGAGE LOAN SCHEDULE
----------------------
[PROVIDED UPON REQUEST]
B-1
EXHIBIT C
[RESERVED]
C-1
EXHIBIT D
REQUEST FOR RELEASE OF DOCUMENTS
To: JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
RE: Pooling and Servicing Agreement dated as of
May 1, 2003, among SAMI,
Xxxxx Fargo Bank Minnesota,
National Association, as master servicer
and securities administrator,
EMC Mortgage Corporation and
JPMorgan Chase Bank as Trustee
In connection with the administration of the Mortgage Loans held by you
pursuant to the above-captioned Pooling and Servicing 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 proceeds have been
deposited into the Custodial Account
_____ 2. Foreclosure
_____ 3. Substitution
_____ 4. Other Liquidation
_____ 5. Nonliquidation Reason:______________________
_____ 6. California Mortgage Loan paid in full
By:_______________________________
(authorized signer)
Issuer:___________________________
Address:__________________________
Date:_____________________________
D-1
EXHIBIT E
FORM OF AFFIDAVIT
Affidavit pursuant to Section
860E(e)(4) of the Internal Revenue
Code of 1986, as amended, and for
other purposes
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of ] [the United States], on behalf of which he
makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" as
defined in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), and will not be a disqualified organization as of [Closing Date]
[date of purchase]; (ii) it is not acquiring the Structured Asset Mortgage
Investments Inc., Prime Mortgage Trust, Mortgage Pass-Through Certificates,
Series 2003-1 Class R-I Certificates and Class R-II Certificates (the "Residual
Certificates") for the account of a disqualified organization; (iii) it consents
to any amendment of the Pooling and Servicing Agreement that shall be deemed
necessary by Structured Asset Mortgage Investments Inc. (upon advice of counsel)
to constitute a reasonable arrangement to ensure that the Residual Certificates
will not be owned directly or indirectly by a disqualified organization; and
(iv) it will not transfer such Residual Certificates unless (a) it has received
from the transferee an affidavit in substantially the same form as this
affidavit containing these same four representations and (b) as of the time of
the transfer, it does not have actual knowledge that such affidavit is false.
3. That the Investor is one of the following: (i) a citizen or resident
of the United States, (ii) a corporation or partnership (including an entity
treated as a corporation or partnership for federal income tax purposes) created
or organized in, or under the laws of, the United States or any state thereof or
the District of Columbia (except, in the case of a partnership, to the extent
provided in regulations), provided that no partnership or other entity treated
as a partnership for United States federal income tax purposes shall be treated
as a United States Person unless all persons that own an interest in such
partnership either directly or through any entity that is not a corporation for
United States federal income tax purposes are United States Persons, (iii) an
estate whose income is subject to United States federal income tax regardless of
its source, or (iv) a trust other than a "foreign trust," as defined in Section
7701 (a)(31) of the Code.
4. That the Investor's taxpayer identification number is
______________________.
E-1
5. That no purpose of the acquisition of the Residual Certificates is
to avoid or impede the assessment or collection of tax.
6. That the Investor understands that, as the holder of the Residual
Certificates, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificates.
7. That the Investor intends to pay taxes associated with holding the
Residual Certificates as they become due.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] this ____ day of _________, 20__.
[NAME OF INVESTOR]
By:___________________________________
[Name of Officer]
[Title of Officer]
[Address of Investor for receipt of
distributions]
Address of Investor for receipt of
tax information:
E-2
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this ___ day of _________, 20___.
NOTARY PUBLIC
COUNTY OF
STATE OF
My commission expires the ___ day of ___________________, 20___.
E-3
EXHIBIT F-1
FORM OF INVESTMENT LETTER
[Date]
[SELLER]
JPMorgan Chase Bank
4 New York Plaza, 6th Floor
New York ,New York 10004
Structured Asset Mortgage Investments Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Structured Asset Mortgage Investments Inc., Prime Mortgage
Trust, Series 2003-1 Mortgage Pass-Through Certificates (the
"Certificates"), including the [Class B-4, Class B-5, Class
B-6] Certificates (the "Privately Offered Certificates")
--------------------------------------------------------
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered Certificates, we
confirm that:
(i) we understand that the Privately Offered Certificates
are not being registered under the Securities Act of
1933, as amended (the "Act") or any applicable state
securities or "Blue Sky" laws, and are being sold to
us in a transaction that is exempt from the
registration requirements of such laws;
(ii) any information we desired concerning the
Certificates, including the Privately Offered
Certificates, the trust in which the Certificates
represent the entire beneficial ownership interest
(the "Trust") or any other matter we deemed relevant
to our decision to purchase Privately Offered
Certificates has been made available to us;
(iii) we are able to bear the economic risk of investment
in Privately Offered Certificates; we are an
institutional "accredited investor" as defined in
Section 501(a) of Regulation D promulgated under the
Act and a sophisticated institutional investor;
(iv) we are acquiring Privately Offered Certificates for
our own account, not as nominee for any other person,
and not with a present view to any distribution or
other disposition of the Privately Offered
Certificates;
(v) we agree the Privately Offered Certificates must be
held indefinitely by us (and may not be sold,
pledged, hypothecated or in any way disposed of)
F-1-1
unless subsequently registered under the Act and any
applicable state securities or "Blue Sky" laws or an
exemption from the registration requirements of the
Act and any applicable state securities or "Blue Sky"
laws is available;
(vi) we agree that in the event that at some future time
we wish to dispose of or exchange any of the
Privately Offered Certificates (such disposition or
exchange not being currently foreseen or
contemplated), we will not transfer or exchange any
of the Privately Offered Certificates unless:
(A) (1) the sale is to an Eligible Purchaser
(as defined below), (2) if required by the Pooling
and Servicing Agreement (as defined below) a letter
to substantially the same effect as either this
letter or, if the Eligible Purchaser is a Qualified
Institutional Buyer as defined under Rule 144A of the
Act, the Rule 144A and Related Matters Certificate in
the form attached to the Pooling and Servicing
Agreement (as defined below) (or such other
documentation as may be acceptable to the Trustee) is
executed promptly by the purchaser and delivered to
the addressees hereof and (3) all offers or
solicitations in connection with the sale, whether
directly or through any agent acting on our behalf,
are limited only to Eligible Purchasers and are not
made by means of any form of general solicitation or
general advertising whatsoever; and
(B) if the Privately Offered Certificate is
not registered under the Act (as to which we
acknowledge you have no obligation), the Privately
Offered Certificate is sold in a transaction that
does not require registration under the Act and any
applicable state securities or "blue sky" laws and,
if JPMorgan Chase Bank (the "Trustee") so requests, a
satisfactory Opinion of Counsel is furnished to such
effect, which Opinion of Counsel shall be an expense
of the transferor or the transferee;
(vii) we agree to be bound by all of the terms (including
those relating to restrictions on transfer) of the
Pooling and Servicing, pursuant to which the Trust
was formed; we have reviewed carefully and understand
the terms of the Pooling and Servicing Agreement;
(viii) we either: (i) are not acquiring the Privately
Offered Certificate directly or indirectly by, or on
behalf of, an employee benefit plan or other
retirement arrangement which is subject to Title I of
the Employee Retirement Income Security Act of 1974,
as amended, or section 4975 of the Internal Revenue
Code of 1986, as amended, or (ii) are providing a
representation to the effect that the proposed
transfer and holding of a Privately Offered
Certificate and the servicing, management and
operation of the Trust and its assets: (I) will not
result in any prohibited transaction which is not
covered under an individual or class prohibited
transaction exemption, including, but not limited to,
Prohibited Transaction Exemption ("PTE") 84-14, XXX
00-00,
X-0-0
XXX 00-0, XXX 95-60, or PTE 96-23 and (II) will not
give rise to any additional obligation on the part of
the Seller, the Master Servicer, THE Securities
Administrator or the Trustee (iii) have attached
hereto the opinion specified in Section 5.0 of the
Agreement.
