Document:

EXHIBIT 10.1

                            LAPIS TECHNOLOGIES, INC.

                             2002 STOCK OPTION PLAN

                            ADOPTED OCTOBER 16, 2002

     1.     PURPOSE OF THE PLAN.  The Lapis Technologies, Inc. 2002 Stock Option
            -------------------
Plan  (the  "Plan")  is  intended to advance the interests of Lapis Technologies
Inc.  (the  "Company")  by  inducing  individuals,  and  eligible  entities  (as
hereinafter  provided)  of  outstanding ability and potential to join and remain
with, or provide consulting or advisory services to, the Company, by encouraging
and  enabling  eligible  employees,  non-employee  Directors,  consultants  and
advisors  to  acquire proprietary interests in the Company, and by providing the
participating  employees,  non-employee Directors, consultants and advisors with
an  additional  incentive  to  promote  the  success  of  the  Company.  This is
accomplished  by  providing  for  the  granting of "Options", which term as used
herein  includes both "Incentive Stock Options" and "Nonstatutory Stock Options"
(as  hereinafter  defined) to employees, non-employee Directors, consultants and
advisors.

2.     ADMINISTRATION.  The Plan shall be administered by the Board of Directors
       --------------
of  the  Company  (the "Board of Directors") or by a committee (the "Committee")
chosen  by  the Board of Directors.  Except as herein specifically provided, the
interpretation  and  construction  by the Board of Directors or the Committee of
any  provision  of the Plan or of any Option granted under it shall be final and
conclusive.  The  receipt  of  Options  by  Directors,  or  any  members  of the
Committee,  shall  not preclude their vote on any matters in connection with the
administration  or  interpretation  of  the  Plan.

3.     SHARES  SUBJECT  TO THE PLAN.  The stock subject to Options granted under
       ----------------------------
the  Plan  shall  be  shares  of the Company's Common Stock, par value $.001 per
share  (the  "Common  Stock"),  whether  authorized  but unissued or held in the
Company's  treasury,  or  shares  purchased  from stockholders expressly for use
under  the  Plan.  The  maximum  number  of  shares of Common Stock which may be
issued  pursuant  to  Options  granted  under  the  Plan shall not exceed in the
aggregate  five  hundred  thousand  (500,000) shares, plus such number of Common
Stock  shares  issuable  upon  the  exercise  of  Reload Options (as hereinafter
defined)  granted  under  the Plan, subject to adjustment in accordance with the
provisions  of Section 13 hereof.  The Company shall at all times while the Plan
is  in force reserve such number of shares of Common Stock as will be sufficient
to  satisfy  the requirements of all outstanding Options granted under the Plan.
In the event any Option granted under the Plan shall expire or terminate for any
reason without having been exercised in full or shall cease for any reason to be
exercisable  in  whole or in part, the un-purchased shares subject thereto shall
again  be  available  for  Options  under  the  Plan.

     4.     PARTICIPATION.  The  class  of  individual  or  entity that shall be
            -------------
eligible  to  receive  Options  under  the  Plan  shall  be  (a) with respect to
Incentive  Stock Options described in Section 6 hereof, all employees (including
officers)  of  either  the Company or any subsidiary corporation of the Company,

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and  (b)  with  respect  to  Nonstatutory  Stock  Options described in Section 7
hereof,  all  employees  (including  officers) and non-employee Directors of, or
consultants and advisors to, either the Company or any subsidiary corporation of
the  Company;  provided,  however,  that Nonstatutory Stock Options shall not be
granted  to any such consultants and advisors unless (i) bona fide services have
                                                         ---- ----
been  or are to be rendered by such consultant or advisor and (ii) such services
are  not in connection with the offer or sale of securities in a capital raising
transaction.   For purposes of the Plan, for an entity to be an eligible entity,
it  must  be included in the definition of "employee" for purposes of a Form S-8
Registration  Statement  filed under the Securities Act of 1933, as amended (the
"Act").  The  Board  of  Directors or the Committee, in its sole discretion, but
subject  to  the  provisions  of  the  Plan,  shall  determine the employees and
non-employee  Directors of, and the consultants and advisors to, the Company and
its  subsidiary corporations to whom Options shall be granted, and the number of
shares  to  be  covered  by  each  Option, taking into account the nature of the
employment or services rendered by the individuals or entities being considered,
their  annual  compensation,  their  present  and potential contributions to the
success  of the Company, and such other factors as the Board of Directors or the
Committee  may  deem  relevant.

     5.     STOCK OPTION AGREEMENT.  Each Option granted under the Plan shall be
            ----------------------
authorized by the Board of Directors or the Committee, and shall be evidenced by
a  Stock  Option  Agreement  which  shall  be executed by the Company and by the
individual or entity to whom such Option is granted.  The Stock Option Agreement
shall  specify  the  number  of shares of Common Stock as to which any Option is
granted, the period during which the Option is exercisable, the option price per
share  thereof,  and  such other terms and provisions not inconsistent with this
Plan.

6.     INCENTIVE  STOCK  OPTIONS.  The  Board  of Directors or the Committee may
       -------------------------
grant  Options  under  the  Plan,  which  Options  are  intended  to  meet  the
requirements  of  Section  422  of the Internal Revenue Code of 1986, as amended
(the  "Code"),  and  which are subject to the following terms and conditions and
any  other terms and conditions as may at any time be required by Section 422 of
the  Code  (referred  to  herein  as  an  "Incentive  Stock  Option"):

          (a) No Incentive Stock Option shall be granted to individuals other
than  employees  of  the  Company or of a subsidiary corporation of the Company.

          (b)  Each  Incentive Stock Option under the Plan must be granted prior
to the date which is ten (10) years from the date the Plan initially was adopted
by  the  Board  of  Directors  of  the  Company.

          (c)  The  option  price  of  the shares of Common Stock subject to any
Incentive  Stock  Option  shall  not  be  less than the fair market value of the
Common  Stock  at  the  time  such  Incentive Stock Option is granted; provided,
however,  if  an Incentive Stock Option is granted to an individual who owns, at
the  time  the Incentive Stock Option is granted, more than ten percent (10%) of
the  total  combined voting power of all classes of stock of the Company or of a
parent or subsidiary corporation of the Company (a "Principal Stockholder"), the
option  price  of  the  shares subject to the Incentive Stock Option shall be at
least  one  hundred  ten  percent  (110%) of the fair market value of the Common

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Stock  at  the  time  the  Incentive  Stock  Option  is  granted.

          (d) No Incentive Stock Option granted under the Plan shall be
exercisable  after  the expiration of ten (10) years from the date of its grant.
However,  if  an  Incentive  Stock Option is granted to a Principal Stockholder,
such  Incentive  Stock  Option  shall not be exercisable after the expiration of
five  (5) years from the date of its grant. Every Incentive Stock Option granted
under  the Plan shall be subject to earlier termination as expressly provided in
Section  12  hereof.

          (e)  For purposes of determining stock ownership under this Section 6,
the  attribution  rules  of  Section  424(d)  of  the  Code  shall  apply.

          (f) For purposes of the Plan, and except as otherwise provided herein,
fair  market  value  shall  be  determined  by  the  Board  of  Directors or the
Committee.  If  the  Common Stock is listed on a national securities exchange or
traded  on  the  over-the-counter market, fair market value shall be the closing
selling  price or, if not available, the closing bid price or, if not available,
the  high  bid  price  of  the  Common  Stock quoted on such exchange, or on the
over-the-counter  market as reported by The Nasdaq Stock Market ("Nasdaq") or if
the Common Stock is not listed on Nasdaq, then by the National Quotation Bureau,
Incorporated,  as  the  case may be, on the day immediately preceding the day on
which the Option is granted or exercised, as the case may be, or, if there is no
selling  or  bid price on that day, the closing selling price, closing bid price
or  high  bid price on the most recent day which precedes that day and for which
such  prices  are  available.

     7.     NONSTATUTORY STOCK OPTIONS.  The Board of Directors or the Committee
            --------------------------
may grant Options under the Plan which are not intended to meet the requirements
of  Section  422  of the Code, as well as Options which are intended to meet the
requirements of Section 422 of the Code but the terms of which provide that they
will  not  be  treated  as  Incentive  Stock  Options  (referred  to herein as a
"Nonstatutory  Stock  Options").  Nonstatutory  Stock  Options  which  are  not
intended  to meet those requirements shall be subject to the following terms and
conditions:

          (a)  A  Nonstatutory  Stock Option may be granted to any individual or
entity  eligible  to  receive  an Option under the Plan pursuant to Section 4(b)
hereof.

          (b)  The  option  price  of  the  shares  of Common Stock subject to a
Nonstatutory  Stock  Option shall be determined by the Board of Directors or the
Committee,  in its sole discretion, at the time of the grant of the Nonstatutory
Stock  Option; provided, however, the option price shall not be less than 85% of
the  fair  market  value  of  a  share of Common Stock on the date of grant. For
purposes of this Section 7(b), fair market value shall mean, if the Common Stock
is  publicly  traded, the closing trading price on the day preceding the date of
the  grant.

          (c)  A Nonstatutory Stock Option granted under the Plan may be of such
duration  as  shall  be  determined  by  the Board of Directors or the Committee
(subject  to  earlier  termination  as expressly provided in Section 11 hereof).

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     8.     RELOAD  FEATURE.  The  Board of Directors or the Committee may grant
            ---------------
Options  with  a  reload  feature.  A  reload  feature shall only apply when the
option  price  is  paid  by  delivery  of  Common Stock (as set forth in Section
13(b)(ii)).  The  Stock  Option  Agreement for the Options containing the reload
feature  shall  provide  that the Option holder shall receive, contemporaneously
with  the  payment of the option price in shares of Common Stock, a reload stock
option  (the  "Reload Option") to purchase that number of shares of Common Stock
equal  to  the  sum of (i) the number of shares of Common Stock used to exercise
the  Option,  and (ii) with respect to Nonstatutory Stock Options, the number of
shares  of Common Stock used to satisfy any tax withholding requirement incident
to  the  exercise  of  such  Nonstatutory  Stock  Option.  The terms of the Plan
applicable  to  the Option shall be equally applicable to the Reload Option with
the  following  exceptions:  (i)  the  option  price  per  share of Common Stock
deliverable  upon the exercise of the Reload Option, (A) in the case of a Reload
Option  which  is  an  Incentive  Stock  Option  being  granted  to  a Principal
Stockholder, shall be one hundred ten percent (110%) of the fair market value of
a share of Common Stock on the date of grant of the Reload Option and (B) in the
case  of  a  Reload Option which is an Incentive Stock Option being granted to a
person  other  than  a  Principal Stockholder or is a Nonstatutory Stock Option,
shall  be  the fair market value of a share of Common Stock on the date of grant
of  the  Reload Option; and (ii) the term of the Reload Option shall be equal to
the  remaining  option term of the Option (including a Reload Option) which gave
rise  to  the  Reload  Option.  The  Reload  Option  shall  be  evidenced  by an
appropriate  amendment  to  the Stock Option Agreement for the Option which gave
rise  to  the  Reload  Option.  In  the  event  the  exercise price of an Option
containing  a reload feature is paid by check and not in shares of Common Stock,
the  reload  feature  shall  have  no application with respect to such exercise.

     9.     RIGHTS  OF  OPTION  HOLDERS.  The holder of any Option granted under
            ---------------------------
the  Plan  shall  have  none  of the rights of a stockholder with respect to the
stock  covered  by  his Option until such stock shall be transferred to him upon
the  exercise  of  his  Option.

     10.     ALTERNATE  STOCK  APPRECIATION  RIGHTS.
             --------------------------------------

          (a)  Concurrently  with,  or subsequent to, the award of any Option to
purchase  one  or  more  shares  of  Common Stock, the Board of Directors or the
Committee may, in its sole discretion, subject to the provisions of the Plan and
such  other  terms and conditions as the Board of Directors or the Committee may
prescribe,  award  to  the  optionee  with respect to each share of Common Stock
covered  by an Option ("Related Option"), a related alternate stock appreciation
right  ("SAR"),  permitting  the  optionee  to  be  paid the appreciation on the
Related  Option  in  lieu of exercising the Related Option.  An SAR granted with
respect  to  an Incentive Stock Option must be granted together with the Related
Option.  An  SAR  granted  with  respect  to  a Nonstatutory Stock Option may be
granted  together  with,  or  subsequent  to,  the grant of such Related Option.

          (b)  Each  SAR granted under the Plan shall be authorized by the Board
of  Directors or the Committee, and shall be evidenced by an SAR Agreement which
shall  be  executed  by the Company and by the individual or entity to whom such
SAR  is granted. The SAR Agreement shall specify the period during which the SAR

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is  exercisable,  and  such other terms and provisions not inconsistent with the
Plan.

          (c) An SAR may be exercised only if and to the extent that its Related
Option  is  eligible to be exercised on the date of exercise of the SAR.  To the
extent  that  a holder of an SAR has a current right to exercise, the SAR may be
exercised  from time to time by delivery by the holder thereof to the Company at
its principal office (attention: Secretary) of a written notice of the number of
shares  with  respect  to  which  it  is  being exercised.  Such notice shall be
accompanied by the agreements evidencing the SAR and the Related Option.  In the
event the SAR shall not be exercised in full, the Secretary of the Company shall
endorse  or  cause  to  be  endorsed on the SAR Agreement and the Related Option
Agreement  the  number  of  shares  which have been exercised thereunder and the
number  of  shares  that remain exercisable under the SAR and the Related Option
and  return  such  SAR  and  Related  Option  to  the  holder  thereof.

          (d)  The amount of payment to which an optionee shall be entitled upon
the  exercise  of  each  SAR shall be equal to one hundred percent (100%) of the
amount, if any, by which the fair market value of a share of Common Stock on the
exercise  date  exceeds  the  exercise  price  per  share of the Related Option;
provided,  however,  the  Company may, in its sole discretion, withhold from any
such  cash  payment any amount necessary to satisfy the Company's obligation for
withholding  taxes  with  respect  to  such  payment.

          (e)  The amount payable by the Company to an optionee upon exercise of
an  SAR  may,  in  the  sole  determination of the Company, be paid in shares of
Common  Stock, cash or a combination thereof, as set forth in the SAR Agreement.
In  the  case of a payment in shares, the number of shares of Common Stock to be
paid  to an optionee upon such optionee's exercise of an SAR shall be determined
by dividing the amount of payment determined pursuant to Section 10(d) hereof by
the  fair  market  value of a share of Common Stock on the exercise date of such
SAR. For purposes of the Plan, the exercise date of an SAR shall be the date the
Company  receives  written notification from the optionee of the exercise of the
SAR  in  accordance  with  the  provisions  of  Section 10(c) hereof. As soon as
practicable after exercise, the Company shall either deliver to the optionee the
amount  of  cash  due  such  optionee  or a certificate or certificates for such
shares  of  Common  Stock.  All  such shares shall be issued with the rights and
restrictions  specified  herein.

          (f) SARs shall terminate or expire upon the same conditions and in the
same  manner  as  the  Related  Options,  and as set forth in Section 12 hereof.

          (g)  The  exercise  of any SAR shall cancel and terminate the right to
purchase  an  equal  number  of  shares  covered  by  the  Related  Option.

          (h)  Upon  the  exercise or termination of any Related Option, the SAR
with  respect to such Related Option shall terminate to the extent of the number
of  shares  of  Common  Stock  as  to  which the Related Option was exercised or
terminated.

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          (i)  An  SAR  granted  pursuant  to the Plan shall be exercisable only
by  the  optionee  hereof  during  the  optionee's  lifetime and, subject to the
provisions  of  Section  10(f)  hereof.

          (j)  An  SAR  granted  pursuant  to  the  Plan  shall not be assigned,
transferred,  pledged or hypothecated in any way (whether by operation of law or
otherwise)  and  shall  not  be  subject  to  execution,  attachment, or similar
process.  Any  attempted  transfer,  assignment, pledge, hypothecation, or other
disposition  of  any  SAR  or  of  any rights granted thereunder contrary to the
foregoing  provisions  of  this  Section 10(j), or the levy of any attachment or
similar  process  upon  an  SAR  or  such  rights,  shall  be  null  and  void.

     11.     TRANSFERABILITY.  No  Option  granted  under  the  Plan  shall  be
             ---------------
transferable  by  the individual or entity to whom it was granted otherwise than
by  will  or  the  laws of descent and distribution, and, during the lifetime of
such  individual, shall not be exercisable by any other person, but only by him.

     12.     TERMINATION  OF  EMPLOYMENT  OR  DEATH.
             --------------------------------------

          (a)  Subject  to  the  terms  of  the  Stock  Option Agreement, if the
employment of an employee by, or the services of a non-employee Director for, or
consultant or advisor to, the Company or a subsidiary corporation of the Company
shall  be  terminated  for  cause  or  voluntarily by the employee, non-employee
Director,  consultant or advisor, then his or its Option shall expire forthwith.
Subject  to  the  terms of the Stock Option Agreement, and except as provided in
subsections (b) and (c) of this Section 12, if such employment or services shall
terminate  for  any  other reason, then such Option may be exercised at any time
within  three  (3)  months  after such termination, subject to the provisions of
subsection  (d)  of this Section 12. For purposes of the Plan, the retirement of
an  individual  either  pursuant  to a pension or retirement plan adopted by the
Company  or  at  the  normal retirement date prescribed from time to time by the
Company  shall be deemed to be termination of such individual's employment other
than  voluntarily  or  for  cause.  For  purposes  of  this  subsection  (a), an
employee,  non-employee Director, consultant or advisor who leaves the employ or
services  of the Company to become an employee or non-employee Director of, or a
consultant  or  advisor  to,  a  subsidiary  corporation  of  the  Company  or a
corporation  (or  subsidiary or parent corporation of the corporation) which has
assumed  the  Option of the Company as a result of a corporate reorganization or
the  like shall not be considered to have terminated his employment or services.

