BEAR XXXXXXX ASSET BACKED SECURITIES, INC.,
Depositor
EMC MORTGAGE CORPORATION,
Seller and Company
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
Master Servicer and Securities Administrator
and
BANK ONE, NATIONAL ASSOCIATION,
Trustee
____________________
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 2002
________________________________________
BEAR XXXXXXX ASSET BACKED SECURITIES TRUST 2002-AC3
ASSET-BACKED CERTIFICATES, SERIES 2002-AC3
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.01 DEFINED TERMS........................................................................-4-
ARTICLE II
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01 CONVEYANCE OF TRUST FUND............................................................-42-
Section 2.02 ACCEPTANCE OF THE MORTGAGE LOANS....................................................-43-
Section 2.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY AND THE SELLER
...................................................................................-46-
Section 2.04 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.....................................-55-
Section 2.05 DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH SUBSTITUTIONS AND
REPURCHASES.........................................................................-56-
Section 2.06 COUNTERSIGNATURE AND DELIVERY OF CERTIFICATES.......................................-57-
ARTICLE III
ADMINISTRATION AND SERVICING OF EMC MORTGAGE LOANS BY COMPANY
Section 3.01 THE COMPANY.........................................................................-58-
Section 3.02 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS..........................................-59-
Section 3.03 SUBSERVICERS........................................................................-60-
Section 3.04 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF COMPANY TO BE HELD FOR
TRUSTEE.............................................................................-60-
Section 3.05 MAINTENANCE OF HAZARD INSURANCE.....................................................-61-
Section 3.06 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS....................................-62-
Section 3.07 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES..............................-62-
Section 3.08 FIDELITY BOND, ERRORS AND OMISSIONS INSURANCE.......................................-63-
Section 3.09 REALIZATION UPON DEFAULTED MORTGAGE LOANS; DETERMINATION OF EXCESS
LIQUIDATION PROCEEDS AND REALIZED LOSSES; REPURCHASES OF CERTAIN MORTGAGE
LOANS...............................................................................-63-
Section 3.10 SERVICING COMPENSATION..............................................................-66-
Section 3.11 REO PROPERTY........................................................................-66-
Section 3.12 LIQUIDATION REPORTS.................................................................-66-
Section 3.13 ANNUAL CERTIFICATE AS TO COMPLIANCE.................................................-66-
Section 3.14 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' SERVICING REPORT
...................................................................................-67-
Section 3.15 BOOKS AND RECORDS...................................................................-67-
i
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 MASTER SERVICER.....................................................................-68-
Section 4.02 REMIC-RELATED COVENANTS.............................................................-69-
Section 4.03 MONITORING OF COMPANY AND SERVICERS.................................................-69-
Section 4.04 FIDELITY BOND.......................................................................-70-
Section 4.05 POWER TO ACT; PROCEDURES............................................................-70-
Section 4.06 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS..........................................-71-
Section 4.07 RELEASE OF MORTGAGE FILES...........................................................-71-
Section 4.08 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER SERVICER, COMPANY
AND THE SERVICERS TO BE HELD FOR TRUSTEE...................................-72-
Section 4.09 STANDARD HAZARD INSURANCE AND FLOOD INSURANCE POLICIES..............................-73-
Section 4.10 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS....................................-74-
Section 4.11 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES..............................-74-
Section 4.12 TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE POLICIES AND DOCUMENTS
............................................................................................-74-
Section 4.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS...........................................-75-
Section 4.14 COMPENSATION FOR THE MASTER SERVICER................................................-75-
Section 4.15 REO PROPERTY........................................................................-75-
Section 4.16 ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.......................................-76-
Section 4.17 ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT....................................-76-
Section 4.18 REPORTS FILED WITH SECURITIES AND EXCHANGE COMMISSION...............................-77-
Section 4.19 EMC.................................................................................-77-
Section 4.20 UCC.................................................................................-77-
Section 4.21 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.......................................-78-
ARTICLE V
ACCOUNTS
Section 5.01 COLLECTION OF MORTGAGE LOAN PAYMENTS; PROTECTED ACCOUNT.............................-79-
Section 5.02 PERMITTED WITHDRAWALS FROM THE PROTECTED ACCOUNT....................................-81-
Section 5.02A REPORTS TO MASTER SERVICER..........................................................-82-
Section 5.03 COLLECTION OF TAXES; ASSESSMENTS AND SIMILAR ITEMS; ESCROW ACCOUNTS
...................................................................................-83-
Section 5.04 SERVICER PROTECTED ACCOUNTS.........................................................-83-
Section 5.05 MASTER SERVICER COLLECTION ACCOUNT..................................................-85-
Section 5.05A RESERVE ACCOUNT.....................................................................-86-
Section 5.06 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE MASTER SERVICER COLLECTION
ACCOUNT......................................................................................-86-
Section 5.07 DISTRIBUTION ACCOUNT................................................................-87-
Section 5.08 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION ACCOUNT
...................................................................................-87-
ARTICLE VI
ii
DISTRIBUTIONS AND ADVANCES
Section 6.01 ADVANCES............................................................................-90-
Section 6.02 COMPENSATING INTEREST PAYMENTS......................................................-91-
Section 6.03 REMIC DISTRIBUTIONS.................................................................-91-
Section 6.04 DISTRIBUTIONS.......................................................................-91-
Section 6.04A ALLOCATION OF REALIZED LOSSES.......................................................-95-
Section 6.05 MONTHLY STATEMENTS TO CERTIFICATEHOLDERS............................................-95-
Section 6.06 REMIC DESIGNATIONS AND ALLOCATIONS..................................................-98-
Section 6.07 POLICY MATTERS.....................................................................-101-
Section 6.08 YIELD MAINTENANCE RESERVE FUND.....................................................-104-
ARTICLE VII
THE CERTIFICATES
Section 7.01 THE CERTIFICATES...................................................................-106-
Section 7.02 CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES
..................................................................................-106-
Section 7.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES..................................-110-
Section 7.04 PERSONS DEEMED OWNERS..............................................................-110-
Section 7.05 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES..........................-111-
Section 7.06 BOOK-ENTRY CERTIFICATES............................................................-111-
Section 7.07 NOTICES TO DEPOSITORY..............................................................-112-
Section 7.08 DEFINITIVE CERTIFICATES............................................................-112-
Section 7.09 MAINTENANCE OF OFFICE OR AGENCY....................................................-113-
ARTICLE VIII
THE DEPOSITOR, THE COMPANY AND THE MASTER SERVICER
Section 8.01 LIABILITIES OF THE DEPOSITOR, THE COMPANY AND THE MASTER SERVICER..................-114-
Section 8.02 MERGER OR CONSOLIDATION OF THE DEPOSITOR, THE COMPANY OR THE MASTER
SERVICER....................................................................................-114-
Section 8.03 INDEMNIFICATION OF THE TRUSTEE, THE MASTER SERVICER AND THE SECURITIES
ADMINISTRATOR...............................................................................-114-
Section 8.04 LIMITATIONS ON LIABILITY OF THE DEPOSITOR, THE COMPANY, THE MASTER SERVICER
AND OTHERS..................................................................................-115-
Section 8.05 MASTER SERVICER AND COMPANY NOT TO RESIGN..........................................-116-
Section 8.06 SUCCESSOR MASTER SERVICER..........................................................-117-
Section 8.07 SALE AND ASSIGNMENT OF MASTER SERVICING............................................-117-
ARTICLE IX
DEFAULT; TERMINATION OF MASTER SERVICER;
TERMINATION OF COMPANY
Section 9.01 EVENTS OF DEFAULT..................................................................-119-
iii
Section 9.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR...........................................-120-
Section 9.03 NOTIFICATION TO CERTIFICATEHOLDERS.................................................-122-
ARTICLE X
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 10.01 DUTIES OF TRUSTEE AND SECURITIES ADMINISTRATOR.....................................-125-
Section 10.02 CERTAIN MATTERS AFFECTING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
..................................................................................-127-
Section 10.03 TRUSTEE AND SECURITIES ADMINISTRATOR NOT LIABLE FOR CERTIFICATES OR MORTGAGE
LOANS..............................................................................-128-
Section 10.04 TRUSTEE AND SECURITIES ADMINISTRATOR MAY OWN CERTIFICATES..........................-129-
Section 10.05 TRUSTEE'S AND SECURITIES ADMINISTRATOR'S FEES AND EXPENSES.........................-129-
Section 10.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE AND SECURITIES ADMINISTRATOR..................-130-
Section 10.07 INSURANCE..........................................................................-130-
Section 10.08 RESIGNATION AND REMOVAL OF TRUSTEE AND SECURITIES ADMINISTRATOR....................-130-
Section 10.09 SUCCESSOR TRUSTEE OR SECURITIES ADMINISTRATOR......................................-131-
Section 10.10 MERGER OR CONSOLIDATION OF TRUSTEE OR SECURITIES ADMINISTRATOR.....................-132-
Section 10.11 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE......................................-132-
Section 10.12 TAX MATTERS........................................................................-133-
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL MORTGAGE LOANS
..................................................................................-137-
Section 11.02 FINAL DISTRIBUTION ON THE CERTIFICATES.............................................-137-
Section 11.03 ADDITIONAL TERMINATION REQUIREMENTS................................................-139-
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 AMENDMENT..........................................................................-140-
Section 12.02 RECORDATION OF AGREEMENT; COUNTERPARTS.............................................-141-
Section 12.03 GOVERNING LAW......................................................................-141-
Section 12.04 INTENTION OF PARTIES...............................................................-142-
Section 12.05 NOTICES............................................................................-142-
Section 12.06 SEVERABILITY OF PROVISIONS.........................................................-143-
Section 12.07 ASSIGNMENT.........................................................................-143-
Section 12.08 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.........................................-143-
Section 12.09 INSPECTION AND AUDIT RIGHTS........................................................-144-
Section 12.10 CERTIFICATES NONASSESSABLE AND FULLY PAID..........................................-145-
Section 12.11 MBIA RIGHTS........................................................................-145-
iv
EXHIBITS
Exhibit A-1 Form of Class A-[1][2][3][4][5] Certificates
Exhibit A-2 Form of Class A-IO Certificates
Exhibit A-3 Form of Class M-[1][2] Certificates
Exhibit A-4 Form of Class B Certificates
Exhibit A-5 Form of Class B-IO Certificates
Exhibit A-6 Form of Class R Certificates
Exhibit B Mortgage Loan Schedule
Exhibit C-1 Form of Initial Certification of Trustee
Exhibit C-2 Form of Interim Certification of Trustee
Exhibit C-3 Form of Final Certification of Trustee
Exhibit D Form of Transfer Affidavit
Exhibit E Form of Transferor Certificate
Exhibit F Form of Investment Letter (Non-Rule 144A)
Exhibit G Form of Rule 144A Investment Letter
Exhibit H Form of Request for Release
Exhibit I DTC Letter of Representations
Exhibit J Schedule of Mortgage Loans with Lost Notes
Exhibit K Form of Custodial Agreement
Exhibit L Form of Class A-5 Policy
v
POOLING AND SERVICING AGREEMENT, dated as of June 1, 2002,
among BEAR XXXXXXX ASSET BACKED SECURITIES, INC., a Delaware corporation, as
depositor (the "Depositor"), EMC MORTGAGE CORPORATION, a Delaware corporation,
as seller (in such capacity, the "Seller") and as company (in such capacity, the
"Company"), XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association, as master servicer (in such capacity, the "Master Servicer") and as
securities administrator (in such capacity, the "Securities Administrator") and
BANK ONE, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby
conveyed to the Trustee in return for the Certificates.
REMIC I
-------
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes, and such segregated pool of
assets will be designated as "REMIC I." The Class R-I Certificates will
represent the sole class of "residual interests" in REMIC I for purposes of the
REMIC Provisions (as defined herein) under federal income tax law. The following
table irrevocably sets forth the designation, the Uncertificated REMIC I
Pass-Through Rate, the initial Uncertificated Principal Balance, and solely for
purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC I Regular Interests. None
of the REMIC I Regular Interests will be certificated.
Uncertificated REMIC I Initial Uncertificated Assumed Final
Designation Pass-Through Rate Principal Balance Maturity Date(1)
----------- ----------------- ----------------- ----------------
LT1A Variable(2) $233,655,209.93 June 25, 2032
LT1B Variable(2) $ 3,895,000.00 June 25, 2032
LT1C Variable(2) $ 3,896,000.00 June 25, 2032
LT1D Variable(2) $ 18,177,000.00 June 25, 2032
___________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each REMIC I Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC I
Pass-Through Rate" herein.
REMIC II
--------
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II". The Class R-II Certificates will represent the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions.
-1-
The following table irrevocably sets forth the designation, the
Uncertificated REMIC II Pass- Through Rate, the initial Uncertificated Principal
Balance, and solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC
II Regular Interests. None of the REMIC II Regular Interests will be
certificated. For federal income tax purposes the Prepayment Charges will be
treated as a "strip" under Section 1286 of the Code from the related Mortgage
Loan and will be included in the Trust Fund but not in any REMIC.
Uncertificated REMIC I Initial Uncertificated Assumed Final
Designation Pass-Through Rate Principal Balance Maturity Date(1)
----------- ----------------- ----------------- ----------------
LT2-AA Variable(2) $254,440,545.73 June 25, 2032
LT2-A1 Variable(2) $ 988,660.00 June 25, 2032
LT2-A2 Variable(2) $ 563,160.00 June 25, 2032
LT2-A3 Variable(2) $ 485,220.00 June 25, 2032
LT2-A4 Variable(2) $ 158,040.00 June 25, 2032
LT2-A5 Variable(2) $ 232,490.00 June 25, 2032
LT2-M1 Variable(2) $ 90,870.00 June 25, 2032
LT2-M2 Variable(2) $ 45,440.00 June 25, 2032
LT2-B Variable(2) $ 32,450.00 June 25, 2032
LT2-ZZ Variable(2) $ 2,596,334.20 June 25, 2032
LT2A-IO Variable(2) N/A(3) June 25, 2032
___________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each REMIC II Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC II
Pass-Through Rate" herein.
(3) REMIC II Regular Interest LT2A-IO will not have an Uncertificated Principal
Balance, but will accrue interest on its uncertificated notional amount
calculated in accordance with the definition of "Uncertificated Notional
Amount" herein.
REMIC III
---------
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC III". The Class R-III Certificates will represent the
sole class of "residual interests" in REMIC III for purposes of the REMIC
Provisions.
The following table irrevocably sets forth the Class designation,
Pass-Through Rate and Initial Certificate Principal Balance for each Class of
Certificates that represents one or more of the "regular interests" in REMIC III
created hereunder:
Uncertificated REMIC I Initial Uncertificated Assumed Final
Designation Pass-Through Rate Principal Balance Maturity Date(1)
----------- ----------------- ----------------- ----------------
Class A-1 $98,866,000 Class A-1 Pass-Through Rate June 25, 2032
Class A-2 $56,316,000 Class A-2 Pass-Through Rate June 25, 2032
-2-
Class A-3 $48,522,000 Class A-3 Pass-Through Rate June 25, 2032
Class A-4 $15,804,000 Class A-4 Pass-Through Rate June 25, 2032
Class A-5 $23,249,000 Class A-5 Pass-Through Rate June 25, 2032
Class A-IO N/A(2) Class A-IO Pass-Through Rate June 25, 2032
Class M-1 $ 9,087,000 Class M-1 Pass-Through Rate June 25, 2032
Class M-2 $ 4,544,000 Class M-2 Pass-Through Rate June 25, 2032
Class B $ 3,245,000 Class B Pass-Through Rate June 25, 2032
Class B-IO $ 209.33 Class B-IO Pass-Through Rate June 25, 2032
___________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each Class of Certificates that
represents one or more of the "regular interests" in REMIC III.
(2) The Class A-IO Certificates do not have a Certificate Principal Balance and
are not entitled to distributions of principal. The Class A-IO Certificates
accrue interest on a Certificate Notional Balance calculated in accordance
with the definition of "Certificate Notional Balance" herein.
(3) The Class B-IO Certificates will accrue interest at the Class B-IO
Pass-Through Rate on the Certificate Notional Balance of the Class B-IO
Certificates outstanding from time to time which shall equal the aggregate
of the Uncertificated Principal Balances of the REMIC II Regular Interests.
The Class B-IO Certificates will not accrue interest on their Certificate
Principal Balance.
The Trust Fund shall be named, and may be referred to as, the "Bear
Xxxxxxx Asset Backed Securities Trust 2002-AC3." The Certificates issued
hereunder may be referred to as "Asset-Backed Certificates, Series 2002-AC3"
(including for purposes of any endorsement or assignment of a Mortgage Note or
Mortgage).
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Securities Administrator, the Seller, the
Company and the Trustee agree as follows:
-3-
ARTICLE I
DEFINITIONS
Section 1.01 DEFINED TERMS.
In addition to those terms defined in Section 1.02, whenever
used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
ACCEPTED MASTER SERVICING PRACTICES: With respect to any
Mortgage Loan, as applicable, either (a) those customary mortgage servicing
practices of prudent mortgage servicing institutions that master service
mortgage loans of the same type and quality as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located, to the extent
applicable to the Trustee or the Master Servicer (except in its capacity as
successor to the Company or the related Servicer), or (b) as provided in Section
3.01 hereof or Section 4.01 of the related Servicing Agreement, but, in each
case, in no event below the standard set forth in clause (a).
ACCEPTED SERVICING PRACTICES: With respect to each EMC
Mortgage Loan, those mortgage servicing practices (including collection
procedures) that are in accordance with all applicable statutes, regulations and
prudent mortgage banking practices for similar mortgage loans.
ACCOUNT: The Distribution Account, the Master Servicer
Collection Account, the Reserve Account, the Class A-5 Policy Payments Account
and any Protected Account.
ACCRUAL PERIOD: With respect to the Certificates (other than
the Class A-1 Certificates) and any Distribution Date, the calendar month
immediately preceding such Distribution Date. With respect to the Class A-1
Certificates and any Distribution Date the period from and including the prior
Distribution Date to and including the day prior to the related Distribution
Date. All calculations of interest on the Certificates (other than the Class A-1
Certificates) will be made on the basis of a 360-day year consisting of twelve
30-day months, and all calculations of interest on the Class A-1 Certificates
will be made on the basis of the actual number of days elapsed in the related
Accrual Period.
ADVANCE: An advance of delinquent payments of principal or
interest in respect of a Mortgage Loan required to be made by the Company as
provided in Section 6.01(a) hereof, by the related Servicer in accordance with
the related Servicing Agreement or by the Master Servicer as provided in Section
6.01(b) hereof.
AGREEMENT: This Pooling and Servicing Agreement and any and
all amendments or supplements hereto made in accordance with the terms herein.
AMOUNT HELD FOR FUTURE DISTRIBUTION: As to any Distribution
Date, the aggregate amount held in the Company's or the related Sevicer's
Protected Account at the close of business on the immediately preceding
Determination Date on account of (i) all Scheduled Payments or portions thereof
received in respect of the Mortgage Loans due after the related Due Period and
(ii)
-4-
Principal Prepayments and Liquidation Proceeds received in respect of such
Mortgage Loans after the last day of the related Prepayment Period.
APPLIED REALIZED LOSS AMOUNT: With respect to any Distribution
Date and a Class of Subordinated Certificates (other than the Class B-IO
Certificates and the Residual Certificates) the sum of the Realized Losses with
respect to the Mortgage Loans, which are to be applied in reduction of the
Certificate Principal Balance of that Class of Certificates pursuant to this
Agreement, which shall on any such Distribution Date equal with respect to the
Class B Certificates, Class M-2 Certificates and Class M-1 Certificates, in that
order, so long as their respective Certificate Principal Balances have not been
reduced to zero, the amount, if any, by which, (i) the aggregate Certificate
Principal Balance of all of the Certificates (after all distributions of
principal on such Distribution Date) exceeds (ii) the aggregate Stated Principal
Balance of all of the Mortgage Loans as of the last day of the related Due
Period.
APPRAISED VALUE: With respect to any Mortgage Loan originated
in connection with a refinancing, the appraised value of the Mortgaged Property
based upon the appraisal made at the time of such refinancing or, with respect
to any other Mortgage Loan, the lesser of (x) the appraised value of the
Mortgaged Property based upon the appraisal made by a fee appraiser at the time
of the origination of the related Mortgage Loan, and (y) the sales price of the
Mortgaged Property at the time of such origination.
ASSIGNMENT AGREEMENTS: Shall mean, collectively, the National
City Assignment Agreement and the Cendant Assignment Agreement.
BASIS RISK SHORTFALL: Shall mean, with respect to any
Distribution Date for the Class A-1 Certificates, the excess, if any, of (a) the
amount of Current Interest that the Class A-1 Certificates would have been
entitled to receive on such Distribution Date had the Class A-1 Pass- Though
Rate been calculated at a per annum rate equal to One-Month LIBOR plus 0.15%,
over (b) the amount of Current Interest that the Class A-1 Certificates would
have been entitled to receive on such Distribution Date had the Class A-1
Pass-Though Rate been calculated at a per annum rate equal to the greater of (i)
the Net Rate Cap and (ii) 6.75%.
BASIS RISK SHORTFALL CARRY FORWARD AMOUNT: Shall mean, with
respect to any Distribution Date and the Class A-1 Certificates, Basis Risk
Shortfalls for all previous Distribution Dates not previously paid, together
with interest thereon at a rate equal to the Class A-1 Pass-Through Rate for
such Distribution Date.
BANKRUPTCY CODE: Title 11 of the United States Code.
XXXXXX'X GATE: Xxxxxx'x Gate Residential Mortgage Trust.
BOOK-ENTRY CERTIFICATES: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository
-5-
and as described in Section 7.06). As of the Closing Date, each Class of Regular
Certificates (other than the Class B-IO Certificates) constitutes a Class of
Book-Entry Certificates.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday,
or (ii) a day on which banking institutions in The City of New York, New York,
Minneapolis, Minnesota or the city in which the Corporate Trust Office of the
Trustee or the principal office of the Company, MBIA or the Master Servicer is
located are authorized or obligated by law or executive order to be closed.
CENDANT: Cendant Mortgage Corporation.
CENDANT ASSIGNMENT AGREEMENT: The Assignment, Assumption and
Recognition Agreement, dated as of June 28, 2002, by and among the Seller,
Cendant, Xxxxxx'x Gate and the Trust acknowledging the assignment of the Cendant
Servicing Agreement to the Trust.
CENDANT SERVICING AGREEMENT: Shall mean the Purchase,
Warranties and Servicing Agreement, dated as of October 23, 2001 among Cendant,
Xxxxxx'x Gate and the Seller.
CERTIFICATE: Any one of the certificates of any Class executed
and authenticated by the Trustee in substantially the forms attached hereto as
Exhibits A-1 through A-6.
CERTIFICATE NOTIONAL BALANCE: With respect to the Class A-IO
Certificates and any Distribution Date, the lesser of (a) (i) for the first
eighteen Distribution Dates, $25,968,000, (ii) from the nineteenth Distribution
Date to and including the twenty-fourth Distribution Date, $22,073,000, (iii)
from the twenty-fifth Distribution Date to and including the thirtieth
Distribution Date, $18,177,000, and (iv) for each Distribution Date thereafter,
$0, and (b) the aggregate of the Stated Principal Balance of the Mortgage Loans.
For federal income tax purposes, however, the equivalent of the foregoing,
expressed as the Uncertificated Notional Balance of REMIC II Regular Interest
LT2A-IO. With respect to the Class B-IO Certificates, immediately prior to any
Distribution Date, the aggregate of the Uncertificated Principal Balances of the
REMIC II Regular Interests.
CERTIFICATE OWNER: With respect to a Book-Entry Certificate,
the Person that is the beneficial owner of such Book-Entry Certificate.
CERTIFICATE PRINCIPAL BALANCE: As to any Certificate (other
than any Class A-IO, Class B-IO or Class R Certificate) and as of any
Distribution Date, the Initial Certificate Principal Balance of such Certificate
less the sum of (i) all amounts distributed with respect to such Certificate in
reduction of the Certificate Principal Balance thereof on previous Distribution
Dates pursuant to Section 6.04, and (ii) in the case of any Subordinated
Certificate, any Applied Realized Loss Amounts allocated to such Certificate on
previous Distribution Dates. Exclusively for the purpose of determining any
subrogation rights of MBIA arising under Section 6.07 hereof, the Certificate
Principal Balance of the Class A-5 Certificates shall not be reduced by the
amount of any payments made by MBIA in respect of principal on such Certificates
under the Class A-5 Policy, except to the extent such payment shall have been
reimbursed to MBIA pursuant to the provisions of this Agreement. References
herein to the Certificate Principal Balance of a Class of Certificates shall
mean the Certificate Principal Balances of all Certificates in such Class.
-6-
CERTIFICATE REGISTER: The register maintained pursuant to
Section 7.02 hereof.
CERTIFICATEHOLDER OR HOLDER: The person in whose name a
Certificate is registered in the Certificate Register (initially, Cede & Co., as
nominee for the Depository, in the case of any Book-Entry Certificates) and,
with respect to the Class A-5 Certificates, MBIA to the extent of any MBIA
Reimbursement Amount.
CLASS: All Certificates bearing the same Class designation as
set forth in Section 7.01 hereof.
CLASS A CERTIFICATES: Collectively, the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5 and Class A-IO Certificates.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date, an amount equal to the excess, if any, of (i) the aggregate Certificate
Principal Balance of the Class A Certificates immediately prior to such
Distribution Date over (ii) the excess of (a) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period over
(b) the product of (1) the aggregate Stated Principal Balance of the Mortgage
Loans as of the last day of the related Due Period and (2) the sum of (x) 13.00%
and (y) the Current Specified Overcollateralization Percentage for such
Distribution Date.
CLASS A-1 CERTIFICATE: Any Certificate designated as a "Class
A-1 Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class A-1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A-1 PASS-THROUGH RATE: For the first Distribution Date,
1.99% per annum and for any Distribution Date thereafter, One-Month LIBOR for
the related Accrual Period plus 0.15% per annum, subject to a cap equal to the
Net Rate Cap for such Distribution Date.
CLASS A-2 CERTIFICATE: Any Certificate designated as a "Class
A-2 Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A-2 PASS-THROUGH RATE: On any Distribution Date, 5.49%
per annum, subject to a cap equal to the Net Rate Cap for such Distribution
Date.
CLASS A-3 CERTIFICATE: Any Certificate designated as a "Class
A-3 Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-3 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A-3 PASS-THROUGH RATE: On any Distribution Date, 6.40%
per annum, subject to a cap equal to the Net Rate Cap for such Distribution
Date.
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CLASS A-4 CERTIFICATE: Any Certificate designated as a "Class
A-4 Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-4 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A-4 PASS-THROUGH RATE: On any Distribution Date, 6.68%
per annum, subject to a cap equal to the Net Rate Cap for such Distribution
Date.
CLASS A-5 CERTIFICATE: Any Certificate designated as a "Class
A-5 Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-5 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A-5 NET RATE CAP: For each Distribution Date from the
first Distribution Date to and including the Distribution Date in December 2004,
the weighted average of the Net Mortgage Rates of the Mortgage Loans minus the
sum of (a) the interest payable to the Class A-IO Certificates with respect to
each such Distribution Date expressed as a per annum rate calculated on the
basis of the aggregate principal balance of the Mortgage Loans and (b) the MBIA
Premium Rate, and thereafter, the weighted average of the Net Mortgage Rates of
the Mortgage Loans minus the MBIA Premium Rate. For federal income tax purposes,
however, the equivalent of the foregoing, expressed as the weighted average of
the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest
LT2-A5 less the MBIA Premium Rate.
CLASS A-5 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date which occurs on or prior to the Optional Termination Date,
6.74% per annum, and (ii) for each Distribution Date thereafter, 7.24% per
annum, in each case subject to a cap equal to the Class A-5 Net Rate Cap for
such Distribution Date.
CLASS A-5 POLICY: The irrevocable Certificate Guaranty
Insurance Policy, No. 38461, including any endorsements thereto, issued by MBIA
with respect to the Class A-5 Certificates, in the form attached hereto as
Exhibit L.
CLASS A-5 POLICY PAYMENTS ACCOUNT: The separate Eligible
Account created and maintained by the Trustee pursuant to Section 6.07(c) in the
name of the Trustee for the benefit of the Class A-5 Certificateholders and
designated "Bank One, National Association, in trust for registered holders of
Bear Xxxxxxx Asset Backed Securities Trust 2002-AC3, Asset-Backed Certificates,
Series 2002- AC3, Class A-5." Funds in the Class A-5 Policy Payments Account
shall be held in trust for the Class A-5 Certificateholders for the uses and
purposes set forth in this Agreement.
CLASS A-IO CERTIFICATE: Any Certificate designated as a "Class
A-IO Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-IO Certificates as set forth herein and evidencing a Regular
Interest in REMIC III.
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CLASS A-IO PASS-THROUGH RATE: On any Distribution Date, 8.00%
per annum, subject to a cap equal to the weighted average of the Net Mortgage
Rates of the Mortgage Loans. For federal income tax purposes, however, the Class
A-IO Ceritificates will not have a Class A-IO Pass-Through Rate, and the Current
Interest for the Class A-IO Certificates and any Distribution Date will be
deemed to be 100% of the amount distributed on REMIC II Regular Interest LT2A-IO
for such Distribution Date.
CLASS B CERTIFICATE: Any Certificate designated as a "Class B
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS B PASS-THROUGH RATE: Shall mean (i) on any Distribution
Date which occurs on or prior to the Optional Termination Date, 7.00% per annum,
and (ii) for each Distribution Date thereafter, 7.50% per annum subject to a cap
equal to the Net Rate Cap for such Distribution Date.
CLASS B PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date, an amount equal to the excess, if any, of (i) the Certificate Principal
Balance of the Class B Certificates immediately prior to such Distribution Date
over (ii) the excess of (a) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period over (b) the sum of
(1) the Certificate Principal Balance of the Class A Certificates (after taking
into account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (2) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (3) the Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date) and (4)
the product of (x) the aggregate Stated Principal Balance of the Mortgage Loans
as of the last day of the related Due Period and (y) the Current Specified
Overcollateralization Percentage for such Distribution Date.
CLASS B-IO CERTIFICATE: Any Certificate designated as a "Class
B-IO Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B-IO Certificates herein and evidencing a Regular Interest in REMIC
III.
CLASS B-IO DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the sum of (i) the Current Interest for the Class B-IO
Certificate for such Distribution Date and (ii) any Excess Overcollateralization
Amount for such Distribution Date.
CLASS B-IO PASS-THROUGH RATE: On any Distribution Date, a per
annum rate equal to the percentage equivalent of a fraction, the numerator of
which is (x) the sum of the amounts calculated pursuant to clauses (A) through
(J) below, and the denominator of which is (y) the aggregate of the
Uncertificated Principal Balances of the REMIC II Regular Interests. For
purposes of calculating the Pass-Through Rate for the Class B-IO Certificates,
the numerator is equal to the sum of the following components:
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(A) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-AA minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LT2-AA;
(B) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-A1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LT2-A1;
(C) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-A2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LT2-A2;
(D) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-A3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LT2-A3;
(E) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-A4 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LT2-A4;
(F) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-A5 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LT2-A5;
(G) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-M1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LT2-M1;
(H) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-M2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LT2-M2;
(I) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-B minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LT2-B; and
(J) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-ZZ minus the Group I Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-ZZ.
CLASS M-1 CERTIFICATE: Any Certificate designated as a "Class
M-1 Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
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CLASS M-1 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date which occurs on or prior to the Optional Termination Date,
6.65% per annum, and (ii) for each Distribution Date thereafter, 7.15% per
annum, subject to a cap equal to the Net Rate Cap for such Distribution Date.
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date, an amount equal to the excess, if any, of (i) the Certificate Principal
Balance of the Class M-1 Certificates immediately prior to such Distribution
Date over (ii) the excess of (a) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period over (b) the sum of
(1) the Certificate Principal Balance of the Class A Certificates (after taking
into account the payment of the Class A Principal Distribution Amount on such
Distribution Date) and (2) the product of (x) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period and
(y) the sum of (I) 6.00% and (II) the Current Specified Overcollateralization
Percentage for such Distribution Date.
CLASS M-2 CERTIFICATE: Any Certificate designated as a "Class
M-2 Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS M-2 PASS-THROUGH RATE: Shall mean (i) on any
Distribution Date which occurs on or prior to the Optional Termination Date,
6.99% per annum, and (ii) for each Distribution Date thereafter, 7.49% per
annum, subject to a cap equal to the Net Rate Cap for such Distribution Date.
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date, an amount equal to the excess, if any, of (i) the Certificate Principal
Balance of the Class M-2 Certificates immediately prior to such Distribution
Date over (ii) the excess of (a) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period over (b) the sum of
(1) the Certificate Principal Balance of the Class A Certificates (after taking
into account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (2) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date) and (3) the product of (x) the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period and (y) the sum of (I) 2.50% and (II) the Current
Specified Overcollateralization Percentage for such Distribution Date.
CLASS R-I CERTIFICATE: Any Certificate designated a "Class R-I
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-6 hereto, evidencing the Residual Interest in REMIC I and representing the
right to the Percentage Interest of distributions provided for the Class R-I
Certificates as set forth herein.
CLASS R-II CERTIFICATE: Any Certificate designated a "Class
R-II Certificate" on the face thereof, in substantially the form set forth in
Exhibit A-6 hereto, evidencing the Residual Interest in REMIC II and
representing the right to the Percentage Interest of distributions provided for
the Class R-II Certificates as set forth herein.
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CLASS R-III CERTIFICATE: Any Certificate designated a "Class
R-III Certificate" on the face thereof, in substantially the form set forth in
Exhibit A-6 hereto, evidencing the Residual Interest in REMIC III and
representing the right to the Percentage Interest of distributions provided for
the Class R-III Certificates as set forth herein.
CLOSING DATE: June 28, 2002.
CODE: The Internal Revenue Code of 1986, including any
successor or amendatory provisions.
COMPENSATING INTEREST: An amount, not to exceed the Servicing
Fee, to be deposited in the Master Servicer Collection Account by the Company or
the related Servicer to the payment of a Prepayment Interest Shortfall on a
Mortgage Loan subject to this Agreement; provided that in the event the Company
or the related Servicer fails to make such payment, the Master Servicer shall be
obligated to do so pursuant to Section 6.02(c) hereof.
CORPORATE TRUST OFFICE: The designated office of the Trustee
where at any particular time its corporate trust business with respect to this
Agreement shall be administered, which office at the date of the execution of
this Agreement is located at 1 Bank Xxx Xxxxx, Xxxx Xxxxx XX0-0000, Xxxxxxx,
Xxxxxxxx 00000, Attention: Global Corporate Trust Services, Bear Xxxxxxx Asset
Backed Securities, Inc., Series 2002-AC3, or at such other address as the
Trustee may designate from time to time.
CORRESPONDING CERTIFICATE: With respect to:
(i) REMIC II Regular Interest LT2-A1, the Class A-1
Certificates,
(ii) REMIC II Regular Interest LT2-A2, the Class A-2
Certificates,
(iii) REMIC II Regular Interest LT2-A3, the Class A-3
Certificates,
(iv) REMIC II Regular Interest LT2-A4, the Class A-4
Certificates,
(v) REMIC II Regular Interest LT2-A5, the Class A-5
Certificates,
(vi) REMIC II Regular Interest LT2-M1, the Class M-1
Certificates,
(vii) REMIC II Regular Interest LT2-M2, the Class M-2
Certificates, and
(viii) REMIC II Regular Interest LT2-B, the Class B
Certificates.
CURRENT INTEREST: As of any Distribution Date, with respect to
Certificates of each Class other than the Residual Certificates, (i) the
interest accrued on the Certificate Principal Balance or Certificate Notional
Balance, as applicable, during the related Accrual Period at the applicable
Pass-Through Rate plus any amount previously distributed with respect to
interest for such Certificate that has been recovered as a voidable preference
by a trustee in bankruptcy minus (ii) the
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sum of (a) any Prepayment Interest Shortfall for such Distribution Date, to the
extent not covered by Compensating Interest and (b) any shortfalls resulting
from application of the Relief Act during the related Due Period, provided,
however, that for purposes of calculating Current Interest for any such Class,
amounts specified in clause (ii) hereof for any such Distribution Date shall be
allocated first to the Class B-IO Certificates and the Residual Certificates in
reduction of amounts otherwise distributable to such Certificates on such
Distribution Date and then any excess shall be allocated to each Class of
Offered Certificates pro rata based on the respective amounts of interest
accrued pursuant to clause (i) hereof for each such Class on such Distribution
Date.
CURRENT SPECIFIED OVERCOLLATERALIZATION PERCENTAGE: For any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the Overcollateralization Target Amount, and the denominator of which
is the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period.
CUSTODIAL AGREEMENT: An agreement dated as of the Closing Date
among the Depositor, the Seller, the Trustee and the Custodian in substantially
the form of Exhibit K hereto.
CUSTODIAN: Xxxxx Fargo Bank Minnesota, National Association,
or any successor custodian appointed pursuant to the provisions hereof and the
Custodial Agreement.
CUT-OFF DATE: The close of business on June 1, 2002.
CUT-OFF DATE PRINCIPAL BALANCE: As to any Mortgage Loan, the
unpaid principal balance thereof as of the close of business on the Cut-off Date
after application of all Principal Prepayments received prior to the Cut-off
Date and scheduled payments of principal due on or before the Cut-off Date,
whether or not received, but without giving effect to any installments of
principal received in respect of Due Dates after the Cut-off Date.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan that became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any other reduction that results in a permanent forgiveness of
principal.
DEFICIENCY AMOUNT: As of any Distribution Date, the sum of (i)
any shortfall in the Interest Funds to pay the Current Interest due on the Class
A-5 Certificates, except for (y) any portion thereof payable under the Class A-5
Policy as a Preference Amount and (z) any portion thereof relating to the
step-up of the Class A-5 Pass-Through Rate due to the failure of the exercise of
the optional termination right pursuant to Section 11.01 of this Agreement and
(ii) if MBIA so elects, in its sole discretion, the amount by which the
Certificate Principal Balance of the Class A-5 Certificates (after taking into
account all distributions to be made on such Distribution Date) exceeds the
aggregate Stated Principal Balance of the Mortgage Loans and (b) for the Last
Scheduled Distribution Date, the Certificate Principal Balance of the Class A-5
Certificates to the extent unpaid on such Distribution Date (after taking into
account all distributions to be made on such Distribution Date).
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DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under such Mortgage Loan, or
any reduction in the amount of principal to be paid in connection with any
Scheduled Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court that is final and
non-appealable in a proceeding under the Bankruptcy Code.
DEFINITIVE CERTIFICATES: As defined in Section 7.06.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be
replaced by a Replacement Mortgage Loan.
DELINQUENCY EVENT: A Delinquency Event shall have occurred and
be continuing if at any time, (x) the percent equivalent of a fraction, the
numerator of which is the aggregate Stated Principal Balance of the Mortgage
Loans that are 60 days or more Delinquent or are in bankruptcy or foreclosure or
are REO Properties, and the denominator of which is the aggregate Stated
Principal Balance of all of the Mortgage Loans as of the last day of the related
Due Period equals or exceeds (y) 50% of the Senior Enhancement Percentage.
DELINQUENT: A Mortgage Loan is "delinquent" if any payment due
thereon is not made pursuant to the terms of such Mortgage Loan by the close of
business on the day such payment is scheduled to be due. A Mortgage Loan is "30
days delinquent" if such payment has not been received by the close of business
on the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30- day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
DENOMINATION: With respect to each Certificate, the amount set
forth on the face thereof as the "Initial Certificate Principal Balance of this
Certificate".
DEPOSITOR: Bear Xxxxxxx Asset Backed Securities, Inc., a
Delaware corporation, or its successor in interest.
DEPOSITORY: The initial Depository shall be The Depository
Trust Company ("DTC"), the nominee of which is Cede & Co., or any other
organization registered as a "clearing agency" pursuant to Section 17A of the
Securities Exchange Act of 1934, as amended. The Depository shall initially be
the registered Holder of the Book-Entry Certificates. The Depository shall at
all times be a "clearing corporation" as defined in Section 8-102(a)(5) of the
Uniform Commercial Code of the State of New York.
DEPOSITORY AGREEMENT: With respect to the Class of Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, dated as of the Closing Date, substantially in the form of Exhibit
I.
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DEPOSITORY PARTICIPANT: A broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
DETERMINATION DATE: With respect to any Distribution Date, the
15th day of the month of such Distribution Date or, if such 15th day is not a
Business Day, the immediately preceding Business Day.
DISTRIBUTION ACCOUNT: The separate Eligible Account created
and maintained by the Trustee pursuant to Section 5.07 in the name of the
Trustee for the benefit of the Certificateholders and designated "Bank One,
National Association, in trust for registered holders of Bear Xxxxxxx Asset
Backed Securities, Inc., Asset-Backed Certificates, Series 2002- AC3". Funds in
the Distribution Account shall be held in trust for the Certificateholders and
MBIA for the uses and purposes set forth in this Agreement.
DISTRIBUTION ACCOUNT DEPOSIT DATE: As to any Distribution
Date, on or before 3:00 p.m. Eastern time on the Business Day immediately
preceding such Distribution Date.
DISTRIBUTION DATE: The 25th day of each calendar month after
the initial issuance of the Certificates, or if such 25th day is not a Business
Day, the next succeeding Business Day, commencing in July 2002.
DUE DATE: As to any Mortgage Loan, the date in each month on
which the related Scheduled Payment is due, as set forth in the related Mortgage
Note.
DUE PERIOD: With respect to any Distribution Date, the period
from the second day of the calendar month preceding the calendar month in which
such Distribution Date occurs through close of business on the first day of the
calendar month in which such Distribution Date occurs.
ELIGIBLE ACCOUNT: Any of (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt obligations
of which (or, in the case of a depository institution or trust company that is
the principal subsidiary of a holding company, the debt obligations of such
holding company, so long as Xxxxx'x is not a Rating Agency) are rated by each
Rating Agency in one of its two highest long-term and its highest short-term
rating categories respectively, at the time any amounts are held on deposit
therein, or (ii) an account or accounts in a depository institution or trust
company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee, MBIA and to each Rating Agency, the Certificateholders have a claim
with respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
the corporate trust department of a federal or state chartered depository
institution or trust company having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity or
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(iv) any other account acceptable to the Rating Agencies. Eligible Accounts may
bear interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Trustee.
EMC: EMC Mortgage Corporation, a Delaware corporation.
EMC MORTGAGE LOANS: Shall mean those Mortgage Loans serviced
by the Company pursuant to the terms of this Agreement.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA RESTRICTED CERTIFICATE: Each of the Class B-IO
Certificates and the Residual Certificates.
EVENT OF DEFAULT: As defined in Section 9.01 hereof.
EXCESS CASHFLOW: With respect to any Distribution Date, an
amount, if any, equal to the sum of (a) the Excess Overcollateralization Amount
and (b) the Remaining Excess Spread, in each case for such Distribution Date.
EXCESS LIQUIDATION PROCEEDS: To the extent not required by law
to be paid to the related Mortgagor, the excess, if any, of any Liquidation
Proceeds with respect to a Mortgage Loan over the Stated Principal Balance of
such Mortgage Loan and accrued and unpaid interest at the related Mortgage Rate
through the last day of the month in which the Mortgage Loan has been
liquidated.
EXCESS OVERCOLLATERALIZATION AMOUNT: With respect to any
Distribution Date, the lesser of (i) Principal Funds and (ii) the excess, if
any, of (a) the Overcollateralization Amount over (b) the Overcollateralization
Target Amount, in each case for such Distribution Date.
EXCESS SPREAD: With respect to any Distribution Date, the
excess, if any, of (i) the Interest Funds for such Distribution Date over (ii)
the sum of the MBIA Premium Amount, Current Interest on the Offered Certificates
and Interest Carry Forward Amounts on the Class A Certificates, in each case for
such Distribution Date.
EXTRA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the lesser of (i) the excess, if any, of the
Overcollateralization Target Amount for such Distribution Date over the
Overcollateralization Amount for such Distribution Date (after giving effect to
distributions of principal on the Certificates other than any Extra Principal
Distribution Amount) and (ii) the Excess Spread for such Distribution Date.
EXCESS YIELD MAINTENANCE AMOUNT: With respect to any
Distribution Date, is the excess, if any, of (a) the sum of the amount received
under the Yield Maintenance Agreement for such Distribution Date, over (b) the
Basis Risk Shortfall for such Distribution Date.
XXXXXX XXX: Xxxxxx Xxx (formerly, Federal National Mortgage
Association), or any successor thereto.