(ix) We understand that each of the Class B-4, Class B-5
and Class B-6 Certificates bears, and will continue
to bear, a legend to substantiate the following
effect: " THIS CERTIFICATE HAS NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING
THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON
THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
(A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED
FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN
THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or
(7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN
WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE
RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN
THE FORM PROVIDED IN THE AGREEMENT AND (B) THE
RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE
ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE,
PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH
CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION. THIS CERTIFICATE MAY NOT BE ACQUIRED
DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT
WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED,
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED, UNLESS THE TRANSFEREE CERTIFIES OR
REPRESENTS THAT THE PROPOSED TRANSFER AND HOLDING OF
A CERTIFICATE AND THE
F-1-3
SERVICING, MANAGEMENT AND OPERATION OF THE TRUST AND
ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED
TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL
OR CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING,
BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION
("PTE") 84-14, XXX 00-00, XXX 00-0, XXX 95-60 OR PTE
96-23 AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL
OBLIGATIONS ON THE PART OF THE SELLER, THE SECURITIES
ADMINISTRATOR, THE MASTER SERVICER OR THE TRUSTEE,
WHICH WILL BE DEEMED REPRESENTED BY AN OWNER OF A
BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE OR
UNLESS THE OPINION SPECIFIED IN SECTION 5.07 OF THE
AGREEMENT IS PROVIDED."
"ELIGIBLE PURCHASER" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.
Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement, dated as of May 1, 2003, among
Structured Asset Mortgage Investments Inc., Xxxxx Fargo Bank Minnesota, National
Association as master servicer and securities administrator, EMC Mortgage
Corporation and JPMorgan Chase Bank, as Trustee (the "Pooling and Servicing
Agreement').
If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.
Name of Nominee (if any):_______________________
F-1-4
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Eligible Purchaser
on the ___ day of ________, 20___.
Very truly yours,
[PURCHASER]
By:__________________________________
(Authorized Officer)
[By:_________________________________
Attorney-in-fact]
F-1-5
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.
[NAME OF NOMINEE]
By:__________________________________
(Authorized Officer)
[By:_________________________________
Attorney-in-fact]
F-1-6
EXHIBIT F-2
FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE
[SELLER] [Date]
JPMorgan Chase Bank
4 New York Plaza, 6th Floor
New York, New York 10004
Structured Asset Mortgage Investments Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Structured Asset Mortgage Investments Inc., Prime Mortgage
Trust, Series 2003-1 Mortgage Pass-Through Certificates, Class
B-4, Class B-5 and Class B-6 Certificates (the "Privately
Offered Certificates")
--------------------------------------------------------------
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered Certificates, the
undersigned certifies to each of the parties to whom this letter is addressed
that it is a qualified institutional buyer (as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Act")) as follows:
1. It owned and/or invested on a discretionary basis eligible securities
(excluding affiliate's securities, bank deposit notes and CD's, loan
participations, repurchase agreements, securities owned but subject to
a repurchase agreement and swaps), as described below:
Date: ______________, 20__ (must be on or after the close of its most
recent fiscal year)
Amount: $ _____________________; and
2. The dollar amount set forth above is:
a. greater than $100 million and the undersigned is one of the
following entities:
(x) |_| an insurance company as defined in Section 2(13) of
the Act1; or
--------
1 A purchase by an insurance company for one or more of its separate
accounts, as defined by Section 2(a)(37) of the Investment Company Act
of 1940, which are neither registered nor required to be registered
thereunder, shall be deemed to be a purchase for the account of such
insurance company.
F-2-1
(y) |_| an investment company registered under the
Investment Company Act or any business
development company as defined in Section
2(a)(48) of the Investment Company Act of
1940; or
(z) |_| a Small Business Investment Company licensed
by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small
Business Investment Act of 1958; or
(aa) |_| a plan (i) established and maintained by a
state, its political subdivisions, or any
agency or instrumentality of a state or its
political subdivisions, the laws of which
permit the purchase of securities of this
type, for the benefit of its employees and
(ii) the governing investment guidelines of
which permit the purchase of securities of
this type; or
(bb) |_| a business development company as defined in
Section 202(a)(22) of the Investment
Advisers Act of 1940; or
(cc) |_| a corporation (other than a U.S. bank,
savings and loan association or equivalent
foreign institution), partnership,
Massachusetts or similar business trust, or
an organization described in Section
501(c)(3) of the Internal Revenue Code; or
(dd) |_| a U.S. bank, savings and loan association or
equivalent foreign institution, which has an
audited net worth of at least $25 million as
demonstrated in its latest annual financial
statements; or
(ee) |_| an investment adviser registered under the
Investment Advisers Act; or
b. |_| greater than $10 million, and the undersigned is a
broker-dealer registered with the SEC; or
c. |_| less than $ 10 million, and the undersigned is a
broker-dealer registered with the SEC and will only
purchase Rule 144A securities in transactions in
which it acts as a riskless principal (as defined in
Rule 144A); or
d. |_| less than $100 million, and the undersigned is an
investment company registered under the Investment
Company Act of 1940, which, together with one or more
registered investment companies having the same or an
affiliated investment adviser, owns at least $100
million of eligible securities; or
e. |_| less than $100 million, and the undersigned is an
entity, all the equity owners of which are qualified
institutional buyers.
F-2-2
The undersigned further certifies that it is purchasing a Privately
Offered Certificate for its own account or for the account of others that
independently qualify as "Qualified Institutional Buyers" as defined in Rule
144A. It is aware that the sale of the Privately Offered Certificates is being
made in reliance on its continued compliance with Rule 144A. It is aware that
the transferor may rely on the exemption from the provisions of Section 5 of the
Act provided by Rule 144A. The undersigned understands that the Privately
Offered Certificates may be resold, pledged or transferred only to (i) a person
reasonably believed to be a Qualified Institutional Buyer that purchases for its
own account or for the account of a Qualified Institutional Buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance in Rule
144A, or (ii) an institutional "accredited investor," as such term is defined
under Rule 501 of the Act in a transaction that otherwise does not constitute a
public offering.
The undersigned agrees that if at some future time it wishes to dispose
of or exchange any of the Privately Offered Certificates, it will not transfer
or exchange any of the Privately Offered Certificates to a Qualified
Institutional Buyer without first obtaining a Rule 144A and Related Matters
Certificate in the form hereof from the transferee and delivering such
certificate to the addressees hereof. Prior to making any transfer of Privately
Offered Certificates, if the proposed Transferee is an institutional "accredited
investor," the transferor shall obtain from the transferee and deliver to the
addressees hereof an Investment Letter in the form attached to the Pooling and
Servicing Agreement, dated as of May 1, 2003, among Structured Asset Mortgage
Investments Inc., Xxxxx Fargo Bank Minnesota, National Association, EMC Mortgage
Corporation and JPMorgan Chase Bank, as Trustee, pursuant to Certificates were
issued.