          (b)  Subject to the terms of the Stock Option Agreement, if the holder
of  an  Option  under the Plan dies (i) while employed by, or while serving as a
non-employee  Director  for  or  a  consultant  or  advisor to, the Company or a
subsidiary corporation of the Company, or (ii) within three (3) months after the
termination of his employment or services other than voluntarily by the employee
or  non-employee Director, consultant or advisor, or for cause, then such Option
may,  subject  to  the  provisions  of  subsection  (d)  of  this Section 12, be
exercised  by the estate of the employee or non-employee Director, consultant or
advisor,  or  by  a  person  who  acquired  the right to exercise such Option by
bequest  or  inheritance  or  by  reason  of  the  death  of  such  employee  or
non-employee  Director,  consultant  or  advisor at any time within one (1) year
after  such  death.

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          (c)  Subject to the terms of the Stock Option Agreement, if the holder
of  an  Option under the Plan ceases employment or services because of permanent
and  total disability (within the meaning of Section 22(e)(3) of the Code) while
employed  by,  or  while serving as a non-employee Director for or consultant or
advisor  to,  the  Company or a subsidiary corporation of the Company, then such
Option  may,  subject to the provisions of subsection (d) of this Section 12, be
exercised  at  any time within one (1) year after his termination of employment,
termination  of  Directorship or termination of consulting or advisory services,
as  the  case  may  be,  due  to  the  disability.

          (d)  An Option may not be exercised pursuant to this Section 12 except
to the extent that the holder was entitled to exercise the Option at the time of
termination  of  employment,  termination  of  Directorship,  termination  of
consulting or advisory services, or death, and in any event may not be exercised
after  the  expiration  of  the  Option.

          (e) For purposes of this Section 12, the employment relationship of an
employee  of  the  Company or of a subsidiary corporation of the Company will be
treated as continuing intact while he is on military or sick leave or other bona
fide  leave  of absence (such as temporary employment by the Government) if such
leave  does  not exceed ninety (90) days, or, if longer, so long as his right to
reemployment  is  guaranteed  either  by  statute  or  by  contract.

     13.     EXERCISE  OF  OPTIONS.
             ---------------------

          (a)  Unless  otherwise  provided  in  the  Stock Option Agreement, any
Option  granted  under the Plan shall be exercisable in whole at any time, or in
part  from  time  to  time,  prior  to expiration. The Board of Directors or the
Committee, in its absolute discretion, may provide in any Stock Option Agreement
that  the exercise of any Options granted under the Plan shall be subject (i) to
such  condition or conditions as it may impose, including, but not limited to, a
condition  that  the  holder  thereof  remain  in  the  employ or service of, or
continue  to  provide  consulting  or  advisory  services  to,  the Company or a
subsidiary  corporation  of the Company for such period or periods from the date
of  grant  of  the  Option  as  the  Board of Directors or the Committee, in its
absolute  discretion,  shall  determine;  and (ii) to such limitations as it may
impose,  including,  but  not  limited  to, a limitation that the aggregate fair
market  value  of the Common Stock with respect to which Incentive Stock Options
are  exercisable  for  the  first  time by any employee during any calendar year
(under  all  plans  of  the  Company and its parent and subsidiary corporations)
shall  not  exceed  one hundred thousand dollars ($100,000). In addition, in the
event  that  under any Stock Option Agreement the aggregate fair market value of
the  Common  Stock with respect to which Incentive Stock Options are exercisable
for  the first time by any employee during any calendar year (under all plans of
the  Company  and  its  parent  and subsidiary corporations) exceeds one hundred
thousand  dollars  ($100,000), the Board of Directors or the Committee may, when
shares  are  transferred  upon  exercise of such Options, designate those shares
which shall be treated as transferred upon exercise of an Incentive Stock Option
and  those  shares  which  shall  be  treated  as transferred upon exercise of a
Nonstatutory  Stock  Option.

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          (b)  An  Option  granted  under  the  Plan  shall  be exercised by the
delivery by the holder thereof to the Company at its principal office (attention
of  the  Secretary)  of  written  notice of the number of shares with respect to
which  the  Option  is  being  exercised.  Such  notice shall be accompanied, or
followed within ten (10) days of delivery thereof, by payment of the full option
price  of  such  shares,  and  payment of such option price shall be made by the
holder's  delivery  of  (i)  his check payable to the order of the Company, (ii)
previously  acquired  Common  Stock,  the  fair  market  value of which shall be
determined  as  of  the  date  of  exercise,  (iii)  by "cash-less" exercise, if
cash-less exercise is otherwise permitted by the Stock Option Agreement, or (iv)
by  the  holder's  delivery  of  any  combination of the foregoing (i), (ii) and
(iii).

     14.     ADJUSTMENT  UPON  CHANGE  IN  CAPITALIZATION.
             --------------------------------------------

          (a)  In  the  event  that  the  outstanding  Common Stock is hereafter
changed  by  reason  of reorganization, merger, consolidation, recapitalization,
reclassification,  stock  split-up,  combination of shares, reverse split, stock
dividend  or  the  like, an appropriate adjustment shall be made by the Board of
Directors or the Committee in the aggregate number of shares available under the
Plan,  in the number of shares and option price per share subject to outstanding
Options,  and  in  any  limitation  on  exerciseability  referred  to in Section
13(a)(ii)  hereof  which is set forth in outstanding Incentive Stock Options. If
the  Company  shall  be  reorganized,  consolidated,  or  merged  with  another
corporation,  the  holder  of  an  Option  shall be entitled to receive upon the
exercise  of  his Option the same number and kind of shares of stock or the same
amount of property, cash or securities as he would have been entitled to receive
upon  the  happening  of any such corporate event as if he had been, immediately
prior  to  such event, the holder of the number of shares covered by his Option;
provided,  however,  that  in such event the Board of Directors or the Committee
shall  have  the discretionary power to take any action necessary or appropriate
to  prevent any Incentive Stock Option granted hereunder which is intended to be
an  "incentive  stock  option"  from  being  disqualified as such under the then
existing  provisions  of  the Code or any law amendatory thereof or supplemental
thereto.

          (b) Any adjustment in the number of shares shall apply proportionately
to only the unexercised portion of the Option granted hereunder. If fractions of
a  share  would result from any such adjustment, the adjustment shall be revised
to  the  next  lower  whole  number  of  shares.

     15.     FURTHER  CONDITIONS  OF  EXERCISE.
             ---------------------------------

          (a)  Unless  prior  to  the exercise of the Option the shares issuable
upon  such  exercise  have  been  registered  with  the  Securities and Exchange
Commission pursuant to the Act, the notice of exercise shall be accompanied by a
representation or agreement of the person or estate exercising the Option to the
Company  to  the  effect  that  such  shares  are  being acquired for investment
purposes  and  not  with  a  view  to  the  distribution thereof, and such other
documentation  as  may  be  required  by  the  Company, unless in the opinion of
counsel  to  the  Company such representation, agreement or documentation is not
necessary  to  comply  with  such  Act.

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          (b)  The  Company  shall  not be obligated to deliver any Common Stock
until  it  has  been  listed  on each securities exchange or market on which the
Common  Stock  may then be listed or until there has been qualification under or
compliance  with such federal or state laws, rules or regulations as the Company
may  deem  applicable.  The  Company shall use reasonable efforts to obtain such
listing,  qualification  and  compliance.

     16.     EFFECTIVENESS  OF THE PLAN.  The Plan shall become operative and in
             --------------------------
effect  on  such date as shall be fixed by the Board of Directors of the Company
in  its  sole  discretion  following  approval  by  vote  of  the holders of the
outstanding  voting  common  shares  of  the  Company.

     17.     TERMINATION,  MODIFICATION  AND  AMENDMENT.
             ------------------------------------------

          (a)  The  Plan  (but  not  the Options or SARs granted pursuant to the
Plan)  shall  terminate  on  a  date  within ten (10) years from the date of its
adoption  by  the  Board  of  Directors of the Company, or sooner as hereinafter
provided,  and  no  Option  shall  be  granted  after  termination  of the Plan.

          (b) The Plan may from time to time be terminated, modified, or amended
by  the  affirmative vote of the holders of a majority of the outstanding shares
of  capital  stock  of  the  Company  present  at  a meeting of shareholders and
entitled  to  vote  thereon  (or,  in  the  case of action by written consent, a
majority  of  the outstanding shares of capital stock of the Company entitled to
vote  thereon).

          (c)  The  Board  of  Directors  may  at  any  time,  on  or before the
termination  date  referred  to  in Section 17(a) hereof, terminate the Plan, or
from  time  to  time make such modifications or amendments to the Plan as it may
deem  advisable;  provided,  however,  that  the  Board  of Directors shall not,
without  approval  by  the  affirmative vote of the holders of a majority of the
outstanding  shares  of  capital  stock  of  the Company present at a meeting of
shareholders  and entitled to vote thereon (or, in the case of action by written
consent,  a  majority  of the outstanding shares of capital stock of the Company
entitled  to vote thereon), increase (except as otherwise provided by Section 14
hereof)  the maximum number of shares as to which Incentive Stock Options may be
granted hereunder, change the designation of the employees or class of employees
eligible  to  receive  Incentive  Stock  Options, or make any other change which
would  prevent any Incentive Stock Option granted hereunder which is intended to
be  an  "incentive  stock  option"  from  disqualifying  as  such under the then
existing  provisions  of  the Code or any law amendatory thereof or supplemental
thereto.

          (d)  No  termination,  modification,  or  amendment  of  the Plan may,
without  the  consent  of the individual or entity to whom any Option shall have
been  granted,  adversely  affect  the  rights  conferred  by  such  Option.

     18.     NOT  A CONTRACT OF EMPLOYMENT.  Nothing contained in the Plan or in
             -----------------------------
any  Stock  Option  Agreement executed pursuant hereto shall be deemed to confer
upon  any  individual or entity to whom an Option is or may be granted hereunder
any  right  to  remain  in  the employ or service of the Company or a subsidiary
corporation  of  the  Company  or  any  entitlement to any remuneration or other
benefit  pursuant  to  any  consulting  or  advisory  arrangement.

                                      E-30
<PAGE>

     19.     USE  OF  PROCEEDS. The proceeds from the sale of shares pursuant to
             -----------------
Options  granted  under  the Plan shall constitute general funds of the Company.

     20.     INDEMNIFICATION OF BOARD OF DIRECTORS OR COMMITTEE.  In addition to
             --------------------------------------------------
such other rights of indemnification as they may have, the members of the Board
of Directors or the Committee,  as  the case may be, shall be indemnified by the
Company  to  the  extent  permitted  under  applicable law against all costs and
expenses  reasonably  incurred  by  them in connection with any action, suit, or
proceeding  to  which they or any of them may be a party by reason of any action
taken  or  failure  to  act  under  or in connection with the Plan or any rights
granted thereunder and against all amounts paid by them in settlement thereof or
paid  by  them  in  satisfaction  of  a  judgment  of  any  such action, suit or
proceeding,  except  a  judgment  based  upon  a finding of bad faith.  Upon the
institution  of  any  such action, suit, or proceeding, the member or members of
the  Board  of  Directors or the Committee, as the case may be, shall notify the
Company  in writing, giving the Company an opportunity at its own cost to defend
the  same  before  such member or members undertake to defend the same on his or
their  own  behalf.

     21.     DEFINITIONS.  For  purposes  of the Plan, the terms "parent
             -----------
corporation"  and  "subsidiary corporation" shall have the meanings set forth in
Sections  424(e)  and  424(f) of the Code, respectively, and the masculine shall
include  the  feminine  and  the  neuter  as  the  context  requires.

     22.     GOVERNING  LAW.  The  Plan  shall be governed by, and all questions
             --------------
arising  hereunder shall be determined in accordance with, the laws of the State
of  Delaware.

                                      E-31
<PAGE>POOLING AND SERVICING AGREEMENT

 
EXHIBIT 4.1

 
FIRST HORIZON ASSET SECURITIES INC.

 
Depositor 
 
FIRST HORIZON HOME LOAN CORPORATION 
 
Master Servicer 
 
and 
 
THE BANK OF NEW YORK, 
 
Trustee 
 

 
POOLING AND SERVICING AGREEMENT 
 
Dated as of April 1, 2003 
 

 
FIRST HORIZON MORTGAGE PASS-THROUGH TRUST 2003-4 
 
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2003-4 

 
TABLE OF
CONTENTS 
 

	 ARTICLE II DEFINITIONS
	  	 6

	
	 ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
	  	 35

	 SECTION 2.1 Conveyance of Mortgage Loans.
	  	 35

	 SECTION 2.2 Acceptance by Trustee of the Mortgage Loans.
	  	 39

	 SECTION 2.3 Representations and Warranties of the Master Servicer; Covenants of the
Seller.
	  	 40

	 SECTION 2.4 Representations and Warranties of the Depositor as to the Mortgage
Loans.
	  	 43

	 SECTION 2.5 Delivery of Opinion of Counsel in Connection with
Substitutions.
	  	 43

	 SECTION 2.6 Execution and Delivery of Certificates.
	  	 44

	 SECTION 2.7 REMIC Matters.
	  	 44

	 SECTION 2.8 Covenants of the Master Servicer.
	  	 46

	
	 ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
	  	 47

	 SECTION 3.1 Master Servicer to Service Mortgage Loans.
	  	 47

	 SECTION 3.2 Subservicing; Enforcement of the Obligations of Servicers.
	  	 48

	 SECTION 3.3 Rights of the Depositor and the Trustee in Respect of the Master
Servicer.
	  	 48

	 SECTION 3.4 Trustee to Act as Master Servicer.
	  	 49

	 SECTION 3.5 Collection of Mortgage Loan Payments; Certificate Account; Distribution
Account.
	  	 49

	 SECTION 3.6 Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.
	  	 52

	 SECTION 3.7 Access to Certain Documentation and Information Regarding the Mortgage
Loans.
	  	 53

	 SECTION 3.8 Permitted Withdrawals from the Certificate Account and Distribution
Account.
	  	 53

	 SECTION 3.9 Maintenance of Hazard Insurance; Maintenance of Primary Insurance
Policies.
	  	 55

	 SECTION 3.10 Enforcement of Due-on-Sale Clauses; Assumption Agreements.
	  	 57

	 SECTION 3.11 Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage
Loans.
	  	 58

	 SECTION 3.12 Trustee to Cooperate; Release of Mortgage Files.
	  	 61

	 SECTION 3.13 Documents Records and Funds in Possession of Master Servicer to be Held for
the Trustee.
	  	 62

	 SECTION 3.14 Master Servicing Compensation.
	  	 62

	 SECTION 3.15 Access to Certain Documentation.
	  	 63

	 SECTION 3.16 Annual Statement as to Compliance.
	  	 63

	 SECTION 3.17 Annual Independent Public Accountants’ Servicing Statement; Financial
Statements.
	  	 63

	 SECTION 3.18 Errors and Omissions Insurance; Fidelity Bonds.
	  	 64

	
	 ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
	  	 64

	 SECTION 4.1 Advances.
	  	 64

	 SECTION 4.2 Priorities of Distribution.
	  	 65

	 SECTION 4.3 Method of Distribution.
	  	 71

 

i 

	 SECTION 4.4 Allocation of Losses.
	  	 72

	 SECTION 4.5 Reserved.
	  	 74

	 SECTION 4.6 Monthly Statements to Certificateholders.
	  	 74

	 SECTION 4.7 Determination of Pass-Through Rates for LIBOR Certificates.
	  	 76

	
	 ARTICLE V THE CERTIFICATES
	  	 78

	 SECTION 5.1 The Certificates.
	  	 78

	 SECTION 5.2 Certificate Register; Registration of Transfer and Exchange of
Certificates.
	  	 79

	 SECTION 5.3 Mutilated, Destroyed, Lost or Stolen Certificates.
	  	 84

	 SECTION 5.4 Persons Deemed Owners.
	  	 84

	 SECTION 5.5 Access to List of Certificateholders’ Names and
Addresses.
	  	 84

	 SECTION 5.6 Maintenance of Office or Agency.
	  	 84

	
	 ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER
	  	 85

	 SECTION 6.1 Respective Liabilities of the Depositor and the Master
Servicer.
	  	 85

	 SECTION 6.2 Merger or Consolidation of the Depositor or the Master
Servicer.
	  	 85

	 SECTION 6.3 Limitation on Liability of the Depositor, the Master Servicer and
Others.
	  	 85

	 SECTION 6.4 Limitation on Resignation of Master Servicer.
	  	 86

	
	 ARTICLE VII DEFAULT
	  	 86

	 SECTION 7.1 Events of Default.
	  	 86

	 SECTION 7.2 Trustee to Act; Appointment of Successor.
	  	 88

	 SECTION 7.3 Notification to Certificateholders.
	  	 89

	
	 ARTICLE VIII CONCERNING THE TRUSTEE
	  	 89

	 SECTION 8.1 Duties of Trustee.
	  	 89

	 SECTION 8.2 Certain Matters Affecting the Trustee.
	  	 91

	 SECTION 8.3 Trustee Not Liable for Certificates or Mortgage Loans.
	  	 93

	 SECTION 8.4 Trustee May Own Certificates.
	  	 93

	 SECTION 8.5 Trustee’s Fees and Expenses.
	  	 93

	 SECTION 8.6 Eligibility Requirements for Trustee.
	  	 94

	 SECTION 8.7 Resignation and Removal of Trustee.
	  	 94

	 SECTION 8.8 Successor Trustee.
	  	 95

	 SECTION 8.9 Merger or Consolidation of Trustee.
	  	 95

	 SECTION 8.10 Appointment of Co-Trustee or Separate Trustee.
	  	 96

	 SECTION 8.11 Tax Matters.
	  	 97

	 SECTION 8.12 Periodic Filings.
	  	 99

	
	 ARTICLE IX TERMINATION
	  	 99

	 SECTION 9.1 Termination upon Liquidation or Purchase of all Mortgage
Loans.
	  	 99

	 SECTION 9.2 Final Distribution on the Certificates.
	  	 100

	 SECTION 9.3 Additional Termination Requirements.
	  	 101

	
	 ARTICLE X [RESERVED]
	  	 102

	
	 ARTICLE XI MISCELLANEOUS PROVISIONS
	  	 102

	 SECTION 11.1 Amendment.
	  	 102

 

ii 

	 SECTION 11.2 Recordation of Agreement; Counterparts.
	  	 103

	 SECTION 11.3 Governing Law.
	  	 104

	 SECTION 11.4 Intention of Parties.
	  	 104

	 SECTION 11.5 Notices.
	  	 104

	 SECTION 11.6 Severability of Provisions.
	  	 105

	 SECTION 11.7 Assignment.
	  	 106

	 SECTION 11.8 Limitation on Rights of Certificateholders.
	  	 106

	 SECTION 11.9 Inspection and Audit Rights.
	  	 106

	 SECTION 11.10 Certificates Nonassessable and Fully Paid.
	  	 107

	 SECTION 11.11 Limitations on Actions; No Proceedings.
	  	 107

	 SECTION 11.12 Acknowledgment of Seller.
	  	 107

 
SCHEDULES 
 

	 Schedule I:
	  	 Mortgage Loan Schedule
	  	 S-I-1

	 Schedule II:
	  	 Representations and Warranties of the Master Servicer
	  	 S-II-1

	 Schedule III:
	  	 Form of Monthly Master Servicer Report
	  	 S-III-1

	 Schedule IV:
	  	 Principal Balance Schedules
	  	 S-IV-1

 
EXHIBITS 
 

	 Exhibit A:
	  	 Form of Senior Certificate
	  	 A-1

	 Exhibit B:
	  	 Form of Subordinated Certificate
	  	 B-1

	 Exhibit C:
	  	 Form of Residual Certificate
	  	 C-1

	 Exhibit D:
	  	 Form of Reverse of Certificates
	  	 D-1

	 Exhibit E:
	  	 Form of Initial Certification
	  	 E-1

	 Exhibit F:
	  	 Form of Delay Delivery Certification
	  	 F-1

	 Exhibit G:
	  	 Form of Final Certification of Custodian
	  	 G-1

	 Exhibit H:
	  	 Transfer Affidavit
	  	 H-1

	 Exhibit I:
	  	 Form of Transferor Certificate
	  	 I-1

	 Exhibit J:
	  	 Form of Investment Letter [Non-Rule 144A]
	  	 J-1

	 Exhibit K:
	  	 Form of Rule 144A Letter
	  	 K-1

	 Exhibit L:
	  	 Request for Release (for Trustee)
	  	 L-1

	 Exhibit M:
	  	 Request for Release (Mortgage Loan)
	  	 M-1

 
 

iii 

 
THIS POOLING
AND SERVICING AGREEMENT, dated as of April 1, 2003, among FIRST HORIZON ASSET SECURITIES INC., a Delaware corporation, as depositor (the “Depositor”), FIRST HORIZON HOME LOAN CORPORATION, a Kansas corporation, as master servicer (the
“Master Servicer”), and THE BANK OF NEW YORK, a banking corporation organized under the laws of the State of New York, as trustee (the “Trustee”). 
 