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FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
XXXXXXX MAC: Federal Home Loan Mortgage Corporation, or any
successor thereto.
FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989.
FISCAL AGENT: As defined in the Class A-5 Policy.
INDEMNIFIED PERSONS: The Trustee, the Master Servicer, the
Company, the Trust Fund 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.
INITIAL CERTIFICATE PRINCIPAL BALANCE: With respect to any
Certificate, the Certificate Principal Balance of such Certificate or any
predecessor Certificate on the Closing Date.
INITIAL OVERCOLLATERALIZATION AMOUNT: $209.93.
INSURANCE POLICY: With respect to any Mortgage Loan included
in the Trust Fund, any insurance policy or LPMI Policy, including all riders and
endorsements thereto in effect with respect to such Mortgage Loan, including any
replacement policy or policies for any Insurance Policies.
INSURANCE PROCEEDS: Proceeds paid in respect of the Mortgage
Loans pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Company, the related Servicer or the trustee under the deed of
trust and are not applied to the restoration of the related Mortgaged Property
or released to the Mortgagor in accordance with the procedures that the Company
or the related Servicer would follow in servicing mortgage loans held for its
own account, in each case other than any amount included in such Insurance
Proceeds in respect of Insured Expenses.
INSURED EXPENSES: Expenses covered by an Insurance Policy or
any other insurance policy with respect to the Mortgage Loans.
INSURED PAYMENT: (i) With respect to any Distribution Date,
any Deficiency Amount and (ii) any amount previously distributed to a Class A-5
Certificateholder on the Class A-5 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.
INTEREST CARRYFORWARD AMOUNT: As of any Distribution Date and
with respect to each Class of Certificates other than the Class B-IO
Certificates and the Residual Certificates, the sum of (i) the excess of (a) the
Current Interest for such Class with respect to prior Distribution Dates over
(b) the amount actually distributed to such Class of Certificates with respect
to interest on such prior Distribution Dates and (ii) interest thereon (to the
extent permitted by applicable law) at the applicable Pass-Through Rate for such
Class for the related Accrual Period including the Accrual Period relating to
such Distribution Date.
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INTEREST DETERMINATION DATE: With respect to the Class A-1
Certificates and for the first Accrual Period, June 26, 2002. With respect to
the Class A-1 Certificates and any Accrual Period thereafter, the second LIBOR
Business Day preceding the commencement of such Accrual Period.
INTEREST FUNDS: For any Distribution Date (i) the sum, without
duplication, of (a) all scheduled interest during the related Due Period with
respect to the Mortgage Loans less the Servicing Fee, the Master Servicing Fee
and the LPMI Fee, if any, (b) all Advances relating to interest with respect to
the Mortgage Loans made on or prior to the related Distribution Account Deposit
Date, (c) all Compensating Interest with respect to the Mortgage Loans and
required to be remitted by the Company or the Master Servicer pursuant to this
Agreement or the related Servicer pursuant to the related Servicing Agreement
with respect to such Distribution Date, (d) Liquidation Proceeds with respect to
the Mortgage Loans collected during the related Prepayment Period (to the extent
such Liquidation Proceeds relate to interest), (e) all amounts relating to
interest with respect to each Mortgage Loan repurchased by the Seller pursuant
to Sections 2.02 and 2.03 or by EMC pursuant to Section 4.21 and (f) all amounts
in respect of interest paid by the Company pursuant to Section 11.01, in each
case to the extent remitted by the Company or the related Servicer, as
applicable, to the Distribution Account pursuant to this Agreement or the
related Servicing Agreement minus (ii) all amounts relating to interest required
to be reimbursed pursuant to Sections 5.02, 5.04, 5.06 and 5.08 or as otherwise
set forth in this Agreement.
LAST SCHEDULED DISTRIBUTION DATE: June 25, 2032.
LATE PAYMENT RATE: The rate of interest publicly announced by
Citibank, N.A. at its principal office in New York, New York as its prime rate
(any change in such prime rate of interest to be effective on the date such
change is announced by Citibank, N.A.) plus 3%. The Late Payment Rate shall be
computed on the basis of a year of 365 days calculating the actual number of
days elapsed. In no event shall the Late Payment Rate exceed the maximum rate
permissible under law applicable to this Agreement limiting interest rates.
LATEST POSSIBLE MATURITY DATE: The Distribution Date following
the final scheduled maturity date of the Mortgage Loan in the Trust Fund having
the latest scheduled maturity date as of the Cut-off Date. For purposes of the
Treasury Regulations under Code section 860A through 860G, the latest possible
maturity date of each regular interest issued by REMIC I, REMIC II and REMIC III
shall be the Latest Possible Maturity Date.
LENDER PAID MORTGAGE INSURANCE POLICY OR LPMI POLICY: A policy
of mortgage guaranty insurance issued by an insurer meeting the requirements of
Xxxxxx Xxx and Xxxxxxx Mac in which the Company or the related Servicer of the
related Mortgage Loan is responsible for the payment of the LPMI Fee thereunder
from collections on the related Mortgage Loan.
LIQUIDATED LOAN: With respect to any Distribution Date, a
defaulted Mortgage Loan that has been liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization as provided
by applicable law governing the real property subject to the related Mortgage
and any security agreements and as to which the Company or the related Servicer
has certified in the
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related Prepayment Period that it has received all amounts it expects to receive
in connection with such liquidation.
LIQUIDATION PROCEEDS: Amounts, other than Insurance Proceeds,
received in connection with the partial or complete liquidation of a Mortgage
Loan, whether through trustee's sale, foreclosure sale or otherwise, or in
connection with any condemnation or partial release of a Mortgaged Property and
any other proceeds received with respect to an REO Property, less the sum of
related unreimbursed Advances, Servicing Fees, Master Servicing Fees and
Servicing Advances and all expenses of liquidation, including property
protection expenses and foreclosure and sale costs, including court and
reasonable attorneys fees.
LOAN-TO-VALUE RATIO: 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 Appraised Value of the related
Mortgaged Property.
LPMI FEE: The fee payable to the insurer for each Mortgage
Loan subject to an LPMI Policy as set forth in such LPMI Policy.
MARKER RATE: With respect to the Class B-IO Certificates and
any Distribution Date, a per annum rate equal to two (2) times the weighted
average of the Uncertificated REMIC II Pass- Through Rates for REMIC II Regular
Interest LT2-A1, REMIC II Regular Interest LT2-A2, REMIC II Regular Interest
LT2-A3, REMIC II Regular Interest LT2-A4, REMIC II Regular Interest LT2-A5,
REMIC II Regular Interest LT2-M1, REMIC II Regular Interest LT2-M2, REMIC II
Regular Interest LT2-B and REMIC II Regular Interest LT2-ZZ, with the rate on
REMIC II Regular Interest LT2-A1 subject to a cap equal to the lesser of (x)
One-Month LIBOR plus 0.15% per annum and (y) the Net Rate Cap for the purpose of
this calculation; with the rate on REMIC II Regular Interest LT2-A2 subject to a
cap equal to the lesser of (x) 5.49% per annum and (y) the Net Rate Cap for the
purpose of this calculation; with the rate on REMIC II Regular Interest LT2-A3
subject to a cap equal to the lesser of (x) 6.40% per annum and (y) the Net Rate
Cap for the purpose of this calculation; with the rate on REMIC II Regular
Interest LT2-A4 subject to a cap equal to the lesser of (x) 6.68% per annum and
(y) the Net Rate Cap for the purpose of this calculation; with the rate on REMIC
II Regular Interest LT2-A5 subject to a cap equal to (A) in the case of any
Distribution Date up to and including the Optional Termination Date, the lesser
of (x) 6.74% per annum plus the MBIA Premium Rate and (y) the Class A-5 Net Rate
Cap plus the MBIA Premium Rate and (B) in the case of any Distribution Date
after the Optional Termination Date, the lesser of (x) 7.24% per annum plus the
MBIA Premium Rate and (y) the Class A-5 Net Rate Cap plus the MBIA Premium Rate
for the purpose of this calculation; with the rate on REMIC II Regular Interest
LT2-M1 subject to a cap equal to (A) in the case of any Distribution Date up to
and including the Optional Termination Date, the lesser of (x) 6.65% per annum
and (y) the Net Rate Cap and (B) in the case of any Distribution Date after the
Optional Termination Date, the lesser of (x) 7.15% per annum and (y) the Net
Rate Cap for the purpose of this calculation; with the rate on REMIC II Regular
Interest LT2-M2 subject to a cap equal to (A) in the case of any Distribution
Date up to and including the Optional Termination Date, the lesser of (x) 6.99%
per annum and (y) the Net Rate Cap and (B) in the case of any Distribution Date
after the Optional Termination Date, the lesser of (x) 7.49% per annum and (y)
the Net Rate Cap for the purpose of this calculation; with the rate on REMIC II
Regular Interest LT2-B subject to a cap equal to (A) in the case of any
Distribution Date up to and including the
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Optional Termination Date, the lesser of (x) 7.00% per annum and (y) the Net
Rate Cap and (B) in the case of any Distribution Date after the Optional
Termination Date, the lesser of (x) 7.50% per annum and (y) the Net Rate Cap for
the purpose of this calculation; and with the rate on REMIC II Regular Interest
LT2-ZZ subject to a cap of zero for the purpose of this calculation; provided,
however, that for this purpose, calculations of the Uncertificated REMIC II
Pass-Through Rate and the related caps with respect to REMIC II Regular Interest
LT2-A1 shall be multiplied by a fraction, the numerator of which is the actual
number of days in the Accrual Period and the denominator of which is 30.
MASTER SERVICER: Xxxxx Fargo Bank Minnesota, National
Association, in its capacity as master servicer, and its successors and assigns.
MASTER SERVICER COLLECTION ACCOUNT: The trust accounts or
accounts created and maintained pursuant to Section 5.05 hereof, which shall be
entitled "Bank One, National Association, as Trustee f/b/o holders of Bear
Xxxxxxx Asset Backed Securities, Inc., Asset Backed Certificates, Series
2002-AC3 - Master Servicer Collection Account".
MASTER SERVICING FEE: As to each Mortgage Loan and any
Distribution Date, an amount equal to 1/12th of the Master Servicing Fee Rate
multiplied by the Stated Principal Balance of such Mortgage Loan as of the last
day of the related Due Period or, in the event of any payment of interest that
accompanies a Principal Prepayment in full during the related Due Period made by
the Mortgagor immediately prior to such prepayment, interest at the Master
Servicing Fee Rate on the Stated Principal Balance of such Mortgage Loan for the
period covered by such payment of interest.
MASTER SERVICING FEE RATE: 0.02% per annum.
MAXIMUM UNCERTIFICATED ACCRUED INTEREST DEFERRAL AMOUNT: With
respect to any Distribution Date, the excess of (a) accrued interest at the
Uncertificated REMIC II Pass-Through Rate applicable to REMIC II Regular
Interest LT2-ZZ for such Distribution Date on a balance equal to the excess of
(i) the Uncertificated Principal Balance of REMIC II Regular Interest LT2-ZZ
over (ii) the REMIC II Overcollateralized Amount for such Distribution Date,
over (b) Uncertificated Accrued Interest on REMIC II Regular Interest LT2-A1,
with the rate on REMIC II Regular Interest LT2-A1 subject to a cap equal to the
lesser of (x) One-Month LIBOR plus 0.15% per annum and (y) the Net Rate Cap;
Uncertificated Accrued Interest on REMIC II Regular Interest LT2-A2, with the
rate on REMIC II Regular Interest LT2-A2 subject to a cap equal to the lesser of
(x) 5.49% per annum and (y) the Net Rate Cap; Uncertificated Accrued Interest on
REMIC II Regular Interest LT2- A3, with the rate on REMIC II Regular Interest
LT2-A3 subject to a cap equal to the lesser of (x) 6.40% per annum and (y) the
Net Rate Cap; Uncertificated Accrued Interest on REMIC II Regular Interest
LT2-A4, with the rate on REMIC II Regular Interest LT2-A4 subject to a cap equal
to the lesser of (x) 6.68% per annum and (y) the Net Rate Cap; Uncertificated
Accrued Interest on REMIC II Regular Interest LT2-A5, with the rate on REMIC II
Regular Interest LT2-A5 subject to a cap equal to (A) in the case of any
Distribution Date up to and including the Optional Termination Date, the lesser
of (x) 6.74% per annum plus the MBIA Premium Rate and (y) the Class A-5 Net Rate
Cap plus the MBIA Premium Rate and (B) in the case of any Distribution Date
after the Optional Termination Date, the lesser of (x) 7.24% per annum plus the
MBIA Premium Rate and (y) the Class
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A-5 Net Rate Cap plus the MBIA Premium Rate; Uncertificated Accrued Interest on
REMIC II Regular Interest LT2-M1 with the rate on REMIC II Regular Interest
LT2-M1 subject to a cap equal to (A) in the case of any Distribution Date up to
and including the Optional Termination Date, the lesser of (x) 6.65% per annum
and (y) the Net Rate Cap and (B) in the case of any Distribution Date after the
Optional Termination Date, the lesser of (x) 7.15% per annum and (y) the Net
Rate Cap for the purpose of this calculation, Uncertificated Accrued Interest on
REMIC II Regular Interest LT2- M2, with the rate on REMIC II Regular Interest
LT2-M2 subject to a cap equal to (A) in the case of any Distribution Date up to
and including the Optional Termination Date, the lesser of (x) 6.99% per annum
and (y) the Net Rate Cap and (B) in the case of any Distribution Date after the
Optional Termination Date, the lesser of (x) 7.49% per annum and (y) the Net
Rate Cap for the purpose of this calculation, and Uncertificated Accrued
Interest on REMIC II Regular Interest LT2-B, with the rate on REMIC II Regular
Interest LT2-B subject to a cap equal to (A) in the case of any Distribution
Date up to and including the Optional Termination Date, the lesser of (x) 7.00%
per annum and (y) the Net Rate Cap and (B) in the case of any Distribution Date
after the Optional Termination Date, the lesser of (x) 7.50% per annum and (y)
the Net Rate Cap for the purpose of this calculation provided, however, that for
this purpose, calculations of the Uncertificated REMIC II Pass-Through Rate and
the related caps with respect to REMIC II Regular Interest LT2-A1 shall be
multiplied by a fraction, the numerator of which is the actual number of days in
the Accrual Period and the denominator of which is 30.
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).
MBIA PREMIUM AMOUNT: With respect to the Class A-5 Policy and
each Distribution Date, an amount equal to the product of the MBIA Premium Rate
and the Certificate Principal Balance of the Class A-5 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 June 27,
2002, between MBIA and Bear, Xxxxxxx & Co.
MBIA REIMBURSEMENT AMOUNT: Shall mean the sum of (a) the
aggregate unreimbursed amount of any payments made by MBIA under the Class A-5
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 Class A-5 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.
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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.
MOM LOAN: With respect to any Mortgage Loan, MERS acting as
the mortgagee of such Mortgage Loan, solely as nominee for the originator of
such Mortgage Loan and its successors and assigns, at the origination thereof.
MONTHLY STATEMENT: The statement delivered to the
Certificateholders and MBIA pursuant to Section 6.05.
MOODY'S: Xxxxx'x Investors Service, Inc.
MORTGAGE: The mortgage, deed of trust or other instrument
creating a first lien on or first priority ownership interest in an estate in
fee simple in real property securing a Mortgage Note.
MORTGAGE FILE: The mortgage documents listed in Section 2.01
hereof pertaining to a particular Mortgage Loan and any additional documents
delivered to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
MORTGAGE LOANS: Such of the Mortgage Loans transferred and
assigned to the Trustee pursuant to the provisions hereof, as from time to time
are held as a part of the Trust Fund (including any REO Property), the mortgage
loans so held being identified in the Mortgage Loan Schedule, notwithstanding
foreclosure or other acquisition of title of the related Mortgaged Property. Any
mortgage loan that was intended by the parties hereto to be transferred to the
Trust Fund as indicated by such Mortgage Loan Schedule which is in fact not so
transferred for any reason including, without limitation, a breach of the
representation contained in Section 2.03(b)(v) hereof, shall continue to be a
Mortgage Loan hereunder until the Purchase Price with respect thereto has been
paid to the Trust Fund.
MORTGAGE LOAN PURCHASE AGREEMENT: Shall mean the Mortgage Loan
Purchase Agreement dated as of June 28, 2002, between the Seller, as seller and
the Depositor, as purchaser.
MORTGAGE LOAN PURCHASE PRICE: The price, calculated as set
forth in Section 11.01, to be paid in connection with the repurchase of the
Mortgage Loans pursuant to Section 11.01.
MORTGAGE LOAN SCHEDULE: The list of Mortgage Loans (as from
time to time amended by the Company or the Master Servicer to reflect the
deletion of Deleted Mortgage Loans and the addition of Replacement Mortgage
Loans pursuant to the provisions of this Agreement) transferred to the Trustee
as part of the Trust Fund and from time to time subject to this Agreement, the
initial
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Mortgage Loan Schedule being attached hereto as Exhibit B, setting forth the
following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the Mortgage Rate in effect as of the Cut-off Date;
(iii) the Servicing Fee Rate and the Master Servicing Fee
Rate;
(iv) the Net Mortgage Rate in effect as of the Cut-off
Date;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the original term;
(ix) the remaining term;
(x) the property type; and
(xi) the MIN with respect to each MOM Loan.
Such schedule shall also set forth the aggregate Cut-off Date Principal Balance
for all of the Mortgage Loans.
MORTGAGE NOTE: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGE RATE: The annual rate of interest borne by a Mortgage
Note.
MORTGAGED PROPERTY: The underlying property securing a
Mortgage Loan.
MORTGAGOR: The obligors on a Mortgage Note.
NATIONAL CITY: National City Mortgage Co., and any successor
thereto.
NATIONAL CITY ASSIGNMENT AGREEMENT: The Assignment, Assumption
and Recognition Agreement, dated June 28, 2002, by and among the Seller,
National City and the Trust acknowledging the transfer of the National City
Servicing Agreement to the Trust.
NATIONAL CITY SERVICING AGREEMENT: Shall mean the Purchase,
Warranties and Servicing Agreement, dated as of October 1, 2001, by and between
the Seller and National City.
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NET MORTGAGE RATE: As to each Mortgage Loan, and at any time,
the per annum rate equal to the Mortgage Rate less the sum of (i) the related
Servicing Fee Rate, (ii) the Master Servicing Fee Rate and (iii) the rate at
which the LPMI Fee is calculated, if any.
NET RATE CAP: For any Distribution Date (i) through the
Distribution Date in December 2004, the excess of (a) the weighted average of
the Net Mortgage Rates of the Mortgage Loans as of the last day of the related
Due Period over (b) interest payable on the Class A-IO Certificates with respect
to each such Accrual Period expressed as a per annum rate calculated on the
basis of the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period and (ii) thereafter, the weighted average of
the Net Mortgage Rates of the Mortgage Loans as of the last day of the related
Due Period. For federal income tax purposes, however, the equivalent of the
foregoing, expressed as a per annum rate (but not less than zero) equal to the
weighted average of (x) the Uncertificated REMIC I Pass-Through Rate with
respect to REMIC I Regular Interest LT1A for such Distribution Date and (y) the
Uncertificated REMIC I Pass- Through Rate with respect to REMIC I Regular
Interest LT1D for such Distribution Date subject, for the first thirty
Distribution Dates, to a cap of 8.00% per annum; weighted, (i) for the first
eighteen Distribution Dates, in the case of clause (x), on the basis of the
Uncertificated Principal Balance of REMIC I Regular Interest LT1A and in the
case of clause (y), on the basis of the aggregate Uncertificated Principal
Balances of REMIC I Regular Interest LT1B, REMIC I Regular Interest LT1C and
REMIC I Regular Interest LT1D, (ii) for the nineteenth Distribution Date to and
including the twenty-fourth Distribution Date, in the case of clause (x), on the
basis of the aggregate Uncertificated Principal Balances of REMIC I Regular
Interest LT1A and REMIC I Regular Interest LT1B, and in the case of clause (y),
on the basis of the aggregate Uncertificated Principal Balances of REMIC I
Regular Interest LT1C and REMIC I Regular Interest LT1D, (iii) from the
twenty-fifth Distribution Date to and including the thirtieth Distribution Date,
in the case of clause (x), on the basis of the aggregate Uncertificated
Principal Balances of REMIC I Regular Interest LT1A, REMIC I Regular Interest
LT1B, and REMIC I Regular Interest LT1C, and in the case of clause (y), on the
basis of the Uncertificated Principal Balance of REMIC I Regular Interest LT1D,
and (iv) after the thirtieth Distribution Date, in the case of clause (x), on
the basis of the Uncertificated Principal Balance of REMIC I Regular Interest
LT1A and in the case of clause (y), on the basis of the aggregate Uncertificated
Principal Balances of REMIC I Regular Interest LT1D.
NON-BOOK-ENTRY CERTIFICATE: Any Certificate other than a
Book-Entry Certificate.
NONRECOVERABLE ADVANCE: Any portion of an Advance previously
made or proposed to be made by the Company or the Master Servicer pursuant to
this Agreement or the related Servicer pursuant to the related Servicing
Agreement, that, in the good faith judgment of the Company, the Master Servicer
or the related Servicer, will not or, in the case of a proposed advance, would
not, be ultimately recoverable by it from the related Mortgagor, related
Liquidation Proceeds or otherwise.
OFFERED CERTIFICATES: The Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-IO, Class M-1, Class M-2 and Class B Certificates.
OFFICER'S CERTIFICATE: A certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a Vice
President (however denominated), an Assistant Vice
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President, the Treasurer, the Secretary, or one of the assistant treasurers or
assistant secretaries of the Depositor or the Master Servicer (or any other
officer customarily performing functions similar to those performed by any of
the above designated officers and also to whom, with respect to a particular
matter, such matter is referred because of such officer's knowledge of and
familiarity with a particular subject) or (ii), if provided for in this
Agreement, signed by a Servicing Officer, as the case may be, and delivered to
the Depositor, the Seller, the Securities Administrator and/or the Trustee, as
the case may be, as required by this Agreement.
ONE-MONTH LIBOR: With respect to any Accrual Period, the rate
determined by the Securities Administrator on the related Interest Determination
Date on the basis of the rate for U.S. dollar deposits for one month that
appears on Telerate Screen Page 3750 as of 11:00 a.m. (London time) on such
Interest Determination Date; provided that the parties hereto acknowledge that
One- Month LIBOR for the first Accrual Period shall equal 1.84% per annum. If
such rate does not appear on such page (or such other page as may replace that
page on that service, or if such service is no longer offered, such other
service for displaying One-Month LIBOR or comparable rates as may be reasonably
selected by the Securities Administrator), One-Month LIBOR for the applicable
Accrual Period will be the Reference Bank Rate. If no such quotations can be
obtained by the Securities Administrator and no Reference Bank Rate is
available, One-Month LIBOR will be One-Month LIBOR applicable to the preceding
Accrual Period.
OPINION OF COUNSEL: A written opinion of counsel, who may be
counsel for the Seller, the Depositor, the Company or the Master Servicer,
reasonably acceptable to each addressee of such opinion; provided that with
respect to Section 2.05, 8.05, 8.07 or 12.01, or the interpretation or
application of the REMIC Provisions, such counsel must (i) in fact be
independent of the Seller, Depositor, the Company and the Master Servicer, (ii)
not have any direct financial interest in the Seller, the Depositor, the Company
or the Master Servicer or in any affiliate of either, and (iii) not be connected
with the Seller, the Depositor, the Company or the Master Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
OPTIONAL TERMINATION: The termination of the Trust Fund
created hereunder as a result of the purchase of all of the Mortgage Loans and
any REO Property pursuant to the last sentence of Section 11.01 hereof.
OPTIONAL TERMINATION DATE: The Distribution Date on which the
Stated Principal Balance of all of the Mortgage Loans is equal to or less than
10% of the Stated Principal Balance of all of the Mortgage Loans as of the
Cut-off Date.
ORIGINAL VALUE: The value of the property underlying a
Mortgage Loan based, in the case of the purchase of the underlying Mortgaged
Property, on the lower of an appraisal or the sales price of such property or,
in the case of a refinancing, on an appraisal.
ORIGINATOR: Shall mean, (i) GreenPoint Mortgage Funding, Inc.,
with respect to approximately 38.32% of the Mortgage Loans, (ii) Ivy Mortgage,
with respect to approximately 13.34% of the Mortgage Loans, (iii) National City,
with respect to approximately 12.54% of the Mortgage Loans, (iv) Alliance
Bancorp, with respect to approximately 2.71% of the Mortgage Loans, (v) Cendant,
with respect to approximately 0.94% of the Mortgage Loans, (vi) Chapel Mortgage
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Corp., with respect to approximately 1.62% of the Mortgage Loans, (vii)
Community Bank of Northern Virginia, with respect to approximately 3.55% of the
Mortgage Loans, (viii) Community Home, with respect to approximately 0.43% of
the Mortgage Loans, (ix) First Guaranty Mortgage Corp., with respect to
approximately 5.71% of the Mortgage Loans, (x) First Horizon, with respect to
approximately 2.43% of the Mortgage Loans, (xi) First Nevada, with respect to
approximately 4.11% of the Mortgage Loans, (xii) Xxxxx, with respect to
approximately 5.82% of the Mortgage Loans, (xiii) Loan Center of California,
with respect to approximately 0.16% of the Mortgage Loans, (xiv) PMCC Mortgage,
with respect to approximately 0.38% of the Mortgage Loans, (xv) US Mortgage,
with respect to approximately 1.22% of the Mortgage Loans and (xvi) Xxxxxxxxxx,
with respect to approximately 6.74% of the Mortgage Loans.
OTS: The Office of Thrift Supervision.
OUTSTANDING: With respect to the Certificates as of any date
of determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(a) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(b) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee pursuant to
this Agreement.
OUTSTANDING MORTGAGE LOAN: As of any date of determination, a
Mortgage Loan with a Stated Principal Balance greater than zero that was not the
subject of a Principal Prepayment in full, and that did not become a Liquidated
Loan, prior to the end of the related Prepayment Period.
OVERCOLLATERALIZATION AMOUNT: With respect to any Distribution
Date, the excess, if any, of the aggregate Stated Principal Balances of the
Mortgage Loans as of the last day of the related Due Period over the Certificate
Principal Balances of the Certificates on such Distribution Date (after taking
into account the payment of principal other than any Extra Principal
Distribution Amount on such Certificates).
OVERCOLLATERALIZATION TARGET AMOUNT: $1,298,387.
OWNERSHIP INTEREST: As to any Certificate, any ownership
interest in such Certificate including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial.
PASS-THROUGH RATE: With respect to each Class of Certificates
other than the Residual Certificates, the applicable Pass-Through Rate for each
such Class as set forth in the Preliminary Statement.
PERCENTAGE INTEREST: With respect to any Certificate of a
specified Class, the Percentage Interest set forth on the face thereof or the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the such Class.
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PERMITTED INVESTMENTS: At any time, any one or more of the
following obligations and securities:
(i) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and credit of
the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency, or such lower
rating as will not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by each Rating Agency
(determined without regard to the Class A-5 Policy);
(iii) [Reserved];
(iv) commercial or finance company paper which is then
receiving the highest commercial or finance company paper rating of
each Rating Agency, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each Rating Agency (determined without regard to the
Class A-5 Policy);
(v) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any
state thereof and subject to supervision and examination by federal
and/or state banking authorities (including the Trustee in its
commercial banking capacity), provided that the commercial paper and/or
long term unsecured debt obligations of such depository institution or
trust company (or in the case of the principal depository institution
in a holding company system, the commercial paper or long-term
unsecured debt obligations of such holding company, but only if Xxxxx'x
is not a Rating Agency) are then rated one of the two highest long-term
and the highest short-term ratings of each such Rating Agency for such
securities, or such lower ratings as will not result in the downgrading
or withdrawal of the rating then assigned to the Certificates by any
Rating Agency (determined without regard to the Class A-5 Policy);
(vi) demand or time deposits or certificates of deposit issued
by any bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
(vii) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation containing, at the time of the
issuance of such agreements, such terms and conditions as will not
result in the downgrading or withdrawal of the rating then assigned to
the Certificates by any such Rating Agency (determined without regard
to the Class A-5 Policy);
(viii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (v) above;
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(ix) securities (other than stripped bonds, stripped coupons
or instruments sold at a purchase price in excess of 115% of the face
amount thereof) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
state thereof which, at the time of such investment, have one of the
two highest long term ratings of each Rating Agency (except if the
Rating Agency is Moody's, such rating shall be the highest commercial
paper rating of Moody's for any such securities), or such lower rating
as will not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by any Rating Agency (determined without
regard to the Class A-5 Policy), as evidenced by a signed writing
delivered by each Rating Agency;
(x) interests in any money market fund (including any such
fund managed or advised by the Trustee or any affiliate thereof) which
at the date of acquisition of the interests in such fund and throughout
the time such interests are held in such fund has the highest
applicable long term rating by each Rating Agency or such lower rating
as will not result in the downgrading or withdrawal of the ratings then
assigned to the Certificates by each Rating Agency (determined without
regard to the Class A-5 Policy);
(xi) short term investment funds sponsored by any trust
company or banking association incorporated under the laws of the
United States or any state thereof (including any such fund managed or
advised by the Trustee or any affiliate thereof) which on the date of
acquisition has been rated by each Rating Agency in their respective
highest applicable rating category or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to
the Certificates by each Rating Agency (determined without regard to
the Class A-5 Policy); and
(xii) such other investments having a specified stated
maturity and bearing interest or sold at a discount acceptable to each
Rating Agency as will not result in the downgrading or withdrawal of
the rating then assigned to the Certificates by any Rating Agency, as
evidenced by a signed writing delivered by each Rating Agency
(determined without regard to the Class A-5 Policy);
provided, that no such instrument shall be a Permitted
Investment if such instrument (i) evidences the right to receive interest only
payments with respect to the obligations underlying such instrument, (ii) is
purchased at a premium or (iii) is purchased at a deep discount; provided
further that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (vii) above);
provided further that no amount beneficially owned by any REMIC may be invested
in investments (other than money market funds) treated as equity interests for
federal income tax purposes, unless the Master Servicer shall receive an Opinion
of Counsel, at the expense of the Master Servicer, to the effect that such
investment will not adversely affect the status of any such REMIC as a REMIC
under the Code or result in imposition of a tax on any such REMIC. Permitted
Investments that are subject to prepayment or call may not be purchased at a
price in excess of par.
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PERMITTED TRANSFEREE: Any person other than (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, (ii) a foreign
government, International Organization or any agency or instrumentality of
either of the foregoing, (iii) an organization (except certain farmers'
cooperatives described in section 521 of the Code) that is exempt from tax
imposed by Chapter 1 of the Code (including the tax imposed by section 511 of
the Code on unrelated business taxable income) on any excess inclusions (as
defined in section 860E(c)(1) of the Code) with respect to any Residual
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership (other than a partnership that has any
direct or indirect foreign partners) or other entity (treated as a corporation
or a partnership for federal income tax purposes), created or organized in or
under the laws of the United States, any state thereof or the District of
Columbia, an estate whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have authority to control all substantial decisions
of the trustor and (vi) any other Person so designated by the Trustee based upon
an Opinion of Counsel (which shall not be an expense of the Trustee) that states
that the Transfer of an Ownership Interest in a Residual Certificate to such
Person may cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at
any time that any Certificates are Outstanding. The terms "United States,"
"State" and "International Organization" shall have the meanings set forth in
section 7701 of the Code or successor provisions. A corporation will not be
treated as an instrumentality of the United States or of any State or political
subdivision thereof for these purposes if all of its activities are subject to
tax and, with the exception of Xxxxxxx Mac, a majority of its board of directors
is not selected by such government unit.
PERSON: Any individual, corporation, partnership, joint
venture, association, joint- stock company, limited liability company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
PREPAYMENT ASSUMPTION: 125% of the following: a constant
prepayment rate ("CPR") of 4% in the first month of the life of the Mortgage
Pool, such rate increasing by an additional approximate 1.27% CPR (precisely
14/11 percent) each month thereafter through the twelfth month of the life of
the Mortgage Pool, and such rate thereafter remaining constant at 18% CPR for
the remainder of the life of the Mortgage Pool.
PREPAYMENT CHARGE: Any prepayment premium, penalty or charge
payable by a Mortgagor in connection with any Principal Prepayment on a Mortgage
Loan pursuant to the terms of the related Mortgage Loan.
PREPAYMENT INTEREST SHORTFALL: With respect to any
Distribution Date, for each Mortgage Loan that was the subject of a partial
Principal Prepayment, a Principal Prepayment in full, or that became a
Liquidated Loan during the related Prepayment Period, (other than a Principal
Prepayment in full resulting from the purchase of a Mortgage Loan pursuant to
Section 2.02, 2.03, 4.21 or 11.01 hereof), the amount, if any, by which (i) one
month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such Mortgage Loan immediately prior to such
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prepayment (or liquidation) or in the case of a partial Principal Prepayment on
the amount of such prepayment (or liquidation proceeds) exceeds (ii) the amount
of interest paid or collected in connection with such Principal Prepayment or
such liquidation proceeds less the sum of (a) any Prepayment Charges, (b) the
related Servicing Fee and (c) the LPMI Fee, if any.
PREPAYMENT PERIOD: As to any Distribution Date, the calendar
month immediately preceding the month in which such Distribution Date occurs.
PRIMARY MORTGAGE INSURANCE POLICY: Any primary mortgage
guaranty insurance policy issued in connection with a Mortgage Loan which
provides compensation to a Mortgage Note holder in the event of default by the
obligor under such Mortgage Note or the related security instrument, if any or
any replacement policy therefor through the related Accrual Period for such
Class relating to a Distribution Date.
PRINCIPAL DISTRIBUTION AMOUNT: With respect to each
Distribution Date, an amount equal to (x) the Principal Funds for such
Distribution Date plus (y) any Extra Principal Distribution Amount for such
Distribution Date minus (z) any Excess Overcollateralization Amount for such
Distribution Date.
PRINCIPAL FUNDS: With respect to any Distribution Date, (i)
the sum, without duplication, of (a) all scheduled principal collected during
the related Due Period, (b) all Advances relating to principal made on or before
the Distribution Account Deposit Date, (c) Principal Prepayments exclusive of
prepayment charges or penalties collected during the related Prepayment Period,
(iii) the Stated Principal Balance of each Mortgage Loan that was repurchased by
the Seller pursuant to Sections 2.02 and 2.03 or by EMC pursuant to Section or
4.21, (d) the aggregate of all Substitution Adjustment Amounts for the related
Determination Date in connection with the substitution of Mortgage Loans
pursuant to Section 2.03(c), (e) amounts in respect of principal paid by the
Company pursuant to Section 11.01 and (f) all Liquidation Proceeds collected
during the related Prepayment Period (to the extent such Liquidation Proceeds
relate to principal), in each case to the extent remitted by the Company or the
related Servicer to the Distribution Account pursuant to this Agreement or the
related Servicing Agreement minus (ii) all amounts required to be reimbursed
pursuant to Sections 5.02, 5.04, 5.06 and 5.08 or as otherwise set forth in this
Agreement.
PRINCIPAL PREPAYMENT: Any Mortgagor payment or other recovery
of (or proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 4.21 and 11.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Company or the related Servicer, as
appropriate, in accordance with the terms of the related Mortgage Note.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated June
26, 2002 relating to the public offering of the Offered Certificates.
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PROTECTED ACCOUNT: Each account established and maintained by
the Company with respect to receipts on the Mortgage Loans and REO Property in
accordance with Section 4.01 hereof or by the related Servicer in accordance
with the related Servicing Agreement.
PUD: A Planned Unit Development.
PURCHASE PRICE: With respect to any Mortgage Loan (x) required
to be repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof or (y)
that EMC has a right to purchase pursuant to Section 4.21 hereof, an amount
equal to the sum of (i) 100% of the outstanding principal balance of the
Mortgage Loan as of the date of such purchase plus (ii) accrued interest thereon
at the applicable Mortgage Rate through the first day of the month in which the
Purchase Price is to be distributed to Certificateholders, reduced by any
portion of the Servicing Fee, Master Servicing Fee, Servicing Advances and
Advances payable to the purchaser of the Mortgage Loan.
RATING AGENCY: Each of Moody's and S&P. If any such
organization or its successor is no longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization, or other comparable
Person, designated by the Depositor, notice of which designation shall be given
to the Trustee. References herein to a given rating category of a Rating Agency
shall mean such rating category without giving effect to any modifiers.
REALIZED LOSS: With respect to each Liquidated Loan, an amount
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of such Liquidated Loan as of the date of such liquidation, minus (ii)
the Liquidation Proceeds, if any, received in connection with such liquidation
during the month in which such liquidation occurs, to the extent applied as
recoveries of principal of the Liquidated Loan. With respect to each Mortgage
Loan that has become the subject of a Deficient Valuation, (i) if the value of
the related Mortgaged Property was reduced below the principal balance of the
related Mortgage Note, the amount by which the value of the Mortgaged Property
was reduced below the principal balance of the related Mortgage Note, and (ii)
if the principal amount due under the related Mortgage Note has been reduced,
the difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation plus any reduction in the
interest component of the Scheduled Payments. With respect to each Mortgage Loan
that has become the subject of a Debt Service Reduction and any Distribution
Date, the amount, if any, by which the related Scheduled Payment was reduced.
With respect to each Mortgage Loan that has become the subject of a Servicing
Modification, a loss resulting from such Servicing Modification.
RECORD DATE: With respect to the Certificates (other than the
Class A-1 Certificates) and (a) the first Distribution Date, the Closing Date
and (b) with respect to any other Distribution Date, the close of business on
the last Business Day of the month preceding the month in which such
Distribution Date occurs. With respect to any Distribution Date and the Class
A-1 Certificates, so long as the Class A-1 Certificates are Book-Entry
Certificates, the Business Day preceding such Distribution Date, and otherwise,
the close of business on the last Business Day of the month preceding the month
in which such Distribution Date occurs.
REGULAR CERTIFICATE: Any Certificate other than a Residual
Certificate.
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RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
REMAINING EXCESS SPREAD: With respect to any Distribution
Date, the Excess Spread less any Extra Principal Distribution Amount, in each
case for such Distribution Date.
REMIC: A "real estate mortgage investment conduit" within the
meaning of section 860D of the Code.
REMIC I: The segregated pool of assets described in Section
6.06(a).
REMIC I CERTIFICATES: The REMIC I Regular Interests and the
Class R-I Certificate.
REMIC I REGULAR INTEREST LT1A: One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest LT1A shall
accrue interest at the related Uncertificated REMIC I Pass- Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.
REMIC I REGULAR INTEREST LT1B: One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest LT1B shall
accrue interest at the related Uncertificated REMIC I Pass- Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.
REMIC I REGULAR INTEREST LT1C: One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest LT1C shall
accrue interest at the related Uncertificated REMIC I Pass- Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.
REMIC I REGULAR INTEREST LT1D: One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest LT1D shall
accrue interest at the related Uncertificated REMIC I Pass- Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.
REMIC I REGULAR INTERESTS: REMIC I Regular Interest LT1A,
REMIC I Regular Interest LT1B, REMIC I Regular Interest LT1C and REMIC I Regular
Interest LT1D.
REMIC II: The segregated pool of assets described in Section
6.06(a).
REMIC II CERTIFICATES: The REMIC II Regular Interests and the
Class R-II Certificate.
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REMIC II INTEREST LOSS ALLOCATION AMOUNT: With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC II Pass- Through Rate for REMIC II
Regular Interest LT2-AA minus the Marker Rate, divided by (b) 12.
REMIC II OVERCOLLATERALIZED AMOUNT: With respect to any date
of determination, (i) 1% of the aggregate of the Uncertificated Principal
Balances of REMIC II Regular Interest LT2-AA, REMIC II Regular Interest LT2-A1,
REMIC II Regular Interest LT2-A2, REMIC II Regular Interest LT2-A3, REMIC II
Regular Interest LT2-A4, REMIC II Regular Interest LT2-M1, REMIC II Regular
Interest LT2-M2, REMIC II Regular Interest LT2-B and REMIC II Regular Interest
LT2-ZZ, minus (ii) the aggregate of the Uncertificated Principal Balances of
REMIC II Regular Interest LT2- A1, REMIC II Regular Interest LT2-A2, REMIC II
Regular Interest LT2-A3, REMIC II Regular Interest LT2-A4, REMIC II Regular
Interest LT2-A5, REMIC II Regular Interest LT2- M1, REMIC II Regular Interest
LT2-M2 and REMIC II Regular Interest LT2-B, in each case as of such date of
determination.
REMIC II PRINCIPAL LOSS ALLOCATION AMOUNT: With respect to any
Distribution Date and the Mortgage Loans, an amount equal to (a) the product of
(i) the aggregate Stated Principal Balance of the Mortgage Loans and related REO
Properties then outstanding and (ii) 1 minus a fraction, the numerator of which
is two times the aggregate of the Uncertificated Principal Balances of REMIC II
Regular Interest LT2-A1, REMIC II Regular Interest LT2-A2, REMIC II Regular
Interest LT2-A3, REMIC II Regular Interest LT2-A4, REMIC II Regular Interest
LT2-A5, REMIC II Regular Interest LT2-M1, REMIC II Regular Interest LT2-M2 and
REMIC II Regular Interest LT2-B, and the denominator of which is the aggregate
of the Uncertificated Principal Balances of REMIC II Regular Interest LT2-A1,
REMIC II Regular Interest LT2-A2, REMIC II Regular Interest LT2-A3, REMIC II
Regular Interest LT2-A4, REMIC II Regular Interest LT2-A5, REMIC II Regular
Interest LT2-M1, REMIC II Regular Interest LT2-M2, REMIC II Regular Interest
LT2-B and REMIC II Regular Interest LT2-ZZ.
REMIC II OVERCOLLATERALIZATION TARGET AMOUNT: 1% of the
Overcollateralization Target Amount.
REMIC II REGULAR INTEREST LT2A-IO: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2A-IO shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate on its Uncertificated Notional Amount outstanding from time to
time.
REMIC II REGULAR INTEREST LT2-AA: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest LT2-AA
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-A1: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC
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II. REMIC II Regular Interest LT2-A1 shall accrue interest at the related
Uncertificated REMIC II Pass-Through Rate in effect from time to time, and shall
be entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-A2: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest LT2-A2
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-A3: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest LT2-A3
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-A4: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest LT2-A4
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-A5: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest LT2-A5
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-M1: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest LT2-M1
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-M2: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest LT2-M2
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
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REMIC II REGULAR INTEREST LT2-B: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest LT2-B
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-ZZ: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest LT2-ZZ
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTERESTS: REMIC II Regular Interest LT2-AA,
REMIC II Regular Interest LT2A-IO, REMIC II Regular Interest LT2-A1, REMIC II
Regular Interest LT2-A2, REMIC II Regular Interest LT2-A3, REMIC II Regular
Interest LT2-A4, REMIC II Regular Interest LT2-A5, REMIC II Regular Interest
LT2-M1, REMIC II Regular Interest LT2-M2, REMIC II Regular Interest LT2-B and
REMIC II Regular Interest LT2-ZZ.
REMIC III: The segregated pool of assets described in Section
6.06(a).
REMIC III CERTIFICATES: The REMIC III Regular Interests and
the Class R-III Certificate.
REMIC III REGULAR INTERESTS: As defined in the Preliminary
Statement.
REMIC PROVISIONS: Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at sections
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and proposed, temporary and final regulations and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time as well as provisions of applicable state laws.
REMIC REGULAR INTEREST: A REMIC I Regular Interest or REMIC II
Regular Interest.
REMITTANCE DATE: Shall mean (i) with respect to the Company,
the Business Day immediately preceding the Distribution Account Deposit Date and
(ii) with respect to any Servicer, the date specified in the related Servicing
Agreement.
REMITTANCE REPORT: As defined in Section 6.04(d).
REO PROPERTY: A Mortgaged Property acquired by the Company or
a Servicer through foreclosure or deed-in-lieu of foreclosure in connection with
a defaulted Mortgage Loan.
REPLACEMENT MORTGAGE LOAN: A Mortgage Loan or Mortgage Loans
in the aggregate substituted by the Seller for a Deleted Mortgage Loan, which
must, on the date of such substitution,
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as confirmed in a Request for Release, (i) have a Stated Principal Balance,
after deduction of the principal portion of the Scheduled Payment due in the
month of substitution, not in excess of, and not less than 90% of, the Stated
Principal Balance of the Deleted Mortgage Loan; (ii) have a fixed Mortgage Rate
not less than or more than 1% per annum higher than the Mortgage Rate of the
Deleted Mortgage Loan; (iii) have the same or higher credit quality
characteristics than that of the Deleted Mortgage Loan; (iv) have a
Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (v) have a
remaining term to maturity no greater than (and not more than one year less
than) that of the Deleted Mortgage Loan; (vi) not permit conversion of the
Mortgage Rate from a fixed rate to a variable rate; (vii) have the same lien
priority as the Deleted Mortgage Loan; (viii) constitute the same occupancy type
as the Deleted Mortgage Loan or be owner occupied; and (ix) comply with each
representation and warranty set forth in Section 2.03 hereof.