The undersigned certifies that it either: (i) is not acquiring the
Privately Offered Certificate directly or indirectly by, or on behalf of, an
employee benefit plan or other retirement arrangement which is subject to Title
I of the Employee Retirement Income Security Act of 1974, as amended, or section
4975 of the Internal Revenue Code of 1986, as amended, or (ii) is providing a
representation or an opinion of counsel to the effect that the proposed transfer
and holding of a Privately Offered Certificate and the servicing, management and
operation of the Trust and its assets: (I) will not result in any prohibited
transaction which is not covered under a prohibited transaction exemption,
including, but not limited to, Prohibited Transaction Exemption ("PTE") 84-14,
XXX 00- 00, XXX 00-0, XXX 95-60, PTE 96-23 and (II) will not give rise to any
additional fiduciary duties on the part of the Seller, the Master Servicer, the
Securities Administrator or the Trustee or (iii) has attached hereto the opinion
specified in Section 5.07 of the Agreement.
If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.
F-2-3
Name of Nominee (if any):
IN WITNESS WHEREOF, this document has been executed by the undersigned who is
duly authorized to do so on behalf of the undersigned Eligible Purchaser on the
____ day of ___________, 20___.
Very truly yours,
[PURCHASER]
By:_________________________________
(Authorized Officer)
[By:________________________________
Attorney-in-fact]
F-2-4
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.
[NAME OF NOMINEE]
By:_________________________________
(Authorized Officer)
[By:________________________________
Attorney-in-fact]
F-2-5
EXHIBIT G
CUSTODIAL AGREEMENT
-------------------
THIS CUSTODIAL AGREEMENT (as amended and supplemented from
time to time, the "Agreement'), dated as of May 30, 2003, by and among JPMORGAN
CHASE BANK, as trustee (including its successors under the Pooling and Servicing
Agreement defined below, the "Trustee"), STRUCTURED ASSET MORTGAGE INVESTMENTS
INC., as company (together with any successor in interest, the "Company"), XXXXX
FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as master servicer and securities
administrator (together with any successor in interest or successor under the
Pooling and Servicing Agreement referred to below, the "Master Servicer") and
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as custodian (together with
any successor in interest or any successor appointed hereunder, the
"Custodian").
WITNESSETH THAT:
---------------
WHEREAS, the Company, the Master Servicer and the Trustee have
entered into a Pooling and Servicing Agreement, dated as of May 1, 2003,
relating to the issuance of Prime Mortgage Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1 (as in effect on the date of this agreement, the
"Original Pooling and Servicing Agreement," and as amended and supplemented from
time to time, the "Pooling and Servicing Agreement'); and
WHEREAS, the Custodian has agreed to act as agent for the
Trustee for the purposes of receiving and holding certain documents and other
instruments delivered by the Company or the Master Servicer under the Pooling
and Servicing Agreement and the Servicers under their respective Servicing
Agreements, all upon the terms and conditions and subject to the limitations
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the Trustee, the Company,
the Master Servicer and the Custodian hereby agree as follows:
ARTICLE II.
CUSTODY OF MORTGAGE DOCUMENTS
Section 2.1. CUSTODIAN TO ACT AS AGENT: ACCEPTANCE OF MORTGAGE
FILES. The Custodian, as the duly appointed agent of the Trustee for these
purposes, acknowledges (subject to any exceptions noted in the Initial
Certification referred to in Section 2.3(a) receipt of the Mortgage
G-1
Files relating to the Mortgage Loans identified on the schedule attached hereto
(the "Mortgage Files") and declares that it holds and will hold such Mortgage
Files as agent for the Trustee, in trust, for the use and benefit of all present
and future Certificateholders and MBIA Insurance Corporation.
Section 2.2. RECORDATION OF ASSIGNMENTS. If any Mortgage File
includes one or more assignments of Mortgage to the Trustee in a state which is
specifically excluded from the Opinion of Counsel delivered by the Seller to the
Trustee (with a copy to the Custodian) pursuant to the provisions of Section
2.01 of the Pooling and Servicing Agreement, each such assignment shall be
delivered by the Custodian to the Company for the purpose of recording it in the
appropriate public office for real property records, and the Company, at no
expense to the Custodian, shall promptly cause to be recorded in the appropriate
public office for real property records each such assignment of Mortgage and,
upon receipt thereof from such public office, shall return each such assignment
of Mortgage to the Custodian.
Section 2.3. REVIEW OF MORTGAGE FILES.
(a) On or prior to the Closing Date, in accordance with
Section 2.02 of the Pooling and Servicing Agreement, the Custodian shall deliver
to the Trustee an Initial Certification in the form annexed hereto as Exhibit
One evidencing receipt (subject to any exceptions noted therein) of a Mortgage
File for each of the Mortgage Loans listed on the Schedule attached hereto (the
"Mortgage Loan Schedule").
(b) Within 90 days of the Closing Date, the Custodian agrees,
for the benefit of Certificateholders and MBIA Insurance Corporation, to review,
in accordance with the provisions of Section 2.02 of the Pooling and Servicing
Agreement, each such document, and shall deliver to the Seller and the Trustee
an Interim Certification in the form annexed hereto as Exhibit Two to the effect
that all such documents have been executed and received and that such documents
relate to the Mortgage Loans identified on the Mortgage Loan Schedule, except
for any exceptions listed on Schedule A attached to such Interim Certification.
The Custodian shall be under no duty or obligation to inspect, review or examine
said documents, instruments, certificates or other papers to determine that the
same are genuine, enforceable, or appropriate for the represented purpose or
that they have actually been recorded or that they are other than what they
purport to be on their face.
(c) Not later than 180 days after the Closing Date, the
Custodian shall review the Mortgage Files as provided in Section 2.02 of the
Pooling and Servicing Agreement and deliver to the Seller and the Trustee a
Final Certification in the form annexed hereto as Exhibit Three evidencing the
completeness of the Mortgage Files.
(d) In reviewing the Mortgage Files as provided herein and in
the Pooling and Servicing Agreement, the Custodian shall make no representation
as to and shall not be responsible to verify (i) the validity, legality,
enforceability, due authorization, recordability, sufficiency or genuineness of
any of the documents included in any Mortgage File or (ii) the collectibility,
insurability, effectiveness or suitability of any of the documents in any
Mortgage File.
G-2
Upon receipt of written request from the Trustee, the Custodian shall
as soon as practicable supply the Trustee with a list of all of the documents
relating to the Mortgage Loans missing from the Mortgage Files.
Section 2.4. NOTIFICATION OF BREACHES OF REPRESENTATIONS AND
WARRANTIES. Upon discovery by the Custodian of a breach of any representation or
warranty made by the Company as set forth in the Pooling and Servicing Agreement
with respect to a Mortgage Loan relating to a Mortgage File, the Custodian shall
give prompt written notice to the Company, the related Servicer and the Trustee.
Section 2.5. CUSTODIAN TO COOPERATE: RELEASE OF MORTGAGE
FILES. Upon receipt of written notice from the Trustee that the Mortgage Loan
Seller has repurchased a Mortgage Loan pursuant to Article II of the Pooling and
Servicing Agreement, and that the purchase price therefore has been deposited in
the Master Servicer Collection Account or the Distribution Account, then the
Custodian agrees to promptly release to the Mortgage Loan Seller the related
Mortgage File.
Upon the Custodian's receipt of a request for release (a
"Request for Release") substantially in the form of Exhibit D to the Pooling and
Servicing Agreement signed by a Servicing Officer of the related Servicer
stating that it has received payment in full of a Mortgage Loan or that payment
in full will be escrowed in a manner customary for such purposes, the Custodian
agrees promptly to release to the related Servicer the related Mortgage File.