WITNESSETH THAT 
 
In consideration of the mutual agreements herein contained, the parties hereto agree as follows: 
 
PRELIMINARY STATEMENT 
 
The Depositor is the owner of the Trust Fund that is hereby
conveyed to the Trustee in return for the Certificates. The Trust Fund for federal income tax purposes will consist of two separate REMICs. The Certificates will represent the entire beneficial ownership interest in the Trust Fund. The Regular
Certificates will represent “regular interests” in the Upper REMIC. The Class I-A-RU Certificates will represent the sole class of residual interests in the Upper REMIC and the Class I-A-RL Certificates will represent the sole class of
residual interests in the Lower REMIC, as described in Section 2.7. The “latest possible maturity date” for federal income tax purposes of all REMIC regular interests created hereby will be the Latest Possible Maturity Date. 
 
The following table sets forth characteristics of the Certificates, together
with the minimum denominations and integral multiples in excess thereof in which such Classes shall be issuable (except that one Certificate of each Class of Certificates may be issued in a different amount and, in addition, one Residual Certificate
representing the Tax Matters Person Certificate may be issued in a different amount): 
 
[Remainder of Page Intentionally Left Blank] 
 

1 

 

	 Class Designation

	    	 Initial Class
Certificate Balance

	 	    	 Pass-Through Rate

	 	    	 Minimum
Denomination

	    	 Integral Multiples
in Excess Minimum

	 Class I-A-1
	    	 $
	 54,860,100.00
	  
	    	 4.500
	 %
	    	 $
	 25,000
	    	 $
	 1,000

	 Class I-A-2
	    	 $
	 40,000,000.00
	  
	    	 4.250
	 %
	    	 $
	 25,000
	    	 $
	 1,000

	 Class I-A-3
	    	 $
	 20,000,000.00
	  
	    	 5.000
	 %
	    	 $
	 25,000
	    	 $
	 1,000

	 Class I-A-4
	    	 $
	 15,000,000.00
	  
	    	 5.000
	 %
	    	 $
	 25,000
	    	 $
	 1,000

	 Class I-A-5
	    	 $
	 55,279,800.00
	  
	    	 5.000
	 %
	    	 $
	 25,000
	    	 $
	 1,000

	 Class I-A-6
	    	 $
	 50,000,000.00
	  
	    	 variable
	 (1)
	    	 $
	 25,000
	    	 $
	 1,000

	 Class I-A-7
	    	  
	 (2
	 )
	    	 variable
	 (3)
	    	 $
	 500,000
	    	 $
	 1,000

	 Class I-A-8
	    	 $
	 22,000,000.00
	  
	    	 5.500
	 %
	    	 $
	 25,000
	    	 $
	 1,000

	 Class I-A-9
	    	 $
	 10,175,000.00
	  
	    	 5.500
	 %
	    	 $
	 25,000
	    	 $
	 1,000

	 Class I-A-10
	    	 $
	 18,000,000.00
	  
	    	 5.500
	 %
	    	 $
	 25,000
	    	 $
	 1,000

	 Class I-A-11
	    	 $
	 32,500,000.00
	  
	    	 5.500
	 %
	    	 $
	 25,000
	    	 $
	 1,000

	 ClassI-A-RU
	    	 $
	 50.00
	  
	    	 5.500
	 %
	    	 $
	 50
	    	  
	 N/A

	 Class I-A-RL
	    	 $
	 50.00
	  
	    	 5.500
	 %
	    	 $
	 50
	    	  
	 N/A

	 Class II-A-1
	    	 $
	 66,115,500.00
	  
	    	 4.350
	 %
	    	 $
	 25,000
	    	 $
	 1,000

	 Class II-A-2
	    	 $
	 12,278,500.00
	  
	    	 variable
	 (4)
	    	 $
	 25,000
	    	 $
	 1,000

	 Class II-A-3
	    	  
	 (5
	 )
	    	 variable
	 (6)
	    	 $
	 500,000
	    	 $
	 1,000

	 Class B-1
	    	 $
	 4,866,000.00
	  
	    	 variable
	 (7)
	    	 $
	 100,000
	    	 $
	 1,000

	 Class B-2
	    	 $
	 1,622,000.00
	  
	    	 variable
	 (7)
	    	 $
	 100,000
	    	 $
	 1,000

	 Class B-3
	    	 $
	 1,217,000.00
	  
	    	 variable
	 (7)
	    	 $
	 100,000
	    	 $
	 1,000

	 Class B-4
	    	 $
	 608,000.00
	  
	    	 variable
	 (7)
	    	 $
	 100,000
	    	 $
	 1,000

	 Class B-5
	    	 $
	 406,000.00
	  
	    	 variable
	 (7)
	    	 $
	 100,000
	    	 $
	 1,000

	 Class B-6
	    	 $
	 608,435.70
	  
	    	 variable
	 (7)
	    	 $
	 100,000
	    	 $
	 1,000

 

	(1)	 	The Pass-Through Rate with respect to any Distribution Date for the Class I-A-6 Certificates is the per annum rate equal to (a) 1.800% with respect to the first
Distribution Date, and (b) thereafter, the lesser of (i) LIBOR plus 0.500% and (ii) 8.500%, subject to a minimum rate of 0.500%. 

	(2)	 	The Notional Amount of the Class I-A-7 Certificates with respect to any Distribution Date will equal the Class Certificate Balance of the Class I-A-6 Certificates
immediately preceding such Distribution Date. 

	(3)	 	The Pass-Through Rate with respect to any Distribution Date for the Class I-A-7 Certificates is the per annum rate equal to (a) 6.700% with respect to the first
Distribution Date, and (b) thereafter, 8.000% minus LIBOR, subject to a minimum rate of 0.000%. 

	(4)	 	The Pass-Through Rate with respect to any Distribution Date for the Class II-A-2 Certificates is the per annum rate equal to (a) 1.760% with respect to the first
Distribution Date, and (b) thereafter, the lesser of (i) LIBOR plus 0.450% and (ii) 8.500%, subject to a minimum rate of 0.450%. 

 

2 

 

	(5)	 	The Notional Amount of the Class II-A-3 Certificates with respect to any Distribution Date will equal the Class Certificate Balance of the Class II-A-2 Certificates
immediately preceding such Distribution Date. 

	(6)	 	The Pass-Through Rate with respect to any Distribution Date for the Class II-A-3 Certificates is the per annum rate equal to (a) 6.740% with respect to the first
Distribution Date, and (b) thereafter, 8.050% minus LIBOR, subject to a minimum rate of 0.000%. 

	(7)	 	The Pass-Through Rate on each Class of Subordinated Certificates is variable and will be equal to the weighted average of the Designated Mortgage Pool Rates,
weighted on the basis of the Group Subordinate Amount for each Mortgage Pool. The initial Pass-Through rate on each Class of Subordinated Certificates for the first Interest Accrual Period will equal 5.401% per annum. 

 

3 

 

	
	 Accrual Certificates
	  	 The Class I-A-10 Certificates.

	
	 Accrual Components
	  	 None.

	
	 Book-Entry Certificates
	  	 All Classes of Certificates other than the Physical Certificates.

	
	 Certificate Group
	  	 With respect to Pool I, the Group I Senior Certificates, and with respect to Pool II, the Group II Senior
Certificates. The Subordinated Certificates correspond to both Mortgage Pools.

	
	 COFI Certificates
	  	 None.

	
	 Component Certificates
	  	 None.

	
	 Components
	  	 None.

	
	 Delay Certificates
	  	 All interest-bearing Classes of Certificates other than the Non-Delay Certificates, if any.

	
	 ERISA-Restricted Certificates
	  	 The Residual Certificates and the Private Certificates.

	
	 Floating Rate Certificates
	  	 The Class I-A-6 and Class I-A-7.

	
	 Group I Senior Certificates
	  	 The Class I-A-1, Class I-A-2, Class I-A-3, Class I-A-4, Class I-A-5, Class I-A-6, Class I-A-7, Class I-A-8, Class
I-A-9, Class I-A-10, Class I-A-11, Class I-A-RU and Class I-A-RL Certificates.

	
	 Group II Senior Certificates
	  	 The Class II-A-1, Class II-A-2 and Class II-A-3 Certificates.

	
	 Interest Only Certificates
	  	 The Class I-A-7 and Class II-A-3 Certificates.

	
	 Inverse Floating Rate Certificates
	  	 The Class I-A-7 and Class II-A-3 Certificates.

	
	 LIBOR Certificates
	  	 The Class I-A-6, Class I-A-7, Class II-A-2 and Class II-A-3 Certificates.

	
	 Non-Delay Certificates
	  	 The Class I-A-6, Class I-A-7, Class II-A-2 and Class II-A-3 Certificates.

	
	 Notional Amount Components
	  	 None.

	
	 Offered Certificates
	  	 All Classes of Certificates other than the Private Certificates.

	
	 Physical Certificates
	  	 The Private Certificates and the Residual Certificates.

	
	 Planned Principal Certificates
	  	 None.

	
	 Principal Only Certificates
	  	 None.

	
	 Private Certificates
	  	 The Class B-4, Class B-5 and Class B-6 Certificates.

	
	 Rating Agencies
	  	 S&P and Fitch; except that, for purposes of the Class B-1, B-2, Class B-3, Class B-4 and Class B-5 Certificates,
S&P shall be the sole Rating Agency.

	
	 Regular Certificates
	  	 All Classes of Certificates, other than the Residual Certificates.

	
	 Residual Certificates
	  	 The Class I-A-RU and Class I-A-RL Certificates.

	
	 Retail Certificates
	  	 None.

 

4 

	
	 Scheduled Principal Certificates
	  	 The Class I-A-4 and Class I-A-5 Certificates.

	
	 Senior Certificates
	  	 The Group I Senior Certificates and the Group II Senior Certificates, collectively.

	
	 Subordinated Certificates
	  	 The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates.

	
	 Support Classes
	  	 None.

	
	 Targeted Principal Certificates
	  	 None.

	
	 Underwriter
	  	 Morgan Stanley & Co. Incorporated.

 
With
respect to any of the foregoing designations as to which the corresponding reference is “None,” all defined terms and provisions herein relating solely to such designations shall be of no force or effect, and any calculations herein
incorporating references to such designations shall be interpreted without reference to such designations and amounts. Defined terms and provisions herein relating to statistical rating agencies not designated above as Rating Agencies shall be of no
force or effect. 
 

5 

 
ARTICLE II

 
DEFINITIONS 
 
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following meanings: 
 
Accretion Termination Date: For the Accrual Certificates, the earlier of: (x) the Cross-over Date and (y) the Distribution Date upon which the Class Certificate Balances of the Class I-A-1, Class
I-A-2, Class I-A-3, Class I-A-4, Class I-A-5, Class I-A-6, Class I-A-8 and Class I-A-9 Certificates have each been reduced to zero. 
 
Accrual Amount: For the Accrual Certificates and each Distribution Date through the Accretion Termination Date, an amount equal to the sum
of (a) any amounts allocable to Accrued Certificate Interest in respect of the Accrual Certificates in accordance with Section 4.2(a)(i), and (b) any available amounts allocable to the Accrual Certificates in accordance with Section 4.2(a)(ii), in
each case on such Distribution Date. 
 
Accrual
Certificates: As specified in the Preliminary Statement. 
 
Accrual Components: Not applicable. 
 
Accrued Certificate Interest: For any Class of Certificates entitled to distributions of interest for any Distribution Date, the interest accrued during the related Interest Accrual Period at the applicable Pass-Through Rate on the
Class Certificate Balance of such Class of Certificates immediately prior to such Distribution Date, less such Class’ share of any Net Interest Shortfall allocable among the outstanding Classes of Senior Certificates of the related Certificate
Group based on the Accrued Certificate Interest otherwise distributable thereto, and allocable to the Subordinated Certificates based on interest accrued on their related Apportioned Principal Balances. 
 
Adjusted Mortgage Rate: As to each Mortgage Loan, and at any
time, the per annum rate equal to the Mortgage Rate less the Master Servicing Fee Rate. 
 
Adjusted Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per annum rate equal to the Mortgage Rate less the related Expense Fee Rate. 
 
Advance: The payment required to be made by the Master
Servicer with respect to any Distribution Date pursuant to Section 4.1, the amount of any such payment being equal to the aggregate of payments of principal and interest (net of the Master Servicing Fee and net of any net income in the case of any
REO Property) on the Mortgage Loans that were due on the related Due Date and not received as of the close of business on the related Determination Date, less the aggregate amount of any such delinquent payments that the Master Servicer has
determined would constitute a Nonrecoverable Advance if advanced. 
 
Agreement: This Pooling and Servicing Agreement and all amendments or supplements hereto. 
 

6 

 
Allocable
Share: With respect to any Class of Subordinated Certificates on any Distribution Date, such Class’ pro rata share (based on the Class Certificate Balance of each Class entitled thereto) of each of the components of the Subordinated Optimal
Principal Amount for both Mortgage Pools; provided, that, except as provided in this Agreement, no Subordinated Certificates (other than the Class of Subordinated Certificates with the highest priority of distribution) shall be entitled on any
Distribution Date to receive distributions pursuant to clauses (2), (3) and (5) of the definition of Subordinated Optimal Principal Amount unless the Class Prepayment Distribution Trigger for such Class is satisfied for such Distribution Date.

 
Amount Held for Future Distribution: As to any
Distribution Date, the aggregate amount held in the applicable subaccount of the Certificate Account at the close of business on the related Determination Date on account of (i) Principal Prepayments on the related Mortgage Pool received after the
related Prepayment Period and Liquidation Proceeds in the related Mortgage Pool received in the month of such Distribution Date and (ii) all Scheduled Payments in the related Mortgage Pool due after the related Due Date. 
 
Apportioned Principal Balance: For any Class of Subordinated
Certificates and any Distribution Date will equal the Class Certificate Balance of that Class immediately prior to that Distribution Date multiplied by a fraction, the numerator of which is the applicable Group Subordinate Amount for that date and
the denominator of which is the sum of the Group Subordinate Amounts for that date. 
 
Appraised Value: With respect to any Mortgage Loan, the Appraised Value of the related Mortgaged Property shall be: (i) with respect to a Mortgage Loan other than a Refinancing Mortgage Loan, the
lesser of (a) the value of the Mortgaged Property based upon the appraisal made at the time of the origination of such Mortgage Loan and (b) the sales price of the Mortgaged Property at the time of the origination of such Mortgage Loan; (ii) with
respect to a Refinancing Mortgage Loan other than a Streamlined Documentation Mortgage Loan, the value of the Mortgaged Property based upon the appraisal made at the time of the origination of such Refinancing Mortgage Loan; and (iii) with respect
to a Streamlined Documentation Mortgage Loan, (a) if the loan-to-value ratio with respect to the Original Mortgage Loan at the time of the origination thereof was 90% or less, the value of the Mortgaged Property based upon the appraisal made at the
time of the origination of the Original Mortgage Loan and (b) if the loan-to-value ratio with respect to the Original Mortgage Loan at the time of the origination thereof was greater than 90%, the value of the Mortgaged Property based upon the
appraisal (which may be a drive-by appraisal) made at the time of the origination of such Streamlined Documentation Mortgage Loan. 
 