REPURCHASE PRICE: Shall mean (a) with respect to each EMC
Mortgage Loan, a price equal to (i) the outstanding principal balance of the EMC
Mortgage Loan, plus (ii) interest on such outstanding principal balance at the
Mortgage Rate (net of the Servicing Fee Rate) from the last date through which
interest has been paid to the end of the month of repurchase, less (iii) amounts
advanced by the Company in respect of such repurchased EMC Mortgage Loan which
are being held in the Master Servicer Collection Account for remittance to the
Trustee and (b) with respect to any other Mortgage Loan, as defined in the
related Servicing Agreement.
REQUEST FOR RELEASE: The Request for Release to be submitted
by the Seller, the Company, a Servicer or the Master Servicer to the Custodian
substantially in the form of Exhibit H. Each Request for Release furnished to
the Custodian by the Seller, the Company, a Servicer or the Master Servicer
shall be in duplicate and shall be executed by an officer of such Person or a
Servicing Officer (or, if furnished electronically to the Custodian, shall be
deemed to have been sent and executed by an officer of such Person or a
Servicing Officer) of the Company or a Servicer, as applicable.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan,
any insurance policy that is required to be maintained from time to time under
this Agreement or any applicable Servicing Agreement.
RESERVE ACCOUNT: Shall mean the account established and
maintained by the Master Servicer pursuant to Section 5.05A hereof.
RESIDUAL CERTIFICATES: The Class R-I Certificates, Class R-II
Certificates and Class R-III Certificates each evidencing the sole class of
"residual interests" (within the meaning of Section 860G(a)(2) of the Code) in
the related REMIC.
RESPONSIBLE OFFICER: With respect to the Trustee, any Vice
President, any Assistant Vice President, the Secretary, any Assistant Secretary,
any Trust Officer, any other officer customarily performing functions similar to
those performed by any of the above designated officers or other officers of the
Trustee specified by the Trustee, as to whom, with respect to a particular
matter, such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
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S&P: Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc.
SCHEDULED PAYMENT: The scheduled monthly payment on a Mortgage
Loan due on any Due Date allocable to principal and/or interest on such Mortgage
Loan.
SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITIES ADMINISTRATOR: Xxxxx Fargo Bank Minnesota, National
Association, in its capacity as securities administrator hereunder, and its
successors and assigns.
SELLER: EMC Mortgage Corporation, a Delaware corporation, and
its successors and assigns, in its capacity as seller of the Mortgage Loans to
the Depositor.
SENIOR CERTIFICATES: The Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates and Class A-IO Certificates.
SENIOR ENHANCEMENT PERCENTAGE: As to each Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the sum of
(i) the aggregate of the Certificate Principal Balances of the Class M-1, Class
M-2 and Class B Certificates and (ii) the Overcollateralization Amount, in each
case after taking into account the distribution of the related Principal
Distribution Amounts on such Distribution Date, and the denominator of which is
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period.
SERVICER: Shall mean either National City or Cendant, as
applicable.
SERVICING ADVANCES: All customary, reasonable and necessary
"out of pocket" costs and expenses (including reasonable legal fees) incurred in
the performance by the Company or a Servicer of its servicing obligations
hereunder or under the related Servicing Agreement, including, but not limited
to, the cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
and including any expenses incurred in relation to any such proceedings that
result from the Mortgage Loan being registered in the MERS(R) System, (iii) the
management and liquidation of any REO Property (including, without limitation,
realtor's commissions) and (iv) compliance with any obligations under Section
3.07 hereof to cause insurance to be maintained.
SERVICING AGREEMENT: Shall mean either the National City
Servicing Agreement or the Cendant Servicing Agreement, as applicable.
SERVICING FEE: As to each Mortgage Loan and any Distribution
Date, an amount equal to 1/12th of the Servicing Fee Rate multiplied by the
Stated Principal Balance of such Mortgage Loan as of the last day of the related
Due Period or, in the event of any payment of interest that accompanies a
Principal Prepayment in full during the related Due Period made by the Mortgagor
immediately prior to such prepayment, interest at the Servicing Fee Rate on the
Stated Principal Balance of such Mortgage Loan for the period covered by such
payment of interest.
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SERVICING FEE RATE: 0.25% per annum.
SERVICING MODIFICATION: With respect to any Mortgage Loan that
is in default or, in the reasonable judgment of the Company or a Servicer, as to
which default is reasonably foreseeable, any modification which is effected by
the Company or a Servicer in accordance with the terms of this Agreement or the
applicable Servicing Agreement which results in any change in the outstanding
Stated Principal Balance, any change in the Mortgage Rate or any extension of
the term of such Mortgage Loan.
SERVICING OFFICER: Any officer of the Company or a Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans (i) in the case of the Company, whose name and facsimile
signature appear on a list of servicing officers furnished to the Trustee and
MBIA by the Company on the Closing Date pursuant to this Agreement, as such list
may from time to time be amended and (ii) in the case of a Servicer, as to which
evidence reasonably acceptable to the Trustee, as applicable, of due
authorization, by such party has been furnished from time to time to the Trustee
and MBIA.
STARTUP DAY: The Startup Day for each REMIC formed hereunder
shall be the Closing Date.
STATED PRINCIPAL BALANCE: With respect to any Mortgage Loan or
related REO Property and any Distribution Date, the Cut-off Date Principal
Balance thereof minus the sum of (i) the principal portion of the Scheduled
Payments due with respect to such Mortgage Loan during each Due Period ending
prior to such Distribution Date (and irrespective of any delinquency in their
payment), (ii) all Principal Prepayments with respect to such Mortgage Loan
received prior to or during the related Prepayment Period, and all Liquidation
Proceeds to the extent applied by the Company or a Servicer as recoveries of
principal in accordance with Section 3.09 or the applicable Servicing Agreement
with respect to such Mortgage Loan, that were received by the Company or a
Servicer as of the close of business on the last day of the Prepayment Period
related to such Distribution Date and (iii) any Realized Losses on such Mortgage
Loan incurred during the related Prepayment Period. The Stated Principal Balance
of a Liquidated Loan equals zero.
STEPDOWN DATE: The earlier to occur of (i) the Distribution
Date on which the aggregate Certificate Principal Balance of the Class A
Certificates has been reduced to zero and (ii) the later to occur of (a) the
Distribution Date in July 2005 and (b) the first Distribution Date on which the
aggregate Certificate Principal Balance of the Class M-1 Certificates, Class M-2
Certificates and the Class B Certificates and the Overcollateralization Amount
divided by the Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period is greater than or equal to 14.00%.
SUBORDINATED CERTIFICATES: The Class M-1 Certificates, Class
M-2 Certificates, Class B Certificates, Class B-IO Certificates and Residual
Certificates.
SUBSERVICING AGREEMENT: Any agreement entered into between the
Company and a subservicer with respect to the subservicing of any Mortgage Loan
hereunder by such subservicer.
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SUBSTITUTION ADJUSTMENT AMOUNT: The meaning ascribed to such
term pursuant to Section 2.03(c).
SUCCESSOR MASTER SERVICER: The meaning ascribed to such term
pursuant to Section 9.01.
TAX MATTERS PERSON: The person designated as "tax matters
person" in the manner provided under Treasury regulation ss. 1.860F-4(d) and
temporary Treasury regulation ss. 301.6231(a)(7)-1T. The holder of the greatest
Percentage Interest in a Class of Residual Certificates shall be the Tax Matters
Person for the related REMIC. The Securities Administrator, or any successor
thereto or assignee thereof shall serve as tax administrator hereunder and as
agent for the related Tax Matters Person.
TRANSFER: Any direct or indirect transfer or sale of any
Ownership Interest in a Certificate.
TRANSFER AFFIDAVIT: As defined in Section 7.02(c).
TRIGGER EVENT: With respect to any Distribution Date after the
Stepdown Date, a Trigger Event exists if a Delinquency Event shall have occurred
and be continuing.
TRUST FUND: The corpus of the trust created hereunder
consisting of (i) the Mortgage Loans and all interest accruing and principal due
with respect thereto after the Cut-off Date to the extent not applied in
computing the Cut-off Date Principal Balance thereof; (ii) the Reserve Account,
the Distribution Account, the Class A-5 Policy Payments Account, the Yield
Maintenance Reserve Fund and the Master Servicer Collection Account maintained
by the Master Servicer and the Protected Accounts maintained by the Company and
the Servicers and all amounts deposited therein pursuant to the applicable
provisions of this Agreement and the Servicing Agreements; (iii) property that
secured a Mortgage Loan and has been acquired by foreclosure, deed in lieu of
foreclosure or otherwise; (iv) the mortgagee's rights under the Insurance
Policies with respect to the Mortgage Loans; (v) the Servicing Agreements and
the Assignment Agreements; (vi) for the benefit of the Class A-5 Certificates
only, the Class A-5 Policy; (vii) the rights under the Yield Maintenance
Agreement; (viii) the rights under the Mortgage Loan Purchase Agreement; and
(ix) all proceeds of the foregoing, including proceeds of conversion, voluntary
or involuntary, of any of the foregoing into cash or other liquid property. The
Prepayment Charges, the Reserve Account and the Yield Maintenance Fund shall
constitute assets of the Trust Fund but will not be included in any of REMIC I,
REMIC II or REMIC III.
TRUSTEE: Bank One, National Association, a national banking
association, not in its individual capacity, but solely in its capacity as
trustee for the benefit of the Certificateholders under this Agreement, and any
successor thereto, and any corporation or national banking association resulting
from or surviving any consolidation or merger to which it or its successors may
be a party and any successor trustee as may from time to time be serving as
successor trustee hereunder.
UNCERTIFICATED ACCRUED INTEREST: With respect to each REMIC
Regular Interest on each Distribution Date, an amount equal to one month's
interest at the related Uncertificated Pass-
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Through Rate on the Uncertificated Principal Balance or Uncertificated Notional
Amount, as applicable, of such REMIC Regular Interest. In each case,
Uncertificated Accrued Interest will be reduced by any Prepayment Interest
Shortfalls and shortfalls resulting from application of the Relief Act
(allocated to such REMIC Regular Interests as set forth in Section 6.06).
UNCERTIFICATED NOTIONAL AMOUNT: With respect to REMIC II
Regular Interest LT2- AIO and (i) the first eighteen Distribution Dates, the
aggregate Uncertificated Principal Balances of REMIC I Regular Interest LTB,
REMIC I Regular Interest LTC and REMIC I Regular Interest LTD, (ii) the
nineteenth Distribution Date to and including the twenty-fourth Distribution
Date, the aggregate Uncertificated Principal Balances of REMIC I Regular
Interest LTC and REMIC I Regular Interest LTD, (iii) the twenty-fifth
Distribution Date to and including the thirtieth Distribution Date, the
Uncertificated Principal Balance of REMIC I Regular Interest LTD, and (iv) each
Distribution Date thereafter, $0.
UNCERTIFICATED PASS-THROUGH RATE: The Uncertificated REMIC I
Pass-Through Rate or the Uncertificated REMIC II Pass-Through Rate.
UNCERTIFICATED PRINCIPAL BALANCE: With respect to each REMIC
Regular Interest (other than REMIC II Regular Interest LT2A-IO), the principal
amount of such REMIC Regular Interest outstanding as of any date of
determination. As of the Closing Date, the Uncertificated Principal Balance of
each REMIC I Regular Interest (other than REMIC II Regular Interest LT2A-IO)
shall equal the amount set forth in the Preliminary Statement hereto as its
initial Uncertificated Principal Balance. On each Distribution Date, the
Uncertificated Principal Balance of each such REMIC Regular Interest shall be
reduced by all distributions of principal made on such REMIC Regular Interest on
such Distribution Date pursuant to Section 6.06 and, if and to the extent
necessary and appropriate, shall be further reduced on such Distribution Date by
Realized Losses as provided in Section 6.06. The Uncertificated Principal
Balance of each REMIC Regular Interest shall never be less than zero. REMIC II
Regular Interest LT2A-IO will not have an Uncertificated Principal Balance.
UNCERTIFICATED REMIC I PASS-THROUGH RATE: With respect to any
Distribution Date and REMIC I Regular Interest LT1A, REMIC I Regular Interest
LT1B, REMIC I Regular Interest LT1C and REMIC I Regular Interest LT1D, a per
annum rate equal to the average of the Net Mortgage Rates of the Mortgage Loans,
weighted on the basis of the Stated Principal Balances thereof as of the close
of business on the last day of the calendar month preceding the month in which
such Distribution Date occurs.
UNCERTIFICATED REMIC II PASS-THROUGH RATE:
(a) With respect to REMIC II Regular Interest LT2-AA, REMIC II
Regular Interest LT2-A1, REMIC II Regular Interest LT2-A2, REMIC II Regular
Interest LT2-A3, REMIC II Regular Interest LT2-A4, REMIC II Regular Interest
LT2-A5, REMIC II Regular Interest LT2-M1, REMIC II Regular Interest LT2- M2,
REMIC II Regular Interest LT2-B and REMIC II Regular Interest LT2-ZZ and any
Distribution Date, a per annum rate equal to the Net Rate Cap.
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(b) With respect to REMIC II Regular Interest LT2A-IO, (A) in
the case of the first thirty Distribution Dates, a per annum rate equal to the
excess of (i) the weighted average of the Uncertificated REMIC I Pass-Through
Rates for the REMIC I Regular Interests over (ii) the excess (but not less than
zero) of (x) the weighted average of the Uncertificated REMIC I Pass-Through
Rates for the REMIC I Regular Interests over (y) 8.00% per annum, and (B) in the
case of each Distribution Date thereafter, 0.00% per annum..
UNPAID REALIZED LOSS AMOUNT: As of any Distribution Date, and
each Class of Subordinated Certificates (other than the Class B-IO Certificates
and Residual Certificates) the excess of (i) the Applied Realized Loss Amount
for such Class over (ii) the sum of all distributions on such Class in reduction
of the Applied Realized Loss Amount for such Class on all previous Distribution
Dates.
VOTING RIGHTS: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions hereunder. Voting Rights shall be allocated (i) 94% to the Offered
Certificates (other than the Class A-IO Certificates and the Residual
Certificates), (ii) 1% to the Class A-IO Certificates until paid in full, (iii)
prior to payment in full of the Class A-IO Certificates, 2% and thereafter 3%,
to the Class B-IO Certificates and (iv) and (v) 1% to each Class of Residual
Certificates, with the allocation among the Certificates (other than the Class
A-IO Certificates, the Class B-IO Certificates and the Residual Certificates) to
be in proportion to the Certificate Principal Balance of each Class relative to
the Certificate Principal Balance of all other such Classes. Voting Rights will
be allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests. With respect to Voting Rights, the Class A-5
Certificateholders are subject to Section 6.07(l) of this Agreement.
YIELD MAINTENANCE AGREEMENT: Shall mean the Yield Maintenance
Agreement dated June 28, 2002 between the Trust (on behalf of the Class A-1
Certificateholders) and Bear Xxxxxxx Financial Products, Inc.
YIELD MAINTENANCE RESERVE FUND: Shall mean the separate trust
account created and maintained by the Trustee pursuant to Section 6.08 hereof.
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ARTICLE II
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01 CONVEYANCE OF TRUST FUND.
The Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the right, title and
interest of the Seller in and to the assets in the Trust Fund.
The Seller has entered into this Agreement in consideration
for the purchase of the Mortgage Loans by the Depositor and has agreed to take
the actions specified herein.
The Depositor, concurrently with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the use and benefit of the Certificateholders and MBIA, without
recourse, all the right, title and interest of the Depositor in and to the Trust
Fund. In addition, on or prior to the Closing Date, the Depositor shall cause
MBIA to deliver the Class A-5 Policy to the Trustee.
In connection with such sale, the Depositor has delivered to,
and deposited with, the Trustee or the Custodian, as its agent, the following
documents or instruments with respect to each Mortgage Loan so assigned: (i) the
original Mortgage Note, including any riders thereto, endorsed without recourse
to the order of "Bank One, National Association, as Trustee for
certificateholders of Bear Xxxxxxx Asset Backed Securities, Inc. Asset Backed
Certificates, Series 2002-AC3," and showing to the extent available to the
Seller an unbroken chain of endorsements from the original payee thereof to the
Person endorsing it to the Trustee, (ii) the original Mortgage and, if the
related Mortgage Loan is a MOM Loan, noting the presence of the MIN and language
indicating that such Mortgage Loan is a MOM Loan, which shall have been recorded
(or if the original is not available, a copy), with evidence of such recording
indicated thereon (or if clause (x) in the proviso below applies, shall be in
recordable form), (iii) unless the Mortgage Loan is a MOM Loan, the assignment
(either an original or a copy, which may be in the form of a blanket assignment
if permitted in the jurisdiction in which the Mortgaged Property is located) to
the Trustee of the Mortgage with respect to each Mortgage Loan in the name of
"Bank One, National Association, as Trustee for certificateholders of Bear
Xxxxxxx Asset Backed Securities, Inc. Asset Backed Certificates, Series
2002-AC3," which shall have been recorded (or if clause (x) in the proviso below
applies, shall be in recordable form) (iv) an original or a copy of all
intervening assignments of the Mortgage, if any, to the extent available to the
Seller, with evidence of recording thereon, (v) the original policy of title
insurance or mortgagee's certificate of title insurance or commitment or binder
for title insurance, if available, or a copy thereof, or, in the event that such
original title insurance policy is unavailable, a photocopy thereof, or in lieu
thereof, a current lien search on the related Mortgaged Property and (vi)
originals or copies of all available assumption, modification or substitution
agreements, if any; provided, however, that in lieu of the foregoing, the Seller
may deliver the following documents, under the circumstances set forth below:
(x) if any Mortgage, assignment thereof to the Trustee or intervening
assignments thereof have been delivered or are being delivered to recording
offices for
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recording and have not been returned in time to permit their delivery as
specified above, the Depositor may deliver a true copy thereof with a
certification by the Seller or the title company issuing the commitment for
title insurance, on the face of such copy, substantially as follows: "Certified
to be a true and correct copy of the original, which has been transmitted for
recording"; and (y) in lieu of the Mortgage Notes relating to the Mortgage Loans
identified in the list set forth in Exhibit J, the Depositor may deliver a lost
note affidavit and indemnity and a copy of the original note, if available; and
provided, further, however, that in the case of Mortgage Loans which have been
prepaid in full after the Cut-Off Date and prior to the Closing Date, the
Depositor, in lieu of delivering the above documents, may deliver to the Trustee
a certification of a Servicing Officer to such effect and in such case shall
deposit all amounts paid in respect of such Mortgage Loans, in the Master
Servicer Collection Account or in the Distribution Account on the Closing Date.
In the case of the documents referred to in clause (x) above, the Depositor
shall deliver such documents to the Trustee promptly after they are received.
The Seller shall cause, at its expense, the Mortgage and intervening
assignments, if any, and to the extent required in accordance with the
foregoing, the assignment of the Mortgage to the Trustee to be submitted for
recording promptly after the Closing Date; provided that the Seller need not
cause to be recorded (a) any assignment in any jurisdiction under the laws of
which, as evidenced by an Opinion of Counsel delivered by the Seller to the
Trustee, MBIA and the Rating Agencies, the recordation of such assignment is not
necessary to protect the Trustee's interest in the related Mortgage Loan or (b)
if MERS is identified on the Mortgage or on a properly recorded assignment of
the Mortgage as the mortgagee of record solely as nominee for Seller and its
successor and assigns. In the event that the Seller, the Depositor or the Master
Servicer gives written notice to the Trustee that a court has recharacterized
the sale of the Mortgage Loans as a financing, the Seller shall submit or cause
to be submitted for recording as specified above or, should the Seller fail to
perform such obligations, the Trustee shall cause each such previously
unrecorded assignment to be submitted for recording as specified above at the
expense of the Trust pursuant to Section 10.05. In the event a Mortgage File is
released to the Company or a Servicer as a result of such Person having
completed a Request for Release, the Trustee shall, if not so completed,
complete the assignment of the related Mortgage in the manner specified in
clause (iii) above.
In connection with the assignment of any Mortgage Loan
registered on the MERS(R) System, the Seller further agrees that it will cause,
at the Seller's own expense, within 30 days after the Closing Date, the MERS(R)
System to indicate that such Mortgage Loans have been assigned by the Seller to
the Depositor and by the Depositor to the Trustee in accordance with this
Agreement for the benefit of the Certificateholders and MBIA by including (or
deleting, in the case of Mortgage Loans which are repurchased in accordance with
this Agreement) in such computer files (a) the code in the field which
identifies the specific Trustee and (b) the code in the field "Pool Field" which
identifies the series of the Certificates issued in connection with such
Mortgage Loans. The Seller further agrees that it will not, and will not permit
any Servicer or the Master Servicer to, and the Master Servicer agrees that it
will not, alter the codes referenced in this paragraph with respect to any
Mortgage Loan during the term of this Agreement unless and until such Mortgage
Loan is repurchased in accordance with the terms of this Agreement.
Section 2.02 ACCEPTANCE OF THE MORTGAGE LOANS.
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(a) The Trustee acknowledges receipt of, subject to the
further review and exceptions reported by the Trustee pursuant to the procedures
described below, the documents (or certified copies thereof) delivered to the
Trustee or the Custodian on its behalf pursuant to Section 2.01 and declares
that it holds and will continue to hold directly or through a custodian those
documents and any amendments, replacements or supplements thereto and all other
assets of the Trust Fund delivered to it in trust for the use and benefit of all
present and future Holders of the Certificates and MBIA. On the Closing Date,
the Trustee or the Custodian on its behalf will deliver an Initial Certification
in the form annexed hereto as Exhibit C-1 confirming whether or not it has
received the Mortgage File for each Mortgage Loan, but without review of such
Mortgage File, except to the extent necessary to confirm whether such Mortgage
File contains the original Mortgage Note or a lost note affidavit and indemnity
in lieu thereof. No later than 90 days after the Closing Date, the Trustee or
the Custodian on its behalf shall, for the benefit of the Certificateholders and
MBIA, review each Mortgage File delivered to it and execute and deliver to the
Seller, the Master Servicer and MBIA an Interim Certification substantially in
the form annexed hereto as Exhibit C-2. In conducting such review, the Trustee
or the Custodian on its behalf will ascertain whether all required documents
have been executed and received and whether those documents relate, determined
on the basis of the Mortgagor name, original principal balance and loan number,
to the Mortgage Loans identified in Exhibit B to this Agreement, as supplemented
(provided, however, that with respect to those documents described in subclauses
(iv) and (vi) of Section 2.01, such obligations shall extend only to documents
actually delivered pursuant to such subclauses). In performing any such review,
the Trustee and the Custodian 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 on its behalf 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 on its behalf
shall include such information in the exception report attached to Exhibit C-2.
The Seller shall correct or cure any such defect or, if prior to the end of the
second anniversary of the Closing Date, the Seller may substitute for the
related Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03 or shall deliver to the Trustee and MBIA an Opinion of Counsel to the
effect that such defect does not materially or adversely affect the interests of
the Certificateholders in such Mortgage Loan (such determination to be made
without regard to the Class A-5 Policy) within 60 days from the date of notice
from the Trustee of the defect and if the Seller fails to correct or cure the
defect or deliver such opinion within such period, the Seller will, subject to
Section 2.03, within 90 days from the notification of the Trustee purchase such
Mortgage Loan at the Purchase Price; provided, however, that if such defect
relates solely to the inability of the Seller to deliver the Mortgage,
assignment thereof to the Trustee, or intervening assignments thereof with
evidence of recording thereon because such documents have been submitted for
recording and have not been returned by the applicable jurisdiction, the Seller
shall not be required to purchase such Mortgage Loan if the Seller delivers such
documents promptly upon receipt, but in no event later than 360 days after the
Closing Date.
(b) No later than 180 days after the Closing Date, the Trustee
or the Custodian on its behalf will review, for the benefit of the
Certificateholders and MBIA, the Mortgage Files and will execute and deliver or
cause to be executed and delivered to the Seller, the Master Servicer and MBIA,
a Final Certification substantially in the form annexed hereto as Exhibit C-3.
In conducting
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such review, the Trustee or the Custodian on its behalf will ascertain whether
each document required to be recorded has been returned from the recording
office with evidence of recording thereon and the Trustee or the Custodian on
its behalf has received either an original or a copy thereof, as required in
Section 2.01 (provided, however, that with respect to those documents described
in subclauses (iv) and (vi) of Section 2.01, such obligations shall extend only
to documents actually delivered pursuant to such subclauses). If the Trustee or
the Custodian on its behalf finds any document with respect to a Mortgage Loan
has not been received, or to be unrelated, determined on the basis of the
Mortgagor name, original principal balance and loan number, to the Mortgage
Loans identified in Exhibit B or to appear defective on its face, the Trustee or
the Custodian on its behalf shall note such defect in the exception report
attached to the Final Certification and shall promptly notify the Seller. The
Seller shall correct or cure any such defect or, if prior to the end of the
second anniversary of the Closing Date, the Seller may substitute for the
related Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03 or shall deliver to the Trustee and 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 Class A-5 Policy) within 60 days from the date of notice from the
Trustee of the defect and if the Seller is unable within such period to correct
or cure such defect, or to substitute the related Mortgage Loan with a
Replacement Mortgage Loan or to deliver such opinion, the Seller shall, subject
to Section 2.03, within 90 days from the notification of the Trustee, purchase
such Mortgage Loan at the Purchase Price; provided, however, that if such defect
relates solely to the inability of the Seller to deliver the Mortgage,
assignment thereof to the Trustee or intervening assignments thereof with
evidence of recording thereon, because such documents have not been returned by
the applicable jurisdiction, the Seller shall not be required to purchase such
Mortgage Loan, if the Seller delivers such documents promptly upon receipt, but
in no event later than 360 days after the Closing Date.
(c) In the event that a Mortgage Loan is purchased by the
Seller in accordance with subsections 2.02(a) or (b) above or Section 2.03, the
Seller shall remit the applicable Purchase Price to the Master Servicer for
deposit in the Master Servicer Collection Account and shall provide written
notice to the Trustee and MBIA detailing the components of the Purchase Price,
signed by a Servicing Officer. Upon deposit of the Purchase Price in the Master
Servicer Collection Account and upon receipt of a Request for Release with
respect to such Mortgage Loan, the Trustee will release to the Seller the
related Mortgage File and the Trustee shall execute and deliver all instruments
of transfer or assignment, without recourse, furnished to it by the Seller, as
are necessary to vest in the Seller title to and rights under the Mortgage Loan.
Such purchase shall be deemed to have occurred on the date on which the deposit
into the Master Servicer Collection Account was made. The Trustee shall promptly
notify the Rating Agencies and MBIA of such repurchase. The obligation of the
Seller to cure, repurchase or substitute for any Mortgage Loan as to which a
defect in a constituent document exists shall be the sole remedies respecting
such defect available to the Certificateholders and MBIA or to the Trustee on
their behalf.
(d) The Seller shall deliver to the Trustee, and Trustee
agrees to accept the Mortgage Note and other documents constituting the Mortgage
File with respect to any Replacement Mortgage Loan, which the Trustee will
review as provided in subsections 2.02(a) and 2.02(b), provided, that the
Closing Date referred to therein shall instead be the date of delivery of the
Mortgage File with respect to each Replacement Mortgage Loan.
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Section 2.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
AND THE SELLER.
(a) The Company hereby represents and warrants to the Master
Servicer, the Depositor, the Securities Administrator and the Trustee as
follows, as of the Closing Date:
(i) It is duly organized and is validly existing and in good
standing under the laws of the State of Delaware and is duly authorized
and qualified to transact any and all business contemplated by this
Agreement to be conducted by it in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law
to effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary to
ensure its ability to enforce each Mortgage Loan, to service the
Mortgage Loans in accordance with the terms of this Agreement and to
perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(ii) It has the full corporate power and authority to service
each Mortgage Loan, and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by this Agreement and
has duly authorized by all necessary corporate action on its part the
execution, delivery and performance of this Agreement; and this
Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its
terms, except that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by it, the
servicing of the EMC Mortgage Loans by it under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in its ordinary course of business and will not (A) result in a
material breach of any term or provision of its charter or by-laws or
(B) materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of
any other material agreement or instrument to which it is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to it of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it; and it is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or violation may materially impair its ability to perform
or meet any of its obligations under this Agreement.
(iv) It is an approved servicer of conventional mortgage loans
for Xxxxxx Xxx or Xxxxxxx Mac and is a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and
211 of the National Housing Act.
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(v) No litigation is pending or, to the best of its knowledge,
threatened, against it that would materially and adversely affect the
execution, delivery or enforceability of this Agreement or its ability
to service the EMC Mortgage Loans or to perform any of its other
obligations under this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for its execution, delivery
and performance of, or compliance with, this Agreement or the
consummation of the transactions contemplated hereby, or if any such
consent, approval, authorization or order is required, it has obtained
the same.
(b) The Seller hereby represents and warrants to the
Depositor, the Securities Administrator, the Master Servicer and the Trustee as
follows, as of the Closing Date:
(i) The Seller is duly organized as a Delaware corporation and
is validly existing and in good standing under the laws of the State of
Delaware and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the Seller
in any state in which a Mortgaged Property is located or is otherwise
not required under applicable law to effect such qualification and, in
any event, is in compliance with the doing business laws of any such
state, to the extent necessary to ensure its ability to enforce each
Mortgage Loan, to sell the Mortgage Loans in accordance with the terms
of this Agreement and to perform any of its other obligations under
this Agreement in accordance with the terms hereof.
(ii) The Seller has the full corporate power and authority to
sell each Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary corporate action on
the part of the Seller the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto, constitutes
a legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except that (a) the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the
Seller, the sale of the Mortgage Loans by the Seller under this
Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of the
Seller and will not (A) result in a material breach of any term or
provision of the charter or by-laws of the Seller or (B) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material default under, the terms of any other
material agreement or instrument to which the Seller is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to the Seller of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Seller; and the Seller is not in breach or
violation of any material indenture or other material agreement or
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instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over it which breach or violation may materially
impair the Seller's ability to perform or meet any of its obligations
under this Agreement.
(iv) The Seller is an approved seller of conventional mortgage
loans for Xxxxxx Mae or Xxxxxxx Mac and is a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and
211 of the National Housing Act.
(v) No litigation is pending or, to the best of the Seller's
knowledge, threatened, against the Seller that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Seller to sell the Mortgage Loans or to
perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Seller of, or compliance by the Seller with,
this Agreement or the consummation of the transactions contemplated
hereby, or if any such consent, approval, authorization or order is
required, the Seller has obtained the same.
(vii) With respect to each Mortgage Loan as of the Cut-off
Date (unless otherwise expressly provided):
(A) The information set forth in the Mortgage Loan Schedule on
the Closing Date is complete, true and correct.
(B) All payments required to be made prior to the Cut-off Date
with respect to each Mortgage Loan have been made and no Mortgage Loan is
delinquent sixty or more days; and the Seller has not advanced funds, or
induced, solicited or knowingly received any advance of funds from a party other
than the owner of the Mortgaged Property subject to the Mortgage, directly or
indirectly, for the payment of any amount required under any Mortgage Loan.
(C) Except with respect to taxes, insurance and other amounts
previously advanced by a prior servicer with respect to any Mortgage Loan, to
the best of Seller's knowledge, there are no delinquent taxes, water charges,
sewer rents, assessments, insurance premiums, leasehold payments, including
assessments payable in future installments, or other outstanding charges
affecting the related Mortgaged Property.
(D) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by written
instruments which in the case of the Mortgage Loans are in the Mortgage File and
have been or will be recorded, if necessary to protect the interests of the
Trustee, and which have been or will be delivered to the Trustee, all in
accordance with this Agreement. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required by
the related policy. No Mortgagor has been released, in whole or in part, except
in connection with an assumption agreement approved by the title insurer,
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to the extent required by the policy, and which assumption agreement in the case
of the Mortgage Loans is part of the Mortgage File.
(E) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto.
(F) All buildings upon, or comprising part of, the Mortgaged
Property are insured by an insurer acceptable to Xxxxxx Mae and Xxxxxxx Mac
against loss by fire, hazards of extended coverage and such other hazards as are
customary in the area where the Mortgaged Property is located, and such insurer
is licensed to do business in the state where the Mortgaged Property is located.
All such insurance policies contain a standard mortgagee clause naming the
originator, its successors and assigns as mortgagee and Seller has received no
notice that all premiums thereon have not been paid. If upon origination of the
Mortgage Loan, the Mortgaged Property was, or was subsequently deemed to be, in
an area identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards (and such flood insurance has been made
available), which require under applicable law that a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration (or any successor thereto) be obtained, such flood insurance
policy is in effect which policy is with a generally acceptable carrier in an
amount representing coverage not less than the least of (A) the Stated Principal
Balance of the related Mortgage Loan, (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis, or (C) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973. The Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at Mortgagor's cost and expense and, on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to maintain such insurance at
Mortgagor's cost and expense and to obtain reimbursement therefor from the
Mortgagor.
(G) Any and all requirements of any federal, state or local
law including, usury, truth in lending, real estate settlement procedures
including, the Real Estate Settlement Procedures Act of 1974, as amended,
consumer credit protection, equal credit opportunity or disclosure laws
applicable to the Mortgage Loan have been complied with in all material
respects.
(H) The Mortgage has not been satisfied, canceled,
subordinated, or rescinded, in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would effect any such release, cancellation,
subordination or rescission.
(I) The Mortgage is a valid, existing and enforceable first on
the Mortgaged Property, including all improvements on the Mortgaged Property, if
any, subject only to (1) the lien of current real property taxes and assessments
not yet due and payable, (2) covenants, conditions and restrictions, rights of
way, easements and other matters of the public record as of the date of
recording being acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered to the
originator of the Mortgage Loan and which do not
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adversely affect the Appraised Value of the Mortgaged Property and (3) other
matters to which like properties are commonly subject which do not materially
interfere with the benefits of the security intended to be provided by the
Mortgage. The Seller has full right to sell and assign the Mortgage to the
Depositor.
(J) The Mortgage Note and the related Mortgage are genuine and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency or reorganization or general principles
of equity.
(K) All parties to the Mortgage Note and the Mortgage had the
legal capacity to enter into the Mortgage Loan transaction and to execute and
deliver the Mortgage Note and the Mortgage, and the Mortgage Note and the
Mortgage have been duly and properly executed by such parties.
(L) The proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future advances thereunder and any and
all requirements as to completion of any on- site or off-site improvement and as
to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Mortgage Note or Mortgage.
(M) Immediately prior to the conveyance of the Mortgage Loans
by the Seller to the Depositor hereunder, the Seller was the sole owner and
holder of the Mortgage Loan; the related Originator or the Seller or the related
Servicer was the custodian of the related escrow account, if applicable; the
Mortgage Loan had neither been assigned nor pledged, and the Seller had good and
marketable title thereto, and had full right to transfer and sell the Mortgage
Loan and the related servicing rights to the Depositor free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest subject to
the Servicing Agreements, if applicable, and had full right and authority
subject to no interest or participation of, or agreement with, any other party,
to sell and assign the Mortgage Loan and the related servicing rights to the
Depositor pursuant to the terms of this Agreement.
(N) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (1) in compliance with
any and all applicable licensing requirements of the laws of the state wherein
the Mortgaged Property is located, and (2) organized under the laws of such
state, qualified to do business in such state, a federal savings and loan
association or national bank having principal offices in such state or not
deemed to be doing business in such state under applicable law.
(O) The Mortgage Loan is covered by an ALTA lender's title
insurance policy or equivalent form acceptable to the Department of Housing and
Urban Development, or any successor thereto, and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject to the
exceptions contained in clause (I) above) the Seller (as assignee), its
successors and assigns as to the first priority lien of the Mortgage in the
original principal amount
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of the Mortgage Loan and against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of the Mortgage Note
and/or Mortgage providing for adjustment in the Mortgage Rate and monthly
payment. Additionally, such lender's title insurance policy affirmatively
insures ingress and egress, and against encroachments by or upon the Mortgaged
Property or any interest therein. With respect to each Mortgage Loan, the Seller
(as assignee) is the sole insured of such lender's title insurance policy, and
such lender's title insurance policy is in full force and effect. No claims have
been made under such lender's title insurance policy, and no prior holder of the
related Mortgage, including the Seller in the case of a Mortgage Loan, has done,
by act or omission, anything which would impair the coverage of such lender's
title insurance policy. (P) Except as provided in clause (B), immediately prior
to the Cut-off Date, there was no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and there was no
event which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event of
acceleration, and the Seller has not waived any default, breach, violation or
event of acceleration.
(Q) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding that
under law could give rise to such lien) affecting the related Mortgaged Property
which are or may be liens prior to or equal with, the lien of the related
Mortgage.
(R) All improvements which were considered in any appraisal
which was used in determining the Appraised Value of the related Mortgaged
Property lay wholly within the boundaries and building restriction lines of the
Mortgaged Property, and no improvements on adjoining properties encroach upon
the Mortgaged Property.
(S) [Reserved]
(T) The origination, servicing and collection practices with
respect to each Mortgage Note and Mortgage including, the establishment,
maintenance and servicing of the escrow accounts and escrow payments, if any,
since origination, have been conducted in all respects in accordance with the
terms of Mortgage Note and in compliance with all applicable laws and
regulations and, unless otherwise required by law or Xxxxxx Xxx/Xxxxxxx Mac
standard, in accordance with the proper, prudent and customary practices in the
mortgage origination and servicing business. With respect to the escrow accounts
and escrow payments, if any, and an EMC Mortgage Loan all such payments are in
the possession or under the control of the Seller and there exists no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. Any interest required to be paid pursuant
to state and local law has been properly paid and credited.
(U) The Mortgaged Property is free of material damage and
waste and there is no proceeding pending for the total or partial condemnation
thereof.
(V) The Mortgage contains customary and enforceable provisions
to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
intended to be provided thereby, including, (1) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (2) otherwise by judicial
foreclosure.
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There is no other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage. The Mortgagor has not notified the Seller and the
Seller has no knowledge of any relief requested or allowed to the Mortgagor
under the Soldiers and Sailors Civil Relief Act of 1940.
(W) The Mortgage Note is not and has not been secured by any
collateral except the lien of the applicable Mortgage.
(X) [Reserved]
(Y) In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor.
(Z) No Mortgage Loan contains a permanent or temporary
"buydown" provision. The Mortgage Loan is not a graduated payment mortgage loan.
(AA) The Mortgagor has received all disclosure materials
required by applicable law with respect to the making of the Mortgage Loan.
(BB) No Mortgage Loan was made in connection with the
construction or rehabilitation of a Mortgaged Property.
(CC) To the best of Seller's knowledge, the Mortgaged Property
is lawfully occupied under applicable law and all inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities.
(DD) The assignment of Mortgage with respect to a Mortgage
Loan is in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located.
(EE) [Reserved].
(FF) [Reserved].
(GG) The Mortgaged Property consists of a single parcel of
real property with or without a detached single family residence erected
thereon, or an individual condominium unit, or a 2-4 family dwelling, or an
individual unit in a planned unit development as defined by Xxxxxx Xxx or a
manufactured dwelling which conforms with Xxxxxx Mae and Xxxxxxx Mac
requirements regarding such dwellings, or a townhouse, each structure of which
is permanently affixed to the Mortgaged Property, and is legally classified as
real estate.
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(HH) [Reserved]
(II) [Reserved].
(JJ) Each Mortgage Loan at the time of origination was
underwritten in general in accordance with guidelines not inconsistent with the
guidelines set forth in the Prospectus Supplement and generally accepted prime
credit underwriting guidelines.
(KK) No error, omission, misrepresentation, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on the part of the
Seller or the related Originator.
(LL) As of the Cut-off Date, none of the Mortgage Loans were
subject to the Home Ownership and Equity Protection Act of 1994 ("HOEPA").
(c) Upon discovery by any of the parties hereto of a breach of
a representation or warranty set forth in Section 2.03(b)(vii) that materially
and adversely affects the interests of the Certificateholders in any Mortgage
Loan (such determination to be made without regard to the Class A-5 Policy), the
party discovering such breach shall give prompt written notice thereof to the
other parties. Any breach of a representation or warranty contained in clause
(LL) above, shall be automatically deemed to affect materially and adversely the
interests of the Certificateholders. The Seller hereby covenants with respect to
the representations and warranties set forth in Section 2.03(b)(vii), that
within 90 days of the discovery of a breach of any representation or warranty
set forth therein that materially and adversely affects the interests of the
Certificateholders (such determination to be made without regard to the Class
A-5 Policy) in any Mortgage Loan, it shall cure such breach in all material
respects and, if such breach is not so cured, (i) if such 90-day period expires
prior to the second anniversary of the Closing Date, remove such Mortgage Loan
(a "Deleted Mortgage Loan") from the Trust Fund and substitute in its place a
Replacement Mortgage Loan, in the manner and subject to the conditions set forth
in this Section; or (ii) repurchase the affected Mortgage Loan or Mortgage Loans
from the Trustee at the Purchase Price in the manner set forth below; provided
that any such substitution pursuant to (i) above or repurchase pursuant to (ii)
above shall not be effected prior to the delivery to the Trustee and MBIA of an
Opinion of Counsel if required by Section 2.05 hereof and any such substitution
pursuant to (i) above shall not be effected prior to the additional delivery to
the Trustee of a Request for Release. The Seller shall promptly reimburse the
Master Servicer and the Trustee for any expenses reasonably incurred by the
Master Servicer or the Trustee in respect of enforcing the remedies for such
breach. To enable the Securities Administrator to amend the Mortgage Loan
Schedule, the Seller shall, unless it cures such breach in a timely fashion
pursuant to this Section 2.03, promptly notify the Securities Administrator
whether it intends either to repurchase, or to substitute for, the Mortgage Loan
affected by such breach. With respect to the representations and warranties in
Section 2.03(b)(vii) that are made to the best of the Seller's knowledge, if it
is discovered by any of the Depositor, the Master Servicer, the Seller, the
Securities Administrator or the Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan, notwithstanding the
Seller's lack of knowledge with respect to the substance of such representation
or warranty, the Seller shall nevertheless be required to cure, substitute for
or repurchase the affected Mortgage Loan in accordance with the foregoing.
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With respect to any Replacement Mortgage Loan or Loans, the
Seller shall deliver to the Trustee for the benefit of the Certificateholders
and MBIA such documents and agreements as are required by Section 2.01. No
substitution will be made in any calendar month after the Determination Date for
such month. Scheduled Payments due with respect to Replacement Mortgage Loans in
the Due Period related to the Distribution Date on which such proceeds are to be
distributed shall not be part of the Trust Fund and will be retained by the
Seller. For the month of substitution, distributions to Certificateholders will
include the Scheduled Payment due on any Deleted Mortgage Loan for the related
Due Period and thereafter the Seller shall be entitled to retain all amounts
received in respect of such Deleted Mortgage Loan. The Securities Administrator
shall amend the Mortgage Loan Schedule for the benefit of the Certificateholders
and MBIA to reflect the removal of such Deleted Mortgage Loan and the
substitution of the Replacement Mortgage Loan or Loans and the Securities
Administrator shall deliver the amended Mortgage Loan Schedule to the Trustee.
Upon such substitution, the Replacement Mortgage Loan or Loans shall be subject
to the terms of this Agreement in all respects, and the Seller shall be deemed
to have made with respect to such Replacement Mortgage Loan or Loans, as of the
date of substitution, the representations and warranties set forth in Section
2.03(b)(vii) with respect to such Mortgage Loan. Upon any such substitution and
the deposit into the Master Servicer Collection Account of the amount required
to be deposited therein in connection with such substitution as described in the
following paragraph and receipt by the Trustee of a Request for Release for such
Mortgage Loan, the Trustee shall release to the Seller the Mortgage File
relating to such Deleted Mortgage Loan and held for the benefit of the
Certificateholders and shall execute and deliver at the Seller's direction such
instruments of transfer or assignment as have been prepared by the Seller, in
each case without recourse, as shall be necessary to vest in the Seller, or its
respective designee, title to the Trustee's interest in any Deleted Mortgage
Loan substituted for pursuant to this Section 2.03.