The Company shall deliver to the Custodian and the Custodian agrees to accept
the Mortgage Note and other documents constituting the Mortgage File with
respect to any Substitute Mortgage Loan.
From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Primary Insurance Policy, the related Servicer shall deliver to the
Custodian a Request for Release signed by a Servicing Officer requesting that
possession of all of the Mortgage File be released to the related Servicer and
certifying as to the reason for such release and that such release will not
invalidate any insurance coverage provided in respect of the Mortgage Loan under
any of the Insurance Policies. Upon receipt of the foregoing, the Custodian
shall deliver the Mortgage File to the related Servicer. The related Servicer
shall cause each Mortgage File or any document therein so released to be
returned to the Custodian when the need therefore by the related Servicer no
longer exists, unless (i) the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Master Servicer Collection Account or the Distribution Account or (ii) the
Mortgage File or such document has been delivered to an attorney, or to a public
trustee or other public official as required by law, for purposes of initiating
or pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non-judicially, and the related Servicer
has delivered to the Custodian a certificate of a Servicing Officer certifying
as to the name and address of the Person to which such Mortgage File or such
document was delivered and the purpose or purposes of such delivery.
At any time that a Servicer is required to deliver to the
Custodian a Request for Release, the Servicer shall deliver two copies of the
Request for Release if delivered in hard copy or the Servicer may furnish such
Request for Release electronically to the Custodian, in which event the
Servicing Officer transmitting the same shall be deemed to have signed the
Request for Release.
G-3
In connection with any Request for Release of a Mortgage File because of a
repurchase of a Mortgage Loan, such Request for Release shall be accompanied by
an assignment of mortgage, without recourse, representation or warranty from the
Trustee to the Mortgage Loan Seller and the related Mortgage Note shall be
endorsed without recourse by the Trustee and be returned to the Mortgage Loan
Seller. In connection with any Request for Release of a Mortgage File because of
the payment in full of a Mortgage Loan, such Request for Release shall be
accompanied by a certificate of satisfaction or other similar instrument to be
executed by or on behalf of the Trustee and returned to the related Servicer.
Section 2.6. ASSUMPTION AGREEMENTS. In the event that any
assumption agreement, substitution of liability agreement or sale of servicing
agreement is entered into with respect to any Mortgage Loan subject to this
Agreement in accordance with the terms and provisions of the Pooling and
Servicing Agreement, the Master Servicer, to the extent provided in the related
Servicing Agreement, shall cause the related Servicer to notify the Custodian
that such assumption or substitution agreement has been completed by forwarding
to the Custodian the original of such assumption or substitution agreement,
which shall be added to the related Mortgage File and, for all purposes, shall
be considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting parts thereof.
ARTICLE III.
CONCERNING THE CUSTODIAN
Section 3.1. CUSTODIAN AS BAILEE AND AGENT OF THE TRUSTEE.
With respect to each Mortgage Note, Mortgage and other documents constituting
each Mortgage File which are delivered to the Custodian, the Custodian is
exclusively the bailee and agent of the Trustee and has no instructions to hold
any Mortgage Note or Mortgage for the benefit of any person other than the
Trustee, MBIA Insurance Corporation and the Certificateholders and undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. Except upon compliance with the provisions of Section 2.5 of this
Agreement, no Mortgage Note, Mortgage or Mortgage File shall be delivered by the
Custodian to the Company, the Servicers or the Master Servicer or otherwise
released from the possession of the Custodian.
Section 3.2. RESERVED.
Section 3.3. CUSTODIAN MAY OWN CERTIFICATES. The Custodian in
its individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Custodian.
Section 3.4. MASTER SERVICER TO PAY CUSTODIAN'S FEES AND
EXPENSES. The Master Servicer covenants and agrees to pay to the Custodian from
time to time, and the Custodian shall be entitled to, reasonable compensation
for all services rendered by it in the exercise and performance of any of the
powers and duties hereunder of the Custodian, and the Master Servicer will pay
or reimburse the Custodian upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Custodian in accordance with
any of the provisions of this Agreement (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ), except any such expense, disbursement or advance as
may
G-4
arise from its negligence or bad faith or to the extent that such cost or
expense is indemnified by the Company pursuant to the Pooling and Servicing
Agreement.
Section 3.5. CUSTODIAN MAY RESIGN TRUSTEE MAY REMOVE
CUSTODIAN. The Custodian may resign from the obligations and duties hereby
imposed upon it as such obligations and duties relate to its acting as Custodian
of the Mortgage Loans. Upon receiving such notice of resignation, the Trustee
shall either take custody of the Mortgage Files itself and give prompt notice
thereof to the Company, the Master Servicer, MBIA Insurance Corporation and the
Custodian, or promptly appoint a successor Custodian by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Custodian and one copy to the successor Custodian. If the Trustee shall not have
taken custody of the Mortgage Files and no successor Custodian shall have been
so appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Custodian may petition any court of
competent jurisdiction for the appointment of a successor Custodian.
The Trustee may remove the Custodian at any time with the
consent of the Master Servicer. In such event, the Trustee shall appoint, or
petition a court of competent jurisdiction to appoint, a successor Custodian
hereunder. Any successor Custodian shall be a depository institution subject to
supervision or examination by federal or state authority, shall be able to
satisfy the other requirements contained in Section 3.7 and shall be
unaffiliated with the Servicer or the Company.
Any resignation or removal of the Custodian and appointment of
a successor Custodian pursuant to any of the provisions of this Section 3.5
shall become effective upon acceptance of appointment by the successor
Custodian. The Trustee shall give prompt notice to the Company, MBIA Insurance
Corporation and the Master Servicer of the appointment of any successor
Custodian. No successor Custodian shall be appointed by the Trustee without the
prior approval of the Company and the Master Servicer.
Section 3.6. MERGER OR CONSOLIDATION OF CUSTODIAN. Any Person
into which the Custodian may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Custodian shall be a party, or any Person succeeding
to the business of the Custodian, shall be the successor of the Custodian
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 3.7. REPRESENTATIONS OF THE CUSTODIAN. The Custodian
hereby represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $15,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Mortgage File.
ARTICLE IV.
MISCELLANEOUS PROVISIONS
Section 4.1. NOTICES. All notices, requests, consents and
demands and other communications required under this Agreement or pursuant to
any other instrument or document delivered hereunder shall be in writing and,
unless otherwise specifically provided, may be delivered
G-5
personally, by telegram or telex, or by registered or certified mail, postage
prepaid, return receipt requested, at the addresses specified on the signature
page hereof (unless changed by the particular party whose address is stated
herein by similar notice in writing), in which case the notice will be deemed
delivered when received.
Section 4.2. AMENDMENTS. No modification or amendment of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by all parties hereto, and neither the Company, the Master
Servicer nor the Trustee shall enter into any amendment hereof except as
permitted by the Pooling and Servicing Agreement. The Trustee shall give prompt
notice to the Custodian of any amendment or supplement to the Pooling and
Servicing Agreement and furnish the Custodian with written copies thereof.
Section 4.3. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 4.4. RECORDATION OF AGREEMENT. To the extent permitted
by applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Company and at the Trust's expense, but
only upon direction accompanied by an Opinion of Counsel reasonably satisfactory
to the Company to the effect that the failure to effect such recordation is
likely to materially and adversely affect the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 4.5. SEVERABILITY OF PROVISIONS. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
G-6
IN WITNESS WHEREOF, this Agreement is executed as of the date
first above written.