Available Funds: For each Mortgage Pool, with respect to any Distribution Date, an amount equal to the sum of: 
 

	 	•	 	all scheduled installments of interest, net of the Master Servicing Fee, the Trustee Fee and any amounts due to First Horizon in respect of the Retained Yield on
such Distribution Date, and all scheduled installments of principal due in respect of the Mortgage Loans in such Mortgage Pool on the Due Date in the month in which the Distribution Date occurs and received before the related Determination Date,
together with any Advances in respect thereof; 

 

7 

 

	 	•	 	all Insurance Proceeds and all Liquidation Proceeds received in respect of the Mortgage Loans in such Mortgage Pool during the calendar month before the Distribution
Date, which in each case is net of unreimbursed expenses incurred in connection with a liquidation or foreclosure and unreimbursed Advances, if any; 

 

	 	•	 	all Principal Prepayments received in respect of the Mortgage Loans in such Mortgage Pool during the related Prepayment Period, plus interest received thereon, net
of any Prepayment Interest Excess; 

 

	 	•	 	any Compensating Interest in respect of Principal Prepayments in Full received in respect of the Mortgage Loans in such Mortgage Pool during the related Prepayment
Period; and 

 

	 	•	 	any Substitution Adjustment Amount or the Purchase Price for any Deleted Mortgage Loan in the related Mortgage Pool or a Mortgage Loan in the related Mortgage Pool
repurchased by the Seller or the Master Servicer as of such Distribution Date, reduced by amounts in reimbursement for Advances previously made and other amounts that the Master Servicer is entitled to be reimbursed for out of the Certificate
Account pursuant to this Agreement. 

 
Bankruptcy Code: The United States Bankruptcy Reform Act of 1978, as amended. 
 
Bankruptcy Coverage Termination Date: The date on which the Bankruptcy Loss Coverage Amount is reduced to zero. 
 
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient Valuation or Debt Service Reduction; provided, however, that a Bankruptcy
Loss shall not be deemed a Bankruptcy Loss hereunder so long as the Master Servicer has notified the Trustee in writing that the Master Servicer is diligently pursuing any remedies that may exist in connection with the related Mortgage Loan and
either (A) the related Mortgage Loan is not in default with regard to payments due thereunder or (B) delinquent payments of principal and interest under the related Mortgage Loan and any related escrow payments in respect of such Mortgage Loan are
being advanced on a current basis by the Master Servicer, in either case without giving effect to any Debt Service Reduction or Deficient Valuation. 
 
Bankruptcy Loss Coverage Amount: As of any Determination Date, the Bankruptcy Loss Coverage Amount shall equal the Initial Bankruptcy
Coverage Amount as reduced by (i) the aggregate amount of Bankruptcy Losses allocated to the Certificates since the Cut-off Date and (ii) any permissible reductions in the Bankruptcy Loss Coverage Amount as evidenced by a letter of each Rating
Agency to the Trustee to the effect that any such reduction will not result in a downgrading of the then current ratings assigned to the Classes of Certificates rated by it. 
 
Blanket Mortgage: The mortgage or mortgages encumbering the Cooperative Property. 
 
Book-Entry Certificates: As specified in the Preliminary
Statement. 
 
Business Day: Any day other than (i)
a Saturday or a Sunday, or (ii) a day on which banking institutions in the City of Dallas, or the State of Texas or the city in which the Corporate 

 

8 

Trust Office of the Trustee is located are authorized or obligated by law or executive order to be closed. 
 
Certificate: Any one of the Certificates executed by the
Trustee in substantially the forms attached hereto as exhibits. 
 
Certificate Account: The separate Eligible Account or Accounts created and maintained by the Master Servicer pursuant to Section 3.5 with a depository institution in the name of the Master Servicer for the benefit of the Trustee on
behalf of Certificateholders and designated “First Horizon Home Loan Corporation in trust for the registered holders of First Horizon Asset Securities Inc. Mortgage Pass-Through Certificates, Series 2003-4.” 
 
Certificate Owner: With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Book-Entry Certificate. 
 
Certificate Principal Balance: With respect to any Certificate (other than the Interest Only Certificates) and as of any Distribution Date, the Certificate Principal Balance on the date of the initial issuance of such
Certificate 
 
(1) as reduced by: 
 

	 	(a)	 	all amounts distributed on previous Distribution Dates on such Certificate on account of principal, 

 

	 	(b)	 	the principal portion of all Realized Losses previously allocated to such Certificate, and 

 

	 	(c)	 	in the case of a Subordinated Certificate, such Certificate’s pro rata share, if any, of the Subordinated Certificate Writedown Amount for previous Distribution
Dates. 

 
(2) in the case of the Accrual
Certificates, as increased by the Accrual Amount added to the Certificate Principal Balance thereof on previous Distribution Dates. 
 
Certificate Register: The register maintained pursuant to Section 5.2 hereof. 
 
Certificateholder or Holder: The person in whose name a Certificate is registered in the Certificate
Register, except that, solely for the purpose of giving any consent pursuant to this Agreement, any Certificate registered in the name of the Depositor or the Seller or any affiliate or agent of the Depositor or the Seller shall be deemed not to be
Outstanding and the Percentage Interest evidenced thereby shall not be taken into account in determining whether the requisite amount of Percentage Interests necessary to effect such consent has been obtained; provided, however, that if any such
Person (including the Depositor) owns 100% of the Percentage Interests evidenced by a Class of Certificates, such Certificates shall be deemed to be Outstanding for purposes of any provision hereof that requires the consent of the Holders of
Certificates of a particular Class as a condition to the taking of any action hereunder. The Trustee is entitled to rely conclusively on a certification of the Depositor or any affiliate of the Depositor in determining which Certificates are
registered in the name of an affiliate of the Depositor. 
 

9 

 
Class: All
Certificates bearing the same class designation as set forth in the Preliminary Statement. 
 
Class I-A-11 Distribution Percentage: 0% through the Distribution Date in April 2008; 30% of the applicable Class I-A-11 Percentage thereafter through the Distribution Date in April 2009; 40% of the
applicable Class I-A-11 Percentage thereafter through the Distribution Date in April 2010; 60% of the applicable Class I-A-11 Percentage thereafter through the Distribution Date in April 2011; 80% of the applicable Class I-A-11 Percentage thereafter
through the Distribution Date in April 2012; and 100% of the applicable Class I-A-11 Percentage thereafter. 
 
Class I-A-11 Percentage: For any Distribution Date, the lesser of (x) 100% and (y) the percentage (carried to six places rounded up)
obtained by dividing (1) the aggregate Class Certificate Balance of the Class I-A-11 Certificates immediately prior to such Distribution Date by (2) the aggregate Stated Principal Balance of the Mortgage Loans in Pool I for the immediately preceding
Distribution Date. 
 
Class I-A-11 Principal
Distribution Amount: For any Distribution Date, the sum of: 
 

	 	(a)	 	the total of the amounts described in clause (1) of the definition of Senior Optimal Principal Amount for Pool I (determined without application of the related
Senior Percentage) for such date multiplied by the Class I-A-11 Scheduled Distribution Percentage for such date; and 

 

	 	(b)	 	the total of the amounts described in clauses (2), (3), (4) and (5) of the definition of Senior Optimal Principal Amount for Pool I (determined without application
of the related Senior Percentage and the related Senior Prepayment Percentage) for such date multiplied by the Class I-A-11 Distribution Percentage for such date. 

 
Class I-A-11 Scheduled Distribution Percentage: As to any Distribution Date, 0% through the Distribution Date
in April 2008 and thereafter, the Class I-A-11 Percentage for such date. 
 
Class Certificate Balance: With respect to any Class of Certificates (other than the Interest Only Certificates) and as of any Distribution Date the aggregate of the Certificate Principal Balances of all Certificates of such
Class as of such date. 
 
Class Prepayment
Distribution Trigger: For a Class of Subordinated Certificates (other than the Class of Subordinated Certificates with the highest priority of distribution), a trigger that is satisfied on any Distribution Date on which a fraction (expressed as a
percentage), the numerator of which is the aggregate Class Certificate Balance of such Class and each Class subordinate thereto, if any, and the denominator of which is the aggregate Pool Principal Balance for both Mortgage Pools with respect to
such Distribution Date, equals or exceeds such percentage calculated as of the Closing Date. 
 
Closing Date: April 30, 2003. 
 
Code: The Internal Revenue Code of 1986, including any successor or amendatory provisions. 
 

10 

 
COFI: Not
applicable. 
 
COFI Certificates: Not applicable.

 
Compensating Interest: As to any Distribution
Date and any Principal Prepayment in respect of a Mortgage Loan that is received during the period from the sixteenth day of the month prior to the month of such Distribution Date through the last day of such month, an additional payment to the
related Mortgage Pool made by the Master Servicer, to the extent funds are available from the Master Servicing Fee, equal to the amount of interest at the Adjusted Net Mortgage Rate for that Mortgage Loan from the date of the prepayment to the
related Due Date; provided that the aggregate of all such payments as to the Mortgage Loans in a Mortgage Pool shall not exceed 0.0083% of the Pool Principal Balance of such Mortgage Pool as of the related Determination Date, and provided further
that if a partial Principal Prepayment is applied after the first of the month following the month of receipt, no additional payment is required for such Principal Prepayment. 
 
Component: Not applicable. 
 
Component Certificates: Not applicable. 
 
Cooperative Corporation: The entity that holds title (fee or an acceptable leasehold estate) to the real
property and improvements constituting the Cooperative Property and which governs the Cooperative Property, which Cooperative Corporation must qualify as a Cooperative Housing Corporation under Section 216 of the Code. 
 
Coop Shares: Shares issued by a Cooperative Corporation.

 
Cooperative Loan: Any Mortgage Loan secured by
Coop Shares and a Proprietary Lease. 
 
Cooperative
Property: The real property and improvements owned by the Cooperative Corporation, including the allocation of individual dwelling units to the holders of the Coop Shares of the Cooperative Corporation. 
 
Cooperative Unit: A single family dwelling located in a
Cooperative Property. 
 
Corporate Trust Office:
The designated office of the Trustee in the State of New York at which 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 The Bank of New York, 101 Barclay Street, 8W, New York, New York 10286 (Attn: Corporate Trust Mortgage-Backed Securities Group, First Horizon Asset Securities Inc. Series 2003-4), facsimile no. (212) 815-3986, and which is the address to which
notices to and correspondence with the Trustee should be directed. 
 
Corresponding Classes of Certificates: As to any Lower REMIC Interest in Section 2.7, the Class or Classes that are identified in Section 2.7 as corresponding to such Lower REMIC interest. 
 

11 

 
Cross-over
Date: The Distribution Date on which the respective Class Certificate Balances of each Class of Subordinated Certificates have been reduced to zero. 
 
Custodial Agreement: The Custodial Agreement dated as of April 30, 2003 by and among the Trustee, the Master Servicer and the Custodian.

 
Custodian: LaSalle Bank National Association, a
national banking association, and its successors and assigns, as custodian under the Custodial Agreement. 
 
Cut-off Date: April 1, 2003. 
 
Cut-off Date Pool Principal Balance: With respect to Pool I, $325,296,597.77 and with respect to Pool II, $80,239,837.93. 
 
Cut-off Date Principal Balance: As to any Mortgage Loan, the
Stated Principal Balance thereof as of the close of business on 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
which became final and non-appealable, except such a reduction resulting from a Deficient Valuation or any reduction that results in a permanent forgiveness of principal. 
 
Defective Mortgage Loan: Any Mortgage Loan which is required to be repurchased pursuant to Section 2.2 or
2.3. 
 
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 the 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 which is final and non-appealable in a proceeding under the Bankruptcy Code. 
 
Definitive Certificates: Any Certificate evidenced by a
Physical Certificate and any Certificate issued in lieu of a Book-Entry Certificate pursuant to Section 5.2(e). 
 
Delay Certificates: As specified in the Preliminary Statement. 
 
Delay Delivery Mortgage Loans: The Mortgage Loans for which all or a portion of a related Mortgage File is
not delivered to Trustee on the Closing Date. The number of Delay Delivery Mortgage Loans shall not exceed 25% of the aggregate number of Mortgage Loans as of the Closing Date. 
 
Deleted Mortgage Loan: As defined in Section 2.3(c) hereof. 
 
Denomination: With respect to each Certificate, the amount set
forth on the face thereof as the “Initial Certificate Balance of this Certificate” or the Percentage Interest appearing on the face thereof. 
 

12 

 
Depositor:
First Horizon Asset Securities Inc., a Delaware corporation, or its successor in interest. 
 
Depository: The initial Depository shall be The Depository Trust Company, the nominee of which is CEDE & Co., as 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 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. 
 
Designated Mortgage Pool Rates: With respect to Pool I, 5.50%, and with respect to Pool II, 5.00%. 
 
Determination Date: As to any Distribution Date, the earlier of (i) the third Business Day after the 15th day of each month, and (ii) the
second Business Day prior to the related Distribution Date. 
 
Discount Mortgage Loan: Any Mortgage Loan in Pool I or Pool II with a Mortgage Rate of less than 5.75% or 5.25% per annum, respectively. 
 
Distribution Account: The separate Eligible Account created and maintained by the Trustee pursuant to Section 3.5 in the name of the
Trustee for the benefit of the Certificateholders and designated “The Bank of New York, in trust for registered Holders of First Horizon Asset Securities Inc. Mortgage Pass-Through Certificates, Series 2003-4.” Funds in the Distribution
Account shall be held in trust for the Certificateholders for the uses and purposes set forth in this Agreement. 
 
Distribution Account Deposit Date: As to any Distribution Date, 1:30 p.m. Central time on the Business Day immediately preceding such
Distribution Date. 
 
Distribution Date: The 25th
day of each calendar month after the initial issuance of the Certificates, or if such 25th day is not a Business Day, the next succeeding Business Day, commencing in May 2003. 
 
Due Date: With respect to any Distribution Date, the first day of the month in which the related 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 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) have the highest short-term ratings of each Rating Agency 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 or the SAIF (to the limits established by the FDIC or the SAIF, as applicable) and the uninsured deposits in which accounts are otherwise secured such that, as evidenced by an Opinion
of Counsel delivered to the Trustee and to each Rating Agency, the 

 

13 

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 (a) the trust department of a federal or state chartered depository institution or (b) a trust company, acting in its fiduciary capacity or (iv) any other account acceptable to each Rating Agency. Eligible
Accounts may bear interest, and may include, if otherwise qualified under this definition, accounts maintained with the Trustee. 
 
ERISA: The Employee Retirement Income Security Act of 1974, as amended. 
 
ERISA-Restricted Certificate: As specified in the Preliminary Statement. 
 
Escrow Account: The Eligible Account or Accounts established
and maintained pursuant to Section 3.6(a) hereof. 
 
Event of Default: As defined in Section 7.1 hereof. 
 
Excess Loss: With respect to a Mortgage Pool, the amount of any (i) Fraud Loss realized after the Fraud Loss Coverage Termination Date, (ii) Special Hazard Loss realized after the Special Hazard Coverage Termination Date or
(iii) Deficient Valuation realized after the Bankruptcy Coverage Termination Date. 
 
Excess Proceeds: With respect to any Liquidated Mortgage Loan, the amount, if any, by which the sum of any Liquidation Proceeds of such Mortgage Loan received in the calendar month in which such
Mortgage Loan became a Liquidated Mortgage Loan, net of any amounts previously reimbursed to the Master Servicer as Nonrecoverable Advance(s) with respect to such Mortgage Loan pursuant to Section 3.8(a)(iii), exceeds (i) the unpaid principal
balance of such Liquidated Mortgage Loan as of the Due Date in the month in which such Mortgage Loan became a Liquidated Mortgage Loan plus (ii) accrued interest at the Mortgage Rate from the Due Date as to which interest was last paid or advanced
(and not reimbursed) to Certificateholders up to the Due Date applicable to the Distribution Date immediately following the calendar month during which such liquidation occurred. 
 
Expense Fee Rate: As to each Mortgage Loan, the sum of the related Master Servicing Fee Rate and the Trustee
Fee Rate. 
 
FDIC: The Federal Deposit Insurance
Corporation, or any successor thereto. 
 
FHLMC:
The Federal Home Loan Mortgage Corporation, a corporate instrumentality of the United States created and existing under Title III of the Emergency Home Finance Act of 1970, as amended, or any successor thereto. 
 
FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989. 
 
First Horizon: First
Horizon Home Loan Corporation, a Kansas corporation and an indirect wholly owned subsidiary of First Tennessee National Corporation, a Tennessee corporation. 
 

14 

 
Fitch: Fitch
Ratings or any successor thereto. If Fitch is designated as a Rating Agency in the Preliminary Statement, for purposes of Section 11.5(b) the address for notices to Fitch shall be Fitch, Inc., One State Street Plaza, New York, New York 10004,
Attention: Residential Mortgage Surveillance Group, or such other address as Fitch may hereafter furnish to the Depositor and the Master Servicer. 
 
FNMA: The Federal National Mortgage Association, a federally chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto. 
 
Fraud Loan: A Liquidated Mortgage Loan as to which a Fraud Loss has occurred. 
 
Fraud Loss Coverage Amount: As of the Closing Date, $4,055,364. As of any Distribution Date from the first anniversary of the Cut-off Date
and prior to the third anniversary of the Cut-off Date, the Fraud Loss Coverage Amount will equal $4,055,364 minus the aggregate amount of Fraud Losses that would have been allocated to the Subordinated Certificates in the absence of the Loss
Allocation Limitation since the Cut-off Date. As of any Distribution Date from the third to the fifth anniversary of the Cut-off Date, the Fraud Loss Coverage Amount will equal (1) the lesser of (a) the Fraud Loss Coverage Amount as of the most
recent anniversary of the Cut-off Date and (b) 0.50% of the aggregate outstanding principal balance of all of the Mortgage Loans as of the most recent anniversary of the Cut-off Date minus (2) the Fraud Losses that would have been allocated to the
Subordinated Certificates in the absence of the Loss Allocation Limitations since the most recent anniversary of the Cut-off Date. As of any Distribution Date on or after the earlier of the Cross-over Date or the fifth anniversary of the Cut-off
Date, the Fraud Loss Coverage Amount shall be zero. 
 
Fraud Loss Coverage Termination Date: The point in time at which the Fraud Loss Coverage Amount is reduced to zero. 
 
Fraud Losses: Realized Losses on Mortgage Loans as to which a loss is sustained by reason of a default arising from fraud, dishonesty or
misrepresentation in connection with the related Mortgage Loan, including a loss by reason of the denial of coverage under any related Primary Insurance Policy because of such fraud, dishonesty or misrepresentation. 
 