For any month in which the Seller substitutes one or more
Replacement Mortgage Loans for a Deleted Mortgage Loan, the Master Servicer will
determine the amount (if any) by which the aggregate principal balance of all
the Replacement Mortgage Loans as of the date of substitution is less than the
Stated Principal Balance (after application of the principal portion of the
Scheduled Payment due in the month of substitution) of such Deleted Mortgage
Loan. An amount equal to the aggregate of such deficiencies, described in the
preceding sentence for any Distribution Date (such amount, the "Substitution
Adjustment Amount") shall be deposited into the Master Servicer Collection
Account, by the Seller delivering such Replacement Mortgage Loan on the
Determination Date for the Distribution Date relating to the Prepayment Period
during which the related Mortgage Loan became required to be purchased or
replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage
Loan, the Purchase Price therefor shall be deposited into the Master Servicer
Collection Account maintained by the Master Servicer, on the Determination Date
for the Distribution Date in the month following the month during which the
Seller became obligated to repurchase or replace such Mortgage Loan and upon
such deposit of the Purchase Price, the delivery of an Opinion of Counsel if
required by Section 2.05 and the receipt of a Request for Release, the Trustee
shall release the related Mortgage File held for the benefit of the
Certificateholders to the Seller, and the Trustee shall execute and deliver at
such Person's direction the related instruments of transfer or assignment
prepared by the Seller, in each case without recourse, as shall be necessary to
transfer title from the Trustee for the benefit of the Certificateholders and
transfer the Trustee's interest to the Seller to any Mortgage Loan
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purchased pursuant to this Section 2.03. It is understood and agreed that the
obligation under this Agreement of the Seller to cure, repurchase or replace any
Mortgage Loan as to which a breach has occurred and is continuing shall
constitute the sole remedies against the Seller respecting such breach available
to the Certificateholders, the Depositor or the Trustee.
(d) The representations and warranties set forth in Section
2.03 hereof shall survive delivery of the respective Mortgage Loans and Mortgage
Files to the Trustee or the Custodian for the benefit of the Certificateholders
and MBIA.
Section 2.04 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents and warrants to the Master
Servicer, the Securities Administrator and the Trustee as follows, as of the
date hereof and as of the Closing Date:
(i) The Depositor is duly organized and is validly existing as
a corporation in good standing under the laws of the State of Delaware
and has full power and authority (corporate and other) necessary to own
or hold its properties and to conduct its business as now conducted by
it and to enter into and perform its obligations under this Agreement.
(ii) The Depositor has the full corporate power and authority
to execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and has duly authorized,
by all necessary corporate action on its part, the execution, delivery
and performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the Depositor in accordance with its
terms, subject, as to enforceability, to (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and (ii) general principles of equity, regardless of
whether enforcement is sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement by the
Depositor, the consummation of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Depositor and will not
(A) result in a material breach of any term or provision of the charter
or by-laws of the Depositor or (B) materially conflict with, result in
a material breach, violation or acceleration of, or result in a
material default under, the terms of any other material agreement or
instrument to which the Depositor is a party or by which it may be
bound or (C) constitute a material violation of any statute, order or
regulation applicable to the Depositor of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Depositor; and the Depositor is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Depositor's
ability to perform or meet any of its obligations under this Agreement.
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(iv) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Depositor to
perform its obligations under this Agreement in accordance with the
terms hereof.
(v) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Depositor of, or compliance by the Depositor
with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee as
of the Closing Date, following the transfer of the Mortgage Loans to it by the
Seller, the Depositor had good title to the Mortgage Loans and the related
Mortgage Notes were subject to no offsets, claims, defenses or counterclaims.
It is understood and agreed that the representations and
warranties set forth in the immediately preceding paragraph shall survive
delivery of the Mortgage Files to the Trustee or the Custodian for the benefit
of the Certificateholders and MBIA. Upon discovery by the Depositor or the
Trustee of a breach of such representations and warranties, the party
discovering such breach shall give prompt written notice to the others, to each
Rating Agency and to MBIA.
Section 2.05 DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH
SUBSTITUTIONS AND REPURCHASES.
(a) Notwithstanding any contrary provision of this Agreement,
with respect to any Mortgage Loan that is not in default or as to which default
is not imminent, no repurchase or substitution pursuant to Sections 2.02 or 2.03
shall be made unless the Seller delivers to the Trustee and MBIA an Opinion of
Counsel, addressed to the Trustee and MBIA, to the effect that such repurchase
or substitution would not (i) result in the imposition of the tax on "prohibited
transactions" of REMIC I, REMIC II or REMIC III or contributions after the
Closing Date, as defined in sections 860F(a)(2) and 860G(d) of the Code,
respectively or (ii) cause any of REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC at any time that any Certificates are outstanding. Any
Mortgage Loan as to which repurchase or substitution was delayed pursuant to
this paragraph shall be repurchased or the substitution therefor shall occur
(subject to compliance with Sections 2.02 or 2.03) upon the earlier of (a) the
occurrence of a default or imminent default with respect to such Mortgage Loan
and (b) receipt by the Trustee and MBIA of an Opinion of Counsel to the effect
that such repurchase or substitution, as applicable, will not result in the
events described in clause (i) or clause (ii) of the preceding sentence.
(b) Upon discovery by the Depositor, the Seller or the Master
Servicer that any Mortgage Loan does not constitute a "qualified mortgage"
within the meaning of section 860G(a)(3) of the Code, the party discovering such
fact shall promptly (and in any event within 5 Business Days of discovery) give
written notice thereof to the other parties and the Trustee. In connection
therewith, the Trustee shall require the Seller, at the Seller's option, to
either (i) substitute, if the conditions in Section 2.03(c) with respect to
substitutions are satisfied, a Replacement Mortgage Loan for the
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affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within 90
days of such discovery in the same manner as it would a Mortgage Loan for a
breach of representation or warranty contained in Section 2.03. The Trustee
shall reconvey to the Seller the Mortgage Loan to be released pursuant hereto in
the same manner, and on the same terms and conditions, as it would a Mortgage
Loan repurchased for breach of a representation or warranty contained in Section
2.03.
Section 2.06 COUNTERSIGNATURE AND DELIVERY OF CERTIFICATES.
The Trustee acknowledges the sale, transfer and assignment to
it of the Trust Fund and, concurrently with such transfer and assignment, has
executed, countersigned and delivered, to or upon the order of the Depositor,
the Certificates in authorized denominations evidencing the entire ownership of
the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and MBIA and to perform the duties set forth in this Agreement
in accordance with its terms.
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ARTICLE III
ADMINISTRATION AND SERVICING OF EMC MORTGAGE LOANS BY COMPANY
Section 3.01 THE COMPANY.
The Company shall service and administer the EMC Mortgage
Loans in accordance with customary and usual standards of practice of prudent
mortgage loan servicers in the respective states in which the related Mortgaged
Properties are located. In connection with such servicing and administration,
the Company shall have full power and authority, acting alone and/or through
subservicers as provided in Section 3.03, to do or cause to be done any and all
things that it may deem necessary or desirable in connection with such servicing
and administration, including but not limited to, the power and authority,
subject to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any related Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided herein), (iii) to collect any Insurance Proceeds and
other Liquidation Proceeds, and (iv) subject to Section 3.09, to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any EMC Mortgage Loan; provided that the Company shall take no action
that is inconsistent with or prejudices the interests of the Trust Fund, MBIA or
the Certificateholders in any EMC Mortgage Loan or the rights and interests of
the Depositor and the Trustee under this Agreement.
Without limiting the generality of the foregoing, the Company,
in its own name or in the name of the Trust, the Depositor or the Trustee, is
hereby authorized and empowered by the Trust, the Depositor and the Trustee,
when the Company believes it appropriate in its reasonable judgment, to execute
and deliver, on behalf of the Trustee, the Depositor, the Certificateholders or
any of them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge and all other comparable instruments, with
respect to the EMC Mortgage Loans, and with respect to the related Mortgaged
Properties held for the benefit of the Certificateholders. The Company shall
prepare and deliver to the Depositor and/or the Trustee such documents requiring
execution and delivery by any or all of them as are necessary or appropriate to
enable the Company to service and administer the EMC Mortgage Loans. Upon
receipt of such documents, the Depositor and/or the Trustee shall execute such
documents and deliver them to the Company.
In accordance with the standards of the first paragraph of
this Section 3.01, the Company shall advance or cause to be advanced funds as
necessary for the purpose of effecting the payment of taxes and assessments on
the Mortgaged Properties relating to the EMC Mortgage Loans, which advances
shall be reimbursable in the first instance from related collections from the
Mortgagors pursuant to Section 5.03, and further as provided in Section 5.02.
All costs incurred by the Company, if any, in effecting the timely payments of
taxes and assessments on the Mortgaged Properties relating to the EMC Mortgage
Loans and related insurance premiums shall not, for the purpose of calculating
monthly distributions to the Certificateholders, be added to the Stated
Principal Balance under the related EMC Mortgage Loans, notwithstanding that the
terms of such Mortgage Loans so permit.
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Section 3.02 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.
(a) Except as otherwise provided in this Section 3.02, when
any property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Company shall to the extent that it has knowledge of such
conveyance, enforce any due-on-sale clause contained in any Mortgage Note or
Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Company is not required to exercise such
rights with respect to an EMC Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies the
terms and conditions contained in the Mortgage Note and Mortgage related thereto
and the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a condition to
such transfer. In the event that the Company is prohibited by law from enforcing
any such due-on-sale clause, or if coverage under any Required Insurance Policy
would be adversely affected, or if nonenforcement is otherwise permitted
hereunder, the Company is authorized, subject to Section 3.02(b), to take or
enter into an assumption and modification agreement from or with the person to
whom such property has been or is about to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, unless prohibited by
applicable state law, the Mortgagor remains liable thereon, provided that the
Mortgage Loan shall continue to be covered (if so covered before the Company
enters such agreement) by the applicable Required Insurance Policies. The
Company, subject to Section 3.02(b), is also authorized with the prior approval
of the insurers under any Required Insurance Policies to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Company shall not be deemed to be in default under this Section
3.02(a) by reason of any transfer or assumption that the Company reasonably
believes it is restricted by law from preventing.
(b) Subject to the Company's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.02(a), in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, and such Person
is to enter into an assumption agreement or modification agreement or supplement
to the Mortgage Note or Mortgage that requires the signature of the Trustee, or
if an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the related EMC Mortgage Loan, the Company shall
prepare and deliver or cause to be prepared and delivered to the Trustee for
signature and shall direct, in writing, the Trustee to execute the assumption
agreement with the Person to whom the Mortgaged Property is to be conveyed and
such modification agreement or supplement to the Mortgage Note or Mortgage or
other instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In connection with any such assumption, no material term of the Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of the Scheduled
Payment and any other term affecting the amount or timing of payment on the
Mortgage Loan) may be changed. In addition, the substitute Mortgagor and the
Mortgaged Property must be acceptable to the Company in accordance with its
servicing standards as then in effect. The Company shall notify the Trustee that
any such substitution or assumption agreement has been completed by forwarding
to the Trustee the original of such substitution or assumption agreement, which
in the case of the original shall be
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added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Any fee collected by the Company for
entering into an assumption or substitution of liability agreement will be
retained by the Company as additional servicing compensation.
Section 3.03 SUBSERVICERS.
The Company shall perform all of its servicing
responsibilities hereunder or may cause a subservicer to perform any such
servicing responsibilities on its behalf, but the use by the Company of a
subservicer shall not release the Company from any of its obligations hereunder
and the Company shall remain responsible hereunder for all acts and omissions of
each subservicer as fully as if such acts and omissions were those of the
Company. The Company shall pay all fees of each subservicer from its own funds,
and a subservicer's fee shall not exceed the Servicing Fee payable to the
Company hereunder.
At the cost and expense of the Company, without any right of
reimbursement from its Protected Account, the Company shall be entitled to
terminate the rights and responsibilities of a subservicer and arrange for any
servicing responsibilities to be performed by a successor subservicer; provided,
however, that nothing contained herein shall be deemed to prevent or prohibit
the Company, at the Company's option, from electing to service the related EMC
Mortgage Loans itself. In the event that the Company's responsibilities and
duties under this Agreement are terminated pursuant to Section 9.03, the Company
shall at its own cost and expense terminate the rights and responsibilities of
each subservicer effective as of the date of termination of the Company. The
Company shall pay all fees, expenses or penalties necessary in order to
terminate the rights and responsibilities of each subservicer from the Company's
own funds without reimbursement from the Trust Fund.
Notwithstanding the foregoing, the Company shall not be
relieved of its obligations hereunder and shall be obligated to the same extent
and under the same terms and conditions as if it alone were servicing and
administering the EMC Mortgage Loans. The Company shall be entitled to enter
into an agreement with a subservicer for indemnification of the Company by the
subservicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
Any subservicing agreement and any other transactions or
services relating to the EMC Mortgage Loans involving a subservicer shall be
deemed to be between such subservicer and the Company alone, and neither the
Master Servicer nor the Trustee shall have any obligations, duties or
liabilities with respect to such subservicer including any obligation, duty or
liability of either the Master Servicer or the Trustee to pay such subservicer's
fees and expenses. For purposes of remittances to the Master Servicer pursuant
to this Agreement, the Company shall be deemed to have received a payment on an
EMC Mortgage Loan when a subservicer has received such payment.
Section 3.04 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF COMPANY
TO BE HELD FOR TRUSTEE.
Notwithstanding any other provisions of this Agreement, the
Company shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of an EMC
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Mortgage Loan coming into the possession of the Company from time to time and
shall account fully to the Trustee for any funds received by the Company or that
otherwise are collected by the Company as Liquidation Proceeds or Insurance
Proceeds in respect of any such Mortgage Loan. All Mortgage Files and funds
collected or held by, or under the control of, the Company in respect of any EMC
Mortgage Loans, whether from the collection of principal and interest payments
or from Liquidation Proceeds, including but not limited to, any funds on deposit
in the Protected Account maintained by the Company, shall be held by the Company
for and on behalf of the Trustee and shall be and remain the sole and exclusive
property of the Trustee, subject to the applicable provisions of this Agreement.
The Company also agrees that it shall not create, incur or subject any Mortgage
File or any funds that are deposited in the Protected Account maintained by the
Company or the Master Servicer Collection Account or in any Escrow Account, or
any funds that otherwise are or may become due or payable to the Trustee for the
benefit of the Certificateholders, to any claim, lien, security interest,
judgment, levy, writ of attachment or other encumbrance, or assert by legal
action or otherwise any claim or right of set off against any Mortgage File or
any funds collected on, or in connection with, an EMC Mortgage Loan, except,
however, that the Company shall be entitled to set off against and deduct from
any such funds any amounts that are properly due and payable to the Company
under this Agreement.
Section 3.05 MAINTENANCE OF HAZARD INSURANCE.
The Company shall cause to be maintained, for each EMC
Mortgage Loan, hazard insurance on buildings upon, or comprising part of, the
Mortgaged Property against loss by fire, hazards of extended coverage and such
other hazards as are customary in the area where the related Mortgaged Property
is located with an insurer which is licensed to do business in the state where
the related Mortgaged Property is located. Each such policy of standard hazard
insurance shall contain, or have an accompanying endorsement that contains, a
standard mortgagee clause. The Company shall also cause flood insurance to be
maintained on property acquired upon foreclosure or deed in lieu of foreclosure
of any EMC Mortgage Loan, to the extent described below. Pursuant to Section
5.01, any amounts collected by the Company under any such policies (other than
the amounts to be applied to the restoration or repair of the related Mortgaged
Property or property thus acquired or amounts released to the Mortgagor in
accordance with the Company's normal servicing procedures) shall be deposited in
the Protected Account maintained by the Company. Any cost incurred by the
Company in maintaining any such insurance shall not, for the purpose of
calculating monthly distributions to the Certificateholders or remittances to
the Trustee for their benefit, be added to the principal balance of the Mortgage
Loan, notwithstanding that the terms of the EMC Mortgage Loan so permit. Such
costs shall be recoverable by the Company out of late payments by the related
Mortgagor or out of Liquidation Proceeds to the extent permitted by Section
5.02. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property is located at the time of
origination of the EMC Mortgage Loan in a federally designated special flood
hazard area and such area is participating in the national flood insurance
program, the Company shall cause flood insurance to be maintained with respect
to such Mortgage Loan. Such flood insurance shall be in an amount equal to the
least of (i) the Stated Principal Balance of the related Mortgage Loan, (ii)
minimum amount required to compensate for damage or
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loss on a replacement cost basis or (iii) the maximum amount of such insurance
available for the related Mortgaged Property under the Flood Disaster Protection
Act of 1973, as amended.
In the event that the Company shall obtain and maintain a
blanket policy insuring against hazard losses on all of the Mortgage Loans, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first sentence of this Section 3.05, it being understood and agreed that
such policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Company shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.05, and there shall have
been a loss that would have been covered by such policy, deposit in the
Protected Account maintained by the Company the amount not otherwise payable
under the blanket policy because of such deductible clause. Such deposit shall
be from the Company's own funds without reimbursement therefor. In connection
with its activities as administrator and servicer of the EMC Mortgage Loans, the
Company agrees to present, on behalf of itself, the Depositor and the Trustee
for the benefit of the Certificateholders and MBIA, claims under any such
blanket policy.
Section 3.06 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.
The Company shall prepare and present on behalf of the
Trustee, the Certificateholders and MBIA all claims under the Insurance Policies
and take such actions (including the negotiation, settlement, compromise or
enforcement of the insured's claim) as shall be necessary to realize recovery
under such Insurance Policies. Any proceeds disbursed to the Company in respect
of such Insurance Policies shall be promptly deposited in the Protected Account
maintained by the Company 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 3.07 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE
POLICIES.
(a) The Company shall not take any action that would result in
noncoverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of the Company would have been covered thereunder.
The Company shall use its best efforts to keep in force and effect (to the
extent that the Mortgage Loan requires the Mortgagor to maintain such
insurance), Primary Mortgage Insurance applicable to each EMC Mortgage Loan. The
Company shall not cancel or refuse to renew any such Primary Mortgage Insurance
Policy that is in effect at the date of the initial issuance of the Mortgage
Note and is required to be kept in force hereunder.
(b) The Company agrees to present on behalf of the Trustee and
the Certificateholders, claims to the insurer under any Primary Mortgage
Insurance Policies and, in this regard, to take such reasonable action as shall
be necessary to permit recovery under any Primary Mortgage Insurance Policies
respecting defaulted Mortgage Loans. Pursuant to Section 5.01, any amounts
collected by the Company under any Primary Mortgage Insurance Policies shall be
deposited in the Protected Account maintained by the Company, subject to
withdrawal pursuant to Section 5.02 hereof.
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Section 3.08 FIDELITY BOND, ERRORS AND OMISSIONS INSURANCE.
The Company shall maintain, at its own expense, a blanket
fidelity bond and an errors and omissions insurance policy, with broad coverage
with responsible companies on all officers, employees or other persons acting in
any capacity with regard to the EMC Mortgage Loans and who handle funds, money,
documents and papers relating to the EMC Mortgage Loans. The fidelity bond and
errors and omissions insurance shall be in the form of the Mortgage Banker's
Blanket Bond and shall protect and insure the Company against losses, including
forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of
such persons. Such fidelity bond shall also protect and insure the Company
against losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of an EMC
Mortgage Loan which is not in accordance with Accepted Servicing Practices. No
provision of this Section 3.08 requiring the fidelity bond and errors and
omissions insurance shall diminish or relieve the Company from its duties and
obligations as set forth in this Agreement. The minimum coverage under any such
bond and insurance policy shall be at least equal to the corresponding amounts
required by Accepted Servicing Practices. The Company shall deliver to the
Master Servicer a certificate from the surety and the insurer as to the
existence of the fidelity bond and errors and omissions insurance policy and
shall obtain a statement from the surety and the insurer that such fidelity bond
or insurance policy shall in no event be terminated or materially modified
without thirty days prior written notice to the Master Servicer and the Trustee.
The Company shall notify the Master Servicer and the Trustee within five
business days of receipt of notice that such fidelity bond or insurance policy
will be, or has been, materially modified or terminated. The Trustee for the
benefit of the Certificateholders and MBIA must be named as loss payees on the
fidelity bond and as additional insured on the errors and omissions policy.
Section 3.09 REALIZATION UPON DEFAULTED MORTGAGE LOANS;
DETERMINATION OF EXCESS LIQUIDATION PROCEEDS AND
REALIZED LOSSES; REPURCHASES OF CERTAIN MORTGAGE
LOANS.
(a) The Company shall use reasonable efforts to foreclose upon
or otherwise comparably convert the ownership of properties securing such of the
EMC Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the Company shall follow
such practices and procedures as it shall deem necessary or advisable and as
shall be normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided that
the Company shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration of any property unless it shall determine
(i) that such restoration and/or foreclosure will increase the proceeds of
liquidation of the EMC Mortgage Loan after reimbursement to itself of such
expenses and (ii) that such expenses will be recoverable to it through
Liquidation Proceeds (respecting which it shall have priority for purposes of
withdrawals from the Protected Account maintained by the Company pursuant to
Section 5.02). If the Company reasonably believes that Liquidation Proceeds with
respect to any such Mortgage Loan would not be increased as a result of such
foreclosure or other action, such Mortgage Loan will be charged-off and will
become a Liquidated Loan. The Company will give notice of any such charge-off to
the Trustee, the Securities Administrator and MBIA. The Company shall be
responsible for all other costs and expenses incurred by it in any such
proceedings; provided that
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such costs and expenses shall be Servicing Advances and that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property, as contemplated in Section 5.02. If the Company has
knowledge that a Mortgaged Property that the Company is contemplating acquiring
in foreclosure or by deed- in-lieu of foreclosure is located within a one-mile
radius of any site with environmental or hazardous waste risks known to the
Company, the Company will, prior to acquiring the Mortgaged Property, consider
such risks and only take action in accordance with its established environmental
review procedures.
With respect to any REO Property, the deed or certificate of
sale shall be taken in the name of the Trustee for the benefit of the
Certificateholders and MBIA (or the Trustee's nominee on behalf of the
Certificateholders). The Trustee's name shall be placed on the title to such REO
Property solely as the Trustee hereunder and not in its individual capacity. The
Company shall ensure that the title to such REO Property references this
Agreement and the Trustee's capacity hereunder. Pursuant to its efforts to sell
such REO Property, the Company shall either itself or through an agent selected
by the Company protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Certificateholders and MBIA, rent the same, or any part thereof, as the Company
deems to be in the best interest of the Company and the Certificateholders and
MBIA for the period prior to the sale of such REO Property. The Company shall
prepare for and deliver to the Trustee a statement with respect to each REO
Property that has been rented showing the aggregate rental income received and
all expenses incurred in connection with the management and maintenance of such
REO Property at such times as is necessary to enable the Trustee to comply with
the reporting requirements of the REMIC Provisions. The net monthly rental
income, if any, from such REO Property shall be deposited in the Protected
Account maintained by the Company no later than the close of business on each
Determination Date. The Company shall perform the tax reporting and withholding
related to receipt of mortgage interest received in a trade or business,
foreclosures, abandonments and cancellation of indebtedness income as specified
by Sections 1445, 6050H, 6050J and 6050P of the Code by preparing and filing
such tax and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or imminent
default on an EMC Mortgage Loan, the Company shall dispose of such Mortgaged
Property prior to three years after its acquisition by the Trust Fund or, at the
expense of the Trust Fund, request more than 60 days prior to the day on which
such three-year period would otherwise expire, an extension of the three-year
grace period unless the Trustee and MBIA shall have been supplied with an
Opinion of Counsel (such opinion not to be an expense of the Trustee) to the
effect that the holding by the Trust Fund of such Mortgaged Property subsequent
to such three-year period will not result in the imposition of taxes on
"prohibited transactions" of REMIC I, REMIC II or REMIC III as defined in
section 860F of the Code or cause any of REMIC I, REMIC II or REMIC III to fail
to qualify as a REMIC at any time that any Certificates are outstanding, in
which case the Trust Fund may continue to hold such Mortgaged Property (subject
to any conditions contained in such Opinion of Counsel). Notwithstanding any
other provision of this Agreement, no Mortgaged Property acquired by the Trust
Fund shall be rented (or allowed to continue to be rented) or otherwise used for
the production of income by or on behalf of the Trust Fund in such a manner or
pursuant to any terms that would (i) cause such Mortgaged Property to fail to
qualify as "foreclosure property" within the meaning of section 860G(a)(8) of
the
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Code or (ii) subject any of REMIC I, REMIC II or REMIC III to the imposition of
any federal, state or local income taxes on the income earned from such
Mortgaged Property under section 860G(c) of the Code or otherwise, unless the
Company has agreed to indemnify and hold harmless the Trust Fund with respect to
the imposition of any such taxes.
The decision of the Company to foreclose on a defaulted EMC
Mortgage Loan shall be subject to a determination by the Company that the
proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. The income earned from the management of any Mortgaged
Properties acquired through foreclosure or other judicial proceeding, net of
reimbursement to the Company for expenses incurred (including any property or
other taxes) in connection with such management and net of unreimbursed
Servicing Fees, Advances, Servicing Advances and any management fee paid or to
be paid with respect to the management of such Mortgaged Property, shall be
applied to the payment of principal of, and interest on, the related defaulted
EMC Mortgage Loans (with interest accruing as though such Mortgage Loans were
still current) and all such income shall be deemed, for all purposes in the
Agreement, to be payments on account of principal and interest on the related
Mortgage Notes and shall be deposited into the Protected Account maintained by
the Company. To the extent the income received during a Prepayment Period is in
excess of the amount attributable to amortizing principal and accrued interest
at the related Mortgage Rate on the related EMC Mortgage Loan, such excess shall
be considered to be a partial Principal Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage
Loan, net of any payment to the Company as provided above, shall be deposited in
the Protected Account maintained by the Company on the next succeeding
Determination Date following receipt thereof for distribution on the related
Distribution Date, except that any Excess Liquidation Proceeds shall be retained
by the Company as additional servicing compensation.
The proceeds of any Liquidated Loan, as well as any recovery
resulting from a partial collection of Liquidation Proceeds or any income from
an REO Property, will be applied in the following order of priority: first, to
reimburse the Company for any related unreimbursed Servicing Advances and
Servicing Fees, pursuant to Section 5.02 or this Section 3.09; second, to
reimburse the Company for any unreimbursed Advances, pursuant to Section 5.02 or
this Section 3.09; third, to accrued and unpaid interest (to the extent no
Advance has been made for such amount) on the EMC Mortgage Loan or related REO
Property, at the Net Mortgage Rate to the first day of the month in which such
amounts are required to be distributed; and fourth, as a recovery of principal
of the Mortgage Loan.
(b) On each Determination Date, the Company shall determine
the respective aggregate amounts of Excess Liquidation Proceeds and Realized
Losses, if any, for the related Prepayment Period.
(c) The Company has no intent to foreclose on any EMC Mortgage
Loan based on the delinquency characteristics as of the Closing Date; provided,
that the foregoing does not prevent the Company from initiating foreclosure
proceedings on any date hereafter if the facts and circumstances of such
Mortgage Loans including delinquency characteristics in the Company's discretion
so warrant such action.
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Section 3.10 SERVICING COMPENSATION.
As compensation for its activities hereunder, the Company
shall be entitled to retain or withdraw from its Protected Account out of each
payment of interest on an EMC Mortgage Loan included in the Trust Fund an amount
equal to the Servicing Fee.
Additional servicing compensation in the form of any Excess
Liquidation Proceeds, assumption fees, late payment charges, all income and gain
net of any losses realized from Permitted Investments with respect to funds in
or credited to the Protected Account maintained by the Company shall be retained
by the Company to the extent not required to be deposited in the Protected
Account maintained by the Company pursuant to Section 5.02. The Company shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of any premiums for hazard insurance, as
required by Section 3.05 and maintenance of the other forms of insurance
coverage required by Section 3.07) and shall not be entitled to reimbursement
therefor except as specifically provided in Section 5.02.
Section 3.11 REO PROPERTY.
(a) In the event the Trust Fund acquires ownership of any REO
Property in respect of any related EMC Mortgage Loan, the deed or certificate of
sale shall be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders and MBIA. The Company shall sell any REO Property as
expeditiously as possible and in accordance with the provisions of this
Agreement. Pursuant to its efforts to sell such REO Property, the Company shall
protect and conserve such REO Property in the manner and to the extent required
herein, in accordance with the REMIC Provisions.
(b) The Company shall deposit all funds collected and received
in connection with the operation of any REO Property into the Protected Account
maintained by the Company.
(c) The Company, upon the final disposition of any REO
Property, shall be entitled to reimbursement for any related unreimbursed
Advances, unreimbursed Servicing Advances or Servicing Fees from Liquidation
Proceeds received in connection with the final disposition of such REO Property;
provided, that any such unreimbursed Advances or Servicing Fees as well as any
unpaid Servicing Fees may be reimbursed or paid, as the case may be, prior to
final disposition, out of any net rental income or other net amounts derived
from such REO Property.
Section 3.12 LIQUIDATION REPORTS.
Upon the foreclosure of any Mortgaged Property relating to an
EMC Mortgage Loan or the acquisition thereof by the Trust Fund pursuant to a
deed-in-lieu of foreclosure, the Company shall submit a liquidation report to
the Master Servicer and MBIA containing such information as shall be mutually
acceptable to the Company and the Master Servicer with respect to such Mortgaged
Property.
Section 3.13 ANNUAL CERTIFICATE AS TO COMPLIANCE.
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The Company will deliver to the Master Servicer and MBIA not
later than 90 days following the end of each fiscal year of the Company
beginning in 2003, an certificate of a Servicing Officer stating, as to each
signatory thereof, that (i) a review of the activities of the Company during the
preceding calendar year and of performance under this Agreement has been made
under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Company has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officers and the nature and status thereof except for such
defaults as such officer in its good faith judgment believe to be immaterial.
Section 3.14 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
SERVICING REPORT.
Not later than 120 days following the end of each fiscal year
of the Company, the Company at its expense shall cause a firm of independent
public accountants which is a member of the American Institute of Certified
Public Accountants to furnish a statement to the Master Servicer and MBIA to the
effect that such firm has examined certain documents and records relating to the
Company's servicing of mortgage loans of the same type as the EMC Mortgage Loans
pursuant to servicing agreements substantially similar to this Agreement, which
agreements may include this Agreement, and that, on the basis of such an
examination, conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, such firm is of the opinion that the
Company's servicing has been conducted in compliance with the agreements
examined pursuant to this Section 3.14, except for (i) such exceptions as such
firm shall believe to be immaterial,(ii) such other exceptions as shall be set
forth in such statement and (iii) such exceptions that the Uniform Single
Attestation Program for Mortgage Bankers requires it to report.
Section 3.15 BOOKS AND RECORDS.
The Company shall be responsible for maintaining, and shall
maintain, a complete set of books and records for the EMC Mortgage Loans which
shall be appropriately identified in the Company's computer system to clearly
reflect the ownership of the EMC Mortgage Loans by the Trust. In particular, the
Company shall maintain in its possession, available for inspection by the Master
Servicer, the Trustee and MBIA and shall deliver to Master Servicer, the Trustee
and MBIA upon demand, evidence of compliance with all federal, state and local
laws, rules and regulations. To the extent that original documents are not
required for purposes of realization of Liquidation Proceeds or Insurance
Proceeds, documents maintained by the Company may be in the form of microfilm or
microfiche or such other reliable means of recreating original documents,
including, but not limited to, optical imagery techniques so long as the Company
complies with the requirements of Accepted Servicing Practices.
The Company shall maintain with respect to each EMC Mortgage
Loan and shall make available for inspection by the Master Servicer, the Trustee
and MBIA the related servicing file during the time such EMC Mortgage Loan is
subject to this Agreement and thereafter in accordance with applicable law.
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ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 MASTER SERVICER. The Master Servicer shall supervise,
monitor and oversee the obligation of the Company and the Servicers to service
and administer their respective Mortgage Loans in accordance with the terms of
this Agreement and the 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 the Company and the Servicers as necessary from
time-to-time to carry out the Master Servicer's obligations hereunder, shall
receive, review and evaluate all reports, information and other data provided to
the Master Servicer by the Company and the Servicers and shall cause the Company
and the Servicers to perform and observe the covenants, obligations and
conditions to be performed or observed by such Person under this Agreement and
the Servicing Agreements. The Master Servicer shall independently and separately
monitor the Company and the Servicers' 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 Company's, the Servicers' and Master Servicer's
records, and based on such reconciled and corrected information, prepare the
statements specified in Section 6.05 and any other information and statements
required hereunder. The Master Servicer shall reconcile the results of its
Mortgage Loan monitoring with the actual remittances of the Company and the
Servicers to the Protected Accounts pursuant to this Agreement and the Servicing
Agreements.
The Trustee shall furnish the Company, 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 Company, the Servicers and the Master
Servicer to service and administer the related Mortgage Loans and REO Property.
The Trustee and the Securities Administrator shall provide access to
the records and documentation in possession of the Trustee or the Securities
Administrator 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 or the Securities Administrator; provided, however, that, unless
otherwise required by law, neither the Trustee nor the Securities Administrator
shall be required to provide access to such records and documentation if the
provision thereof would violate the legal right to privacy of any Mortgagor. The
Trustee and the Securities Administrator shall 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 or the
Securities Administrator's actual costs.
The Trustee shall execute and deliver to the Company or the Servicers
and the Master Servicer any court pleadings, requests for trustee's sale or
other documents necessary or desirable
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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.
Section 4.02 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 Company, any Servicer or the Master Servicer to assure such
continuing treatment. In particular, the Trustee shall not (a) sell or permit
the sale of all or any portion of the Mortgage Loans or of any investment of
deposits in an Account unless such sale is as a result of a repurchase of the
Mortgage Loans pursuant to this Agreement or the Trustee and MBIA has received a
REMIC Opinion prepared at the expense of the Trust Fund; and (b) other than with
respect to a substitution pursuant to the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, accept any contribution to any
REMIC after the Startup Day without receipt of a REMIC Opinion.
Section 4.03 MONITORING OF COMPANY AND SERVICERS. (a) The Master
Servicer shall be responsible for reporting to the Trustee and the Seller the
compliance by the Company and each Servicer with its duties under this Agreement
and the Servicing Agreements. In the review of the Company's and the Servicers'
activities, the Master Servicer may rely upon an Officer's Certificate of the
Company and the Servicers with regard to such Person's compliance with the terms
of this Agreement or the Servicing Agreements. In the event that the Master
Servicer, in its judgment, determines that the Company or any Servicer should be
terminated in accordance with this Agreement or the applicable Servicing
Agreement, or that a notice should be sent pursuant to this Agreement or 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 the Company under
this Agreement and the Servicers under the Servicing Agreements, and shall, in
the event that the Company or any Servicer fails to perform its obligations in
accordance with this Agreement or the applicable Servicing Agreement, subject to
the preceding paragraph, terminate the rights and obligations of such Person
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, subject to its right of reimbursement pursuant to the provisions of
this Agreement or the applicable Servicing Agreement, provided that the Master
Servicer shall not be required to prosecute or defend any legal action except
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to the extent that the Master Servicer shall have received reasonable indemnity
for its costs and expenses in pursuing such action.
(c) To the extent that the costs and expenses of the Master Servicer
related to any termination of the Company or a Servicer, appointment of a
successor Servicer or the transfer and assumption of servicing by the Master
Servicer with respect to this Agreement or the applicable 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 Company or a Servicer as a result of an event of default by
such Person and (ii) all costs and expenses associated with the complete
transfer of servicing, including all servicing files and all servicing data and
the completion, correction or manipulation of such servicing data as may be
required by the successor servicer to correct any errors or insufficiencies in
the servicing data or otherwise to enable the successor service to service the
Mortgage Loans in accordance with this Agreement or the related Servicing
Agreement) are not fully and timely reimbursed by the Company or 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 the Company and the Servicers to
comply with the remittance requirements and other obligations set forth in this
Agreement or the Servicing Agreements, as applicable.
(e) If the Master Servicer acts as a servicer, it will not assume
liability for the representations and warranties of the Company or the
Servicers, if any, that it replaces.
Section 4.04 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 4.05 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 XI 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 applicable Servicing Agreement, as applicable; provided,
however, that the Master Servicer shall not (and, consistent with its
responsibilities under Section 4.03, 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, REMIC II or REMIC III to fail to
qualify
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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 has received an
Opinion of Counsel (but not at the expense of the Master Servicer or MBIA) to
the effect that the contemplated action will not would cause REMIC I, REMIC II
or REMIC III to fail to qualify as a REMIC or result in the imposition of a tax
upon REMIC I, REMIC II or REMIC III, as the case may be. The Trustee shall
furnish the Master Servicer, upon written request from a Servicing Officer, with
any powers of attorney empowering the Master Servicer, the Company or the
related Servicer to execute and deliver instruments of satisfaction or
cancellation, or of partial or full release or discharge, and to foreclose upon
or otherwise liquidate Mortgaged Property, and to appeal, prosecute or defend in
any court action relating to the Mortgage Loans or the Mortgaged Property, in
accordance with the applicable Servicing Agreement and this Agreement, and the
Trustee shall execute and deliver such other documents, as the Master Servicer
may request, to enable 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, the
Company 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 10.11 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 4.06 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. To the extent
provided in this Agreement or the applicable Servicing Agreement, to the extent
Mortgage Loans contain enforceable due-on-sale clauses, the Master Servicer
shall cause the Company and the related Servicer to enforce such clauses in
accordance with this Agreement or 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 this Agreement or the applicable
Servicing Agreement, and, as a consequence, a Mortgage Loan is assumed, the
original Mortgagor may be released from liability in accordance with this
Agreement or the applicable Servicing Agreement.
Section 4.07 RELEASE OF MORTGAGE FILES. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or the receipt by the Company or a
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 Company or such Servicer will, if required under the
applicable Servicing Agreement, promptly furnish to the Custodian, on behalf of
the Trustee, two copies of a certification substantially in the form of Exhibit
H hereto signed by a Servicing Officer or in a mutually agreeable electronic
format which will, in lieu of a signature on its face, originate from a
Servicing Officer (which certification shall include a statement to the effect
that all amounts received in connection with such payment that are required to
be deposited in the Protected Account maintained by the Company or such Servicer
pursuant to Article V or by such Servicer pursuant to the applicable Servicing
Agreement have been or will be so deposited) and shall request that the
Custodian, on behalf of the Trustee, deliver to the Company or such Servicer the
related Mortgage
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File. Upon receipt of such certification and request, the Custodian, on behalf
of the Trustee, shall promptly release the related Mortgage File to the Company
or the related Servicer and the Trustee and Custodian shall have no further
responsibility with regard to such Mortgage File. Upon any such payment in full,
the Company or the related 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 this Agreement or the
applicable Servicing Agreement, the Trustee shall execute such documents as
shall be prepared and furnished to the Trustee by the Company, the related
Servicer or the Master Servicer (in form reasonably acceptable to the Trustee)
and as are necessary to the prosecution of any such proceedings. The Custodian,
on behalf of the Trustee, shall, upon the request of the Company, the related
Servicer or the Master Servicer, and delivery to the Custodian, on behalf of the
Trustee, of two copies of a request for release signed by a Servicing Officer
substantially in the form of Exhibit H (or in a mutually agreeable electronic
format which will, in lieu of a signature on its face, originate from a
Servicing Officer), release the related Mortgage File held in its possession or
control to the Company, the related Servicer or the Master Servicer, as
applicable. Such trust receipt shall obligate the Company, the related Servicer
or the Master Servicer to return the Mortgage File to the Custodian on behalf of
the Trustee, when the need therefor by such Person 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 Company,
the related Servicer or the Master Servicer.
Section 4.08 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF
MASTER SERVICER, COMPANY AND THE SERVICERS TO BE HELD
FOR TRUSTEE.
(a) The Master Servicer shall transmit and the Company or the related
Servicer (to the extent required by this Agreement or the related Servicing
Agreement) shall transmit to the Trustee or Custodian such documents and
instruments coming into the possession of such Person from time to time as are
required by the terms hereof, or in the case of the related Servicer, the
applicable Servicing Agreement, to be delivered to the Trustee or Custodian. Any
funds received by the Master Servicer, the Company or by the related Servicer in
respect of any Mortgage Loan or which otherwise are collected by the Master
Servicer, the Company or by the related Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan shall be held for the benefit
of the Trustee, MBIA and the Certificateholders subject to the Master Servicer's
right to retain or withdraw from the Master Servicer Collection Account the
Master Servicing Fee and other amounts provided in this Agreement, and to the
right of the Company and the related Servicer to retain its Servicing Fee and
other amounts as provided in this Agreement or the applicable Servicing
Agreement. The Master Servicer shall, and (to the extent provided in this
Agreement or the applicable Servicing Agreement) shall cause the Company and the
related Servicer to, provide access to information and documentation regarding
the Mortgage Loans to the Trustee, its agents and
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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, MBIA and the Certificateholders and shall be and remain the sole
and exclusive property of the Trustee; provided, however, that the Master
Servicer, the Company and each Servicer shall be entitled to setoff against, and
deduct from, any such funds any amounts that are properly due and payable to the
Master Servicer or such Servicer under this Agreement or the applicable
Servicing Agreement.
Section 4.09 STANDARD HAZARD INSURANCE AND FLOOD INSURANCE
POLICIES.
(a) For each Mortgage Loan, the Master Servicer shall enforce any
obligation of the Company and the related Servicer under this Agreement or the
applicable Servicing Agreement to maintain or cause to be maintained standard
fire and casualty insurance and, where applicable, flood insurance, all in
accordance with the provisions of this Agreement or the applicable Servicing
Agreement. It is understood and agreed that such insurance shall be with
insurers meeting the eligibility requirements set forth in this Agreement and
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 Sections 5.01, 5.03 and 5.04 any amounts collected by
the Company, any Servicer or the Master Servicer, or by the Company or 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 this Agreement or the applicable
Servicing Agreement) shall be deposited by the Company in its Protected Account
or by the Servicer or the Master Servicer into the Master Servicer Collection
Account, subject to withdrawal pursuant to Sections 5.02, 5.03, 5.04 and 5.06,
as applicable. Any cost incurred by the Master Servicer, the Company 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, the Company or any Servicer pursuant to
Sections 5.02, 5.03, 5.04 and 5.06, as applicable.
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Section 4.10 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS. The
Master Servicer shall (to the extent provided in this Agreement and the related
Servicing Agreement) cause the Company or 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 the Company or any 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 4.11 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE
POLICIES.
(a) The Master Servicer shall not take, or permit the Company or any
Servicer (to the extent such action is prohibited under this Agreement or 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, the Company or such Servicer,
would have been covered thereunder. The Master Servicer shall use its best
reasonable efforts to cause the Company and each Servicer (to the extent
required under this Agreement and 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 (including any LPMI Policy) in accordance with the provisions of this
Agreement and the related Servicing Agreement, as applicable. The Master
Servicer shall not, and shall not permit the Company or any Servicer (to the
extent required under this Agreement or 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 cause the Company and each Servicer
(to the extent required under this Agreement and the related Servicing
Agreement) to present, on behalf of the Trustee, MBIA and the
Certificateholders, claims to the insurer under any Primary Mortgage Insurance
Policies and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any Primary Mortgage Insurance Policies
respecting defaulted Mortgage Loans. Pursuant to Sections 5.01, 5.03 and 5.04,
any amounts collected by the Company or such Servicer under any Primary Mortgage
Insurance Policies shall be deposited by the Company in its Protected Account or
by such Servicer in the Master Servicer Collection Account, subject to
withdrawal pursuant to Section 5.03 or 5.04, as applicable.
Section 4.12 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
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time to time as contemplated by this Agreement. Until all amounts distributable
in respect of the Certificates and MBIA 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 4.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS. The Master
Servicer shall cause the Company and each Servicer (to the extent required under
this Agreement and 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 this Agreement or the related Servicing Agreement.
Section 4.14 COMPENSATION FOR THE MASTER SERVICER.
The Master Servicer shall be entitled to the Master Servicing
Fee on each Distribution Date as compensation for the performance of its
obligations hereunder. In addition, pursuant to Article V all income and gain
realized from any investment of funds in the Distribution Account and the Master
Servicer Collection Account shall be for the benefit of the Master Servicer as
additional compensation. The Master Servicer will be entitled to retain, as
additional compensation, any interest remitted by the Servicer in connection
with a Principal Prepayment in full or otherwise in excess of amounts required
to be remitted to the Master Servicer Collection Account. The Master Servicer
shall be required to pay all expenses incurred by it in connection with its
activities hereunder and shall not be entitled to reimbursement therefor except
as provided in this Agreement.