Address: JPMORGAN CHASE BANK, as Trustee
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 By:____________________________
Name:__________________________
Attention: Institutional Trust Services, Title:_________________________
Structured Finance Services,
SAMI Prime 2003-1
Telecopy: 000-000-0000
Confirmation:
Address: STRUCTURED ASSET MORTGAGE
INVESTMENTS INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
By:____________________________
Name: Xxxxx Xxxxxxxxxxx
Title: Vice President
Address: XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Master
0000 Xxx Xxxxxxxxx Xxxx Xxxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
By:____________________________
Name: Xxxxxx Xxxxxxxxxx
Title: Assistant Vice President
Address: XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Custodian
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000 By:____________________________
Name: Xxxxxx Xxxxxxxxxx
Title: Assistant Vice President
X-0
XXXXX XX XXX XXXX )
)ss.:
COUNTY OF NEW YORK )
On the 30th day of May 2003 before me, a notary public in and
for said State, personally appeared _______________, known to me to be a
_________________of JPMorgan Chase Bank, a New York banking corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_______________________
Notary Public
[SEAL]
X-0
XXXXX XX XXXXXXXX )
) ss.:
COUNTY OF XXXXXX )
On the 30th day of May 2003 before me, a notary public in and
for said State, personally appeared Xxxxxx Xxxxxxxxxx, known to me to be an
Assistant Vice President of Xxxxx Fargo Bank Minnesota, National Association, a
national banking association that executed the within instrument, and also known
to me to be the person who executed it on behalf of said national banking
association, and acknowledged to me that such national banking association
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________
Notary Public
[SEAL]
X-0
XXXXX XX XXX XXXX )
)ss.:
COUNTY OF NEW YORK )
On the 30th day of May 2003 before me, a notary public in and
for said State, personally appeared Xxxxx Xxxxxxxxxxx, known to me to be a Vice
President of Structured Asset Mortgage Investments Inc., one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________
Notary Public
[Notarial Seal]
X-00
XXXXX XX XXXXXXXX )
) ss.:
COUNTY OF XXXXXX )
On the 30th day of May 2003 before me, a notary public in and
for said State, personally appeared Xxxxxx Xxxxxxxxxx, known to me to be an
Assistant Vice President of Xxxxx Fargo Bank Minnesota, National Association,
one of the corporations that executed the within instrument, and also known to
me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________
Notary Public
[Notarial Seal]
G-11
EXHIBIT ONE
FORM OF CUSTODIAN INITIAL CERTIFICATION
May __, 20__
JPMorgan Chase Bank Structured Asset Mortgage Investments Inc.
0 Xxx Xxxx Xxxxx, 0xx Xxxxx 000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Asset Mortgage Investments Inc.
Prime Mortgage Trust 2003-1, Mortgage Pass-Through Certificates, Series 2003-1
Re: Custodial Agreement, dated as of May 30, 2003, by and among
JPMorgan Chase Bank, Structured Asset Mortgage Investments
Inc. and Xxxxx Fargo Bank Minnesota, National Association
relating to Prime Mortgage Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1
--------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned
Custodial Agreement, and subject to Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File (which contains an original Mortgage Note or lost note
affidavit) to the extent required in Section 2.01 of the Pooling and Servicing
Agreement with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule, with any exceptions listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By:________________________
Name:______________________
Title:_____________________
G-12
EXHIBIT TWO
FORM OF CUSTODIAN INTERIM CERTIFICATION
May __, 20__
JPMorgan Chase Bank Structured Asset Mortgage Investments Inc.
0 Xxx Xxxx Xxxxx, 0xx Xxxxx 000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Asset Mortgage Investments Inc.
Prime Mortgage Trust 2003-1, Mortgage Pass-Through Certificates, Series 2003-1
Re: Custodial Agreement, dated as of May 30, 2003, by and among
JPMorgan Chase Bank, Structured Asset Mortgage Investments
Inc. and Xxxxx Fargo Bank Minnesota, National Association
relating to Prime Mortgage Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1
--------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned
Custodial Agreement, the undersigned, as Custodian, hereby certifies that it has
received a Mortgage File to the extent required pursuant to Section 2.01 of the
Pooling and Servicing Agreement with respect to each Mortgage Loan listed in the
Mortgage Loan Schedule, and it has reviewed the Mortgage File and the Mortgage
Loan Schedule and has determined that: all required documents have been executed
and received and that such documents related to the Mortgage Loans identified on
the Mortgage Loan Schedule, with any exceptions listed on Schedule A attached
hereto.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By:________________________
Name:______________________
Title:_____________________
G-13
EXHIBIT THREE
FORM OF CUSTODIAN FINAL CERTIFICATION
May __, 20__
JPMorgan Chase Bank Structured Asset Mortgage Investments Inc.
0 Xxx Xxxx Xxxxx, 0xx Xxxxx 000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Asset Mortgage Investments Inc.
Prime Mortgage Trust 2003-1, Mortgage Pass-Through Certificates, Series 2003-1
Re: Custodial Agreement, dated as of May 30, 2003, by and among
JPMorgan Chase Bank, Structured Asset Mortgage Investments
Inc. and Xxxxx Fargo Bank Minnesota, National Association
relating to Prime Mortgage Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1
--------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned
Custodial Agreement and subject to Section 2.02(b) of the Pooling and Servicing
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule containing with respect to each such Mortgage Loan:
(i) The original Mortgage Note, endorsed without recourse to
the order of the Trustee and showing an unbroken chain of endorsements
from the originator thereof to the Person endorsing it to the Trustee
or a lost note affidavit;
(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;
(iii) unless the Mortgage Loan is a MOM Loan, a certified copy
of the assignment (which may be in the form of a blanket assignment if
permitted in the jurisdiction in which the Mortgage Property is
located) to "JPMorgan Chase Bank, as Trustee", with evidence of
recording with respect to each Mortgage Loan in the name of the Trustee
thereon;
G-14
(iv) With respect to each Mortgage Loan, to the extent
available, the original recorded assignment or assignments of the
Mortgage showing an unbroken chain of title from the originator thereof
to the Person assigning it to the Trustee or a copy of such assignment
or assignments of the Mortgage certified by the public recording office
in which such assignment or assignments have been recorded; and
(v) the original or a copy of the policy or certificate of
primary mortgage guaranty insurance, to the extent available, if any,
(vi) the original policy of title insurance or mortgagee's
certificate of title insurance or commitment or binder for title
insurance, and
(vii) The original of each modification, assumption, extension
or guaranty agreement, if any, relating to such Mortgage Loan or a copy
of each modification, assumption, extension or guaranty agreement
certified by the public recording office in which such document has
been recorded.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement
or in the Pooling and Servicing Agreement, as applicable.
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By:_____________________________
Name:___________________________
Title:__________________________
G-15
EXHIBIT H-1
SERVICING AGREEMENT
EMC Mortgage Corporation
[provided upon request]
X-0-0
XXXXXXX X-0
SERVICING AGREEMENT
Countrywide Home Loans Servicing Inc.