Group I Senior Certificates: As specified in the Preliminary
Statement. 
 
Group II Senior Certificates: As
specified in the Preliminary Statement. 
 
Group
Subordinate Amount: For each Mortgage Pool and any Distribution Date is the excess of the Pool Principal Balance of that Mortgage Pool for the immediately preceding Distribution Date over the aggregate Class Certificate Balance of the Senior
Certificates of the related Certificate Group immediately prior to that Distribution Date. 
 
Index: LIBOR. 
 
Indirect Participant: A broker, dealer, bank or other financial institution or other Person that clears through or maintains a custodial relationship with a Depository Participant. 
 

15 

 
Initial
Bankruptcy Coverage Amount: $100,000. 
 
Insurance
Policy: With respect to any Mortgage Loan included in the Trust Fund, any insurance policy, including all riders and endorsements thereto in effect, including any replacement policy or policies for any Insurance Policies. 
 
Insurance Proceeds: Proceeds paid by an insurer pursuant to
any Insurance Policy, 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 Retail Certificates: Not applicable. 
 
Interest Accrual Period: With respect to each Class of Delay
Certificates and any Distribution Date, the calendar month prior to the month of such Distribution Date. With respect to any Non-Delay Certificates and any Distribution Date, the one month period commencing on the 25th day of the month preceding the
month in which such Distribution Date occurs and ending on the 24th day of the month in which such Distribution Date occurs. 
 
Interest Determination Date: With respect to any Interest Accrual Period for any LIBOR Certificates, the second Business Day prior to the
first day of such Interest Accrual Period. 
 
Interest Only Certificates: As specified in the Preliminary Statement. 
 
Latest Possible Maturity Date: As to each Class of Subordinated Certificates and each Class of Senior Certificates in the Certificate Group corresponding to Pool I, the Distribution Date following the
third anniversary of the scheduled maturity date of the Mortgage Loan in Pool I having the latest scheduled maturity date as of the Cut-off Date; as to each Class of Senior Certificates in the Certificate Group corresponding to Pool II, the
Distribution Date following the third anniversary of the scheduled maturity date of the Mortgage Loan in Pool II having the latest scheduled maturity date as of the Cut-off Date. 
 
Lender PMI Mortgage Loan: Not applicable. 
 
LIBOR: The London interbank offered rate for one month United States dollar deposits calculated in the manner
described in Section 4.7. 
 
LIBOR Certificates: As
specified in the Preliminary Statement. 
 
Liquidated Mortgage Loan: With respect to any Distribution Date, a defaulted Mortgage Loan (including any REO Property) which was liquidated in the calendar month preceding the month of such Distribution Date and as to which the
Master Servicer has determined (in accordance with this Agreement) that it has received all amounts it expects to receive in connection with the liquidation of such Mortgage Loan, including the final disposition of an REO Property. 
 

16 

 
Liquidation
Proceeds: Amounts, including Insurance Proceeds, received in connection with the partial or complete liquidation of defaulted Mortgage Loans, whether through trustee’s sale, foreclosure sale or otherwise or amounts received in connection with
any condemnation or partial release of a Mortgaged Property and any other proceeds received in connection with an REO Property, less the sum of related unreimbursed Master Servicing Fees, Servicing Advances and Advances. 
 
Loan-to-Value Ratio: With respect to any Mortgage Loan and as
to any date of determination, the fraction (expressed as a percentage) the numerator of which is the principal balance of the related Mortgage Loan at such date of determination and the denominator of which is the Appraised Value of the related
Mortgaged Property. 
 
Loss Allocation Limitation:
As defined in Section 4.4(g). 
 
Lost Mortgage
Note: Any Mortgage Note the original of which was permanently lost or destroyed and has not been replaced. 
 
Lower REMIC: The segregated pool of assets consisting of the Trust Fund but excluding the Retained Yield and the Lower REMIC Interests.

 
Lower REMIC Interests: The regular REMIC
interests issued by the Lower REMIC as set forth in Section 2.7. 
 
Maintenance: With respect to any Cooperative Unit, the rent paid by the Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease. 
 
Majority in Interest: As to any Class of Regular Certificates, the Holders of Certificates of such Class
evidencing, in the aggregate, at least 51% of the Percentage Interests evidenced by all Certificates of such Class. 
 
Master Servicer: First Horizon Home Loan Corporation, a Kansas corporation, and its successors and assigns, in its capacity as master
servicer hereunder. 
 
Master Servicer Advance
Date: As to any Distribution Date, 1:30 p.m. Central time on the Business Day immediately preceding such Distribution Date. 
 
Master Servicing Fee: As to each Mortgage Loan and any Distribution Date, an amount payable out of each full payment of interest received
on such Mortgage Loan and equal to one-twelfth of the Master Servicing Fee Rate multiplied by the Stated Principal Balance of such Mortgage Loan as of the Due Date in the month of such Distribution Date (prior to giving effect to any Scheduled
Payments due on such Mortgage Loan on such Due Date), subject to reduction as provided in Section 3.14. 
 
Master Servicing Fee Rate: For each Mortgage Loan, other than Discount Mortgage Loans, a per annum rate equal to 0.244%. For each Discount
Mortgage Loan in Pool I, a per annum rate equal to the excess, if any, of the Mortgage Rate thereof over 5.506%. For each Discount Mortgage Loan in Pool II, a per annum rate equal to the excess, if any, of the Mortgage Rate thereof over 5.006%.

 

17 

 
MLPA: The
Mortgage Loan Purchase Agreement dated as of April 30, 2003, by and between First Horizon Home Loan Corporation, as seller, and First Horizon Asset Securities Inc., as purchaser, as related to the transfer, sale and conveyance of the Mortgage Loans.

 
Monthly Statement: The statement delivered to
the Certificateholders pursuant to Section 4.6. 
 
Moody’s: Moody’s Investors Service, Inc., or any successor thereto. If Moody’s is designated as a Rating Agency in the Preliminary Statement, for purposes of Section 11.5(b) the address for notices to Moody’s
shall be Moody’s Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention: Residential Pass-Through Monitoring, or such other address as Moody’s may hereafter furnish to the Depositor or the Master Servicer.

 
Mortgage: The mortgage, deed of trust or other
instrument creating a first lien on an estate in fee simple or leasehold interest in real property securing a Mortgage Note. 
 
Mortgage File: The mortgage documents listed in Section 2.1 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 Loan Schedule: The list of Mortgage Loans (as from time to time amended by the Master Servicer to reflect the addition of Substitute Mortgage Loans and the deletion of Deleted 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, attached hereto as Schedule I, setting forth the following information with respect to each Mortgage
Loan: 
 

	 	(1)	 	the loan number; 

 

	 	(2)	 	the Mortgagor’s name and the street address of the Mortgaged Property, including the zip code; 

 

	 	(3)	 	the maturity date; 

 

	 	(4)	 	the original principal balance; 

 

	 	(5)	 	the Cut-off Date Principal Balance; 

 

	 	(6)	 	the first payment date of the Mortgage Loan; 

 

	 	(7)	 	the Scheduled Payment in effect as of the Cut-off Date; 

 

	 	(8)	 	the Loan-to-Value Ratio at origination; 

 

	 	(9)	 	a code indicating whether the residential dwelling at the time of origination was represented to be owner-occupied; 

 

	 	(10)	 	 a code indicating whether the residential dwelling is either (a) a detached single family dwelling (b) a dwelling in a de minimis 

 

18 

	 	 
PUD, (c) a condominium unit or PUD (other than a de minimis PUD), (d) a two-to-four unit residential property or (e) a Cooperative Unit;

 

	 	(11)	 	the Mortgage Rate; 

 

	 	(12)	 	the purpose for the Mortgage Loan; 

 

	 	(13)	 	the type of documentation program pursuant to which the Mortgage Loan was originated; and 

 

	 	(14)	 	the Master Servicing Fee for the Mortgage Loan. 

 
Such schedule shall also set forth the total of the amounts described under (4) and (5) above for all of the Mortgage Loans. 
 
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. 
 
Mortgage Note: The original executed note or other evidence of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan. 
 
Mortgage Pool: Either Pool I or Pool II. 
 
Mortgage Rate: The annual rate of interest borne by a Mortgage Note from time to time, net of any insurance premium charged by the
mortgagee to obtain or maintain any Primary Insurance Policy. 
 
Mortgaged Property: The underlying property securing a Mortgage Loan, which, with respect to a Cooperative Loan, is the related Coop Shares and Proprietary Lease. 
 
Mortgagor: The obligor(s) on a Mortgage Note. 
 
National Cost of Funds Index: The National Monthly Median Cost of Funds Ratio to SAIF-Insured Institutions
published by the Office of Thrift Supervision. 
 
Net Interest Shortfall: For any Distribution Date and each Mortgage Pool, the sum of (a) the amount of interest which would otherwise have been received for any Mortgage Loan that was the subject of (x) a Relief Act Reduction or (y)
a Special Hazard Loss, Fraud Loss, or Deficient Valuation, after the exhaustion of the respective amounts of coverage for those types of losses provided by the Subordinated Certificates; and (b) any Net Prepayment Interest Shortfalls. 
 
Net Prepayment Interest Shortfalls: As to any Distribution
Date and each Mortgage Pool, the amount by which the aggregate of Prepayment Interest Shortfalls during the related 

 

19 

Prepayment Period exceeds an amount equal to the Compensating Interest, if any, for such Distribution Date. 
 
Non-Delay Certificates: As specified in the Preliminary
Statement. 
 
Non-Excess Loss: Any Realized Loss
other than an Excess Loss. 
 
Nonrecoverable
Advance: Any portion of an Advance previously made or proposed to be made by the Master Servicer that, in the good faith judgment of the Master Servicer, will not be ultimately recoverable by the Master Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise. 
 
Notice of
Final Distribution: The notice to be provided pursuant to Section 9.2 to the effect that final distribution on any of the Certificates shall be made only upon presentation and surrender thereof. 
 
Notional Amount: With respect to the Class I-A-7 Certificates
and any Distribution Date, an amount equal to the Class Certificate Balance of the Class I-A-6 Certificates immediately prior to such Distribution Date. With respect to the Class II-A-3 Certificates and any Distribution Date, an amount equal to the
Class Certificate Balance of the Class II-A-2 Certificates immediately prior to such Distribution Date. 
 
Notional Amount Component: Not applicable. 
 
Offered Certificates: As specified in the Preliminary Statement. 
 
Officer’s Certificate: A Certificate (i) signed by the Chairman of the Board, the Vice Chairman of the
Board, the President, a Managing Director, a Vice President (however denominated), an Assistant Vice President, the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant Secretaries of the Depositor or the Master Servicer, or
(ii), if provided for in this Agreement, signed by a Servicing Officer, as the case may be, and delivered to the Depositor and the Trustee, as the case may be, as required by this Agreement. 
 
Opinion of Counsel: A written opinion of counsel, who may be
counsel for the Depositor or the Master Servicer, including, in-house counsel, reasonably acceptable to the Trustee; provided, however, that with respect to the interpretation or application of the REMIC Provisions, such counsel must (i) in fact be
independent of the Depositor and the Master Servicer, (ii) not have any direct financial interest in the Depositor or the Master Servicer or in any affiliate of either, and (iii) not be connected with the Depositor or the Master Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. 
 
Optional Termination: The termination of the trust created hereunder in connection with the purchase of the Mortgage Loans pursuant to
Section 9.1(a) hereof. 
 
Original Mortgage Loan:
The Mortgage Loan refinanced in connection with the origination of a Refinancing Mortgage Loan. 
 

20 

 
Original
Subordinated Principal Balance: The aggregate of the Class Certificate Balances of the Subordinated Certificates as of the Closing Date. 
 
OTS: The Office of Thrift Supervision. 
 
Outside Reference Date: Not applicable. 
 
Outstanding: With respect to the Certificates as of any date of determination, all Certificates theretofore executed and authenticated
under this Agreement except: 
 
(i) Certificates theretofore canceled by the Trustee or delivered to the Trustee for cancellation; and 
 
(ii) 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 Due Date, a Mortgage Loan with a Stated Principal Balance greater than zero which was not the subject of a Principal Prepayment in Full prior to such Due Date and which did not become a Liquidated Mortgage Loan prior to such
Due Date. 
 
Ownership Interest: As to any Residual
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: For any interest bearing Class of
Certificates, the per annum rate set forth or calculated in the manner described in the Preliminary Statement. 
 
Percentage Interest: As to any Certificate, the percentage interest evidenced thereby in distributions required to be made on the related
Class, such percentage interest being set forth on the face thereof or equal to the percentage obtained by dividing the Denomination of such Certificate by the aggregate of the Denominations of all Certificates of the same Class. 
 
Permitted Investments: At any time, any one or more of the
following obligations and securities: 
 
(i) obligations of the United States or any agency thereof, provided such obligations are backed by the full faith and credit of the United States; 
 
(ii) general obligations of or obligations guaranteed by any state of the United States or
the District of Columbia receiving the highest long-term debt rating of each Rating Agency, or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by each Rating Agency;

 
(iii) commercial or finance
company paper which is then receiving the highest commercial or finance company paper rating of each Rating Agency, or 

 

21 

such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by each Rating Agency;

 
(iv) certificates of deposit,
demand or time deposits, or bankers’ acceptances issued by any depository institution or trust company incorporated under the laws of the United States or of any state thereof and subject to supervision and examination by federal and/or state
banking authorities, provided that the commercial paper and/or long term unsecured debt obligations of such depository institution or trust company (or in the case of the principal depository institution in a holding company system, the commercial
paper or long-term unsecured debt obligations of such holding company, but only if Moody’s is not a Rating Agency) are then rated one of the two highest long-term and the highest short-term ratings of each 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 either Rating Agency; 
 
(v) 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; 
 
(vi) 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 either Rating Agency; 
 
(vii) 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 (iv) above; 
 
(viii) 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 ratings of each
Rating Agency (except if the Rating Agency is Moody’s or S&P, 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 either Rating Agency as evidenced by a signed writing delivered by each Rating Agency; 
 
(ix) units of a taxable money-market portfolio having the highest rating assigned by each Rating Agency (except if Fitch
is a Rating Agency and has not rated the portfolio, the highest rating assigned by Moody’s) and restricted to obligations issued or guaranteed by the United States of America or entities whose obligations are backed by the full faith and credit
of the United States of America and repurchase agreements collateralized by such obligations; and 
 

22 

 
(x) such other investments 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 either Rating Agency, as
evidenced by a signed writing delivered by each Rating Agency; 
 
provided that no such instrument shall be a Permitted Investment if such instrument evidences the right to receive interest only payments with respect to the obligations underlying such instrument. 
 
Permitted Transferee: Any person other than (i) the United
States, any State or political subdivision thereof, or any agency or instrumentality of any of the foregoing, (ii) a foreign government, International Organization or any agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers’ cooperatives described in section 521 of the Code) which 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)(l) 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) an “electing large partnership” as
defined in section 775 of the Code, (vi) a Person that is not (a) a citizen or resident of the United States, (b) a corporation, partnership, or other entity created or organized in or under the laws of the United States, any state thereof or the
District of Columbia, (c) 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 (d) 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 the authority to control all substantial decisions of the trust,
unless such Person has furnished the transferor and the Trustee with a duly completed Internal Revenue Service Form W-8ECI or any applicable successor form, and (vii) any other Person so designated by the Depositor based upon an Opinion of Counsel
that the Transfer of an Ownership Interest in a Residual Certificate to such Person may cause any REMIC created hereunder to fail to qualify as a REMIC at any time that the Certificates are outstanding; provided, however, that if a person is
classified as a partnership under the Code, such person shall only be a Permitted Transferee if all of its beneficial owners are described in subclauses (a), (b), (c) or (d) of clause (vi) and the governing documents of such person prohibits a
transfer of any interest in such person to any person described in clause (vi). The terms “United States,” “State” and “International Organization” shall have the meanings set forth in section 7701 of the Code or
successor provisions. A corporation will not be treated as an instrumentality of the United States or of any State or political subdivision thereof for these purposes if all of its activities are subject to tax and, with the exception of the Federal
Home Loan Mortgage Corporation, a majority of its board of directors is not selected by such government unit. 
 
Person: Any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof. 
 
Physical Certificate: As specified in the Preliminary Statement. 
 
Planned Balance: Not applicable. 
 

23 

 
Planned
Principal Certificates: Not applicable. 
 
Pool I:
The aggregate of the Mortgage Loans identified on the Mortgage Loan Schedule as being included in Pool I. 
 
Pool II: The aggregate of the Mortgage Loans identified on the Mortgage Loan Schedule as being included in Pool II. 
 
Pool Principal Balance: For each Mortgage Pool, with respect
to any Distribution Date, the aggregate of the Stated Principal Balances of the Mortgage Loans which were Outstanding Mortgage Loans on the Due Date in the month preceding the month of such Distribution Date. 
 
Prepayment Interest Excess: As to any Principal Prepayment
received by the Master Servicer from the first day through the fifteenth day of any calendar month (other than the calendar month in which the Cut-off Date occurs), all amounts paid by the related Mortgagor in respect of interest on such Principal
Prepayment. All Prepayment Interest Excess shall be paid to the Master Servicer as additional master servicing compensation. 
 
Prepayment Interest Shortfall: As to any Distribution Date and each Mortgage Pool, Mortgage Loan and Principal Prepayment received (a)
during the period from the sixteenth day of the month preceding the month of such Distribution Date through the last day of such month, in the case of a Principal Prepayment in full, or (b) during the month preceding the month of such Distribution
Date, in the case of a partial Principal Prepayment, the amount, if any, by which one month’s interest at the related Adjusted Mortgage Rate on such Principal Prepayment exceeds the amount of interest actually paid by the Mortgagor in
connection with such Principal Prepayment. 
 
Prepayment Period: (a) With respect to any Principal Prepayments in Full and any Distribution Date, the period from the sixteenth day of the month preceding the month of such Distribution Date (or, in the case of the first
Distribution Date, from the Cut-off Date) through the fifteenth day of the month of such Distribution Date, and (b) with respect to any other Principal Prepayments and any Distribution Date, the month preceding the month of such Distribution Date.

 
Primary Insurance Policy: Each policy of primary
mortgage guaranty insurance or any replacement policy therefor with respect to any Mortgage Loan. 
 