Section 4.15 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 this Agreement or the related Servicing Agreement, cause the Company or the
related 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 Company or the related Servicer to protect and
conserve, such REO Property in the manner and to the extent required by this
Agreement or the related 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 this Agreement
or the related Servicing Agreement, cause the Company or the related Servicer to
deposit all funds collected and received in connection with the operation of any
REO Property in the Protected Account.
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(c) The Master Servicer and the Company or the related Servicer, upon
the final disposition of any REO Property, shall be entitled to reimbursement
for any related unreimbursed 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 this Agreement or 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 Company or the
related 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 Remittance Date.
Section 4.16 ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
(a) The Master Servicer shall deliver to the Trustee, the Rating
Agencies and MBIA on or before May 31 of each year, commencing on May 31, 2003,
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 such default known to such Servicing Officer and the nature and
status thereof, (iii) nothing has come to the attention of such Servicing
Officer to lead such Servicing Officer to believe that the Company or any
Servicer has failed to perform any of its duties, responsibilities and
obligations under this Agreement or the related 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 4.17 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 May 31 of each year, commencing on May 31, 2003 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
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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 4.18 REPORTS FILED WITH SECURITIES AND EXCHANGE COMMISSION.
Within 15 days after each Distribution Date, the Securities Administrator shall,
in accordance with industry standards, file with the Commission via the
Electronic Data Gathering and Retrieval System ("XXXXX"), a Form 8-K with a copy
of the statement to the Trustee who shall furnish a copy of the statement to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 2003, 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 March
30, 2003, the Securities Administrator shall file a Form 10-K, in substance
conforming to industry standards, with respect to the Trust Fund. 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
4.18; 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"). Copies of all reports filed by the Securities
Administrator under the Exchange Act shall be sent to: the Seller c/o Bear,
Xxxxxxx & Co. Inc., Attn: Managing Director-Analysis and Control, Xxx Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000- 3859. Fees and expenses incurred by the
Securities Administrator in connection with this Section 4.18 shall not be
reimbursable from the Trust Fund.
Section 4.19 EMC. On the Closing Date, EMC will receive from the Seller
a payment of $5,000.
Section 4.20 UCC. The Trustee agrees to file continuation statements
for any Uniform Commercial Code financing statements which the Seller has
informed the Trustee were filed on the Closing Date in connection with the
Trust. The Seller shall file any financing statements or amendments thereto
required by any change in the Uniform Commercial Code.
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Section 4.21 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.
With respect to any Mortgage Loans 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 any Mortgage Loan from the Trust
which becomes 90 days or more delinquent or becomes an REO Property 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.
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 at the request of EMC without
recourse to EMC which shall succeed to all the Trustee's right, title and
interest in and to such Mortgage Loan, and all security and documents relative
thereto. Such assignment shall be an assignment outright and not for security.
EMC will thereupon own such Mortgage, 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 V
ACCOUNTS
Section 5.01 COLLECTION OF MORTGAGE LOAN PAYMENTS; PROTECTED
ACCOUNT.
(a) The Company shall make reasonable efforts in accordance
with customary and usual standards of practice of prudent mortgage lenders in
the respective states in which the Mortgaged Properties are located to collect
all payments called for under the terms and provisions of the Mortgage Loans to
the extent such procedures shall be consistent with this Agreement and the terms
and provisions of any related Required Insurance Policy. Consistent with the
foregoing, the Company may in its discretion (i) waive any late payment charge
and (ii) extend the due dates for payments due on a Mortgage Note for a period
not greater than 125 days. In the event of any such arrangement, the Company
shall make Advances on the related Mortgage Loan during the scheduled period in
accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements, and shall be entitled to
reimbursement therefor in accordance with Section 6.01. The Company shall not be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note or otherwise or against any
public or governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law. In addition, if (x) a Mortgage Loan is in default or default is
imminent and (y) the Company delivers to the Trustee and MBIA a certification,
based on the advice of counsel or certified public accountants, in either case,
that have a national reputation with respect to taxation of REMICs, that a
modification of such Mortgage Loan will not result in the imposition of taxes on
or disqualify any of REMIC I, REMIC II or REMIC III, the Company may, (A) amend
the related Mortgage Note to reduce the Net Mortgage Rate applicable thereto,
provided that such reduced Net Mortgage Rate shall in no event be lower than
8.00% and (B) amend any Mortgage Note to extend to the maturity thereof.
(b) The Company shall establish and maintain a Protected
Account (which shall at all times be an Eligible Account) with a depository
institution in the name of the Company for the benefit of the Trustee on behalf
of the Certificateholders and MBIA and designated "Bank One, National
Association, in trust for registered holders of Bear Xxxxxxx Asset Backed
Securities, Inc., Asset-Backed Certificates Series 2002-AC3". The Company shall
deposit or cause to be deposited into the Protected Account on a daily basis
within one Business Day of receipt, except as otherwise specifically provided
herein, the following payments and collections remitted by subservicers or
received by it in respect of the EMC Mortgage Loans subsequent to the Cut-off
Date (other than in respect of principal and interest due on the EMC Mortgage
Loans on or before the Cut-off Date) and the following amounts required to be
deposited hereunder:
(i) all payments on account of principal, including Principal
Prepayments, on the EMC Mortgage Loans;
(ii) all payments on account of interest on the EMC Mortgage
Loans net of the related Servicing Fee permitted under Section 3.10 and
LPMI Fees, if any;
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(iii) all Liquidation Proceeds, other than proceeds to be
applied to the restoration or repair of the Mortgaged Property or
released to the Mortgagor in accordance with the Company's normal
servicing procedures;
(iv) any amount required to be deposited by the Company
pursuant to Section 5.01(c) in connection with any losses on Permitted
Investments;
(v) any amounts required to be deposited by the Company
pursuant to Section 3.05;
(vi) any Prepayment Charges collected on the EMC Mortgage
Loans; and
(vii) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Company into
the Protected Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of late
payment charges or assumption fees, if collected, need not be remitted by the
Company. In the event that the Company shall remit any amount not required to be
remitted and not otherwise subject to withdrawal pursuant to Section 5.02, it
may at any time withdraw or direct the institution maintaining the Protected
Account, to withdraw such amount from the Protected Account, any provision
herein to the contrary notwithstanding. Such withdrawal or direction may be
accomplished by delivering written notice thereof to the institution maintaining
the Protected Account, that describes the amounts deposited in error in the
Protected Account. The Company shall maintain adequate records with respect to
all withdrawals made pursuant to this Section. All funds deposited in the
Protected Account (other than any Prepayment Charges deposited therein) shall be
held in trust for the Certificateholders and MBIA until withdrawn in accordance
with Section 5.02. Notwithstanding anything to the contrary contained herein, in
the event that the Company assigns the servicing obligations with respect to all
or a portion of the EMC Mortgage Loans to a successor pursuant to Section
8.05(b) hereof, such successor may be entitled to retain the Prepayment Charges
with respect to any EMC Mortgage Loans serviced by such successor and collected
directly from the related Mortgagor and may not be required to remit any such
Prepayment Charges to the Master Servicer in accordance with Section 5.04(c)
hereof.
(c) The institution that maintains the Protected Account shall
invest the funds in the Protected Account, in the manner directed by the
Company, in Permitted Investments which shall mature not later than the
Remittance Date and shall not be sold or disposed of prior to its maturity. All
such Permitted Investments shall be made in the name of the Trustee, for the
benefit of the Certificateholders and MBIA. All income and gain net of any
losses realized from any such investment shall be for the benefit of the Company
as servicing compensation and shall be remitted to it monthly as provided
herein. The amount of any losses incurred in the Protected Account in respect of
any such investments shall be deposited by the Company into the Protected
Account, out of the Company's own funds.
(d) The Company shall give at least 30 days advance notice to
the Trustee, the Seller, the Master Servicer, each Rating Agency, MBIA and the
Depositor of any proposed change of location of the Protected Account prior to
any change thereof.
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Section 5.02 PERMITTED WITHDRAWALS FROM THE PROTECTED ACCOUNT.
(a) The Company may from time to time make withdrawals from
the Protected Account for the following purposes:
(i) to pay itself (to the extent not previously paid to or
withheld by the Company), as servicing compensation in accordance with
Section 3.10, that portion of any payment of interest that equals the
Servicing Fee for the period with respect to which such interest
payment was made, and, as additional servicing compensation, those
other amounts set forth in Section 3.10;
(ii) to reimburse the Company for Advances made by it with
respect to the Mortgage Loans, provided, however, that the Company's
right of reimbursement pursuant to this subclause (ii) shall be limited
to amounts received on particular Mortgage Loan(s) (including, for this
purpose, Liquidation Proceeds) that represent late recoveries of
payments of principal and/or interest on such particular Mortgage
Loan(s) in respect of which any such Advance was made;
(iii) to reimburse the Company for any previously made portion
of a Servicing Advance or an Advance made by the Company that, in the
good faith judgment of the Company, will not be ultimately recoverable
by it from the related Mortgagor, any related Liquidation Proceeds or
otherwise (a "Nonrecoverable Advance"), to the extent not reimbursed
pursuant to clause (ii) or clause (v);
(iv) to reimburse the Company from Insurance Proceeds for
Insured Expenses covered by the related Insurance Policy;
(v) to pay the Company any unpaid Servicing Fees and to
reimburse it for any unreimbursed Servicing Advances, provided,
however, that the Company's right to reimbursement for Servicing
Advances pursuant to this subclause (v) with respect to any Mortgage
Loan shall be limited to amounts received on particular Mortgage
Loan(s) (including, for this purpose, Liquidation Proceeds and purchase
and repurchase proceeds) that represent late recoveries of the payments
for which such Servicing Advances were made;
(vi) to pay to the Seller, the Depositor or itself, as
applicable, with respect to each Mortgage Loan or property acquired in
respect thereof that has been purchased pursuant to Section 2.02 or
2.03 of this Agreement, all amounts received thereon and not taken into
account in determining the related Stated Principal Balance of such
repurchased Mortgage Loan;
(vii) to pay any expenses recoverable by the Company pursuant
to Sections 8.04 of this Agreement;
(viii) to withdraw pursuant to Section 5.01 any amount
deposited in the Protected Account and not required to be deposited
therein; and
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(ix) to clear and terminate the Protected Account upon
termination of this Agreement pursuant to Section 11.01 hereof.
In addition, no later than 1:00 p.m. Eastern time on the
Remittance Date, the Company shall withdraw from the Protected Account and remit
to the Master Servicer the amount required to be withdrawn therefrom pursuant to
Section 5.04 hereof. In addition, on or before the Remittance Date, the Company
shall remit to the Master Servicer for deposit in the Master Servicer Collection
Account any Advances or any payments of Compensating Interest required to be
made by the Company with respect to the EMC Mortgage Loans.
The Company shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Protected Account pursuant to subclauses (i), (ii), (iv),
(v) and (vi) above. Prior to making any withdrawal from the Protected Account
pursuant to subclause (iii), the Company shall deliver to the Trustee and MBIA
an Officer's Certificate of a Servicing Officer indicating the amount of any
previous Advance or Servicing Advance determined by the Company to be a
Nonrecoverable Advance and identifying the related Mortgage Loan(s), and their
respective portions of such Nonrecoverable Advance.
Section 5.02A REPORTS TO MASTER SERVICER.
On or before the tenth calendar day of each month, the Company
shall furnish to the Master Servicer electronically in a format acceptable to
the Master Servicer loan accounting reports in the investor's assigned loan
number order to document the payment activity on each EMC Mortgage Loan on an
individual mortgage loan basis. With respect to each month, such loan accounting
reports shall contain the following:
(i) With respect to each Scheduled Payment (on both an actual
and scheduled basis with respect to mortgage loan balances and on an
actual basis with respect to paid-through dates), the amount of such
remittance allocable to principal (including a separate breakdown of
any Principal Prepayment, including the amount of any Prepayment
Interest Shortfall);
(ii) with respect to each Monthly Payment, the amount of such
remittance allocable to scheduled interest;
(iii) the amount of servicing compensation received by the
Company during the prior calendar month;
(iv) the aggregate scheduled principal balance of the EMC
Mortgage Loans;
(v) the aggregate amount of Advances made by the Company
pursuant to Section 6.01;
(vi) the aggregate of any expenses reimbursed to the Company
during the prior calender month pursuant to Section 5.02;
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(vii) the number and aggregate outstanding principal balances
of EMC Mortgage Loans (a) delinquent (1) 30 to 59 days, (2) 60 to 89
days, (3) 90 days or more; (b) as to which foreclosure has commenced;
and (c) as to which REO Property has been acquired; and
(viii) the amount of any Prepayment Charges collected by the
Company.
Section 5.03 COLLECTION OF TAXES; ASSESSMENTS AND SIMILAR ITEMS;
ESCROW ACCOUNTS.
With respect to each EMC Mortgage Loan, to the extent required
by the related Mortgage Note, the Company shall establish and maintain one or
more accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors (or advances by the Company) for the payment of
taxes, assessments, hazard insurance premiums or comparable items for the
account of the Mortgagors. Nothing herein shall require the Company to compel a
Mortgagor to establish an Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts
may be made only to effect timely payment of taxes, assessments, hazard
insurance premiums, condominium or PUD association dues, or comparable items, to
reimburse the Company out of related collections for any payments made with
respect to each EMC Mortgage Loan pursuant to Section 3.01 (with respect to
taxes and assessments and insurance premiums) and Section 3.05 (with respect to
hazard insurance), to refund to any Mortgagors for any EMC Mortgage Loans any
sums as may be determined to be overages, to pay interest, if required by law or
the terms of the related Mortgage or Mortgage Note, to such Mortgagors on
balances in the Escrow Account or to clear and terminate the Escrow Account at
the termination of this Agreement in accordance with Section 11.01 thereof. The
Escrow Account shall not be a part of the Trust Fund.
Section 5.04 SERVICER PROTECTED ACCOUNTS. (a) The Master Servicer shall
enforce the obligation of the Company and each Servicer to establish and
maintain a Protected Account in accordance with this Agreement and the Servicing
Agreements, with records to be kept with respect thereto on a Mortgage Loan by
Mortgage Loan basis, into which accounts shall be deposited within one Business
Day (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 with
respect to any REO Property received by the Company or the related Servicer,
including Principal Prepayments, Insurance Proceeds, Liquidation Proceeds, and
advances made from the Company's or such Servicer's own funds (less servicing
compensation as permitted by this Agreement or the related Servicing Agreement)
and all other amounts to be deposited in the Protected Accounts. Each of the
Company and the Servicers are 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 this Agreement or the related
Servicing Agreement, the Protected Account shall be held in 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 this Agreement or 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 MBIA and, except as provided in the preceding paragraph,
not commingled with any other funds, such Permitted Investments to mature,
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or to be subject to redemption or withdrawal, no later than the date on which
such funds are required to be withdrawn for deposit in the Master Servicer
Collection Account, and shall be held until required for such deposit. The
income earned from Permitted Investments made pursuant to this Section 5.04
shall be paid to the Company or the related Servicer under this Agreement or the
related Servicing Agreement, and the risk of loss of moneys required to be
distributed to the Certificateholders and MBIA resulting from such investments
shall be borne by and be the risk of the Company or the related Servicer, as the
case may be. The Company or any Servicer (to the extent provided in this
Agreement or the applicable 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 and MBIA.
(c) To the extent provided in this Agreement or the related
Servicing Agreement and subject to this Article V, on or before each Remittance
Date, the Company or the related Servicer shall withdraw or shall cause to be
withdrawn from its Protected Account 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 the Company pursuant to this Agreement or
the Servicers pursuant to the Servicing Agreements which were due on or before
the related Due Date, net of the amount thereof comprising the Servicing Fees
and LPMI Fees, if any;
(ii) Full Principal Prepayments and any Liquidation Proceeds
received by the Company or the Servicer with respect to such Mortgage Loans in
the related Prepayment Period, with interest to the date of prepayment or
liquidation, net of the amount thereof comprising the Servicing Fees and LPMI
Fees, if any;
(iii) Partial Principal Prepayments received by the Company or
the Servicers for such Mortgage Loans in the related Prepayment Period; and
(iv) Any amount to be used as an Advance.
In addition, on each Remittance Date the Company and the Servicers
shall remit the amount of any Prepayment Charges collected on the Mortgage Loans
to the Master Servicer for deposit in the Reserve Account. Amounts on deposit in
the Reserve Account shall be held in trust for the benefit of EMC.
(d) Withdrawals may be made from a Protected Account by the
Company as described in Section 5.02 hereof and by the Master Servicer or the
Servicers only to make remittances as provided in Section 5.04(c), 5.05 and
5.06; to reimburse the Master Servicer or the Servicers for Advances which have
been recovered by subsequent collection from the related Mortgagor; to remove
amounts deposited in error; to remove fees, charges or other such amounts
deposited on a temporary basis; or to clear and terminate the account at the
termination of this Agreement in accordance with Section 11.01. As provided in
Sections 5.04(c) and 5.05(b) certain
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amounts otherwise due to the Servicers may be retained by them and need not be
deposited in the Master Servicer Collection Account.
Section 5.05 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 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 (other than
any Prepayment Charges with respect to the Mortgage Loans);
(ii) Any Advance and any Compensating Interest Payments;
(iii) Any Insurance Proceeds or Liquidation Proceeds received
by or on behalf of the Master Servicer or which were not deposited in a
Protected Account;
(iv) The Repurchase Price with respect to any Mortgage Loans
purchased by the Seller pursuant to Section 2.02 or Section 2.03, any amounts
which are to be treated pursuant to Section 2.04 of this Agreement as the
payment of such a Repurchase Price, the Repurchase Price with respect to any
Mortgage Loans purchased by EMC pursuant to Section 4.21, and all proceeds of
any Mortgage Loans or property acquired with respect thereto repurchased by the
Company or its designee pursuant to Section 11.01;
(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 or the Trustee and required to be deposited in the Master Servicer
Collection Account pursuant to this Agreement.
(b) All amounts deposited to the Master Servicer Collection
Account shall be held by the Master Servicer in the name of the Trustee in trust
for the benefit of the Certificateholders 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 late payment charges or assumption, tax
service, statement account or payoff, substitution, satisfaction, release and
other like fees and charges, 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 shall be invested, in the name of the Trustee, or its
nominee, for the benefit of the Certificateholders
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and MBIA, in Permitted Investments as directed by Master Servicer. All Permitted
Investments shall mature or be subject to redemption or withdrawal on or before,
and shall be held until, the next succeeding Distribution Account Deposit Date.
Any and all investment earnings from the Master Servicer Collection Account
shall be paid to the Master Servicer. The risk of loss of moneys required to be
distributed to the Certificateholders resulting from such investments shall be
borne by and be the risk of the Master Servicer. The Master Servicer shall
deposit the amount of any such loss in the Master Servicer Collection Account
within two Business Days of receipt of notification of such loss but not later
than the second Business Day prior to the Distribution Date on which the moneys
so invested are required to be distributed to the Certificateholders.
Section 5.05A RESERVE ACCOUNT. (a) The Master Servicer shall establish
and maintain with itself a separate, segregated trust account, which shall be an
Eligible Account, titled "Reserve Account, Xxxxx Fargo Bank Minnesota, National
Association, as Master Servicer f/b/o EMC Mortgage Corporation, Bear Xxxxxxx
Asset Backed Securities, Inc., Asset Backed Certificates, Series 2002-AC3". All
Prepayment Charges remitted to the Master Servicer by the Company and the
Servicers with respect to the Mortgage Loans on each Remittance Date shall be
deposited in the Reserve Account immediately upon receipt thereof. Funds on
deposit in the Reserve Account shall be held in trust by the Master Servicer for
EMC. The Master Servicer shall have no obligation to independently verify the
calculation of any Prepayment Charge or the amounts remitted to it as Prepayment
Charges.
(b) The amount at any time credited to the Reserve Account shall be
invested by the Master Servicer in Permitted Investments as directed by EMC. 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. All
amounts on deposit in the Reserve Account (including any income and gain
realized from investment of funds on deposit therein) shall be remitted by the
Master Servicer to EMC on the Distribution Date immediately following the
related Remittance Date. For federal income tax purposes, the Reserve Account
constitutes an "outside reserve fund" within the meaning of Treasury Regulation
ss.1.860G-2(h), shall not be an asset of any REMIC and shall be treated as owned
by EMC.
Section 5.06 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE MASTER
SERVICER COLLECTION ACCOUNT.
(a) The Master Servicer 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 Master Servicer Collection Account as the
Master Servicer has designated for such transfer or withdrawal pursuant to the
Servicing Agreements. The Master Servicer may clear and terminate the Master
Servicer Collection Account pursuant to Section 11.01 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 to pay itself as provided in Section
4.14 and to pay any expenses recoverable by the Trustee, the Master Servicer or
the Securities Administrator pursuant to Sections 4.03, 8.03, 8.04 and 10.05.
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(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 Advances required to be made by
the Master Servicer with respect to the Mortgage Loans.
(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 5.07 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 an Eligible
Account of the Trust Fund segregated on the books of the Trustee and held by the
Trustee 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 (whether made directly, or
indirectly through a liquidator or receiver of the Trustee). The amount at any
time credited to the Distribution Account may be invested in the name of the
Trustee, in such Permitted Investments, or deposited in demand deposits with
such depository institutions, as directed by the Master Servicer. All Permitted
Investments shall mature or be subject to redemption or withdrawal on or before,
and shall be held until, the next succeeding Distribution Date if the obligor
for such Permitted Investment is the Master Servicer 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 receive distribution of any
and all investment earnings from the Distribution Account on each Distribution
Date. If there is any loss on a Permitted Investment or demand deposit, the
Master Servicer shall deposit the amount of the loss in the Distribution
Account. With respect to the Distribution Account and the funds deposited
therein, the Trustee shall take such action as may be necessary to ensure that
the Certificateholders and MBIA 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 5.08 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
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to this Agreement or 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):
(i) to reimburse the Master Servicer, the Company or any
Servicer for any Advance of its own funds or any Servicing Advance of the
Company's or such Servicer's own funds, the right of the Master Servicer, the
Company or the Servicers 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 Advance or Servicing
Advance was made;
(ii) to reimburse the Master Servicer, the Company or any
Servicer from Insurance Proceeds or Liquidation Proceeds relating to a
particular Mortgage Loan for amounts expended by the Master Servicer, the
Company 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, the Company 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, the Company 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 (x) of this Subsection (a) to the
Master Servicer; and (ii) such Liquidation Expenses were not included in the
computation of such Excess Liquidation Proceeds;
(iv) reserved;
(v) reserved;
(vi) to reimburse the Master Servicer, the Company or any
Servicer for advances of funds pursuant to this Agreement or the related
Servicing Agreement, 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, the Company or any
Servicer for any Advance or advance, after a Realized Loss has been allocated
with respect to the related Mortgage Loan if the Advance or advance has not been
reimbursed pursuant to clauses (i) and (vi);
(viii) to pay the Master Servicer as set forth in Section
4.14;
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(ix) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Sections 4.03,
8.04(c) and (d) and 12.02 or otherwise reimbursable to it pursuant to this
Agreement;
(x) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds to the extent not retained by the
Company or the related Servicer;
(xi) to reimburse or pay the Company or any Servicer any such
amounts as are due thereto under this Agreement or the related Servicing
Agreement and have not been retained by or paid to the Company or such Servicer,
to the extent provided herein and in the related Servicing Agreement;
(xii) to reimburse the Trustee or the Securities Administrator
for expenses, costs and liabilities incurred by or reimbursable to it pursuant
to this Agreement;
(xiii) to remove amounts deposited in error; and
(xiv) to clear and terminate the Distribution Account pursuant
to Section 11.01.
(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 5.06.
(c) On each Distribution Date, the Trustee shall distribute
the Interest Funds and Principal Funds in the Distribution Account to the
holders of the Certificates and MBIA in accordance with Section 6.04.
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ARTICLE VI
DISTRIBUTIONS AND ADVANCES
Section 6.01 ADVANCES.
(a) The Company shall make an Advance with respect to any EMC Mortgage
Loan and deposit such Advance in the Master Servicer Collection Account no later
than 1:00 p.m. Eastern time on the Remittance Date in immediately available
funds. The Master Servicer shall cause each Servicer to remit any such Advance
required pursuant to the terms of the Servicing Agreements. The Company or any
Servicer, as applicable, shall be obligated to make any such Advance only to the
extent that such advance would not be a Nonrecoverable Advance. If the Company
or a Servicer shall have determined that it has made a Nonrecoverable Advance or
that a proposed Advance or a lesser portion of such Advance would constitute a
Nonrecoverable Advance, the Company or such Servicer, as the case may be, shall
deliver (i) to the Trustee for the benefit of the Certificateholders and MBIA
funds constituting the remaining portion of such Advance, if applicable, and
(ii) to the Depositor, the Master Servicer each Rating Agency, MBIA and the
Trustee an Officer's Certificate setting forth the basis for such determination.
In lieu of making all or a portion of such Advance from its
own funds, the Company may (i) cause to be made an appropriate entry in its
records relating to the Protected Account that any Amounts Held for Future
Distribution has been used by the Company in discharge of its obligation to make
any such Advance and (ii) transfer such funds from the Protected Account to the
Distribution Account. Any funds so applied and transferred shall be replaced by
the Company by deposit in the Distribution Account, no later than the close of
business on the Remittance Date immediately preceding the Distribution Date on
which such funds are required to be distributed pursuant to this Agreement.
The Company shall be entitled to be reimbursed from the
Protected Account for all Advances of its own funds made pursuant to this
Section as provided in Section 5.02. The obligation to make Advances with
respect to any Mortgage Loan shall continue until such Mortgage Loan is paid in
full or the related Mortgaged Property or related REO Property has been
liquidated or until the purchase or repurchase thereof (or substitution
therefor) from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section 6.01.
(b) 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 Company or a Servicer was required to make an
Advance pursuant to this Agreement or 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 Master Servicing Fee and
Servicing Fee for such Mortgage Loan except to the extent the Master Servicer
determines any such Advance to be nonrecoverable from Liquidation Proceeds,
Insurance Proceeds or future payments on the Mortgage Loan for which such
Advance was made. Subject to
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the foregoing, the Master Servicer shall continue to make such Advances through
the date that the Company or the related Servicer is required to do so under
this Agreement or the related Servicing Agreement, as applicable. If applicable,
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 an Advance in a stated amount and (ii) detailing the
reason it deems the advance to be nonrecoverable.
Subject to and in accordance with the provisions of Article IX
hereof, in the event the Master Servicer fails to make such Advance, then the
Trustee, as Successor Master Servicer, shall be obligated to make such Advance,
subject to the provisions of this Section 6.01.
Section 6.02 COMPENSATING INTEREST PAYMENTS.
(a) In the event that there is a Prepayment Interest Shortfall arising
from a voluntary Principal Prepayment in part or in full by the Mortgagor with
respect to any EMC Mortgage Loan, the Company shall, to the extent of the
Servicing Fee for such Distribution Date, deposit into the Master Servicer
Collection Account, as a reduction of the Servicing Fee for such Distribution
Date, no later than the close of business on the Remittance Date immediately
preceding such Distribution Date, an amount equal to the Prepayment Interest
Shortfall; and in case of such deposit, the Company shall not be entitled to any
recovery or reimbursement from the Depositor, the Trustee, the Seller, the
Securities Administrator, the Trust Fund, MBIA or the Certificateholders.
(b) The Master Servicer shall cause the Servicer under the related
Servicing Agreement to remit any required Compensating Interest Payments to the
Master Servicer Collection Account on the Remittance Date.
(c) The Master Servicer shall be required to remit the amount of any
such Prepayment Interest Shortfalls, to the extent of the Master Servicing Fee
for such Distribution Date, in the event the Company or a Servicer fails to do
so.
Section 6.03 REMIC DISTRIBUTIONS.
On each Distribution Date the Securities Administrator, as
agent for the Trustee, shall allocate distributions to the REMIC I Regular
Interests and REMIC II Regular Interests in accordance with Section 6.06 hereof.
Section 6.04 DISTRIBUTIONS.
(a) On each Distribution Date, an amount equal to the Interest
Funds and Principal Funds for such Distribution Date shall be withdrawn by the
Trustee from the Distribution Account and distributed as directed in accordance
with the Remittance Report for such Distribution Date, in the following order of
priority:
FIRST, to pay MBIA and any accrued and unpaid interest on the
Offered Certificates, in the following order of priority:
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1. From Interest Funds, to MBIA, the MBIA Premium Amount;
2. From Interest Funds, to the Class A-IO Certificates, the
Current Interest and any Interest Carry Forward Amount for such Class;
3. From remaining Interest Funds, to the remaining classes of
Class A Certificates, the Current Interest and any Interest Carry
Forward Amount for such Class, pro rata in accordance with the amount
of accrued interest due thereon;
4. From amounts received under the Yield Maintenance Agreement
on such Distribution Date, to the Class A-1 Certificates, the sum of
(i) any Basis Risk Shortfall for such Distribution Date and (ii) any
Basis Risk Shortfall Carryforward Amount for such Distribution Date;
5. From remaining Interest Funds, to the Class M-1
Certificates, the Class M-2 Certificates and the Class B Certificates,
sequentially, in that order, the Current Interest for each such Class;
6. Any Excess Spread to the extent necessary to meet a level
of overcollateralization equal to the Overcollateralization Target
Amount will be the Extra Principal Distribution Amount and will be
included as part of the Principal Distribution Amount; and
7. Any Remaining Excess Spread will be added to any Excess
Overcollateralization Amount and will be applied as Excess Cashflow
pursuant to clauses THIRD through ELEVENTH, below.
Notwithstanding the provisions of clause FIRST 6 and 7, above, on the
first six Distribution Dates, all Excess Spread will be paid to the holders of
the Class B-IO Certificates.
On any Distribution Date, any shortfalls resulting from the application
of the Relief Act and any Prepayment Interest Shortfalls to the extent not
covered by Compensating Interest will be allocated as set forth in the
definition of "Current Interest" herein.
SECOND, to pay as principal on the Offered Certificates
entitled to payments of principal, in the following order of priority:
(A) For each Distribution Date (i) prior to the Stepdown Date
or (ii) on which a Trigger Event is in effect:
1. To the Class A Certificates (other than the Class A-IO
Certificates) from the Principal Funds for such Distribution Date, the
Principal Distribution Amount to be distributed as follows:
(i) first, to the Class A-1 Certificates, until
the Certificate Principal balance thereof is
reduced to zero;
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(ii) second, to the Class A-2 Certificates, until
the Certificate Principal Balance thereof is
reduced to zero;
(iii) third, to the Class A-3 Certificates, until
the Certificate Principal Balance thereof is
reduced to zero;
(iv) fourth, to the Class A-4 Certificates, until
the Certificate Principal Balance thereof is
reduced to zero; and
(v) fifth, to the Class A-5 Certificates, until
the Certificate Principal Balance thereof is
reduced to zero;
2. To the Class M-1 Certificates, any remaining Principal
Distribution Amount until the Certificate Principal Balance thereof is
reduced to zero;
3. To the Class M-2 Certificates, any remaining Principal
Distribution Amount until the Certificate Principal Balance thereof is
reduced to zero;
4. To the Class B Certificates, any remaining Principal
Distribution Amount until the Certificate Principal Balance thereof is
reduced to zero;
(B) For each Distribution Date on or after the Stepdown Date,
so long as a Trigger Event is not in effect:
1. To the Class A Certificates (other than the Class A-IO
Certificates) from the Principal Distribution Amount for such
Distribution Date, the Class A Principal Distribution Amount to be
distributed as follows:
(i) first, to the Class A-1 Certificates, until
the Certificate Principal Balance thereof is
reduced to zero;
(ii) second, to the Class A-2 Certificates, until
the Certificate Principal Balance thereof is
reduced to zero;
(iii) third, to the Class A-3 Certificates, until
the Certificate Principal Balance thereof is
reduced to zero;
(iv) fourth, to the Class A-4 Certificates, until
the Certificate Principal Balance thereof is
reduced to zero; and
(v) fifth, to the Class A-5 Certificates, until
the Certificate Principal Balance thereof is
reduced to zero;
2. To the Class M-1 Certificates, from any remaining Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, until
the Certificate Principal Balance thereof is reduced to zero;
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3. To the Class M-2 Certificates, from any remaining Principal
Distribution Amount, the Class M-2 Principal Distribution Amount, until
the Certificate Principal Balance thereof is reduced to zero;
4. To the Class B Certificates, from any remaining Principal
Distribution Amount, the Class B Principal Distribution Amount, until
the Certificate Principal Balance thereof is reduced to zero;
THIRD, from the sum of any remaining Excess Cashflow, to the Class A
Certificates, any remaining Interest Carry Forward Amount for such classes, pro
rata, in accordance with the Interest Carry Forward Amount due with respect to
each such class, to the extent not fully paid pursuant to subclauses FIRST 2.
and 3. above;
FOURTH, from any Excess Yield Maintenance Amount, to the Class A-1
Certificates, to the extent not fully paid pursuant to subclause FIRST 4. above,
any Basis Risk Shortfall Carry Forward Amount for such class for such
Distribution Date and to the extent not fully paid pursuant to subclause FIRST
2. and 3. and subclause THIRD above, any remaining Interest Carry Forward Amount
for such class;
FIFTH, from any remaining Excess Cashflow, to MBIA for payment of the
amount, if any, due MBIA pursuant to clause (a) of the definition of MBIA
Reimbursement Amount in Section 1.01 of this Agreement ;
SIXTH, from any remaining Excess Cashflow, to the Class M-1
Certificates an amount equal to (i) any Interest Carry Forward Amount and then
(ii) any Unpaid Realized Loss Amount for such Class for such Distribution Date;
SEVENTH, from any remaining Excess Cashflow, to the Class M-2
Certificates an amount equal to (i) any Interest Carry Forward Amount and then
(ii) any Unpaid Realized Loss Amount for such Class for such Distribution Date;
EIGHTH, from any remaining Excess Cashflow, to the Class B Certificates
an amount equal to (i) any Interest Carry Forward Amount and then (ii) any
Unpaid Realized Loss Amount for such Class and such Distribution Date;
NINTH, from any remaining Excess Cashflow, to MBIA for payment of the
amount, if any, due MBIA pursuant to clauses (b) and (c) of the definition of
MBIA Reimbursement Amount in Section 1.01 of this Agreement;
TENTH, from any remaining Excess Cashflow, to the Class B-IO
Certificates, the Class B-IO Distribution Amount; and
ELEVENTH, any remaining amounts to each of the Class R-I Certificates,
Class R-II Certificates and Class R-III Certificates, based on the related REMIC
in which such amounts remain.
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(c) Subject to Section 11.02 hereof respecting the final
distribution, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either by wire
transfer in immediately available funds to the account of such holder at a bank
or other entity having appropriate facilities therefor, if (i) such Holder has
so notified the Trustee at least 5 Business Days prior to the related Record
Date and (ii) such Holder shall hold Regular Certificates with aggregate
principal denominations of not less than $1,000,000 or evidencing a Percentage
Interest aggregating 10% or more with respect to such Class or, if not, by check
mailed by first class mail to such Certificateholder at the address of such
holder appearing in the Certificate Register. Notwithstanding the foregoing, but
subject to Section 11.02 hereof respecting the final distribution, distributions
with respect to Certificates registered in the name of a Depository shall be
made to such Depository in immediately available funds.
(d) On or before 5:00 p.m. Eastern time on the fifth Business
Day immediately preceding each Distribution Date, the Master Servicer shall
deliver a report to the Securities Administrator in the form of a computer
readable magnetic tape (or by such other means as the Master Servicer and the
Securities Administrator may agree from time to time) containing such data and
information, as agreed to by the Master Servicer and the Securities
Administrator such as to permit the Securities Administrator to prepare the
Monthly Statement to Certificateholders and to direct the Trustee in writing to
make the required distributions for the related Distribution Date (the
"Remittance Report"). The Securities Administrator shall deliver a Remittance
Report to the Trustee on or before 5:00 p.m. Eastern time on the Business Day
immediately preceding each Distribution Date.
Section 6.04A ALLOCATION OF REALIZED LOSSES.
Any Realized Losses with respect to the Mortgage Loans shall
be applied on each Distribution Date after the distributions provided for in
Section 6.04 in reduction of the Certificate Principal Balance of the Class or
Classes of Certificates as provided in the definition of Applied Realized Loss
Amount.
Section 6.05 MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.
(a) Not later than each Distribution Date, the Securities
Administrator shall prepare and make available to each Holder of Certificates,
MBIA, the Trustee, the Master Servicer and the Depositor a statement setting
forth for the Certificates:
(i) the amount of the related distribution to Holders of each
Class allocable to principal, separately identifying (A) the aggregate
amount of any Principal Prepayments included therein, (B) the aggregate
of all scheduled payments of principal included therein and (C) the
Extra Principal Distribution Amount (if any);
(ii) the amount of such distribution to Holders of each Class
allocable to interest and the portion thereof, if any, provided by the
Yield Maintenance Agreement;
(iii) the Interest Carry Forward Amount and any Basis Risk
Shortfall Carry Forward Amount for each Class of Certificates;
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(iv) the Certificate Principal Balance or Certificate Notional
Balance of each Class after giving effect (i) to all distributions
allocable to principal on such Distribution Date and (ii) the
allocation of any Applied Realized Loss Amounts for such Distribution
Date;
(v) the aggregate of the Stated Principal Balances of all of
the Mortgage Loans for the following Distribution Date;
(vi) the related amount of the Master Servicing Fees paid to
or retained by the Master Servicer and the Servicing Fees paid to or
retained by the Company or the related Servicer for the related Due
Period;
(vii) the Pass-Through Rate for each Class of Offered
Certificates with respect to the current Accrual Period, and, if
applicable, whether such Pass-Through Rate was limited by any interest
rate cap;
(viii) the amount of Advances included in the distribution on
such Distribution Date;
(ix) the cumulative amount of Applied Realized Loss Amounts to
date and, in addition, if the Certificate Principal Balances of the
Class M-1 Certificates, Class M-2 Certificates and Class B Certificates
have all been reduced to zero, the cumulative amount of any Realized
Losses that have not been allocated to any Certificates;
(x) the number and aggregate principal amounts of Mortgage
Loans (A) Delinquent (exclusive of Mortgage Loans in foreclosure and
bankruptcy) (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more
days, (B) in foreclosure and delinquent (1) 31 to 60 days, (2) 61 to 90
days and (3) 91 or more days and (C) in bankruptcy and delinquent (1)
31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, in each case
as of the close of business on the last day of the calendar month
preceding such Distribution Date;
(xi) with respect to any Mortgage Loan that was liquidated
during the preceding calendar month, the loan number and Stated
Principal Balance of, and Realized Loss on, such Mortgage Loan as of
the close of business on the Determination Date preceding such
Distribution Date;
(xii) the total number and principal balance of any real
estate owned or REO Properties as of the close of business on the
Determination Date preceding such Distribution Date;
(xiii) the three month rolling average of the percent
equivalent of a fraction, the numerator of which is the aggregate
stated Principal Balance of the Mortgage Loans that are 60 days or more
delinquent or are in bankruptcy or foreclosure or are REO Properties,
and the denominator of which is the aggregate Stated Principal Balance
of all of the Mortgage Loans as of the last day of such Distribution
Date;
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(xiv) the Realized Losses during the related Prepayment Period
and the cumulative Realized Losses through the end of the preceding
month;
(xv) whether a Trigger Event exists; and
(xvi) the amount of any Prepayment Charges remitted to the
Master Servicer and the amount on deposit in The Reserve Fund;
The Securities Administrator may make the foregoing monthly
statement (and, at its option, any additional files containing the same
information in an alternative format) available each month to Certificateholders
and MBIA via the Securities Administrator's internet website. The Securities
Administrator's internet website shall initially be 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 options are entitled to have a
paper copy mailed to them via first class mail by calling the customer service
desk and indicating such. The Securities Administrator may change the way
monthly statements are distributed in order to make such distributions more
convenient or more accessible to the above parties.
(b) The Securities Administrator's responsibility for making
the above information available to the Certificateholders is limited to the
availability, timeliness and accuracy of the information derived from the Master
Servicer, the Company and the Servicers. The Securities Administrator will make
available a copy of each statement provided pursuant to this Section 6.05 to
each Rating Agency.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished upon request to each
Person who at any time during the calendar year was a Certificateholder, a
statement containing the information set forth in clauses (a)(i) and (a)(ii) of
this Section 6.05 aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the
Securities Administrator shall furnish to the Holders of the Residual
Certificates the applicable Form 1066 and each applicable Form 1066Q and shall
respond promptly to written requests made not more frequently than quarterly by
any Holder of a Residual Certificate with respect to the following matters:
(i) The original projected principal and interest cash flows
on the Closing Date on each Class of regular and residual interests
created hereunder and on the Mortgage Loans, based on the Prepayment
Assumption;
(ii) The projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to each Class of
regular and residual interests created hereunder and the Mortgage
Loans, based on the Prepayment Assumption;
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(iii) The applicable Prepayment Assumption and any interest
rate assumptions used in determining the projected principal and
interest cash flows described above;
(iv) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to each Class of
regular or residual interests created hereunder and to the Mortgage
Loans, together with each constant yield to maturity used in computing
the same;
(v) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including
the timing and amount of any cancellation of indebtedness income of a
REMIC with respect to such regular interests or bad debt deductions
claimed with respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of a
REMIC; and
(vii) Any taxes (including penalties and interest) imposed on
the REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure
property" or state or local income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv)
above shall be provided by the Depositor pursuant to Section 10.12.
Section 6.06 REMIC DESIGNATIONS AND ALLOCATIONS.
(a) The Trustee shall elect that each of REMIC I, REMIC II and
REMIC III shall be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of
this Agreement shall be resolved in a manner that preserves the validity of such
REMIC elections. The assets of REMIC I shall include the Mortgage Loans (other
than the Prepayment Charges) and all interest owing in respect of and principal
due thereon, the Distribution Account, the Master Servicer Collection Account,
the Protected Accounts maintained by the Company and the Servicers, any REO
Property, any proceeds of the foregoing and any other assets subject to this
Agreement (other than the Reserve Account and the Yield Maintenance Reserve
Fund). The REMIC I Regular Interests shall constitute the assets of REMIC II.
The REMIC II Regular Interests shall constitute the assets of REMIC III.
(b) On each Distribution Date, the Trustee shall cause the
Interest Funds and Principal Funds, in the following order of priority, to be
distributed by REMIC I to REMIC II on account of the REMIC I Regular Interests
or withdrawn from the Distribution Account and distributed to the Holders of the
Class R-I Certificates, as the case may be:
(1) first, from Interest Funds, to REMIC I Regular Interest
LT1B, REMIC I Regular Interest LT1C and REMIC I Regular Interest LT1D,
in an amount equal to (A) the related Uncertificated Accrued Interest
for such Distribution Date, plus (B) any amounts in respect thereof
remaining unpaid from previous Distribution Dates and second, to
Holders of REMIC I Regular Interest LT1A in an amount equal to (A) the
related Uncertificated
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Accrued Interest for such Distribution Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates; and
(2) second, from Principal Funds, to the Holders of REMIC I
Regular Interests, allocated in the following order of priority:
(A) to the Holders of REMIC I Regular Interest LT1A,
until the Uncertificated Principal Balance of REMIC I Regular
Interest LT1A is reduced to zero;
(B) to the Holders of REMIC I Regular Interest LT1B,
until the Uncertificated Principal Balance of REMIC I Regular
Interest LT1B is reduced to zero;
(C) to the Holders of REMIC I Regular Interest LT1C,
until the Uncertificated Principal Balance of REMIC I Regular
Interest LT1C is reduced to zero;
(D) to the Holders of REMIC I Regular Interest LT1D,
until the Uncertificated Principal Balance of REMIC I Regular
Interest LT1D is reduced to zero; and
(E) any remaining amount to the Holders of the Class
R-I Certificates.