[provided upon request]
X-0-0
XXXXXXX X-0
SERVICING AGREEMENTS
HSBC Mortgage Corporation (USA)
[provided upon request]
H-3-1
EXHIBIT I
ASSIGNMENT AGREEMENTS
[provided upon request]
I-1
EXHIBIT J
MORTGAGE LOAN PURCHASE AGREEMENT
[provided upon request]
J-1
EXHIBIT K
CERTIFICATE GUARANTY INSURANCE POLICY
OBLIGATIONS: Prime Mortgage Trust 2003-1 POLICY NUMBER: 41412
Mortgage Pass-Through Certificates, Series 2003-1
$13,375,000 5.45% Class A-11 Certificates
MBIA Insurance Corporation (the "Insurer"), in consideration of the
payment of the premium and subject to the terms of this Certificate Guaranty
Insurance Policy (this "Policy"), hereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Insured
Payment will be received from the Insurer by JPMorgan Chase Bank, or its
successors, as trustee for the Owners (the "Trustee"), on behalf of the Owners,
for distribution by the Trustee to each Owner of each Owner's proportionate
share of the Insured Payment. The Insurer's obligations hereunder with respect
to a particular Insured Payment shall be discharged to the extent funds equal to
the applicable Insured Payment are received by the Trustee, whether or not such
funds are properly applied by the Trustee. Insured Payments shall be made only
at the time set forth in this Policy, and no accelerated Insured Payments shall
be made regardless of any acceleration of the Obligations, unless such
acceleration is at the sole option of the Insurer. This Policy does not provide
credit enhancement for any Class of Certificates other than the Class A-11
Certificates.
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Trust, any REMIC or the
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference Amount on
the Business Day following receipt on a Business Day by the Fiscal Agent (as
described below) of (a) a certified copy of the order requiring the return of a
preference payment, (b) an opinion of counsel satisfactory to the Insurer that
such order is final and not subject to appeal, (c) an assignment in such form as
is reasonably required by the Insurer, irrevocably assigning to the Insurer all
rights and claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or otherwise with respect
to such preference payment and (d) appropriate instruments to effect the
appointment of the Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon, New York City time, on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case such payment shall be
disbursed to such Owner.
The Insurer will pay any other amount payable hereunder no later than
12:00 noon, New York City time, on the later of the Distribution Date on which
the related Deficiency Amount is due or the third Business Day following receipt
in New York, New York on a Business Day by
K-1
U.S. Bank Trust National Association, as Fiscal Agent for the Insurer, or any
successor fiscal agent appointed by the Insurer (the "Fiscal Agent"), of a
Notice (as described below), provided that if such Notice is received after
12:00 noon, New York City time, on such Business Day, it will be deemed to be
received on the following Business Day. If any such Notice received by the
Fiscal Agent is not in proper form or is otherwise insufficient for the purpose
of making claim hereunder, it shall be deemed not to have been received by the
Fiscal Agent for purposes of this paragraph, and the Insurer or the Fiscal
Agent, as the case may be, shall promptly so advise the Trustee and the Trustee
may submit an amended Notice.
Insured Payments due hereunder, unless otherwise stated herein, will be
disbursed by the Fiscal Agent to the Trustee on behalf of the Owners by wire
transfer of immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference Amounts, any amount
held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Insurer only, and the Fiscal Agent
shall in no event be liable to Owners for any acts of the Fiscal Agent or any
failure of the Insurer to deposit, or cause to be deposited, sufficient funds to
make payments due under this Policy.
Subject to the terms of the Agreement, the Insurer shall be subrogated
to the rights of each Owner to receive payments under the Obligations to the
extent of any payment by the Insurer hereunder.
As used herein, the following terms shall have the following meanings:
"Agreement" means the Pooling and Servicing Agreement dated as of May
1, 2003 among EMC Mortgage Corporation, as Mortgage Loan Seller, Structured
Asset Mortgage Investments, Inc., as Seller, Xxxxx Fargo Bank Minnesota,
National Association, as Securities Administrator and as Master Servicer, and
the Trustee, as trustee, without regard to any amendment or supplement thereto,
unless such amendment or supplement has been approved in writing by the Insurer.
"Business Day" means any day other than (a) a Saturday or a Sunday (b)
a day on which the Insurer is closed or (c) a day on which banking institutions
in New York City or in the city in which the corporate trust office of the
Trustee under the Agreement is located are authorized or obligated by law or
executive order to close.
"Deficiency Amount" means as of any Distribution Date, an amount equal
to (a) any interest shortfall allocated to the Obligations, except for (i) any
Prepayment Interest Shortfalls allocated to the Obligations and (ii) any
Interest Shortfalls caused by the application of the Relief Act allocated to the
Obligations (b) the principal portion of any Realized Losses allocated to the
Obligations, and (c) the Current Principal Amount of the Obligations to the
extent unpaid on the Assumed Final Distribution Date (after taking into account
all distributions on that date).
"Insured Payment" means (a) as of any Distribution Date, any Deficiency
Amount and (b) any Preference Amount.
K-2
"Notice" means the telephonic or telegraphic notice, promptly confirmed
in writing by facsimile substantially in the form of Exhibit A attached hereto,
the original of which is subsequently delivered by registered or certified mail,
from the Trustee specifying the Insured Payment which shall be due and owing on
the applicable Distribution Date.
"Owner" means each Class A-11 Certificateholder (as defined in the
Agreement) who, on the applicable Distribution Date, is entitled under the terms
of the applicable Obligations to payment thereunder.
"Preference Amount" means any amount previously distributed to an Owner
on the Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction. Capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
set forth in the Agreement as of the date of execution of this Policy, without
giving effect to any subsequent amendment to or modification of the Agreement
unless such amendment or modification has been approved in writing by the
Insurer.
Any notice hereunder or service of process on the Fiscal Agent may be
made at the address listed below for the Fiscal Agent or such other address as
the Insurer shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor, 00 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Trustee in writing.
THIS POLICY IS BEING ISSUED UNDER AND PURSUANT TO, AND SHALL BE
CONSTRUED UNDER, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
The insurance provided by this Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
This Policy is not cancelable for any reason. The premium on this
Policy is not refundable for any reason, including payment, or provision being
made for payment, prior to maturity of the Obligations.
K-3
IN WITNESS WHEREOF, the Insurer has caused this Policy to be executed
and attested this 30th day of May, 2003.