Principal Balance Schedules: The schedules attached hereto as Schedule IV. 
 
Principal Prepayment: Any payment of principal by a Mortgagor on a Mortgage Loan that is received in advance
of its scheduled Due Date and is not accompanied by an amount representing scheduled interest due on any date or dates in any month or months subsequent to the month of prepayment. Partial Principal Prepayments shall be applied by the Master
Servicer in accordance with the terms of the related Mortgage Note. 
 
Principal Prepayment in Full: Any Principal Prepayment made by a Mortgagor of the entire principal balance of a Mortgage Loan. 
 

24 

 
Private
Certificate: As specified in the Preliminary Statement. 
 
Proprietary Lease: With respect to any Cooperative Unit, a lease or occupancy agreement between a Cooperative Corporation and a holder of related Coop Shares. 
 
PUD: Planned Unit Development. 
 
Purchase Price: With respect to any Mortgage Loan required to be purchased by the Seller pursuant to Section
2.2 or 2.3 hereof or purchased at the option of the Master Servicer pursuant to Section 3.11, an amount equal to the sum of (i) 100% of the unpaid principal balance of the Mortgage Loan on the date of such purchase, (ii) accrued interest thereon at
the applicable Mortgage Rate (or at the applicable Adjusted Mortgage Rate if the purchaser is the Master Servicer) from the date through which interest was last paid by the Mortgagor to the Due Date in the month in which the Purchase Price is to be
distributed to Certificateholders, and (iii) any costs and damages incurred by the Trust in connection with the noncompliance of such Mortgage Loan with any specifically applicable predatory or abusive lending law. 
 
Qualified Insurer: A mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal place of business and each state having jurisdiction over such insurer in connection with the insurance policy issued by such insurer, duly authorized and licensed in such states to
transact a mortgage guaranty insurance business in such states and to write the insurance provided by the insurance policy issued by it, approved as a FNMA-approved mortgage insurer and having a claims paying ability rating of at least
“AA” or equivalent rating by a nationally recognized statistical rating organization. Any replacement insurer with respect to a Mortgage Loan must have at least as high a claims paying ability rating as the insurer it replaces had on the
Closing Date. 
 
Rating Agency: Each of the Rating
Agencies specified in the Preliminary Statement. If any such organization or a successor is no longer in existence, “Rating Agency” shall be such nationally recognized statistical rating organization, or other comparable Person, as is
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 Mortgage 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 the Liquidated Mortgage Loan as of the date of such liquidation, plus (ii)
interest at the Adjusted Net Mortgage Rate from the Due Date as to which interest was last paid or advanced (and not reimbursed) to Certificateholders up to the Due Date in the month in which Liquidation Proceeds are required to be distributed on
the Stated Principal Balance of such Liquidated Mortgage Loan from time to time, minus (iii) the Liquidation Proceeds, if any, received during the month in which such liquidation occurred, to the extent applied as recoveries of interest at the
Adjusted Net Mortgage Rate and to principal of the Liquidated Mortgage Loan. With respect to each Mortgage Loan which has become the subject of a Deficient Valuation, if the principal amount due under the related Mortgage Note has been reduced, the
difference between the principal balance of the Mortgage Loan outstanding 

 

25 

immediately prior to such Deficient Valuation and the principal balance of the Mortgage Loan as reduced by the Deficient Valuation.

 
Recognition Agreement: With respect to any
Cooperative Loan, an agreement between the Cooperative Corporation and the originator of such Mortgage Loan which establishes the rights of such originator in the Cooperative Property. 
 
Record Date: With respect to any Distribution Date, the close of business on the last Business Day of the
month preceding the month in which such Distribution Date occurs. 
 
Reference Bank: A leading bank with an established place of business in London engaged in transactions in Eurodollar deposits in the international Eurocurrency market, not controlled by, or under the common control with, the
Trustee. 
 
Refinancing Mortgage Loan: Any Mortgage
Loan originated in connection with the refinancing of an existing mortgage loan. 
 
Regular Certificates: As specified in the Preliminary Statement. 
 
Relief Act: The Soldiers’ and Sailors’ Civil Relief Act of 1940, as amended, or any similar state or local legislation or
regulations. 
 
Relief Act Reductions: With respect
to any Distribution Date and any Mortgage Loan as to which there has been a reduction in the amount of interest collectible thereon for the most recently ended calendar month as a result of the application of the Relief Act, the amount, if any, by
which interest collectible on such Mortgage Loan for the most recently ended calendar month is less than interest accrued thereon for such month pursuant to the Mortgage Note. 
 
REMIC: A “real estate mortgage investment conduit” within the meaning of section 860D of the Code.

 
REMIC Change of Law: Any proposed, temporary or
final regulation, revenue ruling, revenue procedure or other official announcement or interpretation relating to REMICs and the REMIC Provisions issued after the Closing Date. 
 
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 regulations promulgated thereunder, as the foregoing may be in effect from time to time as well as provisions of applicable
state laws. 
 
REO Property: A Mortgaged Property
acquired by the Trust Fund through foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan. 
 
Request for Release: The Request for Release submitted by the Master Servicer to the Trustee, substantially in the form of Exhibits L and
M, as appropriate. 
 
Required Coupon: With respect
to Pool I, 5.75% per annum, and with respect to Pool II, 5.25% per annum. 
 

26 

 
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. 
 
Required Recordation States: The states of Florida, Maryland and Mississippi. 
 
Residual Certificates: As specified in the Preliminary Statement. 
 
Responsible Officer: When used with respect to the Trustee,
any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, any Trust Officer or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and
having direct responsibility for the administration of this Agreement and also 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.

 
Retail Certificates: Not applicable.

 
Retained Yield: As to each Mortgage Loan and any
Distribution Date, an amount payable to First Horizon Home Loan Corporation out of each full payment of interest received on such Mortgage Loan and equal to one-twelfth of the Retained Yield Rate multiplied by the Stated Principal Balance of such
Mortgage Loan as of the Due Date in the month of such Distribution Date (prior to giving effect to any Scheduled Payments due on such Mortgage Loan on such Due Date). 
 
Retained Yield Rate: For any Mortgage Loan, other than Discount Mortgage Loans, a per annum rate equal to the
excess of (a) the applicable Mortgage Rate over (b) the Required Coupon. For any Discount Mortgage Loan, 0%. 
 
Scheduled Balances: With respect to a Class of Scheduled Principal Certificates and any Distribution Date, the balance for such Class and
such Distribution Date as reflected in the Principal Balance Schedules. 
 
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 which, unless otherwise specified herein, shall give effect to any related
Debt Service Reduction and any Deficient Valuation that affects the amount of the monthly payment due on such Mortgage Loan. 
 
Scheduled Principal Certificates: As specified in the Preliminary Statement. 
 
Securities Act: The Securities Act of 1933, as amended. 
 
Security Agreement: The security agreement with respect to a
Cooperative Loan. 
 
Seller: First Horizon Home
Loan Corporation, a Kansas corporation, and its successors and assigns, in its capacity as seller of the Mortgage Loans pursuant to the MLPA. 
 
Senior Certificates: As specified in the Preliminary Statement. 
 

27 

 
Senior Final
Distribution Date: For each Certificate Group, the Distribution Date on which the Class Certificate Balance of each Class of related Senior Certificates has been reduced to zero. 
 
Senior Optimal Principal Amount: As to a Mortgage Pool and with respect to each Distribution Date, an amount
equal to the sum of: 
 
(1) the related Senior
Percentage of all Scheduled Payments of principal due on each Mortgage Loan in such Mortgage Pool on the first day of the month in which the Distribution Date occurs, as specified in the amortization schedule at the time applicable thereto after
adjustment for previous principal prepayments and the principal portion of Debt Service Reductions after the Bankruptcy Loss Coverage Amount has been reduced to zero, but before any adjustment to such amortization schedule by reason of any other
bankruptcy or similar proceeding or any moratorium or similar waiver or grace period; 
 
(2) the related Senior Prepayment Percentage of the Stated Principal Balance of each Mortgage Loan in such Mortgage Pool which was the subject of a prepayment in full received by the Master Servicer
during the applicable Prepayment Period; 
 
(3) the
related Senior Prepayment Percentage of all partial prepayments of principal in respect of each Mortgage Loan in such Mortgage Pool received during the applicable Prepayment Period; 
 
(4) the lesser of: 
 
(a) the related Senior Prepayment Percentage of the sum of (x) the Liquidation Proceeds allocable to principal on each
Mortgage Loan in such Mortgage Pool which became a Liquidated Mortgage Loan during the related Prepayment Period, other than Mortgage Loans described in clause (y), and (y) the principal balance of each Mortgage Loan in such Mortgage Pool that was
purchased by a private mortgage insurer during the related Prepayment Period as an alternative to paying a claim under the related Insurance Policy; and 
 
(b)(i) the related Senior Percentage of the sum of (x) the Stated Principal Balance of each Mortgage Loan in such Mortgage
Pool which became a Liquidated Mortgage Loan during the related Prepayment Period, other than Mortgage Loans described in clause (y), and (y) the Stated Principal Balance of each Mortgage Loan in such Mortgage Pool that was purchased by a private
mortgage insurer during the related Prepayment Period as an alternative to paying a claim under the related Insurance Policy minus (ii) the related Senior Percentage of the principal portion of Excess Losses (other than Debt Service Reductions) for
such Mortgage Pool during the related Prepayment Period; and 
 
(5) the related Senior Prepayment Percentage of the sum of (a) the Stated Principal Balance of each Mortgage Loan in such Mortgage Pool which was repurchased by the seller in connection with such Distribution Date and (b) the
difference, if any, between the Stated Principal Balance of a Mortgage Loan in such Mortgage Pool that has been replaced by the seller 

 

28 

with a Substitute Mortgage Loan pursuant to the agreement in connection with such Distribution Date and the Stated Principal Balance of such
Substitute Mortgage Loan. 
 
Senior Percentage: On
any Distribution Date for a Certificate Group, the lesser of 100% and the percentage (carried to six places rounded up) obtained by dividing the aggregate Class Certificate Balances of all Classes of Senior Certificates of such Certificate Group
immediately preceding such Distribution Date by the Pool Principal Balance of the related Mortgage Pool for the immediately preceding Distribution Date. 
 
Senior Prepayment Percentage: On any Distribution Date occurring during the periods set forth below, and as to each Mortgage Pool, the
Senior Prepayment Percentages, described below: 
 

	 Period (Dates Inclusive)

	  	 Senior Prepayment Percentage

	 May 2003 – April 2008
	  	 100%

	 May 2008 – April 2009
	  	 the related Senior Percentage plus 70% of the related Subordinated Percentage

	 May 2009 – April 2010
	  	 the related Senior Percentage plus 60% of the related Subordinated Percentage

	 May 2010 – April 2011
	  	 the related Senior Percentage plus 40% of the related Subordinated Percentage

	 May 2011 – April 2012
	  	 the related Senior Percentage plus 20% of the related Subordinated Percentage

	 May 2012 and thereafter
	  	 the related Senior Percentage

 
Notwithstanding the foregoing, if the Senior Percentage for a Certificate Group on any Distribution Date exceeds the initial Senior Percentage, for that Certificate Group, the related Senior Prepayment Percentage for such
Distribution Date will equal 100%. 
 
In addition,
no reduction of the Senior Prepayment Percentage for a Certificate Group below the level in effect for the most recent prior period specified in the table above shall be effective on any Distribution Date unless, as of the last day of the month
preceding such Distribution Date: 
 
(1) the
aggregate Stated Principal Balance of Mortgage Loans in the related Mortgage Pool delinquent 60 days or more (including for this purpose any Mortgage Loans in foreclosure or subject to bankruptcy proceedings and Mortgage Loans with respect to which
the related Mortgaged Property, including REO Property, has been acquired by the Trust) does not exceed 50% of the related Group Subordinate Amount as of such date; and 
 
(2) cumulative Realized Losses in the related Mortgage Pool with respect to the Mortgage Loans in the related
Mortgage Pool do not exceed: 
 
(a) 30% of the related Group Subordinate Amount as of the Cut-off Date (the “Original Group Subordinated Amount” with respect to such Mortgage 

 

29 

Pool) if such Distribution Date occurs between and including May 2008 and April 2009; 
 
(b) 35% of the Original Subordinated
Principal Balance if such Distribution Date occurs between and including May 2009 and April 2010; 
 
(c) 40% of the Original Subordinated Principal Balance if such Distribution Date occurs between and including May 2010 and
April 2011; 
 
(d) 45% of the
Original Subordinated Principal Balance if such Distribution Date occurs between and including May 2011 and April 2012; and 
 
(e) 50% of the Original Subordinated Principal Balance if such Distribution Date occurs during or after May 2012.

 
Servicing Advances: All customary, reasonable
and necessary “out of pocket” costs and expenses incurred in the performance by the Master Servicer of its servicing obligations, including, but not limited to, the cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any expenses reimbursable to the Master Servicer pursuant to Section 3.11 and any enforcement or judicial proceedings, including foreclosures, (iii) the management and liquidation of any REO Property and (iv) compliance with the
obligations under Section 3.9. 
 
Servicing
Agreement: The servicing agreement, dated as of November 26, 2002 by and between First Horizon Asset Securities Inc. and its assigns, as owner, and First Tennessee Mortgage Services, Inc., as servicer. 
 
Servicing Officer: Any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans whose name and facsimile signature appear on a list of servicing officers furnished to the Trustee by the Master Servicer on the Closing Date pursuant to this Agreement,
as such list may from time to time be amended. 
 
Servicing Rights Transfer and Subservicing Agreement: The servicing rights transfer and subservicing agreement dated as of November 26, 2002, by and between First Horizon Home Loan Corporation, as transferor and subservicer, and
First Tennessee Mortgage Services, Inc., as transferee and servicer. 
 
Special Hazard Coverage Termination Date: The point in time at which the Special Hazard Loss Coverage Amount is reduced to zero. 
 
Special Hazard Loss: Any Realized Loss suffered by a Mortgaged Property on account of direct physical loss but not including (i) any loss
of a type covered by a hazard insurance policy or a flood insurance policy required to be maintained with respect to such Mortgaged Property pursuant to Section 3.9 to the extent of the amount of such loss covered thereby, or (ii) any loss caused by
or resulting from: 
 
(1) normal wear and tear;

 

30 

 
(2) fraud,
conversion or other dishonest act on the part of the Trustee, the Master Servicer or any of their agents or employees (without regard to any portion of the loss not covered by any errors and omissions policy); 
 
(3) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues and then only for the ensuing loss; 
 
(4) nuclear or chemical reaction or nuclear radiation or radioactive or chemical contamination, all whether controlled or uncontrolled,
and whether such loss be direct or indirect, proximate or remote or be in whole or in part caused by, contributed to or aggravated by a peril covered by the definition of the term “Special Hazard Loss”; 
 
(5) hostile or warlike action in time of peace and war,
including action in hindering, combating or defending against an actual, impending or expected attack: 
 
(i) by any government or sovereign power, de jure or de facto, or by any authority maintaining or using military, naval or
air forces; 
 
(ii) by military,
naval or air forces; or 
 
(iii)
by an agent of any such government, power, authority or forces; 
 
(6) any weapon of war employing nuclear fission, fusion or other radioactive force, whether in time of peace or war; or 
 
(7) insurrection, rebellion, revolution, civil war, usurped power or action taken by governmental authority in hindering, combating or
defending against such an occurrence, seizure or destruction under quarantine or customs regulations, confiscation by order of any government or public authority or risks of contraband or illegal transportation or trade. 
 
Special Hazard Loss Coverage Amount: Upon the initial issuance
of the Certificates, $7,688,410. As of any Distribution Date, the Special Hazard Loss Coverage Amount will equal the greater of 
 
(a) 1.00% (or if greater than 1.00%, the highest percentage of Mortgage Loans by principal balance secured by Mortgaged Properties in any
single California zip code) of the outstanding principal balance of all the Mortgage Loans as of the related Determination Date; and 
 
(b) twice the outstanding principal balance of the Mortgage Loan which has the largest outstanding principal balance as of the related
Determination Date, 
 
less, in each case, the aggregate amount of
Special Hazard Losses that would have been previously allocated to the Subordinated Certificates in the absence of the Loss Allocation Limitation. As of any Distribution Date on or after the Cross-over Date, the Special Hazard Loss Coverage Amount
will be zero. 
 

31 

 
Special Hazard
Mortgage Loan: A Liquidated Mortgage Loan as to which a Special Hazard Loss has occurred. 
 
S&P: Standard & Poor’s Corporation, a division of The McGraw-Hill Companies, Inc. If S&P is designated as a Rating Agency in the Preliminary Statement, for purposes of Section 11.5(b)
the address for notices to S&P shall be Standard & Poor’s, 55 Water Street, 41st Floor, New York, New York 10041, Attention: Mortgage Surveillance Monitoring, or such other address as S&P may hereafter furnish to the Depositor and
the Master Servicer. 
 
Startup Day: The Closing
Date. 
 
Stated Principal Balance: As to any
Mortgage Loan and Due Date, the unpaid principal balance of such Mortgage Loan as of such Due Date as specified in the amortization schedule at the time relating thereto (before any adjustment to such amortization schedule by reason of any
moratorium or similar waiver or grace period) after giving effect to any previous partial Principal Prepayments and Liquidation Proceeds allocable to principal (other than with respect to any Liquidated Mortgage Loan) and to the payment of principal
due on such Due Date and irrespective of any delinquency in payment by the related Mortgagor. 
 
Streamlined Documentation Mortgage Loan: Any Mortgage Loan originated pursuant to the Seller’s Streamlined Loan Documentation Program then in effect. 
 
Subordinated Certificates: As specified in the Preliminary
Statement. 
 
Subordinated Certificate Writedown
Amount: As of any Distribution Date, the amount by which (a) the sum of the Class Certificate Balances of all of the Certificates, after giving effect to the distribution of principal and the allocation of Realized Losses in reduction of the Class
Certificate Balances of all of the Certificates on such Distribution Date, exceeds (b) the aggregate Pool Principal Balance for both Mortgage Pools on the first day of the month of such Distribution Date less any Deficient Valuations occurring
before the Bankruptcy Loss Coverage Amount has been reduced to zero. 
 