(c) On each Distribution Date, the Trustee shall cause in the
following order of priority, the following amounts to be distributed by REMIC II
to REMIC III on account of the REMIC II Regular Interests or withdrawn from the
Distribution Account and distributed to the holders of the Class R-II
Certificates, as the case may be:
(1) first, from Interest Funds, to the Holders of REMIC II
Regular Interest LT2A- IO, in an amount equal to (A) the related
Uncertificated Accrued Interest for such Distribution Date, plus (B)
any amounts in respect thereof remaining unpaid from previous
Distribution Dates, and then to Holders of REMIC II Regular Interest
LT2-AA, REMIC II Regular Interest LT2-A1, REMIC II Regular Interest
LT2-A2, REMIC II Regular Interest LT2-A3, REMIC II Regular Interest
LT2-A4, REMIC II Regular Interest LT2-A5, REMIC II Regular Interest
LT2-M1, REMIC II Regular Interest LT2-M2, REMIC II Regular Interest
LT2-B and REMIC II Regular Interest LT2-ZZ, PRO RATA, in an amount
equal to (A) the related Uncertificated Accrued Interest for such
Distribution Date, plus (B) any amounts in respect thereof remaining
unpaid from previous Distribution Dates. Amounts payable as
Uncertificated Accrued Interest in respect of REMIC II Regular Interest
LT2-ZZ on a Distribution Date shall be reduced when the REMIC II
Overcollateralized Amount for such Distribution Date is less than the
REMIC II Overcollateralization Target Amount, by the lesser of (x) the
amount of such difference and (y) the Maximum Uncertificated Accrued
Interest Deferral Amount for such Distribution Date, and such amount
will be payable to the Holders of REMIC II Regular Interest LT2-A1,
REMIC II Regular Interest LT2- A2, REMIC II Regular Interest LT2-A3,
REMIC II Regular Interest LT2-A4, REMIC II Regular Interest
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LT2-A5, REMIC II Regular Interest LT2-1M1, REMIC II Regular Interest
LT2-1M2 and REMIC II Regular Interest LT2-B in the same proportion as
the Extra Principal Distribution Amount is allocated to the
Corresponding Certificates for such Distribution Date;
(2) second, from Principal Funds to the Holders of REMIC II
Regular Interests, allocated as follows:
(A) to the Holders of REMIC II Regular Interest
LT2-AA, 98.00% of such Principal Funds, until the
Uncertificated Principal Balance of such Uncertificated REMIC
II Regular Interest is reduced to zero;
(B) to the Holders of REMIC II Regular Interest
LT2-A1, REMIC II Regular Interest LT2-A2, REMIC II Regular
Interest LT2-A3, REMIC II Regular Interest LT2-A4, REMIC II
Regular Interest LT2-A5, REMIC II Regular Interest LT2-M1,
REMIC II Regular Interest LT2-M2 and REMIC II Regular Interest
LT2-B, 1.00% of such Principal Funds, in the same proportion
as principal payments are allocated to the Corresponding
Certificates, until the Uncertificated Principal Balances of
such REMIC II Regular Interests are reduced to zero;
(C) to the Holders of REMIC II Regular Interest
LT2-ZZ, 1.00% of such Principal Funds, until the
Uncertificated Principal Balance of such REMIC II Regular
Interest is reduced to zero; and
(D) any remaining amount to the Holders of the Class
R-II Certificates.
(d) For purposes of calculating the amount of Uncertificated
Accrued Interest for the Uncertificated REMIC I Regular Interests for any
Distribution Date, the aggregate amount of any Prepayment Interest Shortfalls
and shortfalls resulting from application of the Relief Act incurred in respect
of the Mortgage Loans for any Distribution Date shall be allocated first: to
REMIC I Regular Interest LT1A, and second to REMIC I Regular Interest LT1B,
REMIC I Regular Interest LT1C and REMIC I Regular Interest LT1D in each case to
the extent of one month's interest at the then applicable respective
Uncertificated REMIC I Pass-Through Rate on the respective Uncertificated
Principal Balance of each such Uncertificated REMIC I Regular Interest.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the Uncertificated REMIC II Regular Interests for any Distribution
Date, the aggregate amount of any Prepayment Interest Shortfalls and shortfalls
resulting from application of the Relief Act incurred in respect of the Mortgage
Loans for any Distribution Date shall be allocated (i) first, to Uncertificated
Accrued Interest payable to REMIC II Regular Interest LT2-1AA and REMIC II
Regular Interest LT2-ZZ up to an aggregate amount equal to the REMIC II Group 1
Interest Loss Allocation Amount, 98% and 2%, respectively, and thereafter among
REMIC II Regular Interest LT2-1AA, REMIC II Regular Interest LT2-AI1, REMIC II
Regular Interest LT2-A2, REMIC II Regular Interest LT2-A3, REMIC II Regular
Interest LT2-A4, REMIC II Regular Interest LT2-A5, REMIC II Regular Interest
LT2-M1, REMIC II Regular Interest LT2-M2, REMIC II Regular Interest LT2-B and
REMIC II Regular Interest LT2-ZZ, PRO RATA based on, and to the extent of, one
month's
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interest at the then applicable respective Uncertificated REMIC II Pass-Through
Rate on the respective Uncertificated Principal Balance of each such
Uncertificated REMIC II Regular Interest.
(e) All Realized Losses on the Mortgage Loans shall be
allocated by the Trustee on each Distribution Date as follows: first, to REMIC I
Regular Interest LTA until the Uncertificated Principal Balance thereof has been
reduced to zero, second, to REMIC I Regular Interest LTB until the
Uncertificated Principal Balance thereof has been reduced to zero, third, to
REMIC I Regular Interest LTC until the Uncertificated Principal Balance thereof
has been reduced to zero, and fourth, to REMIC I Regular Interest LTD until the
Uncertificated Principal Balance thereof has been reduced to zero.
(f) All Realized Losses on the REMIC I Regular Interest LT1A,
REMIC I Regular Interest LT1B, REMIC I Regular Interest LT1C and REMIC I Regular
Interest LT1D shall be deemed to have been allocated in the specified
percentages, as follows: with respect to Realized Losses on the Mortgage Loans,
first, to Uncertificated Accrued Interest payable to the REMIC II Regular
Interest LT2-AA and REMIC II Regular Interest LT2-ZZ up to an aggregate amount
equal to the REMIC II Interest Loss Allocation Amount, 98% and 2%, respectively;
second, to the Uncertificated Principal Balances of REMIC II Regular Interest
LT2-AA and REMIC II Regular Interest LT2-ZZ up to an aggregate amount equal to
the REMIC II Principal Loss Allocation Amount, 98% and 2%, respectively; third,
to the Uncertificated Principal Balances of REMIC II Regular Interest LT2-AA,
REMIC II Regular Interest LT2-B and REMIC II Regular Interest LT2-ZZ, 98%, 1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC II
Regular Interest LT2-B has been reduced to zero; fourth, to the Uncertificated
Principal Balances of REMIC II Regular Interest LT2-AA, REMIC II Regular
Interest LT2-M2 and REMIC II Regular Interest LT2-ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LT2-M2 has been reduced to zero; and fifth, to the Uncertificated
Principal Balances of REMIC II Regular Interest LT2-AA, REMIC II Regular
Interest LT2-M1 and REMIC II Regular Interest LT2-ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LT2-M1 has been reduced to zero.
Section 6.07 POLICY MATTERS.
(a) If, on the third Business Day before any Distribution
Date, the Trustee determines that a Deficiency Amount exists on such
Distribution Date, the Trustee shall give notice to MBIA and the Fiscal Agent
(as defined in the Class A-5 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 Class A-5 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 Class A-5 Policy), the Trustee shall (i) promptly notify MBIA and the Fiscal
Agent, if any, and (ii) comply with the provisions of the Class A-5 Policy to
obtain payment by MBIA of such Preference Amount. In addition, the Trustee shall
mail notice to all Holders of the Class A-5 Certificates so affected that, in
the event that any such
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Holder's scheduled payment is a Preference Amount, such Holder will be entitled
to payment pursuant to the terms of the Class A-5 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-5 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-5 Certificates
(the "Class A-5 Policy Payments Account") over which the Trustee shall have
exclusive control and sole right of withdrawal. The Class A-5 Policy Payments
Account shall be an Eligible Account. The Trustee shall deposit any amount paid
under the Class A-5 Policy into the Class A-5 Policy Payments Account and
distribute such amount only for the purposes of making the payments to Holders
of the Class A-5 Certificates in respect of the Insured Payment for which the
related claim was made under the Class A-5 Policy. Such amounts shall be
allocated by the Trustee to Holders of Class A-5 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 6.04. 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-5 Certificates from funds in the Class A-5 Policy
Payments Account shall be noted as provided in subsection (e) below. Funds held
in the Class A-5 Policy Payments Account shall not be invested by the Trustee.
(d) Any funds received from MBIA for deposit into the Class
A-5 Policy Payments Account pursuant to the Class A-5 Policy in respect of a
Distribution Date or otherwise as a result of any claim under the Class A-5
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-5
Certificates, or (ii) of other amounts payable under the Class A-5 Policy. Funds
received by the Trustee as a result of any claim under the Class A-5 Policy
shall be used solely for payment to the Holders of the Class A-5 Certificates
and may not be applied for any other purpose, including, without limitation,
satisfaction of any costs, expenses or liabilities of the Trustee, the
Depositor, the Seller, any Servicer, the Securities Administrator, the Master
Servicer or the Trust Fund. Any funds remaining in the Class A-5 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-5
Policy Payments Account and (ii) the allocation of such funds to (A) payments of
interest on and principal in respect of any Class A-5 Certificates and (B) the
amount of funds available to make distributions on the Class A-5 Certificates
pursuant to Section 6.04. 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-5
Certificate by its acceptance of the Class A-5 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
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of principal of or interest on any Class A-5 Certificates, MBIA will be fully
subrogated to the rights of the Holders of such Class A-5 Certificates to
receive such principal and interest from the Trust Fund. The Holders of the
Class A-5 Certificates, by acceptance of the Class A-5 Certificates, assign
their rights as Holders of the Class A-5 Certificates to the extent of MBIA's
interest with respect to amounts paid under the Class A-5 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 6.04, any payment with respect to distributions to the Class A-5
Certificates which is made with funds received pursuant to the terms of the
Class A-5 Policy, shall not be considered payment of the Class A-5 Certificates
from the Trust Fund and shall not result in the distribution or the provision
for the distribution in reduction of the Certificate Principal Balance of the
Class A-5 Certificates as described in this Article VI.
The Trustee, the Company 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 its 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 Depositor commenced under the
United States bankruptcy code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding") and (B)
the 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-5 Certificates as to which it has actual knowledge. Each
Holder of a Class A-5 Certificate, by its purchase of Class A-5 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-5 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 Class A-5 Policy
to MBIA for cancellation upon the reduction of the Certificate Principal Balance
of the Class A-5 Certificates to zero.
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(k) The Trustee shall send to MBIA the certificates and
statements prepared pursuant to Sections 3.13 and 3.14 and the statements
prepared pursuant to Section 6.05, as well as any other statements or
communications sent to Holders of the Class A-5 Certificates, in each case at
the same time such reports, statements and communications are otherwise sent.
(l) For so long as there is not continuing default by MBIA
under its obligations under the Class A-5 Policy (an "MBIA Default"), each
Holder of a Class A-5 Certificate agrees that MBIA shall be treated by the
Depositor, the Master Servicer, the Securities Administrator and the Trustee as
if MBIA were the Holder of all Class A-5 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-5 Certificates hereunder without any further consent
of the Holders of the Class A-5 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 Class A-5 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.
(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 6.04(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.: 38461
Section 6.08 YIELD MAINTENANCE RESERVE FUND.
(a) On or before the Closing Date, the Trustee shall establish a Yield
Maintenance Reserve Fund on behalf of the Class A-1 Certificateholders. The
Yield Maintenance Reserve Fund must be an Eligible Account. The Yield
Maintenance Reserve Fund shall be entitled "Yield Maintenance Reserve Fund, Bank
One, National Association as Trustee for the benefit of holders of Bear Xxxxxxx
Asset Backed Securities, Inc., Asset-Backed Certificates, Series 2002-AC3, Class
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A-1". The Trustee shall demand payment of all money payable by Bear Xxxxxxx
Financial Products Inc. (the "Counterparty") under the Yield Maintenance
Agreement. The Trustee shall deposit in the Yield Maintenance Reserve Fund all
payments received from the Counterparty pursuant to the Yield Maintenance
Agreement. On each Distribution Date the Trustee shall pay remit amounts
received from the Counterparty to the Class A-1 Certificateholders in the manner
provided in Section 6.04 hereof.
(b) The Yield Maintenance Reserve Fund is an "outside reserve fund"
within the meaning of Treasury Regulation ss.1.860G-2(h) and shall be an asset
of the Trust Fund but not an asset of any REMIC. The Trustee on behalf of the
Trust shall be the nominal owner of the Yield Maintenance Reserve Fund. The
Class B-IO Certificateholder shall be the beneficial owner of the Yield
Maintenance Reserve Fund, subject to the power of the Trustee to transfer
amounts under Section 6.04. Amounts in the Yield Maintenance Reserve Fund shall,
at the direction of the Class B-IO Certificateholder, be invested in Permitted
Investments that mature no later than the Business Day prior to the next
succeeding Distribution Date. All net income and gain from such investments
shall be distributed to the Class B-IO Certificateholder, not as a distribution
in respect of any interest in any REMIC, on such Distribution Date. All amounts
earned on amounts on deposit in the Yield Maintenance Reserve Fund shall be
taxable to the Class B-IO Certificateholder. Any losses on such investments
shall be deposited in the Yield Maintenance Reserve Fund by the Class B-IO
Certificateholder out of its own funds immediately as realized.
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ARTICLE VII
THE CERTIFICATES
Section 7.01 THE CERTIFICATES.
The Certificates shall be substantially in the forms attached
hereto as Exhibits A-1 through A-6. The Certificates shall be issuable in
registered form, in the minimum dollar denominations, integral dollar multiples
in excess thereof (except that one Certificate of each Class may be issued in a
different amount which must be in excess of the applicable minimum dollar
denomination) and aggregate dollar denominations as set forth in the following
table:
Minimum Integral Multiple in Original Certificate
Class Denomination Excess of Minimum Principal Balance Pass Through Rate
----- ------------ ----------------- ----------------- -----------------
A-1 $25,000 $1.00 $98,866,000 Class A-1 Pass-Through Rate
A-2 $25,000 $1.00 $56,316,000 Class A-2 Pass-Through Rate
A-3 $25,000 $1.00 $48,522,000 Class A-3 Pass-Through Rate
A-4 $25,000 $1.00 $15,804,000 Class A-4 Pass-Through Rate
A-5 $25,000 $1.00 $23,249,000 Class A-5 Pass-Through Rate
A-IO $25,000 $1.00 N/A Class A-IO Pass-Through Rate
M-1 $25,000 $1.00 $ 9,087,000 Class M-1 Pass-Through Rate
M-2 $25,000 $1.00 $ 4,544,000 Class M-2 Pass-Through Rate
B $25,000 $1.00 $ 3,245,000 Class B Pass-Through Rate
B-IO 10% 1% $ 209.33 Class B-IO Pass-Through Rate
R-I 100% N/A N/A N/A
R-II 100% N/A N/A N/A
R-III 100% N/A N/A N/A
The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures were affixed, authorized to sign on behalf of the Trustee
shall bind the Trustee, notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate the
countersignature of the Trustee by manual signature, and such countersignature
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly countersigned and delivered hereunder. All
Certificates shall be dated the date of their countersignature. On the Closing
Date, the Trustee shall authenticate the Certificates to be issued at the
written direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the
Trustee on a continuous basis, an adequate inventory of Certificates to
facilitate transfers.
Section 7.02 CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND
EXCHANGE OF CERTIFICATES.
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(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 7.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
Transfer of any Certificate, the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to the Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for
any registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or
exchange shall be canceled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No Transfer of a Class B-IO or Class R Certificate shall
be made unless such Transfer is made pursuant to an effective registration
statement under the Securities Act and any applicable state securities laws or
is exempt from the registration requirements under the Securities Act and such
state securities laws. In the event that a Transfer is to be made in reliance
upon an exemption from the Securities Act and such laws, in order to assure
compliance with the Securities Act and such laws, the Certificateholder desiring
to effect such Transfer and such Certificateholder's prospective transferee
shall each certify to the Trustee and the Securities Administrator in writing
the facts surrounding the Transfer in substantially the forms set forth in
Exhibit E (the "Transferor Certificate") and (x) deliver a letter in
substantially the form of either Exhibit F (the "Investment Letter") or Exhibit
G (the "Rule 144A Letter") or (y) there shall be delivered to the Trustee and
the Securities Administrator an Opinion of Counsel that such Transfer may be
made pursuant to an exemption from the Securities Act, which Opinion of Counsel
shall not be an expense of the Depositor, the Seller, the Master Servicer, the
Securities Administrator or the Trustee. The Depositor shall provide to any
Holder of a Subordinated Certificate and any prospective transferee designated
by any such Holder, information regarding the related Certificates and the
Mortgage Loans and such other information as shall be necessary to satisfy the
condition to eligibility set forth in Rule 144A(d)(4) for Transfer of any such
Certificate without registration thereof under the Securities Act pursuant to
the registration exemption provided by Rule 144A. The Trustee, the Securities
Administrator and the Master Servicer shall cooperate with the Depositor in
providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust
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Fund as the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Class B-IO or Class R Certificate desiring
to effect such Transfer shall, and does hereby agree to, indemnify the Trustee,
the Depositor, the Seller, the Securities Administrator and the Master Servicer
against any liability that may result if the Transfer is not so exempt or is not
made in accordance with such federal and state laws.
No Transfer of an ERISA Restricted Certificate shall be made
unless the Trustee, the Master Servicer and the Securities Administrator shall
have received either (i) a representation from the transferee of such
Certificate acceptable to and in form and substance satisfactory to the Trustee,
the Master Servicer and the Securities Administrator, to the effect that such
transferee is not an employee benefit plan subject to Section 406 of ERISA
and/or a plan subject to Section 4975 of the Code, or a Person acting on behalf
of any such plan or using the assets of any such plan, or (ii) in the case of
any such ERISA Restricted Certificate presented for registration in the name of
an employee benefit plan subject to ERISA, or a plan subject to Section 4975 of
the Code (or comparable provisions of any subsequent enactments), or a trustee
of any such plan or any other person acting on behalf of any such plan, an
Opinion of Counsel satisfactory to the Trustee, the Master Servicer and the
Securities Administrator to the effect that the purchase or holding of such
ERISA Restricted Certificate will not result in any prohibited transactions
under ERISA or Section 4975 of the Code and will not subject the Trustee, the
Master Servicer or the Securities Administrator to any obligation in addition to
those expressly undertaken in this Agreement, which Opinion of Counsel shall not
be an expense of the Trustee, the Master Servicer or the Securities
Administrator. Notwithstanding anything else to the contrary herein, any
purported transfer of an ERISA Restricted Certificate to or on behalf of an
employee benefit plan subject to Section 406 of ERISA and/or a plan subject to
Section 4975 of the Code without the delivery to the Trustee, the Master
Servicer and the Securities Administrator of an Opinion of Counsel satisfactory
to the Trustee, the Master Servicer and the Securities Administrator as
described above shall be void and of no effect; provided that the restriction
set forth in this sentence shall not be applicable if there has been delivered
to the Trustee, the Master Servicer and the Securities Administrator an Opinion
of Counsel meeting the requirements of clause (ii) of the first sentence of this
paragraph. None of the Trustee, the Securities Administrator or the Master
Servicer shall be required to monitor, determine or inquire as to compliance
with the transfer restrictions with respect to any ERISA Restricted Certificate
that is a Book-Entry Certificate, and none of the Trustee, the Securities
Administrator or the Master Servicer shall have any liability for transfers of
any such Book-Entry Certificates made through the book- entry facilities of any
Depository or between or among participants of the Depository or Certificate
Owners made in violation of the transfer restrictions set forth herein. None of
the Trustee, the Securities Administrator or the Master Servicer shall be under
any liability to any Person for any registration of transfer of any ERISA
Restricted Certificate that is in fact not permitted by this Section 7.02(b) or
for making any payments due on such Certificate to the Holder thereof or taking
any other action with respect to such Holder under the provisions of this
Agreement. The Trustee and the Securities Administrator shall each be entitled,
but not obligated, to recover from any Holder of any ERISA Restricted
Certificate that was in fact an employee benefit plan subject to Section 406 of
ERISA or a plan subject to Section 4975 of the Code or a Person acting on behalf
of any such plan at the time it became a Holder or, at such subsequent time as
it became such a plan or Person acting on behalf of such a plan, all payments
made on such ERISA Restricted Certificate at and after either such time. Any
such payments so recovered by the Trustee or the Securities Administrator shall
be
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paid and delivered by the Trustee or the Securities Administrator to the last
preceding Holder of such Certificate that is not such a plan or Person acting on
behalf of a plan.
(c) Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions,
and the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Ownership Interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Residual Certificate
unless, in addition to the certificates required to be delivered to the
Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "Transfer Affidavit") of the initial
owner or the proposed transferee in the form attached hereto as Exhibit
D.
(iii) Each Person holding or acquiring any Ownership Interest
in a Residual Certificate shall agree (A) to obtain a Transfer
Affidavit from any other Person to whom such Person attempts to
Transfer its Ownership Interest in a Residual Certificate, (B) to
obtain a Transfer Affidavit from any Person for whom such Person is
acting as nominee, trustee or agent in connection with any Transfer of
a Residual Certificate and (C) not to Transfer its Ownership Interest
in a Residual Certificate or to cause the Transfer of an Ownership
Interest in a Residual Certificate to any other Person if it has actual
knowledge that such Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of
this Section 7.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Residual Certificate in violation of the
provisions of this Section 6.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Residual
Certificate. The Trustee shall be under no liability to any Person for
any registration of Transfer of a Residual Certificate that is in fact
not permitted by Section 7.02(b) and this Section 7.02(c) or for making
any payments due on such Certificate to the Holder thereof or taking
any other action with respect to such Holder under the provisions of
this Agreement so long as the Transfer was registered after receipt of
the related Transfer Affidavit. The Trustee shall be entitled but not
obligated to recover from any Holder of a Residual Certificate that was
in fact not a Permitted Transferee at the time it became a Holder or,
at such subsequent time as it became other than a Permitted Transferee,
all payments made on such Residual Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of
such Certificate.
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(v) The Master Servicer shall make available within 60 days of
written request from the Trustee, all information necessary to compute
any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Residual Certificate to any
Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set
forth in this Section 7.02(c) shall cease to apply (and the applicable portions
of the legend on a Residual Certificate may be deleted) with respect to
Transfers occurring after delivery to the Trustee and MBIA of an Opinion of
Counsel, which Opinion of Counsel shall not be an expense of the Trustee, the
Securities Administrator, the Seller, MBIA or the Master Servicer to the effect
that the elimination of such restrictions will not cause REMIC I, REMIC II or
REMIC III, as applicable, to fail to qualify as a REMIC at any time that the
Certificates are outstanding or result in the imposition of any tax on the Trust
Fund, a Certificateholder or another Person. Each Person holding or acquiring
any ownership Interest in a Residual Certificate hereby consents to any
amendment of this Agreement that, based on an Opinion of Counsel furnished to
the Trustee and MBIA, is reasonably necessary (a) to ensure that the record
ownership of, or any beneficial interest in, a Residual Certificate is not
transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the Transfer of a Residual
Certificate that is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
(d) The preparation and delivery of all certificates and
opinions referred to above in this Section 7.02 shall not be an expense of the
Trust Fund, the Trustee, the Depositor, the Seller, the Securities Administrator
or the Master Servicer.
Section 7.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (a) any mutilated Certificate is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and of the ownership thereof and
(b) there is delivered to the Securities Administrator and the Trustee (and with
respect to any Class A-5 Certificates, to MBIA) such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like Class, tenor and Percentage Interest. In connection with the
issuance of any new Certificate under this Section 7.03, the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith. Any replacement
Certificate issued pursuant to this Section 7.03 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time. All Certificates surrendered to the Trustee under the terms of this
Section 7.03 shall be canceled and destroyed by the Trustee in accordance with
its standard procedures without liability on its part.
Section 7.04 PERSONS DEEMED OWNERS.
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The Securities Administrator, the Trustee, MBIA and any agent
of the Securities Administrator, MBIA or the Trustee may treat the person in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions as provided in this Agreement and for all
other purposes whatsoever, and neither the Securities Administrator, MBIA, the
Trustee nor any agent of the Securities Administrator, MBIA or the Trustee shall
be affected by any notice to the contrary.
Section 7.05 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES.
If three or more Certificateholders (a) request such
information in writing from the Trustee, (b) state that such Certificateholders
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor, MBIA or the Master Servicer shall request such information in writing
from the Trustee, then the Trustee shall, within ten Business Days after the
receipt of such request, provide the Depositor, MBIA, the Master Servicer or
such Certificateholders at such recipients' expense the most recent list of the
Certificateholders of the Trust Fund held by the Trustee, if any. The Depositor
and every Certificateholder, by receiving and holding a Certificate, agree that
the Trustee shall not be held accountable by reason of the disclosure of any
such information as to the list of the Certificateholders hereunder, regardless
of the source from which such information was derived.
Section 7.06 BOOK-ENTRY CERTIFICATES.
The Regular Certificates, upon original issuance, shall be
issued in the form of one or more typewritten Certificates representing the
Book-Entry Certificates, to be delivered to the Depository by or on behalf of
the Depositor. Such Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of such Certificates will receive a definitive certificate
representing such Certificate Owner's interest in such Certificates, except as
provided in Section 7.08. Unless and until definitive, fully registered
Certificates ("Definitive Certificates") have been issued to the Certificate
Owners of such Certificates pursuant to Section 7.08:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Depositor, the Securities Administrator and the
Trustee may deal with the Depository and the Depository Participants for all
purposes (including the making of distributions) as the authorized
representative of the respective Certificate Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be
transferred by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 7.08, the Depository will make
book-entry
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transfers among the Depository Participants and receive and transmit
distributions of principal and interest on the related Certificates to such
Depository Participants;
(e) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to its
Depository Participants; and
(g) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this Section
shall control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of any Class of Certificates, such direction or consent may be
given by Certificate Owners (acting through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing the requisite percentage
of principal amount of such Class of Certificates.
Section 7.07 NOTICES TO DEPOSITORY.
Whenever any notice or other communication is required to be
given to Certificateholders of a Class with respect to which Book-Entry
Certificates have been issued, unless and until Definitive Certificates shall
have been issued to the related Certificate Owners, the Trustee shall give all
such notices and communications to the Depository.
Section 7.08 DEFINITIVE CERTIFICATES.
If, after Book-Entry Certificates have been issued with
respect to any Certificates, (a) the Depositor or the Depository advises the
Trustee that the Depository is no longer willing or able to discharge properly
its responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its sole option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Certificates
through the Depository or (c) after the occurrence and continuation of an Event
of Default, Certificate Owners of such Book-Entry Certificates having not less
than 51% of the Voting Rights evidenced by any Class of Book-Entry Certificates
advise the Trustee and the Depository in writing through the Depository
Participants that the continuation of a book-entry system with respect to
Certificates of such Class through the Depository (or its successor) is no
longer in the best interests of the Certificate Owners of such Class, then the
Trustee shall notify all Certificate Owners of such Certificates, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to applicable Certificate Owners requesting the same.
The Depositor shall provide the Trustee with an adequate inventory of
certificates to facilitate the issuance and transfer of Definitive Certificates.
Upon surrender to the Trustee of any such Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall countersign and deliver such Definitive Certificates. Neither
the Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and each may
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conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of such Definitive Certificates, all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of such Definitive Certificates as Certificateholders hereunder.
Section 7.09 MAINTENANCE OF OFFICE OR AGENCY.
The Trustee will maintain or cause to be maintained at its
expense an office or offices or agency or agencies at the Corporate Trust Office
where Certificates may be surrendered for registration of transfer or exchange.
The Trustee initially designates its Corporate Trust Office, as the office for
such purposes. The Trustee will give prompt written notice to the
Certificateholders and MBIA of any change in such location of any such office or
agency.
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ARTICLE VIII
THE DEPOSITOR, THE COMPANY AND THE MASTER SERVICER
Section 8.01 LIABILITIES OF THE DEPOSITOR, THE COMPANY AND THE MASTER
SERVICER. Each of the Depositor, the Company and 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 8.02 MERGER OR CONSOLIDATION OF THE DEPOSITOR, THE
COMPANY OR THE MASTER SERVICER.
(a) Each of the Depositor, the Company and 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 Depositor, the Company or the Master
Servicer may be merged or consolidated, or any corporation resulting from any
merger or consolidation to which the Depositor, the Company or the Master
Servicer shall be a party, or any Person succeeding to the business of the
Depositor, the Company or the Master Servicer, shall be the successor of the
Depositor, the Company or 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 8.03 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 or the Certificates (i) related to the Master
Servicer's failure to perform its duties in compliance with this Agreement
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) or (ii) incurred by reason of the Master Servicer's
willful misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder, provided, in each case, that with respect to any such claim or legal
action (or pending or threatened claim or legal action), 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. This indemnity shall survive the resignation or removal of the Trustee,
Master Servicer or the Securities Administrator and the termination of this
Agreement.
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(b) The Company agrees to indemnify the Indemnified Persons and to hold
them harmless from and against any and all claims, losses, damages, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Indemnified Persons may sustain in any way
related to the failure of the Company to perform in any way its duties and
service the EMC Mortgage Loans in strict compliance with the terms of this
Agreement and for breach of any representation or warranty of the Company
contained herein. The Company shall immediately notify the Master Servicer and
the Trustee if a claim is made by a third party with respect to this Agreement
or the EMC Mortgage Loans, assume (with the consent of the Master Servicer and
the Trustee and with counsel reasonably satisfactory to the Master Servicer and
the Trustee) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or any Indemnified Person in
respect of such claim but failure to so notify the Company shall not limit its
obligations hereunder. The Company agrees that it will not enter into any
settlement of any such claim without the consent of the Indemnified Persons
unless such settlement includes an unconditional release of such Indemnified
Persons from all liability that is the subject matter of such claim. The
provisions of this Section 8.03(b) shall survive termination of this Agreement.
(c) The Seller will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise referred to in
Subsections (a) or (b) above.
Section 8.04 LIMITATIONS ON LIABILITY OF THE DEPOSITOR, THE COMPANY,
THE MASTER SERVICER AND OTHERS. Subject to the obligation of the Company and the
Master Servicer to indemnify the Indemnified Persons pursuant to Section 8.03:
(a) None of the Depositor, the Company, the Master Servicer nor any of
the directors, officers, employees or agents of the Depositor, the Company and
the Master Servicer shall be under any liability to the Indemnified Persons, 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
Depositor, the Company, 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 Depositor, the Company, the Master Servicer and any director,
officer, employee or agent of the Depositor, the Company and 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 Depositor, the Company, the Master Servicer, the Custodian and
any director, officer, employee or agent of the Depositor, the Company, 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
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Servicing Agreement (except with respect to the Master Servicer only, to the
extent that the Master Servicer is indemnified by the Company under this
Agreement or by the Servicers under the Servicing Agreements), other than (i)
any such loss, liability or expense related to the Depositor's, the Company's or
the Master Servicer's failure to perform its respective 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, or (ii) any such
loss, liability or expense incurred by reason of the Depositor's, the Company's,
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) None of the Depositor, the Company nor the Master Servicer shall 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 Depositor, the
Company or 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 Depositor, the Company and the Master
Servicer shall be entitled to be reimbursed therefor out of the Master Servicer
Collection Account as provided by Section 5.05. Nothing in this Subsection
8.04(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 4.01(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 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 the Company or any Servicer, except as otherwise expressly provided herein.
Section 8.05 MASTER SERVICER AND COMPANY NOT TO RESIGN. (a) Except as
provided in Section 8.07, 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 Counsel
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 9.02 hereof. The Trustee shall notify the Rating Agencies and MBIA of
the resignation of the Master Servicer.
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(b) The Company shall not resign from the obligations and duties hereby
imposed on it except (i) upon the assignment of its servicing duties with
respect to all or a portion of the EMC Mortgage Loans to an institution that is
a Xxxxxx Xxx and Xxxxxxx Mac approved seller/servicer in good standing that has
a net worth of not less than $10,000,000 or (ii) upon the determination that its
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Company. No appointment of a successor to the
Company shall be effective hereunder unless (a) the Rating Agencies have
confirmed in writing that such appointment will not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to the
Certificates (determined without regard to the Class A-5 Policy), (b) such
successor shall have represented that it is meets the eligibility criteria set
forth in clause (i) above and (c) such successor has agreed to assume the
obligations of the Company hereunder to the extent of the EMC Mortgage Loans to
be serviced by such successor. The Company shall provide a copy of the written
confirmation of the Rating Agencies and the agreement executed by such successor
to the Master Servicer, MBIA and the Trustee. Any determination permitting the
resignation of the Company shall be evidenced by an Opinion of Counsel to such
effect delivered to the Master Servicer, MBIA and the Trustee which Opinion of
Counsel shall be in form and substance acceptable to the Master Servicer and the
Trustee. No such resignation shall become effective until a qualified successor
or the Master Servicer shall have assumed the Company's responsibilities and
obligations hereunder. The Company shall notify the Master Servicer, the
Trustee, MBIA and the Rating Agencies of the resignation of the Company or the
assignment of all or a portion of its servicing duties hereunder in accordance
with this Section 8.05.
Section 8.06 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. In no event shall the compensation of any successor master
servicer exceed that permitted the Master Servicer without the consent of MBIA
and all of the Certificateholders.
Section 8.07 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 Mae 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 in effect immediately prior to such
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assignment, sale and delegation (determined without regard to the Class A-5
Policy) 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, the Trustee and MBIA; (iii) the Master
Servicer assigning and selling the master servicing shall deliver to the Trustee
and MBIA an Officer's Certificate and an Opinion of Counsel, 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
Stated 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 IX
DEFAULT; TERMINATION OF MASTER SERVICER;
TERMINATION OF COMPANY
Section 9.01 EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to remit to the Trustee
any payment, including any Advance, required to be made pursuant to
this Agreement, which failure shall continue unremedied for one
Business Day after the date on which written notice of such failure
shall have been given to the Master Servicer by the Trustee or the
Depositor, or to the Trustee and the Master Servicer by the Holders of
Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates; or
(ii) any failure by the Master Servicer to observe or perform
in any material respect any other of the covenants or agreements on the
part of the Master Servicer contained in this Agreement or any breach
of a representation or warranty by the Master Servicer, which failure
or breach shall continue unremedied for a period of 60 days after the
date on which written notice of such failure shall have been given to
Master Servicer by the Trustee or the Depositor, or to the Trustee and
the Master Servicer by the Holders of Certificates evidencing not less
than 25% of the Voting Rights evidenced by the Certificates; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60
consecutive days; or
(iv) the Master Servicer shall consent to the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or all or substantially all of the
property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of, or commence a voluntary case under, any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vi) 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 8.05 or 8.07.
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If an Event of Default shall occur, then, and in each and
every such case, so long as such Event of Default shall not have been remedied,
the Trustee may, and at the direction of the Holders of Certificates evidencing
not less than 25% of the Voting Rights evidenced by the Certificates, the
Trustee shall, by notice in writing to the Master Servicer (with a copy to each
Rating Agency and MBIA), terminate all of the rights and obligations of the
Master Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, other than its rights as a Certificateholder hereunder. On or
after the receipt by the Master Servicer of such written notice, all authority
and power of the Master Servicer hereunder, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the Trustee, or any successor
appointed pursuant to Section 9.02 (a "Successor Master Servicer"). Such
Successor Master Servicer shall thereupon if such Successor Master Servicer is a
successor to the Master Servicer, make any Advance required by Article VI,
subject, in the case of the Trustee, to Section 9.02. The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the terminated
Master Servicer, as attorney- in- fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of any Mortgage Loans and
related documents, or otherwise. Unless expressly provided in such written
notice, no such termination shall affect any obligation of the Master Servicer
to pay amounts owed pursuant to Article VIII or Article X. The Master Servicer
agrees to cooperate with the Trustee in effecting the termination of the Master
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the applicable Successor Master Servicer of all cash amounts
which shall at the time be credited to the Master Servicer Collection Account
maintained pursuant to Section 5.05, or thereafter be received with respect to
the applicable Mortgage Loans. The Trustee shall promptly notify the Rating
Agencies and MBIA of the occurrence of an Event of Default known to the Trustee.
Notwithstanding any termination of the activities of the
Master Servicer hereunder, the Master Servicer shall be entitled to receive, out
of any late collection of a Scheduled Payment on a Mortgage Loan that was due
prior to the notice terminating the Master Servicer's rights and obligations as
Master Servicer hereunder and received after such notice, that portion thereof
to which the Master Servicer would have been entitled pursuant to Sections 5.05
and to receive any other amounts payable to the Master Servicer hereunder the
entitlement to which arose prior to the termination of its activities hereunder.
Section 9.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 9.01 hereof the Trustee shall automatically
become the successor to the Master Servicer with respect to the transactions set
forth or provided for herein and after a transition period (not to exceed 90
days), shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Master Servicer by the terms and provisions
hereof and applicable law including, if applicable, the obligation to make
Advances pursuant to Article VI except as otherwise provided herein. Effective
on the date of such notice of termination, as compensation therefor, the Trustee
shall be entitled to all fees, costs and expenses relating to the Mortgage Loans
that the Master Servicer would have been entitled to if it had continued to act
hereunder, provided, however, that the Trustee shall not be (i) liable for any
acts or omissions of the Master Servicer, (ii) obligated to make Advances if it
is prohibited from doing so under applicable law, (iii) responsible for expenses
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of the Master Servicer pursuant to Section 2.03 or (iv) obligated to deposit
losses on any Permitted Investment directed by the Master Servicer.
Notwithstanding the foregoing, the Trustee may, if it shall be unwilling to so
act, or shall, if it is prohibited by applicable law from making Advances
pursuant to Article VI or if it is otherwise unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established mortgage
loan servicing institution the appointment of which does not adversely affect
the then current rating of the Certificates by each Rating Agency (determined
without regard to the Class A-5 Policy) as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder. Any Successor Master Servicer
shall (i) be an institution that is a Xxxxxx Mae and Xxxxxxx Mac approved
seller/servicer in good standing, that has a net worth of at least $15,000,000
and (ii) be willing to act as successor servicer of any Mortgage Loans under
this Agreement or any Servicing Agreement with respect to which the Company or
the original Servicer has been terminated as servicer, and shall have executed
and delivered to the Depositor and the Trustee an agreement accepting such
delegation and assignment, that contains an assumption by such Person of the
rights, powers, duties, responsibilities, obligations and liabilities of the
Master Servicer (other than any liabilities of the Master Servicer hereof
incurred prior to termination of the Master Servicer under Section 9.01 or as
otherwise set forth herein), with like effect as if originally named as a party
to this Agreement, provided that each Rating Agency shall have acknowledged in
writing that its rating of the Certificates in effect immediately prior to such
assignment and delegation (determined without regard to the Class A-5 Policy)
will not be qualified or reduced as a result of such assignment and delegation.
If the Trustee assumes the duties and responsibilities of the Master Servicer in
accordance with this Section 9.02, the Trustee shall not resign as Master
Servicer until a Successor Master Servicer has been appointed and has accepted
such appointment. Pending appointment of a successor to the Master Servicer
hereunder, the Trustee, unless the Trustee is prohibited by law from so acting,
shall, subject to Section 4.04 hereof, act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans or otherwise as it and such successor shall agree; provided that
no such compensation shall be in excess of that permitted the Master Servicer
hereunder. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
Neither the Trustee nor any other Successor Master Servicer shall be deemed to
be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Master Servicer to deliver or
provide, or any delay in delivering or providing, any cash, information,
documents or records to it.
The costs and expenses of the Trustee in connection with the
termination of the Master Servicer, appointment of a Successor Master Servicer
and, if applicable, any transfer of servicing, including, without limitation,
all costs and expenses associated with the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Trustee to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Trustee or the Successor Master
Servicer to service the related Mortgage Loans properly and effectively, to the
extent not paid by the terminated Master Servicer, shall be payable to the
Trustee pursuant to Section 10.05. Any successor to the Master Servicer as
successor servicer under any Subservicing Agreement shall give notice to the
applicable Mortgagors of such change
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of servicer and shall, during the term of its service as successor servicer
maintain in force the policy or policies that the Master Servicer is required to
maintain pursuant to Section 4.04.
Section 9.03 NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any termination of or appointment of a successor to
the Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, MBIA and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of
Default, the Trustee shall transmit by mail to all Certificateholders notice of
each such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
Section 9.04 WAIVER OF DEFAULTS.
The Trustee shall transmit by mail to all Certificateholders,
within 60 days after the occurrence of any Event of Default known to the
Trustee, unless such Event of Default shall have been cured, notice of each such
Event of Default hereunder known to the Trustee. The Holders of Certificates
aggregating not less than 51% of the Voting Rights 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. 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 9.04 COMPANY DEFAULT.
In case one or more of the following events of default by the
Company (each, a "Company Default") shall occur and be continuing, that is to
say:
(i) any failure by the Company to remit to the Master Servicer
any payment required to be made under the terms of this Agreement which
continues unremedied for a period of one Business Day; or
(ii) failure on the part of the Company duly to observe or
perform in any material respect any other of the covenants or agreements on the
part of the Company set forth in this Agreement, the breach of which has a
material adverse effect and which continue unremedied for a period of sixty days
(except that such number of days shall be fifteen in the case of a failure to
pay any premium for any insurance policy required to be maintained under this
Agreement and such failure shall be deemed to have a material adverse effect)
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Company by the Master Servicer; or
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(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Company and such
decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or
(iv) the Company shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Company or of or relating to all or
substantially all of its property; or
(v) the Company shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(vi) the Company attempts to assign its right to servicing
compensation hereunder or the Company attempts to sell or otherwise dispose of
all or substantially all of its property or assets or to assign this Agreement
or the servicing responsibilities hereunder or to delegate its duties hereunder
or any portion thereof except as otherwise permitted herein; or
(vii) the Company ceases to be qualified to transact business
in any jurisdiction where it is currently so qualified, but only to the extent
such non-qualification materially and adversely affects the Company's ability to
perform its obligations hereunder;
then, and in each and every such case, so long as a Company Default
shall not have been remedied, the Master Servicer, by notice in writing to the
Company may, in addition to whatever rights the Master Servicer and the Trustee
on behalf of the Certificateholders may have under Section 8.03 and at law or
equity to damages, including injunctive relief and specific performance,
terminate all the rights and obligations of the Company under this Agreement and
in and to the EMC Mortgage Loans and the proceeds thereof without compensating
the Company for the same. On or after the receipt by the Company of such written
notice, all authority and power of Company under this Agreement, whether with
respect to the EMC Mortgage Loans or otherwise, shall pass to and be vested in
the Master Servicer. Upon written request from the Master Servicer, the Company
shall prepare, execute and deliver, any and all documents and other instruments,
place in the Master Servicer's possession all Mortgage Files relating to the EMC
Mortgage Loans, and 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 EMC Mortgage Loans
and related documents, or otherwise, at the Company's sole expense. The Company
agrees to cooperate with the Master Servicer in effecting the termination of the
Company's responsibilities and rights hereunder, including, without limitation,
the transfer to such successor for administration by it of all cash amounts
which shall at the time be credited by the Company to its Protected Account or
Escrow Account or thereafter received with respect to the EMC Mortgage Loans or
any related REO Property.
Section 9.04 WAIVER OF COMPANY DEFAULTS.
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The Master Servicer, with the consent of the Trustee, may waive only by
written notice any default by the Company in the performance of its obligations
hereunder and its consequences. Upon any such waiver of a past default, such
default shall cease to exist, and any Company Default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon except to the extent expressly so waived in writing.
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ARTICLE X
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 10.01 DUTIES OF TRUSTEE AND SECURITIES ADMINISTRATOR.
(a) The Trustee, prior to the occurrence of an Event of
Default and after the curing or waiver of all Events of Default which may have
occurred, and the Securities Administrator each undertake to perform such duties
and only such duties as are specifically set forth in this Agreement as duties
of the Trustee and the Securities Administrator, respectively. If an Event of
Default has occurred and has not been cured or waived, the Trustee shall
exercise such of the rights and powers vested in it by this Agreement, and the
same degree of care and skill in their exercise, as a prudent person would
exercise under the circumstances in the conduct of such Person's own affairs.
(b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee or the Securities Administrator pursuant
to any provision of this Agreement, the Trustee or the Securities Administrator,
respectively, shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that neither the Trustee nor the
Securities Administrator shall be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Master Servicer; provided, further, that neither the
Trustee nor the Securities Administrator shall be responsible for the accuracy
or verification of any calculation provided to it pursuant to this Agreement.
(c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 6.04 and 11.01 herein based the
applicable Remittance Report.