MBIA INSURANCE CORPORATION
By______________________________________
President
Attest:
By______________________________________
Assistant Secretary
K-4
EXHIBIT A
TO CERTIFICATE GUARANTY INSURANCE
POLICY NUMBER: 41412
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER: 41412
U.S. Bank Trust National Association, as Fiscal Agent
for MBIA Insurance Corporation
00xx Xxxxx
00 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Municipal Registrar and
Paying Agency
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
The undersigned, a duly authorized officer of [NAME OF TRUSTEE], as
trustee (the "Trustee"), hereby certifies to U.S. Bank Trust National
Association (the "Fiscal Agent") and MBIA Insurance Corporation (the "Insurer"),
with reference to Certificate Guaranty Insurance Policy Number: 41412 (the
"Policy") issued by the Insurer in respect of the Prime Mortgage Trust 2003-1,
Mortgage Pass-Through Certificates, Series 2003-1 $13,375,000 5.45% Class A-11
Certificates (the "Obligations"), that:
(a) the Trustee is the trustee under the Pooling and Servicing
Agreement dated as of May 1, 2003, among EMC Mortgage Corporation, as Mortgage
Loan Seller, Structured Asset Mortgage Investments, Inc., as Seller, Xxxxx Fargo
Bank Minnesota, National Association, as Securities Administrator and as Master
Servicer, and the Trustee, as trustee for the Owners;
(b) the amount due under clause (a) of the definition of Deficiency
Amount for the Distribution Date occurring on [ ] the "Applicable Distribution
Date") is $[ ];
(c) the amount due under clause (b) of the definition of Deficiency
Amount for the Applicable Distribution Date is $[ ];
(d) the amount due under clause (c) of the definition of Deficiency
Amount for the Applicable Distribution Date is $[_________];
(e) the sum of the amounts listed in paragraphs (b), (c) and (d) above
is $[ ] (the "Deficiency Amount");
K-5
(f) the amount of previously distributed payments on the Obligations
that is recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the Bankruptcy Code in accordance with a final
nonappealable order of a court having competent jurisdiction is $[ ] (the
"Preference Amount");
(g) the total Insured Payment due is $[ ], which amount equals the sum
of the Deficiency Amount and the Preference Amount;
(h) the Trustee is making a claim under and pursuant to the terms of
the Policy for the dollar amount of the Insured Payment set forth in (e) above
to be applied to the payment of the Deficiency Amount for the Applicable
Distribution Date in accordance with the Agreement and for the dollar amount of
the Insured Payment set forth in (f) above to be applied to the payment of any
Preference Amount; and
(i) the Trustee directs that payment of the Insured Payment be made to
the following account by bank wire transfer of federal or other immediately
available funds in accordance with the terms of the Policy: [TRUSTEE'S ACCOUNT
NUMBER].
Any capitalized term used in this Notice and not otherwise defined
herein shall have the meaning assigned thereto in the Policy.
ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE COMPANY OR
OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR STATEMENT OF CLAIM CONTAINING
ANY MATERIALLY FALSE INFORMATION, OR CONCEALS FOR THE PURPOSE OF MISLEADING,
INFORMATION CONCERNING ANY FACT MATERIAL THERETO, COMMITS A FRAUDULENT INSURANCE
ACT, WHICH IS A CRIME, AND SHALL ALSO BE SUBJECT TO A CIVIL PENALTY NOT TO
EXCEED FIVE THOUSAND DOLLARS AND THE STATED VALUE OF THE CLAIM FOR EACH SUCH
VIOLATION.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
under the Policy as of the [ ] day of [ ], [ ].
[NAME OF TRUSTEE], as Trustee
By__________________________________
Title
K-6
EXHIBIT L
PLANNED PRINCIPAL AMOUNTS AND TARGETED PRINCIPAL AMOUNTS
Date Class A-6 Certificates Class A-7 Certificates Class A-8 Certificates Class A-10 Certificates
---- ---------------------- ---------------------- ---------------------- -----------------------
25-May-03 $23,373,000.00 $70,775,143.00 $11,795,857.00 $50,000,000.00
25-Jun-03 23,073,683.51 70,775,143.00 11,795,857.00 49,843,146.84
25-Jul-03 22,733,875.62 70,775,143.00 11,795,857.00 49,630,282.05
25-Aug-03 22,353,745.78 70,775,143.00 11,795,857.00 49,361,551.34
25-Sep-03 21,933,434.73 70,775,143.00 11,795,857.00 49,037,221.57
25-Oct-03 21,473,109.21 70,775,143.00 11,795,857.00 48,657,681.31
25-Nov-03 20,972,961.89 70,775,143.00 11,795,857.00 48,223,440.95
25-Dec-03 20,433,211.33 70,775,143.00 11,795,857.00 47,735,132.55
25-Jan-04 19,854,101.80 70,775,143.00 11,795,857.00 47,193,509.30
25-Feb-04 19,235,903.20 70,775,143.00 11,795,857.00 46,599,444.64
25-Mar-04 18,578,910.80 70,775,143.00 11,795,857.00 45,953,931.01
25-Apr-04 17,883,445.13 70,775,143.00 11,795,857.00 45,258,078.31
25-May-04 17,149,851.67 70,775,143.00 11,795,857.00 44,513,111.92
25-Jun-04 16,378,500.66 70,775,143.00 11,795,857.00 43,720,370.45
25-Jul-04 15,569,786.74 70,775,143.00 11,795,857.00 42,881,303.09
25-Aug-04 14,724,128.73 70,775,143.00 11,795,857.00 41,997,466.65
25-Sep-04 13,841,969.20 70,775,143.00 11,795,857.00 41,070,522.23
25-Oct-04 12,923,774.16 70,775,143.00 11,795,857.00 40,102,231.63
25-Nov-04 11,970,032.65 70,775,143.00 11,795,857.00 39,094,453.35
25-Dec-04 10,981,256.36 70,775,143.00 11,795,857.00 38,049,138.37
25-Jan-05 9,957,979.10 70,775,143.00 11,795,857.00 36,968,325.56
25-Feb-05 8,900,756.45 70,775,143.00 11,795,857.00 35,854,136.83
25-Mar-05 7,810,165.15 70,775,143.00 11,795,857.00 34,708,772.07
25-Apr-05 6,686,802.71 70,775,143.00 11,795,857.00 33,534,503.69
25-May-05 5,531,286.75 70,775,143.00 11,795,857.00 32,333,671.10
25-Jun-05 4,344,254.55 70,775,143.00 11,795,857.00 31,108,674.79
25-Jul-05 3,126,362.38 70,775,143.00 11,795,857.00 29,861,970.37
25-Aug-05 1,878,284.96 70,775,143.00 11,795,857.00 28,596,062.27
25-Sep-05 600,714.82 70,775,143.00 11,795,857.00 27,313,497.40