Subordinated Optimal Principal Amount: With respect to each Mortgage Pool and each Distribution Date, an amount equal to the sum of the following (but in no event greater than the aggregate Class Certificate Balances of the
Subordinated Certificates immediately prior to such Distribution Date): 
 
(1) the related Subordinated Percentage of all Scheduled Payments of principal due on each outstanding Mortgage Loan in the related Mortgage Pool on the first day of the month in which the Distribution Date occurs, as
specified in the amortization schedule at the time applicable thereto, after adjustment for previous principal prepayments and the principal portion of Debt Service Reductions after the Bankruptcy Loss Coverage Amount has been reduced to zero, but
before any adjustment to such amortization schedule by reason of any other bankruptcy or similar proceeding or any moratorium or similar waiver or grace period; 
 
(2) the related Subordinated Prepayment Percentage of the Stated Principal Balance of each Mortgage Loan in
the related Mortgage Pool which was the subject of a prepayment in full received by the Master Servicer during the related Prepayment Period; 

 

32 

 
(3) the
related Subordinated Prepayment Percentage of all partial prepayments of principal received in respect of each Mortgage Loan in the related Mortgage Pool during the related Prepayment Period, plus, on the Senior Final Distribution Date, 100% of any
related Senior Optimal Principal Amount remaining undistributed on such date; 
 
(4) the amount, if any, by which the sum of (a) the net Liquidation Proceeds allocable to principal received during the related Prepayment Period in respect of each Liquidated Mortgage Loan in the
related Mortgage Pool, other than Mortgage Loans described in clause (b), and (b) the principal balance of each Mortgage Loan in the related Mortgage Pool that was purchased by a private mortgage insurer during the related Prepayment Period as an
alternative to paying a claim under the related Insurance Policy exceeds (c) the sum of the amounts distributable to the Senior Certificateholders under clause (4) of the definition of applicable Senior Optimal Principal Amount on such Distribution
Date; and 
 
(5) the related Subordinated
Prepayment Percentage of the sum of (a) the Stated Principal Balance of each Mortgage Loan in the related Mortgage Pool which was repurchased by the seller in connection with such Distribution Date and (b) the difference, if any, between the Stated
Principal Balance of a Mortgage Loan in the related Mortgage Pool that has been replaced by the seller with a Substitute Mortgage Loan pursuant to the Agreement in connection with such Distribution Date and the Stated Principal Balance of each such
Substitute Mortgage Loan. 
 
Subordinated
Percentage: For any Distribution Date and each Certificate Group, 100% minus the related Senior Percentage. 
 
Subordinated Prepayment Percentage: For any Distribution Date, 100% minus the Senior Prepayment Percentage. 
 
Subservicer: Any person to whom the Master Servicer has
contracted for the servicing of all or a portion of the Mortgage Loans pursuant to Section 3.2 hereof. 
 
Substitute Mortgage Loan: A Mortgage Loan substituted by the Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in a Request for Release, substantially in the form of Exhibit L, (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 more than 10% less than the Stated Principal Balance of the Deleted Mortgage Loan; (ii) have an Adjusted Net Mortgage Rate not lower than the applicable Required Coupon, provided that the Master Servicing Fee for the Substitute Mortgage Loan
shall be equal to or greater than that of the Deleted Mortgage Loan; (iii) be accruing interest at a rate no lower than and not more than 1% per annum higher 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 be a Cooperative Loan unless the Deleted Mortgage Loan was a Cooperative Loan
and (vii) comply with each representation and warranty set forth in Section 2.3 hereof. 
 

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Substitution
Adjustment Amount: The meaning ascribed to such term pursuant to Section 2.3. 
 
Support Classes: Not applicable. 
 
Targeted Balances: Not applicable. 
 
Targeted Principal Certificates: Not applicable. 
 
Tax Matters Person: The person designated as “tax matters person” in the manner provided under Treasury regulation § 1.860F-4(d) and Treasury regulation § 301.6231(a)(7)-1.
Initially, the Tax Matters Person shall be the Trustee. 
 
Tax Matters Person Certificate: The Class I-A-RU and Class I-A-RL Certificates, each with a Denomination of $0.01. 
 
Transfer: Any direct or indirect transfer or sale of any Ownership Interest in a Residual Certificate. 
 
Trust Fund: The corpus of the trust created hereunder
consisting of (i) the Mortgage Loans and all interest and principal received on or with respect thereto after the Cut-off Date to the extent not applied in computing the Cut-off Date Principal Balance thereof; (ii) all of the Depositor’s rights
as purchaser under the MLPA; (iii) the Certificate Account and the Distribution Account and all amounts deposited therein pursuant to the applicable provisions of this Agreement; (iv) property that secured a Mortgage Loan and has been acquired by
foreclosure, deed-in-lieu of foreclosure or otherwise; and (v) all proceeds of the conversion, voluntary or involuntary, of any of the foregoing; provided that the Trust Fund shall exclude the Retained Yield. 
 
Trustee: The Bank of New York and its successors and, if a
successor trustee is appointed hereunder, such successor. 
 
Trustee Fee: As to any Distribution Date and a Mortgage Pool, an amount equal to one-twelfth of the Trustee Fee Rate multiplied by the applicable Pool Principal Balance with respect to such Distribution Date. 
 
Trustee Fee Rate: With respect to each Mortgage Loan, the per
annum rate agreed upon in writing on or prior to the Closing Date by the Trustee and the Depositor. 
 
Unanticipated Recovery: As defined in Section 4.2(h). 
 
Undercollateralization Distribution: As defined in Section 4.2(i). 
 
Undercollateralized Group: With respect to any Distribution
Date, the Senior Certificates of any Certificate Group as to which the aggregate Certificate Principal Balance thereof, after giving effect to distributions pursuant to Section 4.2(a) on such date, is greater than the Pool Principal Balance of the
related Mortgage Pool for such Distribution Date. 
 

34 

 
Underwriters:
As specified in the Preliminary Statement. 
 
Upper
REMIC: The segregated pool of assets consisting of the Lower REMIC interests. 
 
Voting Rights: The portion of the voting rights of all of the Certificates which is allocated to any Certificate. As of any date of determination, (a) 97% of all Voting Rights will be allocated among
all Holders of the Certificates, other than the Class I-A-7, Class II-A-3, Class I-A-RU and Class I-A-RL Certificates, in proportion to their then outstanding Class Certificate Balances; (b) 1% of all Voting Rights will be allocated among the
Holders of each of the Class I-A-7 and Class II-A-3 Certificates, in proportion to their then outstanding Notional Amounts; and (c) 0.5% of all Voting Rights will be allocated among the Holders of each of the Class I-A-RU and Class I-A-RL
Certificates, in proportion to their then outstanding Class Certificate Balances. 
 
ARTICLE II 
 
CONVEYANCE OF MORTGAGE LOANS; 
REPRESENTATIONS AND WARRANTIES 
 
SECTION 2.1 Conveyance of Mortgage Loans. 
 

	 	(a)	 	The Depositor, concurrently with the execution and delivery hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee for the benefit
of the Certificateholders, without recourse, all the right, title and interest of the Depositor in and to the Trust Fund together with (i) the Depositor’s right to (A) require the Seller to cure any breach of a representation or warranty made
by the Seller pursuant to the MLPA, or (B) to repurchase or substitute for any affected Mortgage Loan in accordance herewith, and (ii) all, right, title and interest of the Depositor in, to and under the Servicing Agreement, which right has been
assigned to the Depositor pursuant to the MLPA. 

 

	 	(b)	 	In connection with the transfer and assignment set forth in clause (a) above, the Depositor has delivered or caused to be delivered to the Trustee or the Custodian
on its behalf (or, in the case of the Delay Delivery Mortgage Loans, will deliver or cause to be delivered to the Trustee or the Custodian on its behalf within thirty (30) days following the Closing Date) for the benefit of the Certificateholders
the following documents or instruments with respect to each Mortgage Loan so assigned: 

 

	 	(i)	 	(A) the original Mortgage Note endorsed by manual or facsimile signature in blank in the following form: “Pay to the order of
                    , without recourse,” with all intervening endorsements showing a complete chain of endorsement from the originator to
the Person endorsing the Mortgage Note (each such endorsement being sufficient to transfer all right, title and interest of the party so endorsing, as noteholder or assignee thereof, in and to that Mortgage Note); or 

 
(B) with respect to any Lost Mortgage Note, a lost note
affidavit from the Seller stating that the original Mortgage Note was lost or destroyed, together with a copy of such Mortgage Note; 
 

35 

 

	 	(ii)	 	except as provided below, the original recorded Mortgage or a copy of such Mortgage certified by the Seller as being a true and complete copy of the Mortgage;

 

	 	(iii)	 	a duly executed assignment of the Mortgage in blank (which may be included in a blanket assignment or assignments), together with, except as provided below, all
interim recorded assignments of such mortgage (each such assignment, when duly and validly completed, to be in recordable form and sufficient to effect the assignment of and transfer to the assignee thereof, under the Mortgage to which the
assignment relates); provided that, if the related Mortgage has not been returned from the applicable public recording office, such assignment of the Mortgage may exclude the information to be provided by the recording office;

 

	 	(iv)	 	the original or copies of each assumption, modification, written assurance or substitution agreement, if any; 

 

	 	(v)	 	either the original or duplicate original title policy (including all riders thereto) with respect to the related mortgaged property, if available, provided that the
title policy (including all riders thereto) will be delivered as soon as it becomes available, and if the title policy is not available, and to the extent required pursuant to the second paragraph below or otherwise in connection with the rating of
the Certificates, a written commitment or interim binder or preliminary report of the title issued by the title insurance or escrow company with respect to the mortgaged property, and 

 

	 	(vi)	 	in the case of a Cooperative Loan, the originals of the following documents or instruments: 

 

	 	(A)	 	The Coop Shares, together with a stock power in blank; 

 

	 	(B)	 	The executed Security Agreement; 

 

	 	(C)	 	The executed Proprietary Lease; 

 

	 	(D)	 	The executed Recognition Agreement; 

 

	 	(E)	 	The executed UCC-1 financing statement with evidence of recording thereon which have been filed in all places required to perfect the Seller’s interest in the
Coop Shares and the Proprietary Lease; and 

 

	 	(F)	 	Executed UCC-3 financing statements or other appropriate UCC financing statements required by state law, evidencing a complete and unbroken line from the mortgagee
to the Trustee with evidence of recording thereon (or in a form suitable for recordation). 

 

36 

 
In the event
that in connection with any Mortgage Loan the Depositor cannot deliver (a) the original recorded Mortgage or (b) all interim recorded assignments satisfying the requirements of clause (ii) or (iii) above, respectively, concurrently with the
execution and delivery hereof because such document or documents have not been returned from the applicable public recording office, the Depositor shall promptly deliver or cause to be delivered to the Trustee or the Custodian on its behalf such
original Mortgage or such interim assignment, as the case may be, with evidence of recording indicated thereon upon receipt thereof from the public recording office, or a copy thereof, certified, if appropriate, by the relevant recording office, but
in no event shall any such delivery of the original Mortgage and each such interim assignment or a copy thereof, certified, if appropriate, by the relevant recording office, be made later than one year following the Closing Date; provided, however,
in the event the Depositor is unable to deliver or cause to be delivered by such date each Mortgage and each such interim assignment by reason of the fact that any such documents have not been returned by the appropriate recording office, or, in the
case of each such interim assignment, because the related Mortgage has not been returned by the appropriate recording office, the Depositor shall deliver or cause to be delivered such documents to the Trustee or the Custodian on its behalf as
promptly as possible upon receipt thereof and, in any event, within 720 days following the Closing Date. The Depositor shall forward or cause to be forwarded to the Trustee or the Custodian on its behalf (a) from time to time additional original
documents evidencing an assumption or modification of a Mortgage Loan and (b) any other documents required to be delivered by the Depositor or the Master Servicer to the Trustee. In the event that the original Mortgage is not delivered and in
connection with the payment in full of the related Mortgage Loan and the public recording office requires the presentation of a “lost instruments affidavit and indemnity” or any equivalent document, because only a copy of the Mortgage can
be delivered with the instrument of satisfaction or reconveyance, the Master Servicer shall execute and deliver or cause to be executed and delivered such a document to the public recording office. In the case where a public recording office retains
the original recorded Mortgage or in the case where a Mortgage is lost after recordation in a public recording office, the Depositor shall deliver or cause to be delivered to the Trustee or the Custodian on its behalf a copy of such Mortgage
certified by such public recording office to be a true and complete copy of the original recorded Mortgage. 
 
In addition, in the event that in connection with any Mortgage Loan the Depositor cannot deliver or cause to be delivered the original or
duplicate original lender’s title policy (together with all riders thereto), satisfying the requirements of clause (v) above, concurrently with the execution and delivery hereof because the related Mortgage has not been returned from the
applicable public recording office, the Depositor shall promptly deliver or cause to be delivered to the Trustee or the Custodian on its behalf such original or duplicate original lender’s title policy (together with all riders thereto) upon
receipt thereof from the applicable title insurer, but in no event shall any such delivery of the original or duplicate original lender’s title policy be made later than one year following the Closing Date; provided, however, in the event the
Depositor is unable to deliver or cause to be delivered by such date the original or duplicate original lender’s title policy (together with all riders thereto) because the related Mortgage has not been returned by the appropriate recording
office, the Depositor shall deliver or cause to be delivered such documents to the Trustee or the Custodian on its behalf as promptly as possible upon receipt thereof and, in any event, within 720 days following the Closing Date. Notwithstanding the
preceding, in connection with any Mortgage Loan for which either the original or duplicate original title policy has not been delivered to the Trust, if at any time during 

 

37 

the term of this Agreement the parent company of the Seller does not have a long term senior debt rating of A- or higher from S&P and A-
or higher from Fitch (if rated by Fitch), then the Depositor shall within 30 days deliver or cause to be delivered to the Trustee or the Custodian on its behalf (if it has not previously done so) a written commitment or interim binder or preliminary
report of the title issued by the title insurance or escrow company with respect to the mortgaged property. 
 
Subject to the immediately following sentence, as promptly as practicable subsequent to such transfer and assignment, and in any event,
within thirty (30) days thereafter, the Master Servicer shall (i) complete each assignment of Mortgage, as follows: “First Horizon Mortgage Pass-Through Certificates, Series 2003-4, The Bank of New York, as trustee for the holders of the
Certificates”, (ii) cause such assignment to be in proper form for recording in the appropriate public office for real property records and (iii) cause to be delivered for recording in the appropriate public office for real property records the
assignments of the Mortgages to the Trustee, except that, with respect to any assignments of Mortgage as to which the Master Servicer has not received the information required to prepare such assignment in recordable form, the Master Servicer’s
obligation to do so and to deliver the same for such recording shall be as soon as practicable after receipt of such information and in any event within thirty (30) days after receipt thereof. Notwithstanding the foregoing, the Master Servicer need
not cause to be recorded any assignment which relates to a Mortgage Loan in any state other than the Required Recordation States. 
 
In the case of Mortgage Loans that have been prepaid in full as of the Closing Date, the Depositor, in lieu of delivering the above
documents to the Trustee or the Custodian on its behalf, will deposit in the Certificate Account the portion of such payment that is required to be deposited in the Certificate Account pursuant to Section 3.8 hereof. 
 
Notwithstanding anything to the contrary in this Agreement,
within thirty days after the Closing Date, the Depositor shall either (i) deliver or cause to be delivered to the Trustee or the Custodian on its behalf the Mortgage File as required pursuant to this Section 2.1 for each Delay Delivery Mortgage Loan
or (ii) (A) substitute or cause to be substituted a Substitute Mortgage Loan for the Delay Delivery Mortgage Loan or (B) repurchase or cause to be repurchased the Delay Delivery Mortgage Loan, which substitution or repurchase shall be accomplished
in the manner and subject to the conditions set forth in Section 2.3 (treating each Delay Delivery Mortgage Loan as a Deleted Mortgage Loan for purposes of such Section 2.3), provided, however, that if the Depositor fails to deliver a Mortgage File
for any Delay Delivery Mortgage Loan within the thirty-day period provided in the prior sentence, the Depositor shall use its best reasonable efforts to effect or cause to be effected a substitution, rather than a repurchase of, such Deleted
Mortgage Loan and provided further that the cure period provided for in Section 2.2 or in Section 2.3 shall not apply to the initial delivery of the Mortgage File for such Delay Delivery Mortgage Loan, but rather the Depositor shall have five (5)
Business Days to cure or cause to be cured such failure to deliver. At the end of such thirty-day period, the Trustee or the Custodian, on its behalf shall send a Delay Delivery Certification for the Delay Delivery Mortgage Loans delivered during
such thirty-day period in accordance with the provisions of Section 2.2. Notwithstanding anything to the contrary contained in this Agreement, none of the Mortgage Loans in the Trust Fund is or will be Delay Delivery Mortgage Loans. 
 

38 

 
SECTION 2.2
Acceptance by Trustee of the Mortgage Loans. 
 
The
Trustee or the Custodian, on behalf of the Trustee, acknowledges receipt of the documents identified in the Initial Certification in the form annexed hereto as Exhibit E and declares that it or the Custodian holds and will hold such documents and
the other documents delivered to it or the Custodian, as applicable, constituting the Mortgage Files, and that it or the Custodian, as applicable, holds or will hold such other assets as are included in the Trust Fund, in trust for the exclusive use
and benefit of all present and future Certificateholders. The Trustee acknowledges that the Custodian will maintain possession of the Mortgage Notes in the State of Illinois, unless otherwise permitted by the Rating Agencies. 
 
The Trustee agrees to execute and deliver or to cause the
Custodian to execute and deliver on the Closing Date to the Depositor and the Master Servicer an Initial Certification in the form annexed hereto as Exhibit E. Based on its or the Custodian’s review and examination, and only as to the documents
identified in such Initial Certification, the Custodian, on behalf of the Trustee, acknowledges that such documents appear regular on their face and relate to such Mortgage Loan. Neither the Trustee nor the Custodian shall be under any 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 in the real
estate records or that they are other than what they purport to be on their face. 
 