(d) No provision of this Agreement shall be construed to
relieve the Trustee or the Securities Administrator from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after
the curing or waiver of all such Events of Default which may have
occurred with respect to the Trustee and at all times with respect to
the Securities Administrator, the duties and obligations of the Trustee
and the Securities Administrator shall be determined solely by the
express provisions of this Agreement, neither the Trustee nor the
Securities Administrator shall be liable except for the performance of
their respective duties and obligations as are specifically set forth
in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee or the Securities Administrator
and, in the absence of bad faith on the part of the Trustee or the
Securities Administrator, respectively, the Trustee or the Securities
Administrator, respectively, may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to
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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 Responsible Officers of
the Trustee or an officer or officers of the Securities Administrator,
respectively, unless it shall be proved that the Trustee or the
Securities Administrator, respectively, was negligent in ascertaining
the pertinent facts;
(iii) Neither the Trustee nor the Securities Administrator
shall be liable with respect to any action taken, suffered or omitted
to be taken by it in good faith in accordance with the directions of
the Holders of Certificates evidencing not less than 25% of the
aggregate Voting Rights of the Certificates, if such action or
non-action relates to the time, method and place of conducting any
proceeding for any remedy available to the Trustee or the Securities
Administrator, respectively, or exercising any trust or other power
conferred upon the Trustee or the Securities Administrator,
respectively, under this Agreement;
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default or Event of Default
unless a Responsible Officer of the Trustee shall have actual knowledge
thereof. In the absence of such notice, the Trustee may conclusively
assume there is no such default or Event of Default;
(v) The Trustee shall not in any way be liable by reason of
any insufficiency in any Account held by or in the name of Trustee
unless it is determined by a court of competent jurisdiction that the
Trustee's gross negligence or willful misconduct was the primary cause
of such insufficiency (except to the extent that the Trustee is obligor
and has defaulted thereon);
(vi) Anything in this Agreement to the contrary
notwithstanding, in no event shall the Trustee or the Securities
Administrator be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost
profits), even if the Trustee or the Securities Administrator,
respectively, has been advised of the likelihood of such loss or damage
and regardless of the form of action; and
(vii) None of the Securities Administrator, the Master
Servicer, the Seller, the Depositor 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.
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
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obligations of the Master Servicer or the Company hereunder or any Servicer
under the applicable Servicing Agreement.
(e) All funds received by the Trustee and required to be
deposited in the Distribution Account pursuant to this Agreement will be
promptly so deposited by the Trustee.
Section 10.02 CERTAIN MATTERS AFFECTING THE TRUSTEE AND THE
SECURITIES ADMINISTRATOR.
(a) Except as otherwise provided in Section 10.01:
(i) The Trustee and the Securities Administrator may rely and
shall be protected in acting or refraining from acting in reliance on
any resolution or certificate of the Seller, the Company, the Master
Servicer or any Servicer, any certificates of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(ii) The Trustee and the Securities Administrator may consult
with counsel 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 or the Securities Administrator, as applicable, reasonable
security or indemnity against the costs, expenses and liabilities which
may be incurred therein or thereby. Nothing contained herein shall,
however, relieve the Trustee of the obligation, upon the occurrence of
an Event of Default of which a Responsible Officer of the Trustee has
actual knowledge (which has not been cured or waived), to exercise such
of the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in their exercise, as a prudent person
would exercise under the circumstances in the conduct of his own
affairs;
(iv) Prior to the occurrence of an Event of Default hereunder
and after the curing or waiver of all Events of Default which may have
occurred with respect to the Trustee and at all times with respect to
the Securities Administrator, neither the Trustee nor the Securities
Administrator shall be liable in its individual capacity for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) Neither the Trustee nor the Securities Administrator shall
be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or
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document, unless requested in writing to do so by Holders of
Certificates evidencing not less than 25% of the aggregate Voting
Rights of the Certificates and provided that the payment within a
reasonable time to the Trustee or the Securities Administrator, as
applicable, of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the
Trustee or the Securities Administrator, as applicable, reasonably
assured to the Trustee or the Securities Administrator, as applicable,
by the security afforded to it by the terms of this Agreement. The
Trustee or the Securities Administrator may require reasonable
indemnity against such expense or liability as a condition to taking
any such action. The reasonable expense of every such examination shall
be paid by the Certificateholders requesting the investigation;
(vi) The Trustee and the Securities Administrator may execute
any of the trusts or powers hereunder or perform any duties hereunder
either directly or through Affiliates, agents or attorneys; provided,
however, that the Trustee may not appoint any paying agent other than
the Securities Administrator to perform any paying agent functions
under this Agreement without the express written consent of the Master
Servicer, which consent will not be unreasonably withheld. 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 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 to be unclear, the
Trustee or the Securities Administrator, respectively, may require
prior to such action that it be provided by the Depositor with
reasonable further instructions; the right of the Trustee or the
Securities Administrator to perform any discretionary act enumerated in
this Agreement shall not be construed as a duty, and neither the
Trustee nor the Securities Administrator shall be accountable for other
than its negligence or willful misconduct in the performance of any
such act;
(viii) Neither the Trustee nor the Securities Administrator
shall be required to give any bond or surety with respect to the
execution of the trust created hereby or the powers granted hereunder,
except as provided in Subsection 10.07; and
(ix) Neither the Trustee nor the Securities Administrator
shall have any duty to conduct any affirmative investigation as to the
occurrence of any condition requiring the repurchase of any Mortgage
Loan by any Person pursuant to this Agreement, or the eligibility of
any Mortgage Loan for purposes of this Agreement.
Section 10.03 TRUSTEE AND SECURITIES ADMINISTRATOR NOT LIABLE FOR
CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other
than the signature and countersignature of the Trustee on the Certificates)
shall be taken as the statements of the Depositor, and neither the Trustee nor
the Securities Administrator shall have any responsibility for their
correctness. Neither the Trustee nor the Securities Administrator makes any
representation as to the
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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 2.06 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 2.05 of this Agreement.
The Trustee's signature and countersignature (or countersignature of its agent)
on the Certificates shall be solely in its capacity as Trustee and shall not
constitute the Certificates an obligation of the Trustee in any other capacity.
Neither the Trustee or the Securities Administrator shall be accountable for the
use or application by the Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor with respect to the Mortgage Loans. Subject to the provisions
of Section 2.06, neither the Trustee nor the Securities Administrator shall be
responsible for the legality or validity of this Agreement or any document or
instrument relating to this Agreement, the validity of the execution of this
Agreement or of any supplement hereto or instrument of further assurance, or the
validity, priority, perfection or sufficiency of the security for the
Certificates issued hereunder or intended to be issued hereunder. Neither the
Trustee nor the Securities Administrator shall at any time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Fund or its ability to
generate the payments to be distributed to Certificateholders, under this
Agreement. Neither the Trustee nor the Securities Administrator shall have any
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to record this Agreement.
Section 10.04 TRUSTEE AND SECURITIES ADMINISTRATOR MAY OWN
CERTIFICATES.
Each of the Trustee and the Securities Administrator in its
individual capacity or in any capacity other than as Trustee or Securities
Administrator hereunder may become the owner or pledgee of any Certificates with
the same rights it would have if it were not the Trustee or the Securities
Administrator, as applicable, and may otherwise deal with the parties hereto.
Section 10.05 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 with the
Master Servicer and at the expense of 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 5.06 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 or the Trust Fund hereunder. If funds
in the Master Servicer Collection Account are insufficient therefor, the Trustee
and the Securities Administrator shall recover such expenses from the Depositor.
Such compensation and
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reimbursement obligation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust.
Section 10.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE AND SECURITIES
ADMINISTRATOR.
The Trustee and any successor Trustee and the Securities
Administrator and any successor Securities Administrator shall during the entire
duration of this Agreement be a state bank or trust company or a national
banking association organized and doing business under the laws of a state or
the United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus and undivided profits of at
least $40,000,000 or, in the case of a successor Trustee, $50,000,000, subject
to supervision or examination by federal or state authority and, in the case of
the Trustee, rated "BBB" or higher by Fitch with respect to their long-term
rating and rated "BBB" or higher by Standard & Poor's and "Baa2" or higher by
Moody's with respect to any outstanding long-term unsecured unsubordinated debt,
and, in the case of a successor Trustee or successor Securities Administrator
other than pursuant to Section 10.10, rated in one of the two highest long-term
debt categories of, or otherwise acceptable to, each of the Rating Agencies. The
Trustee shall not be an Affiliate of the Master Servicer. If the Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 10.06 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, as applicable,
shall cease to be eligible in accordance with the provisions of this Section
10.06, the Trustee or the Securities Administrator shall resign immediately in
the manner and with the effect specified in Section 10.08.
Section 10.07 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 10.07 shall be furnished to any
Certificateholder and MBIA upon reasonable written request.
Section 10.08 RESIGNATION AND REMOVAL OF TRUSTEE AND SECURITIES
ADMINISTRATOR.
The Trustee and the Securities Administrator may at any time
resign and be discharged from the Trust hereby created by giving written notice
thereof to the Depositor, the Seller, the Securities Administrator (or the
Trustee, if the Securities Administrator resigns) and the Master Servicer, with
a copy to the Rating Agencies and MBIA. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee or
successor securities administrator, as applicable, by written instrument, in
triplicate, one copy of which instrument shall be delivered to each of the
resigning trustee or securities administrator, as applicable, and the successor
trustee or
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securities administrator, as applicable. If no successor trustee or successor
securities administrator shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee or Securities Administrator may petition any court of
competent jurisdiction for the appointment of a successor trustee or securities
administrator.
If at any time (i) the Trustee or the Securities Administrator
shall cease to be eligible in accordance with the provisions of Section 10.06
hereof and shall fail to resign after written request thereto by the Depositor,
(ii) the Trustee or the Securities Administrator shall become incapable of
acting, or shall be adjudged as bankrupt or insolvent, or a receiver of the
Trustee or the Securities Administrator or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or the
Securities Administrator or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or (iii)(A) a tax is imposed with
respect to the Trust Fund by any state in which the Trustee or the Securities
Administrator or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee or securities administrator
and (C) the Trustee or the Securities Administrator, as applicable fails to
indemnify the Trust Fund against such tax, then the Depositor or the Master
Servicer may remove the Trustee or the Securities Administrator, as applicable,
and appoint a successor trustee or successor securities administrator, as
applicable, by written instrument, in multiple copies, a copy of which
instrument shall be delivered to the Trustee, the Securities Administrator, each
Master Servicer and the successor trustee or successor securities administrator,
as applicable.
The Holders evidencing at least 51% of the Voting Rights of
each Class of Certificates may at any time remove the Trustee or Securities
Administrator and appoint a successor trustee or securities administrator by
written instrument or instruments, in multiple copies, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered by the successor trustee or successor securities
administrator to each of the Master Servicer, the Trustee or Securities
Administrator so removed and the successor trustee or securities administrator
so appointed. Notice of any removal of the Trustee or Securities Administrator
shall be given to each Rating Agency and MBIA by the Trustee or successor
trustee.
Any resignation or removal of the Trustee or Securities
Administrator and appointment of a successor trustee or securities administrator
pursuant to any of the provisions of this Section 10.08 shall become effective
upon acceptance of appointment by the successor trustee or securities
administrator as provided in Section 10.09 hereof.
Section 10.09 SUCCESSOR TRUSTEE OR SECURITIES ADMINISTRATOR.
Any successor trustee or securities administrator appointed as
provided in Section 10.08 hereof shall execute, acknowledge and deliver to the
Depositor and to its predecessor trustee or predecessor securities
administrator, as applicable, and the Master Servicer an instrument accepting
such appointment hereunder and thereupon the resignation or removal of the
predecessor trustee or securities administrator shall become effective and such
successor trustee or securities administrator, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee or securities administrator herein.
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No successor trustee or securities administrator shall accept
appointment as provided in this Section 10.09 unless at the time of such
acceptance such successor trustee or securities administrator shall be eligible
under the provisions of Section 10.06 hereof and its appointment shall not
adversely affect the then current rating of the Certificates (determined without
regard to the Class A-5 Policy).
Upon acceptance of appointment by a successor trustee or
securities administrator as provided in this Section 10.09, the successor
trustee or securities administrator shall mail notice of the succession of such
trustee or securities administrator hereunder to all Holders of Certificates and
MBIA. If the successor trustee or securities administrator fails to mail such
notice within ten days after acceptance of appointment, the Depositor shall
cause such notice to be mailed at the expense of the Trust Fund.
Section 10.10 MERGER OR CONSOLIDATION OF TRUSTEE OR SECURITIES
ADMINISTRATOR.
Any corporation, state bank or national banking association
into which the Trustee or the Securities Administrator may be merged or
converted or with which it may be consolidated or any corporation, state bank or
national banking association resulting from any merger, conversion or
consolidation to which the Trustee or the Securities Administrator shall be a
party, or any corporation, state bank or national banking association succeeding
to substantially all of the corporate trust business of the Trustee or of the
business of the Securities Administrator, shall be the successor of the Trustee
or the Securities Administrator hereunder, provided that such corporation shall
be eligible under the provisions of Section 10.06 hereof without the execution
or filing of any paper or further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 10.11 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Fund or property securing any Mortgage Note may at
the time be located, the Master Servicer and the Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Trustee to act as co-trustee or co-trustees jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust Fund, and to vest in such Person or Persons, in such capacity and
for the benefit of the Certificateholders and MBIA, such title to the Trust Fund
or any part thereof, whichever is applicable, and, subject to the other
provisions of this Section 10.11, such powers, duties, obligations, rights and
trusts as the Master Servicer and the Trustee may consider necessary or
desirable. If the Master Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a request to do so, or in the case an
Event of Default shall have occurred and be continuing, the Trustee alone shall
have the power to make such appointment. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 10.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 10.09.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
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(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee, except for the obligation of the Trustee
under this Agreement to advance funds on behalf of the Master Servicer,
shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized
to act separately without the Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether a Trustee hereunder
or as a Successor Master Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust Fund or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article X. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Master Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co- trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 10.12 TAX MATTERS.
It is intended that the Trust Fund shall constitute, and that
the affairs of the Trust Fund shall be conducted so that each REMIC formed
hereunder qualifies as, a "real estate mortgage investment conduit" as defined
in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Securities Administrator covenants and agrees that it shall act
as agent (and the Securities Administrator is hereby appointed to act as agent)
on behalf of the Trust Fund. The Trustee and/or the Securities Administrator, as
agent on behalf of the Trust Fund, shall do or refrain from doing, as
applicable, the following: (a) the Securities Administrator shall prepare and
file, or cause to be prepared and filed, in a timely manner, U.S. Real Estate
Mortgage Investment Conduit
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Income Tax Returns (Form 1066 or any successor form adopted by the Internal
Revenue Service) and prepare and file or cause to be prepared and filed with the
Internal Revenue Service and applicable state or local tax authorities income
tax or information returns for each taxable year with respect to each such REMIC
containing such information and at the times and in the manner as may be
required by the Code or state or local tax laws, regulations, or rules, and
furnish or cause to be furnished to Certificateholders the schedules, statements
or information at such times and in such manner as may be required thereby; (b)
the Securities Administrator shall apply for an employer identification number
with the Internal Revenue Service via a Form SS-4 or other comparable method for
each REMIC that is or becomes a taxable entity, and within thirty days of the
Closing Date, furnish or cause to be furnished to the Internal Revenue Service,
on Forms 8811 or as otherwise may be required by the Code, the name, title,
address, and telephone number of the person that the holders of the Certificates
may contact for tax information relating thereto, together with such additional
information as may be required by such Form, and update such information at the
time or times in the manner required by the Code for the Trust Fund; (c) the
Trustee shall make or cause to be made elections, on behalf of each REMIC formed
hereunder to be treated as a REMIC on the federal tax return of such REMIC for
its first taxable year (and, if necessary, under applicable state law); (d) the
Securities Administrator shall prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service and, if
necessary, state tax authorities, all information returns and reports as and
when required to be provided to them in accordance with the REMIC Provisions,
including without limitation, the calculation of any original issue discount
using the Prepayment Assumption; (e) the Securities Administrator shall provide
information necessary for the computation of tax imposed on the transfer of a
Residual Certificate to a Person that is not a Permitted Transferee, or an agent
(including a broker, nominee or other middleman) of a Person that is not a
Permitted Transferee, or a pass-through entity in which a Person that is not a
Permitted Transferee is the record holder of an interest (the reasonable cost of
computing and furnishing such information may be charged to the Person liable
for such tax); (f) each of the Securities Administrator and the Trustee shall,
to the extent under its control, conduct the affairs of the Trust Fund at all
times that any Certificates are outstanding so as to maintain the status of each
REMIC formed hereunder as a REMIC under the REMIC Provisions; (g) neither the
Trustee nor the Securities Administrator shall knowingly or intentionally take
any action or omit to take any action that would cause the termination of the
REMIC status of any REMIC formed hereunder; (h) the Trustee shall pay, from the
sources specified in the last paragraph of this Section 10.12, as directed by
the Securities Administrator in its Remittance Report, the amount of any
federal, state and local taxes, including prohibited transaction taxes as
described below, imposed on any REMIC formed hereunder prior to the termination
of the Trust Fund when and as the same shall be due and payable (but such
obligation shall not prevent the Trustee, the Securities Administrator at the
written request of the Trustee, or any other appropriate Person from contesting
any such tax in appropriate proceedings and shall not prevent the Securities
Administrator from withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings); (i) the Trustee shall sign or cause to be
signed federal, state or local income tax or information returns or any other
document prepared by the Securities Administrator pursuant to this Section 10.12
requiring a signature thereon by the Trustee; (j) the Securities Administrator
shall maintain records relating to each REMIC formed hereunder including but not
limited to the income, expenses, assets and liabilities of each such REMIC and
adjusted basis of the Trust Fund property determined at such intervals as may be
required by the Code, as may be necessary to prepare the foregoing returns,
schedules, statements or information; (k) the Securities Administrator shall,
for federal income tax purposes, maintain
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books and records with respect to the REMICs on a calendar year and on an
accrual basis; (l) neither the Trustee nor the Master Servicer shall enter into
any arrangement not otherwise provided for in this Agreement by which the REMICs
will receive a fee or other compensation for services nor permit the REMICs to
receive any income from assets other than "qualified mortgages" as defined in
Section 860G(a)(3) of the Code or "permitted investments" as defined in Section
860G(a)(5) of the Code; and (m) as and when necessary and appropriate, the
Trustee, or at the written request of the Trustee, the Securities Administrator,
shall represent the Trust Fund in any administrative or judicial proceedings
relating to an examination or audit by any governmental taxing authority,
request an administrative adjustment as to any taxable year of any REMIC formed
hereunder, enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations relating to any tax item of the Trust Fund,
and otherwise act on behalf of each REMIC formed hereunder in relation to any
tax matter involving any such REMIC.
In order to enable each of the Trustee and the Securities
Administrator to perform its duties as set forth herein, the Depositor shall
provide, or cause to be provided, to the Trustee or the Securities Administrator
within 10 days after the Closing Date all information or data that the Trustee
or the Securities Administrator requests in writing and determines to be
relevant for tax purposes to the valuations and offering prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flows of the Certificates and the Mortgage Loans.
Thereafter, the Depositor shall provide to the Trustee or the Securities
Administrator promptly upon written request therefor, any such additional
information or data that the Trustee or the Securities Administrator may, from
time to time, request in order to enable the Trustee or the Securities
Administrator to perform its duties as set forth herein. The Depositor hereby
indemnifies each of Trustee and the Securities Administrator for any losses,
liabilities, damages, claims or expenses of the Trustee or the Securities
Administrator arising from any errors or miscalculations of the Trustee or the
Securities Administrator, as applicable, that result from any failure of the
Depositor to provide, or to cause to be provided, accurate information or data
to the Trustee or the Securities Administrator, as applicable, on a timely
basis.
In the event that any tax is imposed on "prohibited
transactions" of any of REMIC I, REMIC II or REMIC III as defined in Section
860F(a)(2) of the Code, on the "net income from foreclosure property" of the
Trust Fund as defined in Section 860G(c) of the Code, on any contribution to any
of REMIC I, REMIC II or REMIC III after the startup day pursuant to Section
860G(d) of the Code, or any other tax is imposed, including, without limitation,
any federal, state or local tax or minimum tax imposed upon any of REMIC I,
REMIC II or REMIC III, and is not paid as otherwise provided for herein, such
tax shall be paid by (i) the Trustee or the Securities Administrator, if any
such other tax arises out of or results from a breach by the Trustee or the
Securities Administrator, respectively, of any of its obligations under this
Agreement, (ii) any party hereto (other than the Trustee or the Securities
Administrator) to the extent any such other tax arises out of or results from a
breach by such other party of any of its obligations under this Agreement or
(iii) in all other cases, or in the event that any liable party hereto fails to
honor its obligations under the preceding clauses (i) or (ii), any such tax will
be paid first with amounts otherwise to be distributed to the Class R
Certificateholders, and second with amounts otherwise to be distributed to all
other Certificateholders in the following order of priority: first, to the Class
B Certificates, second, to the Class M-2 Certificates, third, to the Class M-1
Certificates and fourth to the Senior Certificates (pro rata based on the
amounts to be distributed). Notwithstanding anything to the
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contrary contained herein, to the extent that such tax is payable by the Holder
of any Certificates, the Trustee is hereby authorized to retain on any
Distribution Date, from the Holders of the Class R Certificates (and, if
necessary, second, from the Holders of the other Certificates in the priority
specified in the preceding sentence), funds otherwise distributable to such
Holders in an amount sufficient to pay such tax. Following written notification
to the Securities Administrator by the Trustee of any amount payable out of
distributions to the Certificateholders pursuant to the preceding two sentences,
the Securities Administrator shall include in its Remittance Report instructions
as to distributions to such parties taking into account the priorities described
in the second preceding sentence. The Securities Administrator, on written
request by the Trustee, agrees to promptly notify in writing the party liable
for any such tax of the amount thereof and the due date for the payment thereof.
The Trustee and the Securities Administrator each agree that,
in the event it should obtain any information necessary for the other party to
perform its obligations pursuant to this Section 10.12, it will promptly notify
and provide such information to such other party. Notwithstanding anything in
this Agreement to the contrary, the Trustee agrees that, in the event that the
Trustee obtains actual knowledge that the Securities Administrator has breached
any of its obligations pursuant to this Section 10.12, the Trustee shall perform
such obligations on its behalf to the extent that the Trustee possesses all
documents necessary to so perform and receives reasonable compensation therefor,
provided, however, that the Trustee shall not be liable for any losses resulting
from any such breach.
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ARTICLE XI
TERMINATION
Section 11.01 TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL
MORTGAGE LOANS.
Subject to Section 11.03, the obligations and responsibilities
of the Depositor, the Master Servicer, the Securities Administrator, the Seller
and the Trustee created hereby with respect to the Trust Fund shall terminate
upon the earlier of (a) the purchase by the Company of all of the Mortgage Loans
(and REO Properties) remaining in the Trust Fund at a price (the "Mortgage Loan
Purchase Price") equal to the sum of (i) 100% of the Stated Principal Balance of
each Mortgage Loan (other than in respect of REO Property), (ii) accrued
interest thereon at the applicable Mortgage Rate to, but not including, the
first day of the month of such purchase, (iii) the appraised value of any REO
Property in the Trust Fund (up to the Stated Principal Balance of the related
Mortgage Loan), such appraisal to be conducted by an appraiser mutually agreed
upon by the Company and the Securities Administrator, (iv) unreimbursed out-of
pocket costs of the Company, the Servicers or the Master Servicer, including
unreimbursed servicing advances and the principal portion of any unreimbursed
Advances, made on the Mortgage Loans prior to the exercise of such repurchase
right, (v) any unreimbursed costs and expenses of the Trustee and the Securities
Administrator payable pursuant to Section 10.05 and (vi) the amount of any MBIA
Reimbursement Amount due to MBIA and (b) the later of (i) the maturity or other
liquidation (or any Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and the disposition of all REO Property and (ii) the
distribution to Certificateholders and to MBIA of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event shall
the trusts created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late Ambassador of the United States to the Court of St. Xxxxx,
living on the date hereof and (ii) the Latest Possible Maturity Date.
The right to repurchase all Mortgage Loans and REO Properties
pursuant to clause (a) above shall be conditioned upon the Stated Principal
Balance of all of the Mortgage Loans in the Trust Fund, at the time of any such
repurchase, aggregating ten percent or less of the aggregate Cut- off Date
Principal Balance of all of the Mortgage Loans.
Section 11.02 FINAL DISTRIBUTION ON THE CERTIFICATES.
If on any Determination Date, (i) the Master Servicer
determines that there are no Outstanding Mortgage Loans and no other funds or
assets in the Trust Fund other than the funds in the Master Servicer Collection
Account, the Master Servicer shall direct the Securities Administrator to send a
final distribution notice promptly to MBIA and each Certificateholder or (ii)
the Securities Administrator determines that a Class of Certificates shall be
retired after a final distribution on such Class, the Securities Administrator
shall notify the Certificateholders (and MBIA with respect to the Class A-5
Certificates) within five (5) Business Days after such Determination Date that
the final distribution in retirement of such Class of Certificates is scheduled
to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the related Certificates at the
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Corporate Trust Office of the Trustee. If the Company elects to terminate the
Trust Fund pursuant to Section 11.01, at least 20 days prior to the date notice
is to be mailed to the Certificateholders, the Company shall notify the Master
Servicer, the Depositor, the Securities Administrator, MBIA, the Trustee and the
Securities Administrator of the date the Company intends to terminate the Trust
Fund. The Company shall remit the Mortgage Loan Purchase Price to the Master
Servicer on the Business Day prior to the Distribution Date for such Optional
Termination by the Company.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Securities Administrator by letter to Certificateholders and MBIA mailed
not earlier than the 10th day and no later than the 15th day of the month
immediately preceding the month of such final distribution. Any such notice
shall specify (a) the Distribution Date upon which final distribution on the
Certificates will be made upon presentation and surrender of Certificates at the
office therein designated, (b) the amount of such final distribution, (c) the
location of the office or agency at which such presentation and surrender must
be made and (d) that the Record Date otherwise applicable to such Distribution
Date is not applicable, distributions being made only upon presentation and
surrender of the Certificates at the office therein specified. The Securities
Administrator will give such notice to each Rating Agency at the time such
notice is given to Certificateholders.
In the event such notice is given, the Master Servicer shall
cause all funds in the Master Servicer Collection Account to be remitted to the
Trustee for deposit in the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates and any MBIA Reimbursement Amounts due to MBIA. Upon
such final deposit with respect to the Trust Fund and the receipt by the Trustee
of a Request for Release therefor, the Trustee shall promptly release to the
Company or the related Servicer, as applicable the Mortgage Files for the
Mortgage Loans and any documents necessary to transfer any REO Property.
Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to Certificateholders of each Class and to
MBIA the amounts allocable to such Certificates and to MBIA held in the
Distribution Account in the order and priority set forth in Section 6.04 hereof
on the final Distribution Date and in proportion to their respective Percentage
Interests.
In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Securities Administrator
shall give a second written notice to the remaining Certificateholders to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. If within six months after the second notice all the
applicable Certificates shall not have been surrendered for cancellation, the
Securities Administrator may take appropriate steps, or may appoint an agent to
take appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets that remain a part of the Trust Fund. If within one year
after the second notice all Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to all unclaimed
funds and other assets of the Trust Fund that remain subject hereto.
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Section 11.03 ADDITIONAL TERMINATION REQUIREMENTS.
(a) Upon exercise by the Company of its purchase option as
provided in Section 11.01, the Trust Fund shall be terminated in accordance with
the following additional requirements, unless each of the Trustee, MBIA and the
Securities Administrator have been supplied with an Opinion of Counsel, at the
expense of the Company, to the effect that the failure of the Trust Fund to
comply with the requirements of this Section 11.03 will not (i) result in the
imposition of taxes on "prohibited transactions" of a REMIC, or (ii) cause a
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(1) The Company shall establish a 90-day liquidation period
and notify the Trustee and Securities Administrator thereof, and the Securities
Administrator shall in turn specify the first day of such period in a statement
attached to the tax return for each of REMIC I, REMIC II and REMIC III pursuant
to Treasury Regulation Section 1.860F-1. The Company shall satisfy all the
requirements of a qualified liquidation under Section 860F of the Code and any
regulations thereunder, as evidenced by an Opinion of Counsel obtained at the
expense of the Company;
(2) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Company as agent
of the Trustee shall sell all of the assets of REMIC I, REMIC II and REMIC III
for cash; and
(3) At the time of the making of the final payment on the
Certificates, the Securities Administrator as agent for the Trustee shall
distribute or credit, or cause to be distributed or credited, to the Holders of
the Residual Certificates all cash on hand (other than cash retained to meet
claims), and REMIC I shall terminate at that time.
(b) By their acceptance of the Certificates, the Holders
thereof hereby authorize the Company to specify the 90-day liquidation period
for REMIC I, REMIC II and REMIC III, which authorization shall be binding upon
all successor Certificateholders.
(c) The Securities Administrator as agent for each REMIC
hereby agrees to adopt and sign such a plan of complete liquidation upon the
written request of the Company, and the receipt of the Opinion of Counsel
referred to in Section 11.03(a)(1) and to take such other action in connection
therewith as may be reasonably requested by the Company.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 AMENDMENT.
This Agreement may be amended from time to time by parties
hereto, with the consent of MBIA but without the consent of any of the
Certificateholders to cure any ambiguity, to correct or supplement any
provisions herein (including to give effect to the expectations of investors),
to change the manner in which the Master Servicer Collection Account maintained
by the Master Servicer or the Protected Account maintained by the Company is
maintained or to make such other provisions with respect to matters or questions
arising under this Agreement as shall not be inconsistent with any other
provisions herein if such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder; provided that any such amendment shall be deemed not to
adversely affect in any material respect the interests of the Certificateholders
and no such Opinion of Counsel shall be required if the Person requesting such
amendment obtains a letter from each Rating Agency stating that such amendment
would not result in the downgrading or withdrawal of the respective ratings then
assigned to the Certificates (determined without regard to the Class A-5
Policy).
Notwithstanding the foregoing, without the consent of the
Certificateholders, but with the consent of MBIA the parties hereto may at any
time and from time to time amend this Agreement to modify, eliminate or add to
any of its provisions to such extent as shall be necessary or appropriate to
maintain the qualification of each of REMIC I, REMIC II and REMIC III as a REMIC
under the Code or to avoid or minimize the risk of the imposition of any tax on
any of REMIC I, REMIC II or REMIC III pursuant to the Code that would be a claim
against any of REMIC I, REMIC II or REMIC III at any time prior to the final
redemption of the Certificates, provided that the Trustee and MBIA has been
provided an Opinion of Counsel, which opinion shall be an expense of the party
requesting such opinion but in any case shall not be an expense of the Trustee,
the Securities Administrator or the Trust Fund, to the effect that such action
is necessary or appropriate to maintain such qualification or to avoid or
minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the
parties hereto with the consent of MBIA and the Holders of each Class of
Certificates affected thereby evidencing over 50% of the Voting Rights of such
Class or Classes for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of Certificates; provided that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments required to be distributed on any Certificate without the consent of
the Holder of such Certificate, (ii) cause any of REMIC I, REMIC II or REMIC III
to cease to qualify as a REMIC or (iii) reduce the aforesaid percentages of
Certificates of each Class the Holders of which are required to consent to any
such amendment without the consent of the Holders of all Certificates of such
Class then outstanding.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it and MBIA
shall have first received an Opinion of Counsel, which opinion shall be an
expense of the party requesting such amendment but
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in any case shall not be an expense of the Trustee, the Securities Administrator
or the Trust Fund, to the effect that such amendment will not (other than an
amendment pursuant to clause (ii) of, and in accordance with, the preceding
paragraph) cause the imposition of any tax on REMIC I, REMIC II or REMIC III or
the Certificateholders or cause REMIC I, REMIC II or REMIC III to cease to
qualify as a REMIC at any time that any Certificates are outstanding. Further,
nothing in this Agreement shall require the Trustee to enter into an amendment
without receiving an Opinion of Counsel (a copy of which shall be addressed to
and delivered to MBIA), satisfactory to the Trustee that (i) such amendment is
permitted and is not prohibited by this Agreement and that all requirements for
amending this Agreement (including any consent of the applicable
Certificateholders) have been complied with.
Promptly after the execution of any amendment to this
Agreement requiring the consent of Certificateholders, the Trustee shall furnish
written notification of the substance of such amendment to each
Certificateholder, MBIA and each Rating Agency.
It shall not be necessary for the consent of
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
Section 12.02 RECORDATION OF AGREEMENT; COUNTERPARTS.
To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all of the counties or other comparable jurisdictions in which any or
all of the Mortgaged Properties are situated, and in any other appropriate
public recording office or elsewhere. The Master Servicer shall effect such
recordation at the Trust's expense upon the request in writing of a
Certificateholder, but only if such direction is accompanied by an Opinion of
Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 12.03 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT
REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
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Section 12.04 INTENTION OF PARTIES.
It is the express intent of the parties hereto that the
conveyance of the Mortgage Notes, Mortgages, assignments of Mortgages, title
insurance policies and any modifications, extensions and/or assumption
agreements and private mortgage insurance policies relating to the Mortgage
Loans by the Seller to the Depositor, and by the Depositor to the Trustee be,
and be construed as, an absolute sale thereof to the Depositor or the Trustee,
as applicable. It is, further, not the intention of the parties that such
conveyance be deemed a pledge thereof by the Seller to the Depositor, or by the
Depositor to the Trustee. However, in the event that, notwithstanding the intent
of the parties, such assets are held to be the property of the Seller or the
Depositor, as applicable, or if for any other reason this Agreement is held or
deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) each conveyance provided for
in this Agreement shall be deemed to be an assignment and a grant by the Seller
or the Depositor, as applicable , for the benefit of the Certificateholders and
MBIA, of a security interest in all of the assets that constitute the Trust
Fund, whether now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders and
MBIA shall, to the extent consistent with this Agreement, take such actions as
may be necessary to ensure that, if this Agreement were deemed to create a
security interest in the assets of the Trust Fund, such security interest would
be deemed to be a perfected security interest of first priority under applicable
law and will be maintained as such throughout the term of the Agreement.
Section 12.05 NOTICES.
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency and MBIA with respect to each of the following of
which it has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured;
(iii) The resignation or termination of the Master Servicer,
the Securities Administrator or the Trustee and the appointment of any
successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant
to Sections 2.02, 2.03, 4.21 and 11.01; and
(v) The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(i) Each report to Certificateholders described in Section
6.05;
(ii) Each annual statement as to compliance described in
Section 4.16; and
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(iii) Each annual independent public accountants' servicing
report described in Section 4.17.
(b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered at or mailed
by registered mail, return receipt requested, postage prepaid, or by recognized
overnight courier, or by facsimile transmission to a number provided by the
appropriate party if receipt of such transmission is confirmed to (i) in the
case of the Depositor, Bear Xxxxxxx Asset Backed Securities, Inc., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Chief Counsel; (ii) in the case of
the Seller or the Company, EMC Mortgage Corporation, 000 Xxxxxx Xxxxx Xxxxx,
Xxxxxx, Xxxxx 00000, Attention: Xxxxxx Xxxxx or such other address as may be
hereafter furnished to the other parties hereto by the Master Servicer in
writing; (iv) in the case of the Trustee, at each Corporate Trust Office or such
other address as the Trustee may hereafter furnish to the other parties hereto;
(v) in the case of the Master Servicer or the Securities Administrator, 0000 Xxx
Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: BSABS 2002-AC3 or such
other address as may be hereafter furnished to the other parties hereto by the
Securities Administrator in writing; (vi) in the case of MBIA, MBIA Insurance
Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000, Attention: Insured
Portfolio Management--Structured Finance (BSABS 2002-AC3), or such other address
as may be hereafter furnished to the Trustee by MBIA in writing; and (vii) in
the case of the Rating Agencies, (x) Xxxxx'x Investors Service, Inc., 00 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Home Equity Monitoring and (y)
Standard & Poor's, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Mortgage Surveillance Group. Any notice delivered to the Seller, the
Master Servicer, the Securities Administrator, the Trustee or MBIA under this
Agreement shall be effective only upon receipt. Any notice required or permitted
to be mailed to a Certificateholder, unless otherwise provided herein, shall be
given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register; any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.
Section 12.06 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.
Section 12.07 ASSIGNMENT.
Notwithstanding anything to the contrary contained herein,
except as provided pursuant to Section 8.02, this Agreement may not be assigned
by the Master Servicer, the Seller or the Depositor.
Section 12.08 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
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The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third party by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee or the
Securities Administrator, as appropriate, a written notice of an Event of
Default and of the continuance thereof, as hereinbefore provided, the Holders of
Certificates evidencing not less than 25% of the Voting Rights evidenced by the
Certificates shall also have made written request to the Trustee or the
Securities Administrator, as appropriate to institute such action, suit or
proceeding in its own name as Trustee or the Securities Administrator, as
appropriate, hereunder and shall have offered to the Trustee or the Securities
Administrator, as appropriate, such reasonable indemnity as it may require
against the costs, expenses, and liabilities to be incurred therein or thereby,
and the Trustee or the Securities Administrator, as appropriate, for 60 days
after its receipt of such notice, request and offer of indemnity shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner whatever
by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder or to enforce any right under this Agreement, except in
the manner herein provided and for the common benefit of all Certificateholders.
For the protection and enforcement of the provisions of this Section 12.08, each
and every Certificateholder, the Trustee or the Securities Administrator shall
be entitled to such relief as can be given either at law or in equity.
Section 12.09 INSPECTION AND AUDIT RIGHTS. The Master Servicer agrees
that, on reasonable prior notice, it will permit any representative of the
Depositor or the Trustee during the Master Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Master Servicer relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants selected by the Depositor or the Trustee and to discuss its affairs,
finances and accounts relating to such Mortgage Loans with its officers,
employees and independent public accountants (and by this provision the Master
Servicer hereby authorizes such accountants to discuss with such representative
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested. Any out-of-pocket expense incident to the
exercise by the Depositor or the Trustee of any right under this Section 12.09
shall be borne by the party requesting such inspection.
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Section 12.10 CERTIFICATES NONASSESSABLE AND FULLY PAID.
It is the intention of the Depositor that Certificateholders
shall not be personally liable for obligations of the Trust Fund, that the
interests in the Trust Fund represented by the Certificates shall be
nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and shall
be deemed fully paid.
Section 12.11 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-5 Certificateholders shall also be sent at such time to
MBIA at the notice address set forth in Section 12.05.
(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.
(c) All references herein to the ratings assigned to the
Certificates and to the interests of any Certificateholders shall be without
regard to the Class A-5 Policy.
* * *
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IN WITNESS WHEREOF, the Depositor, the Master Servicer, the
Seller, the Company, the Securities Administrator and the Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
BEAR XXXXXXX ASSET BACKED SECURITIES,
INC.,
as Depositor
By:__________________________________
Name:
Title:
EMC MORTGAGE CORPORATION,
as Seller and Company
By:__________________________________
Name:
Title:
XXXXX FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION
as Securities Administrator and Master
Servicer
By:__________________________________
Name:
Title:
BANK ONE, NATIONAL ASSOCIATION
as Trustee
By:__________________________________
Name:
Title:
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of June, 2002, before me, a notary public in
and for said State, appeared _______________, personally known to me on the
basis of satisfactory evidence to be an authorized representative of Bear
Xxxxxxx Asset Backed Securities, Inc., one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of such corporation and acknowledged to me that such corporation executed
the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
____________________________
Notary Public
[Notarial Seal]
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STATE OF )
) ss.:
COUNTY OF )
On this ____ day of June, 2002, before me, a notary public in
and for said State, appeared _____________, personally known to me on the basis
of satisfactory evidence to be an authorized representative of Xxxxx Fargo Bank
Minnesota, National Association that executed the within instrument, and also
known to me to be the person who executed it on behalf of such corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________
Notary Public
[Notarial Seal]
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STATE OF )
) ss.:
COUNTY OF )
On this ____ day of June, 2002, before me, a notary public in
and for said State, appeared ______________, personally known to me on the basis
of satisfactory evidence to be an authorized representative of EMC Mortgage
Corporation, one of the corporations that executed the within instrument, and
also known to me to be the person who executed it on behalf of such corporation
and acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
__________________________
Notary Public
[Notarial Seal]
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of June, 2002, before me, a notary public in
and for said State, appeared _____________, personally known to me on the basis
of satisfactory evidence to be an authorized representative of Bank One,
National Association that executed the within instrument, and also known to me
to be the person who executed it on behalf of such corporation, and acknowledged
to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________
Notary Public
[Notarial Seal]
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EXHIBIT A-1
CLASS A-[1] [2] [3] [4] [5] 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 CERTIFICATE PRINCIPAL BALANCE 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 CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE
PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
Certificate No. 1 Pass-Through Rate: ____%
Class A-_ Senior
Date of Pooling and Servicing Agreement and Aggregate Initial Certificate Principal Balance
Cut-off Date: of this Certificate as of the Cut-off Date:
June 1, 2002 $__________
First Distribution Date: Initial Certificate Principal Balance of this
July 25, 2002 Certificate as of the Cut-off Date:
$__________
Master Servicer:
Xxxxx Fargo Bank Minnesota, National
Association CUSIP: __________
Assumed Final Distribution Date:
__________
ASSET-BACKED CERTIFICATE
SERIES 2002-AC3
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 conventional one- to four-family
fixed interest rate mortgage loans sold by BEAR XXXXXXX ASSET BACKED
SECURITIES, INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Bear Xxxxxxx
Asset Backed Securities, Inc., the Master Servicer, the Trustee or the
Securities Administrator 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 Bear Xxxxxxx Asset Backed
Securities, Inc., the Master Servicer, the Trustee or the Securities
Administrator or any of their affiliates or any other person. None of Bear
Xxxxxxx Asset Backed Securities, Inc., the Master Servicer or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that [Cede & Co.] is the registered owner of
the Percentage Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally consisting of conventional first lien, fixed rate mortgage loans
secured by one- to four- family residences, units in planned unit developments
and individual condominium units (collectively, the "Mortgage Loans") sold by
Bear Xxxxxxx Asset Backed Securities, Inc. ("BSABS"). The Mortgage Loans were
sold by EMC Mortgage Corporation
A-1-2
("EMC") to BSABS. Xxxxx Fargo Bank Minnesota, National Association 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 BSABS, as depositor
(the "Depositor"), EMC Mortgage Corporation as seller and company, Xxxxx Fargo
Bank Minnesota, National Association, as Master Servicer and securities
administrator (the "Securities Administrator") and Bank One, National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Certificate Principal Balance hereof at a per annum rate equal to the
Pass-Through Rate set forth above. 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 day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
calendar month immediately preceding the month in which the Distribution Date
occurs, an amount equal to the product of the Percentage 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 following the latest scheduled maturity date of any Mortgage Loan and is
not likely to be the date on which the Certificate Principal Balance 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 Certificate Principal Balance of this Certificate is set forth above.
The Certificate Principal Balance 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").
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.
A-1-3
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, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Agreement from time to time by the parties thereto with the consent of the
Holders of each Class of Certificates affected thereby evidencing over 50% of
the Voting Rights of such Class or Classes. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate 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 Percentage 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 Percentage 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 Depositor, 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 Depositor, 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 (A) the maturity or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (B) the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is less than the
percentage of the aggregate Stated 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
A-1-4
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: June 28, 2002 BANK ONE, NATIONAL ASSOCIATION,
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.
BANK ONE, NATIONAL ASSOCIATION
Authorized signatory of Bank One,
National Association, not in its
individual capacity but solely as
Trustee
By:______________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Asset-Backed Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated: ___________________________________________________
Signature by or on behalf of assignor
________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
EXHIBIT A-2
CLASS A-IO 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").
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
Certificate No.1 Pass-Through Rate: ____%
Class A-IO Senior
Date of Pooling and Servicing Agreement and Aggregate Initial Certificate Notional Balance
Cut-off Date: of this Certificate as of the Cut-off Date:
June 1, 2002 $__________
First Distribution Date: Initial Certificate Notional Balance of this
July 25, 2002 Certificate as of the Cut-off Date:
$__________
Master Servicer:
Xxxxx Fargo Bank Minnesota, National
Association
Assumed Final Distribution Date:
__________ CUSIP: __________
ASSET-BACKED CERTIFICATE
SERIES 2002-AC3
evidencing a fractional undivided interest in the distributions
allocable to the Class A-IO Certificates with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family
fixed interest rate mortgage loans sold by BEAR XXXXXXX ASSET BACKED
SECURITIES, INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Bear Xxxxxxx
Asset Backed Securities, Inc., the Master Servicer, the Trustee or the
Securities Administrator 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 Bear Xxxxxxx Asset Backed
Securities, Inc., the Master Servicer, the Trustee or the Securities
Administrator or any of their affiliates or any other person. None of Bear
Xxxxxxx Asset Backed Securities, Inc., the Master Servicer or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that [Cede & Co.] is the registered owner of
the Percentage Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally consisting of conventional first lien, fixed rate mortgage loans
secured by one- to four- family residences, units in planned unit developments
and individual condominium units (collectively, the "Mortgage Loans") sold by
Bear Xxxxxxx Asset Backed Securities, Inc. ("BSABS"). The Mortgage Loans were
sold by EMC Mortgage Corporation
A-2-2
("EMC") to BSABS. Xxxxx Fargo Bank Minnesota, National Association 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 BSABS, as depositor
(the "Depositor"), EMC Mortgage Corporation as seller and company, Xxxxx Fargo
Bank Minnesota, National Association, as Master Servicer and securities
administrator (the "Securities Administrator") and Bank One, National
Association as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Certificate Notional Balance hereof at a per annum rate equal to the
Pass-Through Rate set forth above. 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 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 Percentage Interest evidenced by this Certificate and the
amount of interest 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 December 2004.