25-Oct-05 0 70,195,977.86 11,699,329.48 26,056,293.06
25-Nov-05 0 69,109,323.27 11,518,220.38 24,834,121.41
25-Dec-05 0 68,030,029.63 11,338,338.11 23,646,300.21
25-Jan-06 0 66,958,049.22 11,159,674.71 22,492,159.21
25-Feb-06 0 65,893,334.64 10,982,222.28 21,371,039.99
25-Mar-06 0 64,835,838.79 10,805,972.98 20,282,295.71
25-Apr-06 0 63,785,514.90 10,630,919.00 19,225,290.94
25-May-06 0 62,742,316.48 10,457,052.60 18,199,401.48
25-Jun-06 0 61,710,911.64 10,285,151.79 17,204,014.14
25-Jul-06 0 60,686,540.22 10,114,423.23 16,238,526.55
25-Aug-06 0 59,669,156.64 9,944,859.30 15,302,347.03
25-Sep-06 0 58,658,715.63 9,776,452.47 14,394,894.34
25-Oct-06 0 57,655,172.20 9,609,195.23 13,515,597.53
25-Nov-06 0 56,658,481.67 9,443,080.15 12,663,895.80
25-Dec-06 0 55,668,599.64 9,278,099.81 11,839,238.25
25-Jan-07 0 54,685,481.99 9,114,246.87 11,041,083.80
25-Feb-07 0 53,709,084.91 8,951,514.03 10,268,900.95
25-Mar-07 0 52,739,364.87 8,789,894.02 9,522,167.66
25-Apr-07 0 51,776,278.61 8,629,379.65 8,800,371.18
25-May-07 0 50,819,783.18 8,469,963.74 8,103,007.88
L-1
Date Class A-6 Certificates Class A-7 Certificates Class A-8 Certificates Class A-10 Certificates
---- ---------------------- ---------------------- ---------------------- -----------------------
25-Jun-07 $0 $49,869,835.88 $8,311,639.20 $7,429,583.10
25-Jul-07 0 48,926,394.31 8,154,398.94 6,779,611.01
25-Aug-07 0 47,989,416.33 7,998,235.94 6,152,614.44
25-Sep-07 0 47,058,860.10 7,843,143.24 5,548,124.75
25-Oct-07 0 46,134,684.03 7,689,113.90 4,965,681.66
25-Nov-07 0 45,216,846.81 7,536,141.03 4,404,833.14
25-Dec-07 0 44,305,307.41 7,384,217.80 3,865,135.26
25-Jan-08 0 43,400,025.04 7,233,337.40 3,346,152.02
25-Feb-08 0 42,500,959.21 7,083,493.10 2,847,455.25
25-Mar-08 0 41,608,069.68 6,934,678.18 2,368,624.47
25-Apr-08 0 40,721,316.47 6,786,885.98 1,909,246.76
25-May-08 0 39,840,659.86 6,640,109.88 1,468,916.60
25-Jun-08 0 38,975,028.05 6,495,837.92 1,063,271.83
25-Jul-08 0 38,115,369.97 6,352,561.57 675,727.50
25-Aug-08 0 37,261,646.59 6,210,274.34 305,900.36
25-Sep-08 0 36,413,819.13 6,068,969.77 0
25-Oct-08 0 35,571,849.07 5,928,641.43 0
25-Nov-08 0 34,735,698.13 5,789,282.94 0
25-Dec-08 0 33,905,328.29 5,650,887.97 0
25-Jan-09 0 33,080,701.77 5,513,450.22 0
25-Feb-09 0 32,261,781.03 5,376,963.43 0
25-Mar-09 0 31,448,528.80 5,241,421.39 0
25-Apr-09 0 30,640,908.02 5,106,817.93 0
25-May-09 0 29,838,881.89 4,973,146.91 0
25-Jun-09 0 29,045,280.23 4,840,879.97 0
25-Jul-09 0 28,257,178.08 4,709,529.61 0
25-Aug-09 0 27,474,539.38 4,579,089.83 0
25-Sep-09 0 26,697,328.32 4,449,554.66 0
25-Oct-09 0 25,925,509.32 4,320,918.16 0
25-Nov-09 0 25,159,047.01 4,193,174.44 0
25-Dec-09 0 24,397,906.28 4,066,317.66 0
25-Jan-10 0 23,648,819.67 3,941,469.89 0
25-Feb-10 0 22,918,269.87 3,819,711.59 0
25-Mar-10 0 22,205,815.49 3,700,969.20 0
25-Apr-10 0 21,511,025.46 3,585,170.86 0
25-May-10 0 20,833,478.83 3,472,246.42 0
25-Jun-10 0 20,189,357.56 3,364,892.88 0
25-Jul-10 0 19,561,234.37 3,260,205.68 0
25-Aug-10 0 18,948,725.14 3,158,120.81 0
25-Sep-10 0 18,351,454.81 3,058,575.76 0
25-Oct-10 0 17,769,057.18 2,961,509.49 0
25-Nov-10 0 17,201,174.70 2,866,862.41 0
25-Dec-10 0 16,647,458.24 2,774,576.33 0
25-Jan-11 0 16,107,566.92 2,684,594.45 0
25-Feb-11 0 15,581,167.91 2,596,861.28 0
25-Mar-11 0 15,067,936.26 2,511,322.67 0
25-Apr-11 0 14,567,554.68 2,427,925.75 0
25-May-11 0 14,079,713.39 2,346,618.86 0
25-Jun-11 0 13,617,889.75 2,269,648.26 0
25-Jul-11 0 13,167,520.83 2,194,586.77 0
25-Aug-11 0 12,728,330.79 2,121,388.44 0
25-Sep-11 0 12,300,050.37 2,050,008.37 0
25-Oct-11 0 11,882,416.69 1,980,402.75 0
25-Nov-11 0 11,475,173.10 1,912,528.82 0
L-2
Date Class A-6 Certificates Class A-7 Certificates Class A-8 Certificates Class A-10 Certificates
---- ---------------------- ---------------------- ---------------------- -----------------------
25-Dec-11 $0 $11,078,069.06 $1,846,344.82 $0
25-Jan-12 0 10,690,859.98 1,781,809.97 0
25-Feb-12 0 10,313,307.07 1,718,884.49 0
25-Mar-12 0 9,945,177.23 1,657,529.51 0
25-Apr-12 0 9,586,242.89 1,597,707.13 0
25-May-12 0 9,236,281.90 1,539,380.29 0
25-Jun-12 0 8,905,886.58 1,484,314.41 0
25-Jul-12 0 8,583,552.27 1,430,592.02 0
25-Aug-12 0 8,269,088.15 1,378,181.34 0
25-Sep-12 0 7,962,307.85 1,327,051.29 0
25-Oct-12 0 7,663,029.37 1,277,171.54 0
25-Nov-12 0 7,371,074.97 1,228,512.48 0
25-Dec-12 0 7,086,271.06 1,181,045.16 0
25-Jan-13 0 6,808,448.13 1,134,741.34 0
25-Feb-13 0 6,537,440.65 1,089,573.43 0
25-Mar-13 0 6,273,086.95 1,045,514.48 0
25-Apr-13 0 6,015,229.16 1,002,538.18 0
25-May-13 0 5,763,713.11 960,618.84 0
25-Jun-13 0 5,518,388.23 919,731.36 0
25-Jul-13 0 5,279,107.51 879,851.24 0
25-Aug-13 0 5,045,727.36 840,954.55 0
25-Sep-13 0 4,818,107.58 803,017.92 0
25-Oct-13 0 4,596,111.26 766,018.53 0
25-Nov-13 0 4,379,604.68 729,934.10 0
25-Dec-13 0 4,168,457.28 694,742.87 0
25-Jan-14 0 3,962,541.57 660,423.59 0
25-Feb-14 0 3,761,733.04 626,955.50 0
25-Mar-14 0 3,565,910.11 594,318.34 0
25-Apr-14 0 3,374,954.06 562,492.34 0
25-May-14 0 3,188,748.96 531,458.15 0
25-Jun-14 0 3,007,181.60 501,196.93 0
25-Jul-14 0 2,830,141.45 471,690.23 0
25-Aug-14 0 2,657,520.55 442,920.08 0
25-Sep-14 0 2,489,213.50 414,868.91 0
25-Oct-14 0 2,325,117.38 387,519.56 0
25-Nov-14 0 2,165,131.69 360,855.28 0
25-Dec-14 0 2,009,158.29 334,859.71 0
25-Jan-15 0 1,857,101.36 309,516.89 0
25-Feb-15 0 1,708,867.33 284,811.22 0
25-Mar-15 0 1,564,364.84 260,727.47 0
25-Apr-15 0 1,423,504.67 237,250.78 0
25-May-15 0 1,286,199.73 214,366.62 0
25-Jun-15 0 1,152,364.95 192,060.82 0
25-Jul-15 0 1,021,917.29 170,319.55 0
25-Aug-15 0 894,775.66 149,129.27 0
25-Sep-15 0 770,860.89 128,476.81 0
25-Oct-15 0 650,095.66 108,349.27 0
25-Nov-15 0 532,404.49 88,734.08 0
25-Dec-15 0 417,713.69 69,618.95 0
25-Jan-16 0 305,951.30 50,991.88 0
25-Feb-16 0 197,047.05 32,841.17 0
25-Mar-16 0 90,932.35 15,155.39 0
25-Apr-16 0 0 0 0
L-3