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
Class A-IO Certificates have no Certificate Principal Balance. The Initial
Certificate Notional Balance of this Certificate is set forth above.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates").
The Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
A-2-3
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Agreement from time to time by the parties thereto with the consent of the
Holders of the Class or Classes of Certificates affected thereby evidencing over
50% of the Voting Rights of such Class or Classes. Any such consent by the
Holder of this Certificate shall be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate 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 Percentage 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 Percentage 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 Depositor, 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 Depositor, 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 (A) the maturity or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (B) the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is less than the
percentage of the aggregate Stated 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.
A-2-4
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-2-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: June 28, 2002 BANK ONE, NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Trustee
By:___________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-IO Certificates referred to in the
within-mentioned Agreement.
BANK ONE, NATIONAL ASSOCIATION
Authorized signatory of Bank One,
National Association, not in its
individual capacity but solely as
Trustee
By:______________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Asset-Backed Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated: ___________________________________________________
Signature by or on behalf of assignor
________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
EXHIBIT A-3
CLASS M-[1] [2] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
SENIOR 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 CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO
AS DESCRIBED IN THE AGREEMENT. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF
THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE
DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE
MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE NAMED
HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
Certificate No.1 Pass-Through Rate: _____%
Class M-_ Subordinate
Date of Pooling and Servicing Agreement and Aggregate Initial Certificate Principal Balance
Cut-off Date: of this Certificate as of the Cut-off Date:
June 1, 2002 $__________
First Distribution Date: Initial Certificate Principal Balance of this
July 25, 2002 Certificate as of the Cut-off Date:
$__________
Master Servicer:
Xxxxx Fargo Bank Minnesota, National
Association CUSIP: __________
Assumed Final Distribution Date:
__________
ASSET-BACKED CERTIFICATE
SERIES 2002-AC3
evidencing a fractional undivided interest in the distributions
allocable to the Class M-_ Certificates with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family
fixed interest rate mortgage loans sold by BEAR XXXXXXX ASSET BACKED
SECURITIES, INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Bear Xxxxxxx
Asset Backed Securities, Inc., the Master Servicer, the Trustee or the
Securities Administrator 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 Bear Xxxxxxx Asset Backed
Securities, Inc., the Master Servicer, the Trustee or the Securities
Administrator or any of their affiliates or any other person. None of Bear
Xxxxxxx Asset Backed Securities, Inc., the Master Servicer or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that [Cede & Co.] is the registered owner of
the Percentage Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally consisting of conventional first lien, fixed rate mortgage loans
secured by one- to four- family residences, units in planned unit developments
and individual condominium units (collectively, the "Mortgage Loans") sold by
Bear Xxxxxxx Asset Backed Securities, Inc. ("BSABS"). The Mortgage Loans were
sold by EMC Mortgage Corporation
A-3-9
("EMC") to BSABS. Xxxxx Fargo Bank Minnesota, National Association 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 BSABS, as depositor
(the "Depositor"), EMC Mortgage Corporation as seller and company, Xxxxx Fargo
Bank Minnesota, National Association, as Master Servicer and securities
administrator (the "Securities Administrator") and Bank One, National
Association as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Certificate Principal Balance hereof at a per annum rate equal to the
Pass-Through Rate set forth above. 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 day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
calendar month immediately preceding the month in which the Distribution Date
occurs, an amount equal to the product of the Percentage 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 following the latest scheduled maturity date of any Mortgage Loan and is
not likely to be the date on which the Certificate Principal Balance 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 Certificate Principal Balance of this Certificate is set forth above.
The Certificate Principal Balance 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").
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.
A-3-10
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, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Agreement from time to time by the parties thereto with the consent of the
Holders of the Class or Classes of Certificates affected thereby evidencing over
50% of the Voting Rights of such Class or Classes. Any such consent by the
Holder of this Certificate shall be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate 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 Percentage 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 Percentage 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 Depositor, 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 Depositor, 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 (A) the maturity or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (B) the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is less than the
percentage of the aggregate Stated 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
A-3-11
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-3-12
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: June 28, 2002 BANK ONE, NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Trustee
By:___________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class M-_ Certificates referred to in the
within-mentioned Agreement.
BANK ONE, NATIONAL ASSOCIATION
Authorized signatory of Bank One,
National Association, not in its
individual capacity but solely as
Trustee
By:______________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Asset-Backed Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated: ___________________________________________________
Signature by or on behalf of assignor
________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
EXHIBIT A-4
CLASS B CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
SENIOR 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 CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES AND CLASS PO
CERTIFICATE DEFERRED PAYMENT WRITEDOWN AMOUNTS ALLOCABLE HERETO AS DESCRIBED IN
THE AGREEMENT. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES,
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE
DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS
CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
Certificate No.1 Pass-Through Rate: ____%
Class B Subordinate
Date of Pooling and Servicing Agreement and Aggregate Initial Certificate Principal Balance
Cut-off Date: of this Certificate as of the Cut-off Date:
June 1, 2002 $__________
First Distribution Date: Initial Certificate Principal Balance of this
July 25, 2002 Certificate as of the Cut-off Date:
$__________
Master Servicer:
Xxxxx Fargo Bank Minnesota, National
Association CUSIP: __________
Assumed Final Distribution Date:
__________
ASSET-BACKED CERTIFICATE
SERIES 2002-AC3
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 conventional one- to four-family
fixed interest rate mortgage loans sold by BEAR XXXXXXX ASSET BACKED
SECURITIES, INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Bear Xxxxxxx
Asset Backed Securities, Inc., the Master Servicer, the Trustee or the
Securities Administrator 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 Bear Xxxxxxx Asset Backed
Securities, Inc., the Master Servicer, the Trustee or the Securities
Administrator or any of their affiliates or any other person. None of Bear
Xxxxxxx Asset Backed Securities, Inc., the Master Servicer or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that [Cede & Co.] is the registered owner of
the Percentage Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally consisting of conventional first lien, fixed rate mortgage loans
secured by one- to four- family residences, units in planned unit developments
and individual condominium units (collectively, the "Mortgage Loans") sold by
Bear Xxxxxxx Asset Backed Securities, Inc. ("BSABS"). The Mortgage Loans were
sold by EMC Mortgage Corporation
A-4-2
("EMC") to BSABS. Xxxxx Fargo Bank Minnesota, National Association 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 BSABS, as depositor
(the "Depositor"), EMC Mortgage Corporation as seller and company, Xxxxx Fargo
Bank Minnesota, National Association, as Master Servicer and securities
administrator (the "Securities Administrator") and Bank One, National
Association as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Certificate Principal Balance hereof at a per annum rate equal to the
Pass-Through Rate set forth above. 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 day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
calendar month immediately preceding the month in which the Distribution Date
occurs, an amount equal to the product of the Percentage 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 following the latest scheduled maturity date of any Mortgage Loan and is
not likely to be the date on which the Certificate Principal Balance 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 Certificate Principal Balance of this Certificate is set forth above.
The Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal hereon and any Realized Losses and Class PO
Certificate Deferred Payment Writedown Amounts allocable hereto.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates").
The Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
A-4-3
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, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Agreement from time to time by the parties thereto with the consent of the
Holders of the Class or Classes of Certificates affected thereby evidencing over
50% of the Voting Rights of such Class or Classes. Any such consent by the
Holder of this Certificate shall be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate 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 Percentage 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 Percentage 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 Depositor, 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 Depositor, 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 (A) the maturity or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (B) the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is less than the
percentage of the aggregate Stated 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
A-4-4
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-4-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: June 28, 2002 BANK ONE, NATIONAL ASSOCIATION,
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.
BANK ONE, NATIONAL ASSOCIATION
Authorized signatory of Bank One,
National Association, not in its
individual capacity but solely as
Trustee
By:______________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Asset-Backed Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated: ___________________________________________________
Signature by or on behalf of assignor
________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
EXHIBIT A-5
CLASS B-IO CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
SENIOR CERTIFICATES, THE CLASS M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES 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").
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.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON,
UNLESS THE TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION
7.02(B) OF THE AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER
SERVICER, THE TRUSTEE AND THE
A-4-8
SECURITIES ADMINISTRATOR THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT
CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE MASTER SERVICER, THE TRUSTEE
OR THE SECURITIES ADMINISTRATOR TO ANY OBLIGATION OR LIABILITY IN ADDITION TO
THOSE UNDERTAKEN IN THE AGREEMENT.
A-4-9
Certificate No.1 Variable Pass-Through Rate
Class B-IO Subordinate
Date of Pooling and Servicing Agreement and Aggregate Initial Certificate Notional Balance
Cut-off Date: of this Certificate as of the Cut-off Date:
June 1, 2002 $__________
First Distribution Date: Initial Certificate Notional Balance of this
July 25, 2002 Certificate as of the Cut-off Date:
$__________
Master Servicer:
Xxxxx Fargo Bank Minnesota, National
Association
Assumed Final Distribution Date:
__________ CUSIP: __________
ASSET-BACKED CERTIFICATE
SERIES 2002-AC3
evidencing a fractional undivided interest in the distributions
allocable to the Class B-IO Certificates with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family
fixed interest rate mortgage loans sold by BEAR XXXXXXX ASSET BACKED
SECURITIES, INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Bear Xxxxxxx
Asset Backed Securities, Inc., the Master Servicer, the Trustee or the
Securities Administrator 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 Bear Xxxxxxx Asset Backed
Securities, Inc., the Master Servicer, the Trustee or the Securities
Administrator or any of their affiliates or any other person. None of Bear
Xxxxxxx Asset Backed Securities, Inc., the Master Servicer or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that [Bear, Xxxxxxx Securities Corp.] is the
registered owner of the Percentage Interest evidenced hereby in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust Fund") generally consisting of conventional first lien, fixed
rate mortgage loans secured by one- to four- family residences, units in planned
unit developments and individual condominium units (collectively, the "Mortgage
Loans") sold by Bear Xxxxxxx Asset Backed Securities, Inc. ("BSABS"). The
Mortgage Loans were sold by EMC Mortgage
A-5-2
Corporation ("EMC") to BSABS. Xxxxx Fargo Bank Minnesota, National Association
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 BSABS, as depositor
(the "Depositor"), EMC Mortgage Corporation as seller and company, Xxxxx Fargo
Bank Minnesota, National Association, as Master Servicer and securities
administrator (the "Securities Administrator") and Bank One, National
Association as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Certificate Notional Balance hereof at a per annum rate equal to the
Pass-Through Rate set forth above. 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 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 Percentage Interest evidenced by this Certificate and the
amount of interest 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 June 2032.
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
Class B-IO Certificates have no Certificate Principal Balance. The Initial
Certificate Notional Balance of this Certificate is set forth above.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibits E, and F or G,
as applicable, and (ii) in all other cases, an Opinion of Counsel satisfactory
to it that such transfer may be made without such registration or qualification
(which Opinion of Counsel shall not be an expense of the Trust Fund or of the
Depositor, the Trustee, the Securities Administrator or the Master Servicer in
their respective capacities as such), together with copies of the written
A-5-3
certification(s) of the Holder of the Certificate desiring to effect the
transfer and/or such Holder's prospective transferee upon which such Opinion of
Counsel is based. Neither the Depositor nor the Trustee is obligated to register
or qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Securities
Administrator, the Depositor, the Seller and the Master Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of this Class B-IO Certificate will be made unless
the Trustee and the Securities Administrator have received either (i) an opinion
of counsel acceptable to and in form and substance satisfactory to the Trustee,
the Securities Administrator and the Master Servicer with respect to the
permissibility of such transfer under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and Section 4975 of the Internal Revenue Code
(the "Code") and stating, among other things, that the transferee's acquisition
of a Class B-6 Certificate will not constitute or result in a non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or
(ii) a representation letter, in the form as described by the Agreement, stating
that the transferee is not an employee benefit or other plan subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code (a
"Plan"), or any other person (including an investment manager, a named fiduciary
or a trustee of any Plan) acting, directly or indirectly, on behalf of or
purchasing any Certificate with "plan assets" of any Plan.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates").
The Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Agreement from time to time by the parties thereto with the consent of the
Holders of the Class or Classes of Certificates affected thereby evidencing over
50% of the Voting Rights of such class or classes. Any such consent by the
Holder of this Certificate shall be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
A-5-4
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 Percentage 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 Percentage 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 Depositor, 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 Depositor, 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 (A) the maturity or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (B) the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is less than the
percentage of the aggregate Stated 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-5-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: June 28, 2002 BANK ONE, NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Trustee
By:___________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class B-IO Certificates referred to in the
within-mentioned Agreement.
BANK ONE, NATIONAL ASSOCIATION
Authorized signatory of Bank One,
National Association, not in its
individual capacity but solely as
Trustee
By:______________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Asset-Backed Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated: ___________________________________________________
Signature by or on behalf of assignor
________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
EXHIBIT A-6
CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A
NON-UNITED STATES PERSON 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").
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON,
UNLESS THE TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION
7.02(B) OF THE AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER
SERVICER, THE TRUSTEE AND THE SECURITIES ADMINISTRATOR THAT THE PURCHASE OF THIS
CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION
UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE MASTER
SERVICER, THE TRUSTEE OR THE SECURITIES ADMINISTRATOR TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
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 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 XXXXXXX MAC, A MAJORITY OF ITS BOARD OF DIRECTORS IS NOT
SELECTED BY SUCH GOVERNMENTAL UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF EITHER OF THE FOREGOING, (C)
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
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE (INCLUDING THE TAX IMPOSED BY SECTION 511 OF THE CODE ON UNRELATED BUSINESS
TAXABLE INCOME), (D) RURAL ELECTRIC AND TELEPHONE COOPERATIVES DESCRIBED IN
SECTION 1381(A)(2)(C) OF THE CODE, (E) AN ELECTING LARGE PARTNERSHIP UNDER
SECTION 775(A) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES
(A), (B), (C), (D) OR (E) BEING HEREIN REFERRED TO AS A
"DISQUALIFIED ORGANIZATION"), OR (F) 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 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.
Certificate No.1 Percentage Interest: 100%
Class R
Date of Pooling and Servicing Agreement and Aggregate Initial Certificate Principal Balance
Cut-off Date: of this Certificate as of the Cut-off Date:
June 1, 2002 $50.00
First Distribution Date: Initial Certificate Principal Balance of this
July 25, 2002 Certificate as of the Cut-off Date:
$50.00
Master Servicer:
Xxxxx Fargo Bank Minnesota, National
Association CUSIP: __________
Assumed Final Distribution Date:
__________
ASSET-BACKED CERTIFICATE
SERIES 2002-AC2
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 conventional one- to four-family
fixed interest rate mortgage loans sold by BEAR XXXXXXX ASSET BACKED
SECURITIES, INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in Bear Xxxxxxx
Asset Backed Securities, Inc., the Master Servicer, the Trustee or the
Securities Administrator 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 Bear Xxxxxxx Asset Backed
Securities, Inc., the Master Servicer, the Trustee or the Securities
Administrator or any of their affiliates or any other person. None of Bear
Xxxxxxx Asset Backed Securities, Inc., the Master Servicer or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that [Bear, Xxxxxxx Securities Corp.] is the
registered owner of the Percentage Interest evidenced hereby in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust Fund") generally consisting of conventional first lien, fixed
rate mortgage loans secured by one- to four- family residences, units in planned
unit developments and individual condominium units (collectively, the "Mortgage
Loans") sold by Bear Xxxxxxx Asset Backed Securities, Inc. ("BSABS"). The
Mortgage Loans were sold by EMC Mortgage
A-6-3
Corporation ("EMC") to BSABS. Xxxxx Fargo Bank Minnesota, National Association
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 BSABS, as depositor
(the "Depositor"), EMC Mortgage Corporation as seller and company, Xxxxx Fargo
Bank Minnesota, National Association, as Master Servicer and securities
administrator (the "Securities Administrator") and Bank One, National
Association as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
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 Depositor will have the right, in
its sole discretion and without notice to the Holder of this Certificate, to
sell this Certificate to a purchaser selected by the Depositor, which purchaser
may be the Depositor, or any affiliate of the Depositor, on such terms and
conditions as the Depositor may choose.
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 day (or if such last day is not a Business
Day, the Business Day immediately preceding such last day) of the calendar month
immediately preceding the month in which the Distribution Date occurs, an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amounts required to be distributed to the Holders of Certificates of the
same Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month following the latest scheduled maturity date of
any Mortgage Loan.
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.
A-6-4
No transfer of this Class R Certificate will be made unless
the Trustee and the Securities Administrator have received either (i) an opinion
of counsel acceptable to and in form and substance satisfactory to the Trustee,
the Securities Administrator and the Master Servicer with respect to the
permissibility of such transfer under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and Section 4975 of the Internal Revenue Code
(the "Code") and stating, among other things, that the transferee's acquisition
of a Class R Certificate will not constitute or result in a non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or
(ii) a representation letter, in the form as described by the Agreement, stating
that the transferee is not an employee benefit or other plan subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code (a
"Plan"), or any other person (including an investment manager, a named fiduciary
or a trustee of any Plan) acting, directly or indirectly, on behalf of or
purchasing any Certificate with "plan assets" of any Plan.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates").
The Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust Fund for payment hereunder and that
the Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Agreement from time to time by the parties thereto with the consent of the
Holders of the Class or Classes of Certificates affected thereby evidencing over
50% of the Voting Rights of such Class or Classes. Any such consent by the
Holder of this Certificate shall be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate 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 Percentage 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
A-6-5
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
Percentage 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 Depositor, 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 Depositor, 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 (A) the maturity or other
liquidation (or Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (B) the
remittance of all funds due under the Agreement, or (ii) the optional repurchase
by the party named in the Agreement of all the Mortgage Loans and other assets
of the Trust Fund in accordance with the terms of the Agreement. Such optional
repurchase may be made only on or after the Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is less than the
percentage of the aggregate Stated 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-6-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: June 28, 2002 BANK ONE, NATIONAL ASSOCIATION,
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.
BANK ONE, NATIONAL ASSOCIATION
Authorized signatory of Bank One,
National Association, not in its
individual capacity but solely as
Trustee
By:______________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________ (Please print or
typewrite name and address including postal zip code of assignee) a Percentage
Interest evidenced by the within Asset-Backed Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated: ___________________________________________________
Signature by or on behalf of assignor
________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of _________________________ account number _____________, or, if mailed by
check, to ______________________________. Applicable statements should be mailed
to _____________________________________________.
This information is provided by __________________, the
assignee named above, or ________________________, as its agent.
EXHIBIT B
MORTGAGE LOAN SCHEDULE
----------------------
The Preliminary and Final Mortgage Loan Schedules shall set
forth the following information with respect to each Mortgage Loan:
(a) the loan number;
(b) the Mortgagor's name;
(c) the street address (including city, state and zip code) of the
Mortgaged Property;
(d) the property type;
(e) the Mortgage Rate;
(f) the Master Servicing Rate;
(g) the Net Rate;
(h) the original term;
(i) the maturity date;
(j) the stated remaining term to maturity;
(k) the original principal balance;
(1) the first payment date;
(m) the principal and interest payment in effect as of the Cut-off Date;
(n) the unpaid principal balance as of the Cut-off Date;
(o) the Loan-to-Value Ratio at origination;
(p) paid-through date;
(q) the insurer of any Primary Mortgage Insurance Policy;
(r) the Mortgage Loan Group;
(s) the Gross Margin, if applicable;
(t) the Maximum Lifetime Mortgage Rate, if applicable;
B-1
(u) the Minimum Lifetime Mortgage Rate, if applicable;
(v) the Periodic Rate Cap, if applicable; and
(w) the number of days delinquent, if any.
Such schedule also shall set forth for all of the Mortgage Loans, the total
number of Mortgage Loans, the total of each of the amounts described under (xi)
and (xiv) above, the weighted average by principal balance as of the Cut-off
Date of each of the rates described under (v), (vi) and (vii) above, and the
weighted average remaining term to maturity by unpaid principal balance as of
the Cut-off Date.
B-2
EXHIBIT C-1
FORM OF INITIAL CERTIFICATION
Bear Xxxxxxx Asset Backed Securities, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Pooling and Servicing Agreement, dated as of June 1, 2002,
among Bear Xxxxxxx Asset Backed Securities, Inc., as
depositor, EMC Mortgage Corporation, as seller and company,
Xxxxx Fargo Bank Minnesota, National Association, as master
servicer and securities administrator and Bank One, National
Association, as trustee, issuing Asset-Backed Certificates,
Series 2002-AC3
------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, hereby certifies that, except as otherwise
noted on the attached exception report, that as to each Mortgage Loan listed on
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed
on the attachment hereto) it has reviewed the Mortgage File and the Mortgage
Loan Schedule and has determined that: (i) all documents required to be included
in the Mortgage File pursuant to the Pooling and Servicing Agreement are in its
possession; (ii) such documents have been reviewed by it and appear regular on
their face, have, where applicable, been executed and relate to such Mortgage
Loan; and (iii) based on examination by it, and only as to such documents, the
information set forth in the Mortgage Loan Schedule as to Mortgagor Name,
original principal balance and loan number respecting such Mortgage Loan is
correct and accurately reflects the information in the Mortgage Loan File.
The undersigned has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The undersigned makes no
representation that any documents specified in subclauses (iv), (v) and (vii) of
Section 2.01(b) should be included in any Mortgage File. The undersigned makes
no representations as to: (i) the validity, legality, enforceability or
genuineness of any of the documents contained in each Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANK ONE, NATIONAL ASSOCIATION
By:___________________________
Name:
Title:
C-1-1
EXHIBIT C-2
FORM OF INTERIM CERTIFICATION
Bear Xxxxxxx Asset Backed Securities, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Pooling and Servicing Agreement, dated as of June 1, 2002,
among Bear Xxxxxxx Asset Backed Securities, Inc., as
depositor, EMC Mortgage Corporation, as seller and company,
Xxxxx Fargo Bank Minnesota, National Association, as master
servicer and securities administrator and Bank One, National
Association, as trustee, issuing Asset-Backed Certificates,
Series 2002-AC3
------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, hereby certifies that, except as otherwise
noted on the attached exception report, that as to each Mortgage Loan listed on
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed
on the attachment hereto) it has reviewed the Mortgage File and the Mortgage
Loan Schedule and has determined that: (i) all documents required to be included
in the Mortgage File pursuant to the Pooling and Servicing Agreement are in its
possession; (ii) such documents have been reviewed by it and appear regular on
their face, have, where applicable, been executed and relate to such Mortgage
Loan; and (iii) based on examination by it, and only as to such documents, the
information set forth in the Mortgage Loan Schedule as to Mortgagor Name,
original principal balance and loan number respecting such Mortgage Loan is
correct and accurately reflects the information in the Mortgage Loan File.
The undersigned has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The undersigned makes no
representation that any documents specified in subclauses (iv), (v) and (vii) of
Section 2.01(b) should be included in any Mortgage File. The undersigned makes
no representations as to: (i) the validity, legality, enforceability or
genuineness of any of the documents contained in each Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANK ONE, NATIONAL ASSOCIATION
By:___________________________
Name:
Title:
C-2-1
EXHIBIT C-3
FORM OF FINAL CERTIFICATION
Bear Xxxxxxx Asset Backed Securities, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Pooling and Servicing Agreement, dated as of June 1, 2002,
among Bear Xxxxxxx Asset Backed Securities, Inc., as
depositor, EMC Mortgage Corporation, as seller and company,
Xxxxx Fargo Bank Minnesota, National Association, as master
servicer and securities administrator and Bank One, National
Association, as trustee, issuing Asset-Backed Certificates,
Series 2002-AC3
------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, hereby certifies that, except as otherwise
noted on the attached exception report, that as to each Mortgage Loan listed on
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed
on the attachment hereto) it has received the documents set forth in Section
2.01 and has determined that (i) all documents required to be included in the
Mortgage File pursuant to the Pooling and Servicing Agreement are in its
possession; (ii) such documents have been reviewed by it and appear regular on
their face, have, where applicable, been executed and relate to such Mortgage
Loan; and (iii) based on examination by it, and only as to such documents, the
information set forth in the Mortgage Loan Schedule as to Mortgagor name,
original principal balance and loan number respecting such Mortgage Loan is
correct and accurately reflects the information in the Mortgage Loan File.
The undersigned has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The undersigned makes no
representation that any documents specified in subclauses (iv), (v) and (vii) of
Section 2.01(b) should be included in any Mortgage File. The undersigned makes
no representations as to: (i) the validity, legality, enforceability or
genuineness of any of the documents contained in each Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANK ONE, NATIONAL ASSOCIATION
By:___________________________
Name:
Title:
C-3-1
EXHIBIT D
FORM OF TRANSFER 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 Bear Xxxxxxx Asset-Backed
Securities, Inc. Asset-Backed Certificates, Series 2002-AC3, Class R-__
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 Bear Xxxxxxx Asset Backed
Securities, 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
______________________.
D-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:
D-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___.
D-3
EXHIBIT E
FORM OF TRANSFEROR CERTIFICATE
______________,200___
Bear Xxxxxxx Asset Backed Securities, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Bank One, National Association
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Bear Xxxxxxx Asset Backed Securities Trust 2002-AC3
Re: Bear Xxxxxxx Asset Backed Securities, Inc.
Asset-Backed Certificates, Series 2002-AC3, Class__
---------------------------------------------------
Ladies and Gentlemen:
In connection with the sale by ___________ (the "Seller") to ________
(the "Purchaser") of $_________ Initial Certificate Principal Balance of
Asset-Backed Certificates, Series 2002-AC3, Class _____ (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of June 1, 2002 among Bear Xxxxxxx Asset-Backed
Securities, Inc., as depositor (the "Depositor"), EMC Mortgage Corporation, as
seller and company, Xxxxx Fargo Bank Minnesota, National Association, as master
servicer and securities administrator, and Bank One, National Association, as
trustee (the "Trustee"). The Seller hereby certifies, represents and warrants
to, a covenants with, the Depositor and the Trustee that:
Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the "Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Seller will not act in any
manner set forth in the foregoing sentence with respect to any Certificate. The
Seller has not and will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing Agreement.
E-1
Very truly yours,
______________________________
_____________
(Seller)
By:___________________________
Name:_________________________
Title:________________________
E-2
EXHIBIT F
FORM OF INVESTOR REPRESENTATION LETTER (NON-RULE 144A)
___________,200__
Bear Xxxxxxx Asset Backed Securities, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Bank One, National Association
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Bear Xxxxxxx Asset Backed Securities Trust 2002-AC3
Re: Bear Xxxxxxx Asset-Backed Securities, Inc.
Asset-Backed Certificates, Series 2002-AC3, Class__
---------------------------------------------------
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
______________ (the "Seller") $_________ Initial Certificate Principal Balance
of Asset-Backed Certificates, Series 2002-AC3, Class _____ (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of June 1, 2002 among Bear Xxxxxxx Asset Backed
Securities, Inc., as depositor (the "Depositor"), EMC Mortgage Corporation, as
seller and company, Xxxxx Fargo Bank Minnesota, National Association, as master
servicer and securities administrator, and Bank One, National Association, as
trustee (the "Trustee"). All terms used herein and not otherwise defined shall
have the meanings set forth in the Pooling and Servicing Agreement. The
Purchaser hereby certifies, represents and warrants to, and covenants with, the
Depositor and the Trustee that:
1. The Purchaser understands that (a) the
Certificates have not been and will not be registered or
qualified under the Securities Act of 1933, as amended (the
"Act") or any state securities law, (b) the Depositor is not
required to so register or qualify the Certificates, (c) the
Certificates may be resold only if registered and qualified
pursuant to the provisions of the Act or any state securities
law, or if an exemption from such registration and
qualification is available, (d) the Pooling and Servicing
Agreement contains restrictions regarding the transfer of the
Certificates and (e) the Certificates will bear a legend to
the foregoing effect.
2. The Purchaser is acquiring the Certificates for
its own account for investment only and not with a view to or
for sale in connection with any distribution
F-1
thereof in any manner that would violate the Act or any
applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters, and, in particular, in such
matters related to securities similar to the Certificates,
such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) able to bear the economic
risks of such an investment and (c) an "accredited investor"
within the meaning of Rule 501 (a) promulgated pursuant to the
Act.
4. The Purchaser has been furnished with, and has had
an opportunity to review (a) [a copy of the Private Placement
Memorandum, dated ______, 2002, relating to the Certificates
(b)] a copy of the Pooling and Servicing Agreement and [(b)]
[(c)] such other information concerning the Certificates, the
Mortgage Loans and the Depositor as has been requested by the
Purchaser from the Depositor or the Seller and is relevant to
the Purchaser's decision to purchase the Certificates. The
Purchaser has had any questions arising from such review
answered by the Depositor or the Seller to the satisfaction of
the Purchaser. [If the Purchaser did not purchase the
Certificates from the Seller in connection with the initial
distribution of the Certificates and was provided with a copy
of the Private Placement Memorandum (the "Memorandum")
relating to the original sale (the "Original Sale") of the
Certificates by the Depositor, the Purchaser acknowledges that
such Memorandum was provided to it by the Seller, that the
Memorandum was prepared by the Depositor solely for use in
connection with the Original Sale and the Depositor did not
participate in or facilitate in any way the purchase of the
Certificates by the Purchaser from the Seller, and the
Purchaser agrees that it will look solely to the Seller and
not to the Depositor with respect to any damage, liability,
claim or expense arising out of, resulting from or in
connection with (a) error or omission, or alleged error or
omission, contained in the Memorandum, or (b) any information,
development or event arising after the date of the
Memorandum.]
5. The Purchaser has not and will not nor has it
authorized or will it authorize any person to (a) offer,
pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other
similar security to any person in any manner, (b) solicit any
offer to buy or to accept a pledge, disposition of other
transfer of any Certificate, any interest in any Certificate
or any other similar security from any person in any manner,
(c) otherwise approach or negotiate with respect to any
Certificate, any interest in any Certificate or any other
similar security with any person in any manner, (d) make any
general solicitation by means of general advertising or in any
other manner or (e) take any other action, that (as to any of
(a) through (e) above) would constitute a distribution of any
Certificate under the Act, that would render the disposition
of any Certificate a violation of Section 5 of the Act or any
state securities law, or that would require registration or
qualification pursuant thereto. The Purchaser will not sell or
otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing
Agreement.
F-2
Very truly yours,
________________________________
______________
(Purchaser)
By:_____________________________
Name:___________________________
Title:__________________________
F-3
EXHIBIT G
FORM OF RULE 144A INVESTMENT LETTER
[Date]
[SELLER]
Bear Xxxxxxx Asset Backed Securities, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Bank One, National Association
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Bear Xxxxxxx Asset Backed Securities Trust 2002-AC3,
Asset-Backed Certificates, Series 2002-AC3 (the
"Certificates"), including the Class __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)
unless subsequently registered under the Act and any
applicable state
G-1
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 Xxxxx Fargo Bank Minnesota, National Association
(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, and/or section 4975 of the Internal
Revenue Code of 1986, as amended, or (ii) are
providing a representation or an opinion of counsel
to the effect that the proposed transfer and/or
holding of a Privately Offered Certificate and the
servicing, management and/or 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, XXX
00-00 or
G-2
Section 401(c) of ERISA and the regulations
promulgated thereunder and (II) will not give rise to
any additional fiduciary duties on the part of the
Seller, the Master Servicer or the Trustee.
(ix) We understand that each of the Class ___ 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,
AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, UNLESS THE PROPOSED TRANSFER AND/OR
HOLDING OF A CERTIFICATE AND THE SERVICING,
MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS
ASSETS: (1) WILL NOT RESULT IN ANY PROHIBITED
G-3
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, XXX
96-23 OR SECTION 401(C) OF ERISA AND THE REGULATIONS
TO BE PROMULGATED THEREUNDER AND (II) WILL NOT GIVE
RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART
OF THE SELLER, THE MASTER 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 A HOLDER
OF A PRIVATE CERTIFICATE."
"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 June 1, 2002, between
Bear Xxxxxxx Asset Backed Securities, Inc., as depositor, EMC Mortgage
Corporation, as seller and company, Xxxxx Fargo Bank Minnesota, National
Association, as master servicer and securities administrator, and Bank One,
National Association, 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):__________________
G-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]
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]
EXHIBIT H
REQUEST FOR RELEASE OF DOCUMENTS
To: Bank One, National Association
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
RE: Pooling and Servicing Agreement dated as of June 1, 2002, between Bear
Xxxxxxx Asset Backed Securities Inc., as Depositor, EMC Mortgage
Corporation, as seller and company, Xxxxx Fargo Bank Minnesota,
National Association, as master servicer and securities administrator,
and Bank One, National Association, 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:_____________________________
H-1
EXHIBIT I
DTC Letter of Representations
[provided upon request]
I-1
EXHIBIT J
Schedule of Mortgage Loans with Lost Notes
[provided upon request]
J-1
EXHIBIT K
FORM OF CUSTODIAL AGREEMENT
---------------------------
THIS CUSTODIAL AGREEMENT (as amended and supplemented from
time to time, the "Agreement'), dated as of June 28, 2002, by and among BANK
ONE, NATIONAL ASSOCIATION, as trustee (including its successors under the
Pooling and Servicing Agreement defined below, the "Trustee"), BEAR XXXXXXX
ASSET BACKED SECURITIES, INC., as depositor (together with any successor in
interest, the "Depositor"), EMC MORTGAGE CORPORATION, as seller (the "Seller")
and company and XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as master
servicer (together with any successor in interest or successor under the Pooling
and Servicing Agreement referred to below, the "Master Servicer"), securities
administrator and custodian (together with any successor in interest or any
successor appointed hereunder, the "Custodian").
WITNESSETH THAT:
---------------
WHEREAS, the Depositor, the Seller, the Master Servicer and
the Trustee have entered into a Pooling and Servicing Agreement, dated as of
June 1, 2002, relating to the issuance of Bear Xxxxxxx Asset Backed Securities
Trust 2002-AC3, Asset-Backed Certificates, Series 2002-AC3 (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 Depositor, the Seller 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
Depositor, the Seller, the Master Servicer and the Custodian hereby agree as
follows:
ARTICLE I.
DEFINITIONS
Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned in the Original Pooling and Servicing
Agreement, unless otherwise required by the context herein.
K-1
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 23(a) receipt of the Mortgage 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.
Section 2.2. RECORDATION OF ASSIGNMENTS. If any Mortgage File
includes one or more assignments of Mortgage that have not been recorded
pursuant to the provisions of Section 2.01 of the Pooling and Servicing
Agreement and the related Mortgaged Properties are located in jurisdictions
specifically excluded by the Opinion of Counsel delivered to the Trustee
pursuant to Section 2.01 of the Pooling and Servicing Agreement, each such
assignment shall be delivered by the Custodian to the Seller for the purpose of
recording it in the appropriate public office for real property records, and the
Seller, 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, 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 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 Trustee a Final Certification
in the form annexed hereto as Exhibit Three evidencing the completeness of the
Mortgage Files.
K-2
(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.
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 then contained in 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 Seller 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 Seller, the related Servicer (if applicable)
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 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 H to the Pooling and
Servicing Agreement signed by a Servicing Officer of the Company or the related
Servicer, as applicable, 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 Company or the
related Servicer, as applicable, the related Mortgage File. The Depositor 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
Replacement 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 Company or the related Servicer, as
applicable, 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 Company or the related Servicer, as applicable, 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 Company or the related Servicer, as applicable. The
Company or the related Servicer, as applicable, shall cause each Mortgage File
or any document therein so released to be returned to the Custodian when the
need therefore by the Company or the related Servicer, as applicable, 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
K-3
either judicially or non-judicially, and the Company or the related Servicer, as
applicable, 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 the Company or a Servicer is required to
deliver to the Custodian a Request for Release, the Company or the related
Servicer, as applicable, shall deliver two copies of the Request for Release if
delivered in hard copy or the Company or the Servicer, as applicable, 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. 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, from the Trustee
to the Seller and the related Mortgage Note shall be endorsed without recourse
by the Trustee and be returned to the 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 Company or the related Servicer, as applicable.
Section 2.6. ASSUMPTION AGREEMENTS. In the event that any
assumption agreement or substitution of liability 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 Pooling and Servicing Agreement or
related Servicing Agreement, shall cause the Company or the related Servicer, as
applicable, 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 A 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 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.
K-4
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 arise from its negligence or bad faith or to the extent that such cost or
expense is indemnified by the Depositor 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 Depositor, the Master Servicer 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 Servicers, the Company and the Depositor.
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 Depositor 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 Depositor
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
K-5
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 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 Depositor, 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 Depositor and at the Trust's expense on
direction by the Trustee, but only upon direction accompanied by an Opinion of
Counsel reasonably satisfactory to the Depositor 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.
K-6
IN WITNESS WHEREOF, this Agreement is executed as of the date
first above written.
Address: BANK ONE, NATIONAL ASSOCIATION,
as Trustee
000 Xxxx 00xx Xx., 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
By:__________________________________
Attention: Name:
Telecopy: Title:
Confirmation:
Address: BEAR XXXXXXX ASSET BACKED
SECURITIES, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
By:__________________________________
Name:
Title:
Address: EMC MORTGAGE CORPORATION
000 Xxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000 By:__________________________________
Name:
Title:
Address: XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Custodian
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000 By:__________________________________
Name:
Title:
STATE OF ILLINOIS )
)ss:
COUNTY OF NEW YORK )
On the ______ day of June, 2002 before me, a notary public in
and for said State, personally appeared _______________, known to me to be a
_________________of Bank One, National Association, a national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation and acknowledged to me that
such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________
Notary Public
[SEAL]
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the ___ day of June, 2002 before me, a notary public in and
for said State, personally appeared ________________, known to me to be a
_____________ of Bear Xxxxxxx Asset Backed Securities, Inc., 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]
STATE OF TEXAS )
)ss:
COUNTY OF DALLAS )
On the ___ day of June, 2002 before me, a notary public in and
for said State, personally appeared ________________, known to me to be a
__________________ of EMC Mortgage Corporation, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of 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]
STATE OF MARYLAND )
)ss:
COUNTY OF XXXXXX )
On the ____ day of June, 2002 before me, a notary public in
and for said State, personally appeared ____________, known to me to be a 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
[SEAL]
EXHIBIT ONE
FORM OF CUSTODIAN INITIAL CERTIFICATION
June 28, 2002
Bank One, National Association
000 Xxxx 00xx Xx., 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Bear Xxxxxxx Asset Backed Securities, Inc., Series 2002-AC3
Re: Custodial Agreement, dated as of June 28, 2002, by
and among Bank One, National Association, Xxxxx Fargo
Bank Minnesota, National Association, Bear Xxxxxxx
Asset Backed Securities, Inc. and EMC Mortgage
Corporation relating to Bear Xxxxxxx Asset Backed
Securities Trust 2002-AC3, Asset- Backed
Certificates, Series 2002-AC3
-----------------------------------------------------
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:_______________________
K-1-1
EXHIBIT TWO
FORM OF CUSTODIAN INTERIM CERTIFICATION
____________, 2002
Bank One, National Association
000 Xxxx 00xx Xx., 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Bear Xxxxxxx Asset Backed Securities, Inc., Series 2002-AC3
Re: Custodial Agreement, dated as of June 28, 2002, by
and among Bank One, National Association, Xxxxx Fargo
Bank Minnesota, National Association, Bear Xxxxxxx
Asset Backed Securities, Inc. and EMC Mortgage
Corporation relating to Bear Xxxxxxx Asset Backed
Securities Trust 2002-AC3, Asset-Backed Certificates,
Series 2002-AC3
-----------------------------------------------------
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:_____________________
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EXHIBIT THREE
FORM OF CUSTODIAN FINAL CERTIFICATION
____________, 2002
Bank One, National Association
000 Xxxx 00xx Xx., 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Bear Xxxxxxx Asset Backed Securities, Inc., Series 2002-AC3
Re: Custodial Agreement, dated as of June 28, 2002, by and
among Bank One, National Association, Xxxxx Fargo Bank
Minnesota, National Association, Bear Xxxxxxx Asset
Backed Securities, Inc. and EMC Mortgage Corporation
relating to Bear Xxxxxxx Asset Backed Securities Trust
2002-AC3, Asset-Backed Certificates, Series 2002-AC3
-----------------------------------------------------
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 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 an original lost note affidavit from the Seller stating that the
original Mortgage Note was lost, misplaced or destroyed, together with
a copy of the related Mortgage Note;
(ii) The original Mortgage with evidence of recording
indicated thereon or a copy of the Mortgage certified by the public
recording office in which such mortgage has been recorded;
(iii) An original Assignment of the Mortgage to the Trustee
with evidence of recording indicated thereon or a copy of such
assignment certified by the public recording office in which such
assignment has been recorded;
(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
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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 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.
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By:___________________________
Name:_________________________
Title:________________________
K-3-2
EXHIBIT L
CERTIFICATE GUARANTY INSURANCE POLICY
OBLIGATIONS: $23,249,000 6.74% Bear Xxxxxxx POLICY NUMBER: 38461
Asset Backed Securities Trust 2002-AC3,
Asset-Backed Certificates, Series 2002-AC3
Class A-5 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 Bank One, National Association, 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.
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Issuer, the Trust or
the Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability). This Policy does not provide credit enhancement
for any Class of Certificates other than the Class A-5 Certificates.
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 State Street Bank and Trust Company,
N.A., 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 June
1, 2002 among EMC Mortgage Corporation, as Seller, Bear Xxxxxxx Asset Backed
Securities, Inc., as Depositor, 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 (a) for any Distribution Date, the sum of (i)
any shortfall in the Interest Funds to pay the Current Interest due on the Class
A-5 Certificates, except for (y) any portion thereof payable under this Policy
as a Preference Amount and (z) any portion thereof relating to the step-up of
the Pass-Through Rate of the Class A-5 Certificates due to the failure of the
exercise of the optional termination right pursuant to Section 11.01 of the
Agreement and (ii) if the Insurer so
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elects, in its sole discretion, the amount by which the Certificate Principal
Balance of the Class A-5 Certificates (after taking into account all
distributions to be made on such Distribution Date) exceeds the aggregate Stated
Principal Balance of the Mortgage Loans and (b) for the Last Scheduled
Distribution Date, the Certificate Principal Balance of the Class A-5
Certificates to the extent unpaid on such date (after taking into account all
distributions to be made on such date).
"Insured Payment" means (a) as of any Distribution Date, any Deficiency
Amount and (b) any Preference Amount.
"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-5 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.
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.
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IN WITNESS WHEREOF, the Insurer has caused this Policy to be executed
and attested this 28th day of June, 2002.
MBIA INSURANCE CORPORATION
By ___________________________
President
Attest:
By ___________________________
Assistant Secretary
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EXHIBIT A
TO CERTIFICATE GUARANTY INSURANCE
POLICY NUMBER: 38461
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER: 00000
Xxxxx Xxxxxx Bank and Trust Company, N.A., 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 State Street Bank and Trust Company, N.A. (the
"Fiscal Agent") and MBIA Insurance Corporation (the "Insurer"), with reference
to Certificate Guaranty Insurance Policy Number: 38461 (the "Policy") issued by
the Insurer in respect of the $23,249,000 6.74% Bear Xxxxxxx Asset Backed
Securities Trust 2002-AC3, Asset-Backed Certificates, Series 2002-AC3, Class A-5
Certificates (the "Obligations"), that:
(a) the Trustee is the trustee under the Pooling and Servicing
Agreement dated as of June 1, 2002, among EMC Mortgage Corporation, as
Seller, Bear Xxxxxxx Asset Backed Securities, Inc., as Depositor, 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 sum of the amounts listed in paragraphs (b) and (c)
above is $[__________] (the "Deficiency Amount");
(e) 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");
(f) the total Insured Payment due is $[__________], which
amount equals the sum of the Deficiency Amount and the Preference
Amount;
(g) 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 (d) 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
(e) above to be applied to the payment of any Preference Amount; and
(h) 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_____________________________