On or about the thirtieth (30th) day after the Closing Date, the Trustee shall deliver or shall cause the Custodian to deliver to the Depositor and the Master Servicer a Delay Delivery Certification in
the form annexed hereto as Exhibit F, with any applicable exceptions noted thereon. Notwithstanding anything to the contrary contained in this Agreement, none of the Mortgage Loans in the Trust Fund is or will be Delay Delivery Mortgage Loans.

 
Not later than 90 days after the Closing Date,
the Trustee shall deliver or shall cause the Custodian to deliver to the Depositor and the Master Servicer a Final Certification in the form annexed hereto as Exhibit G, with any applicable exceptions noted thereon. 
 
If, in the course of such review, the Trustee or the
Custodian, on behalf of the Trustee finds any document constituting a part of a Mortgage File which does not meet the requirements of Section 2.1, the Trustee shall list or shall cause the Custodian to list such as an exception in the Final
Certification; provided, however that neither the Trustee nor the Custodian shall make any determination as to whether (i) any endorsement is sufficient to transfer all right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note or (ii) any assignment is in recordable form or is sufficient to effect the assignment of and transfer to the assignee thereof under the mortgage to which the assignment relates. The Seller shall promptly
correct or cure such defect within 90 days from the date it was so notified of such defect and, if the Seller does not correct or cure such defect within such period, the Seller shall either (a) substitute for the related Mortgage Loan a Substitute
Mortgage Loan, which substitution shall be accomplished in the manner and subject to the conditions set forth in Section 2.3, or (b) purchase such Mortgage Loan from the Trustee within 90 days from the date the Seller was notified of such defect in
writing at the Purchase Price of such Mortgage Loan; provided, however, that in no event shall such substitution or purchase occur more than 540 days 

 

39 

from the Closing Date, except that if the substitution or purchase of a Mortgage Loan pursuant to this provision is required by reason of a
delay in delivery of any documents by the appropriate recording office, and there is a dispute between either the Master Servicer or the Seller and the Trustee over the location or status of the recorded document, then such substitution or purchase
shall occur within 720 days from the Closing Date. The Trustee shall deliver written notice to each Rating Agency within 270 days from the Closing Date indicating each Mortgage Loan (a) which has not been returned by the appropriate recording office
or (b) as to which there is a dispute as to location or status of such Mortgage Loan. Such notice shall be delivered every 90 days thereafter until the related Mortgage Loan is returned to the Trustee or the Custodian on its behalf. Any such
substitution pursuant to (a) above or purchase pursuant to (b) above shall not be effected prior to the delivery to the Trustee of the Opinion of Counsel required by Section 2.5 hereof, if any, and any substitution pursuant to (a) above shall not be
effected prior to the additional delivery to the Trustee of a Request for Release substantially in the form of Exhibit L. No substitution is permitted to be made in any calendar month after the Determination Date for such month. The Purchase Price
for any such Mortgage Loan shall be deposited by the Seller in the Certificate Account on or prior to the Distribution Account Deposit Date for the Distribution Date in the month following the month of repurchase and, upon receipt of such deposit
and certification with respect thereto in the form of Exhibit M hereto, the Trustee shall cause the Custodian to release the related Mortgage File to the Seller and shall execute and deliver at the Seller’s request such instruments of transfer
or assignment prepared by the Seller, in each case without recourse, as shall be necessary to vest in the Seller, or a designee, the Trustee’s interest in any Mortgage Loan released pursuant hereto. 
 
The Trustee shall retain or shall cause the Custodian to
retain possession and custody of each Mortgage File in accordance with and subject to the terms and conditions set forth herein. The Master Servicer shall promptly deliver to the Trustee or the Custodian on its behalf, upon the execution or receipt
thereof, the originals of such other documents or instruments constituting the Mortgage File as come into the possession of the Master Servicer from time to time. 
 
It is understood and agreed that the obligation of the Seller to substitute for or to purchase any Mortgage
Loan which does not meet the requirements of Section 2.1 above shall constitute the sole remedy respecting such defect available to the Trustee, the Depositor and any Certificateholder against the Seller. 
 
SECTION 2.3 Representations and Warranties of the Master
Servicer; Covenants of the Seller. 
 

	 	(a)	 	The Master Servicer hereby makes the representations and warranties set forth in Schedule II hereto and by this reference incorporated herein, to the Depositor and
the Trustee, as of the Closing Date, or if so specified therein, as of the Cut-off Date. 

 

	 	(b)	 	 Upon discovery by any of the parties hereto of a breach of a representation or warranty made pursuant to Schedule B to the MLPA that materially and adversely
affects the interests of the Certificateholders in any Mortgage Loan, the party discovering such breach shall give prompt notice thereof to the other parties. The Seller hereby covenants that within 90 days of the earlier of its discovery or its

 

40 

	 	 
receipt of written notice from any party of a breach of any representation or warranty made pursuant to Schedule B to the MLPA which
materially and adversely affects the interests of the Certificateholders in any Mortgage Loan, it shall cure such breach in all material respects, and if such breach is not so cured, shall, (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 Substitute 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, however, that any such substitution pursuant to (i) above shall not be effected prior to the delivery to the
Trustee of the Opinion of Counsel required by Section 2.5 hereof, if any, and any such substitution pursuant to (i) above shall not be effected prior to the additional delivery to the Trustee or the Custodian on its behalf of a Request for Release
substantially in the form of Exhibit M and the Mortgage File for any such Substitute Mortgage Loan. 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. With respect to the representations and warranties described in this Section which are made to the best of the Seller’s knowledge, if it is discovered by either the Depositor, the Seller 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 or the interests of the Certificateholders therein, notwithstanding the
Seller’s lack of knowledge with respect to the substance of such representation or warranty, such inaccuracy shall be deemed a breach of the applicable representation or warranty. 

 
With respect to any Substitute Mortgage Loan or Loans, the
Seller shall deliver to the Trustee or the Custodian on its behalf for the benefit of the Certificateholders the Mortgage Note, the Mortgage, the related assignment of the Mortgage, and such other documents and agreements as are required by Section
2.1, with the Mortgage Note endorsed and the Mortgage assigned as required by Section 2.1. No substitution is permitted to be made in any calendar month after the Determination Date for such month. Scheduled Payments due with respect to Substitute
Mortgage Loans in the month of substitution shall not be part of the Trust Fund and will be retained by the Seller on the next succeeding Distribution Date. For the month of substitution, distributions to Certificateholders will include the monthly
payment due on any Deleted Mortgage Loan for such month and thereafter the Seller shall be entitled to retain all amounts received in respect of such Deleted Mortgage Loan. The Master Servicer shall amend the Mortgage Loan Schedule for the benefit
of the Certificateholders to reflect the removal of such Deleted Mortgage Loan and the substitution of the Substitute Mortgage Loan or Loans and the Master Servicer shall deliver the amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, the Substitute 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 Substitute Mortgage Loan or Loans, as of the date of substitution,
the representations and warranties made pursuant to Schedule B to the MLPA with respect to such Mortgage Loan. Upon any such substitution and the deposit to the Certificate Account of the amount required to be deposited therein in connection with
such substitution as described in the following 

 

41 

paragraph, the Trustee shall release or shall cause the Custodian to release the Mortgage File held for the benefit of the Certificateholders
relating to such Deleted Mortgage Loan to the Seller and shall execute and deliver at the Seller’s direction such instruments of transfer or assignment prepared by the Seller, in each case without recourse, as shall be necessary to vest title
in the Seller, or its designee, the Trustee’s interest in any Deleted Mortgage Loan substituted for pursuant to this Section 2.3. 
 
For any month in which the Seller substitutes one or more Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal balance of all such Substitute Mortgage Loans as of the date of substitution is less than the aggregate Stated Principal Balance of all such Deleted Mortgage Loans (after
application of the scheduled principal portion of the monthly payments due in the month of substitution). The amount of such shortage (the “Substitution Adjustment Amount”) plus an amount equal to the aggregate of any unreimbursed Advances
with respect to such Deleted Mortgage Loans shall be deposited in the Certificate Account by the Seller on or before the Distribution Account Deposit Date for the Distribution Date in the month succeeding the calendar month during which the related
Mortgage Loan became required to be purchased or replaced hereunder. 
 
In the event that the Seller shall have repurchased a Mortgage Loan, the Purchase Price therefor shall be deposited in the Certificate Account pursuant to Section 3.5 on or before the Distribution Account Deposit Date for
the Distribution Date in the month following the month during which the Seller became obligated hereunder to repurchase or replace such Mortgage Loan and upon such deposit of the Purchase Price, the delivery of the Opinion of Counsel required by
Section 2.5 and receipt of a Request for Release in the form of Exhibit M hereto, the Trustee shall release or shall cause the Custodian to release the related Mortgage File held for the benefit of the Certificateholders to such Person, and the
Trustee shall execute and deliver or shall cause the Custodian to execute and deliver at such Person’s direction such instruments of transfer or assignment prepared by such Person, in each case without recourse, as shall be necessary to
transfer title from the Trustee. It is understood and agreed that the obligation under this Agreement of the Seller to cure, repurchase or replace any Mortgage Loan as to which a breach has occurred and is continuing shall constitute the sole remedy
against the Seller respecting such breach available to Certificateholders, the Depositor or the Trustee on their behalf. 
 
After giving effect to the sale of the Certificates by the Depositor to the Underwriters, and thereafter, so long as any Certificates
remain outstanding, the Seller, its affiliates and agents, collectively, shall not beneficially own Certificates the aggregate fair value of which would represent 90% or more of the beneficial interests in the Trust Fund. 
 
The representations and warranties made pursuant to this
Section 2.3 shall survive delivery of the respective Mortgage Files to the Trustee or the Custodian for the benefit of the Certificateholders. 
 

42 

 
SECTION 2.4
Representations and Warranties of the Depositor as to the Mortgage Loans. 
 
The Depositor hereby represents and warrants to the Trustee with respect to each Mortgage Loan as of the date hereof or such other date set forth herein that as of the Closing Date, and following the transfer of the Mortgage
Loans to it pursuant to the MLPA and immediately prior to the conveyance of the Mortgage Loans by it to the Trustee pursuant to Section 2.1(a) hereof, the Depositor had good title to the Mortgage Loans and the Mortgage Notes were subject to no
offsets, defenses or counterclaims. 
 
It is
understood and agreed that the representations and warranties set forth in this Section 2.4 shall survive delivery of the Mortgage Files to the Trustee. Upon discovery by the Depositor or the Trustee of a breach of any of the foregoing
representations and warranties set forth in this Section 2.4 (referred to herein as a “breach”), which breach materially and adversely affects the interest of the Certificateholders, the party discovering such breach shall give prompt
written notice to the others and to each Rating Agency. 
 
SECTION 2.5 Delivery of Opinion of Counsel in Connection with Substitutions. 
 

	 	(a)	 	Notwithstanding any contrary provision of this Agreement, no substitution pursuant to Section 2.2 or Section 2.3 shall be made more than 90 days after the Closing
Date unless the Depositor delivers to the Trustee an Opinion of Counsel, which Opinion of Counsel shall not be at the expense of either the Trustee or the Trust Fund, addressed to the Trustee, to the effect that such substitution will not (i) result
in the imposition of the tax on “prohibited transactions” on the Trust Fund or contributions after the Startup Date, as defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively, or (ii) cause any REMIC created hereunder to fail
to qualify as a REMIC at any time that any Certificates are outstanding. 

 

	 	(b)	 	Upon discovery by the Depositor, the Master Servicer or the Trustee that any Mortgage Loan does not constitute a “qualified mortgage” within the meaning of
Section 860G(a)(3) of the Code, the party discovering such fact shall promptly (and in any event within five (5) Business Days of discovery) give written notice thereof to the other parties. In connection therewith, the Trustee shall require the
Depositor to cause the Seller, pursuant to the MLPA and at the Seller’s option, to either (i) substitute, if the conditions in Section 2.3(b) with respect to substitutions are satisfied, a Substitute Mortgage Loan for the affected Mortgage
Loan, or (ii) repurchase the affected Mortgage Loan within 90 days of such discovery in the same manner as it would a Mortgage Loan for a breach of representation or warranty made pursuant to Section 2.3. The Trustee shall reconvey or shall cause
the Custodian to 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 2.3. 

 

43 

 
SECTION 2.6
Execution and Delivery of Certificates. 
 
The
Trustee acknowledges the transfer and assignment to it of the Trust Fund and, concurrently with such transfer and assignment, has executed and delivered to or upon the order of the Depositor, the Certificates in authorized denominations evidencing
directly or indirectly the entire ownership of the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the rights referred to above for the benefit of all present and future Holders of the Certificates and to perform the duties set
forth in this Agreement to the best of its ability, to the end that the interests of the Holders of the Certificates may be adequately and effectively protected. 
 
SECTION 2.7 REMIC Matters. 
 
The Preliminary Statement sets forth the designations and “latest possible maturity date” for
federal income tax purposes of all REMIC regular interests created hereby. Each interest identified in the table below by a designation beginning with “L” shall be a “regular interest” in the Lower REMIC and the Class I-A-RL
Certificates shall be the sole class of residual interest in the Lower REMIC. The Lower REMIC Interests shall be uncertificated and shall be held by the Trustee as assets of the Upper REMIC. The assets of the Lower REMIC shall be as set forth in the
definition thereof. The assets of the Upper REMIC shall be as set forth in the definition thereof. The “Startup Day” for purposes of the REMIC Provisions shall be the Closing Date. The Tax Matters Person with respect to each REMIC
hereunder shall be the Trustee and the Trustee shall hold the Tax Matters Person Certificate. Each REMIC’s taxable year shall be the calendar year and its accounts shall be maintained using the accrual method. 
 

44 

	 Lower
REMIC
Interest or
Certificate

	    	 Lower REMIC Interest Balance

	    	 Lower REMIC Interest Rate

	 	    	 Corresponding Class of Certificates

	    	 Latest Possible Maturity Date (Payment Date in)

	    	    	    	 Interest

	    	 Principal

	    
	 L-I-A-1
	    	 $
	 54,860,100.00
	    	 4.500
	 %
	    	 I-A-1
	    	 I-A-1
	    	 May, 2036

	 L-I-A-2
	    	 $
	 40,000,000.00
	    	 4.250
	 %
	    	 I-A-2
	    	 I-A-2
	    	 May, 2036

	 L-I-A-3
	    	 $
	 20,000,000.00
	    	 5.000
	 %
	    	 I-A-3
	    	 I-A-3
	    	 May, 2036

	 L-I-A-4
	    	 $
	 15,000,000.00
	    	 5.000
	 %
	    	 I-A-4
	    	 I-A-4
	    	 May, 2036

	 L-I-A-5
	    	 $
	 55,279,800.00
	    	 5.000
	 %
	    	 I-A-5
	    	 I-A-5
	    	 May, 2036

	 L-I-A-6
	    	 $
	 50,000,000.00
	    	 8.500
	 %
	    	 I-A-6, I-A-7(1),(2),(3)
	    	 I-A-6
	    	 May, 2036

	 L-I-A-8
	    	 $
	 22,000,000.00
	    	 5.500
	 %
	    	 I-A-8
	    	 I-A-8
	    	 May, 2036

	 L-I-A-9
	    	 $
	 10,175,000.00
	    	 5.500
	 %
	    	 I-A-9
	    	 I-A-9
	    	 May, 2036

	 L-I-A-10
	    	 $
	 18,000,000.00
	    	 5.500
	 %
	    	 I-A-10
	    	 I-A-10
	    	 May, 2036

	 L-I-A-11
	    	 $
	 32,500,000.00
	    	 5.500
	 %
	    	 I-A-11
	    	 I-A-11
	    	 May, 2036

	 L-I-A-RU
	    	 $
	 50.00
	    	 5.500
	 %
	    	 I-A-RU
	    	 I-A-RU
	    	 May, 2036

	 Class I-A-RL
	    	 $
	 50.00
	    	 5.500
	 %
	    	 N/A
	    	 N/A
	    	 N/A

	 L-II-A-1
	    	 $
	 66,115,500.00
	    	 4.350
	 %
	    	 II-A-1
	    	 II-A-1
	    	 May, 2021

	 L-II-A-2
	    	 $
	 12,278,500.00
	    	 8.500
	 %
	    	 II-A-2, II-A-3(4),(5),(6)
	    	 II-A-2
	    	 May, 2021

	 L-B-1
	    	 $
	 4,866,000.00
	    	 variable 
	 (7)
	    	 B-1
	    	 B-1
	    	 May, 2036

	 L-B-2
	    	 $
	 1,622,000.00
	    	 variable 
	 (7)
	    	 B-2
	    	 B-2
	    	 May, 2036

	 L-B-3
	    	 $
	 1,217,000.00
	    	 variable 
	 (7)
	    	 B-3
	    	 B-3
	    	 May, 2036

	 L-B-4
	    	 $
	 608,000.00
	    	 variable 
	 (7)
	    	 B-4
	    	 B-4
	    	 May, 2036

	 L-B-5
	    	 $
	 406,000.00
	    	 variable 
	 (7)
	    	 B-5
	    	 B-5
	    	 May, 2036

	 L-B-6
	    	 $
	 608,435.70
	    	 variable 
	 (7)
	    	 B-6
	    	 B-6
	    	 May, 2036

	(1)	 	The Pass-Through Rate with respect to any Distribution Date for the Class I-A-6 Certificates is the per annum rate equal to (a) 1.800% with respect to the first
Distribution Date, and (b) thereafter, the lesser of (i) LIBOR plus 0.500% and (ii) 8.500%, subject to a minimum rate of 0.500%. 

	(2)	 	The Notional Amount of the Class I-A-7 Certificates with respect to any Distribution Date will equal the Class Certificate Balance of the Class I-A-6 Certificates
immediately preceding such Distribution Date. 

	(3)	 	The Pass-Through Rate with respect to any Distribution Date for the Class I-A-7 Certificates is the per annum rate equal to (a) 6.700% with respect to the first
Distribution Date, and (b) thereafter, 8.000% minus LIBOR, subject to a minimum rate of 0.000%. 

	(4)	 	The Pass-Through Rate with respect to any Distribution Date for the Class II-A-2 Certificates is the per annum rate equal to (a) 1.760% with respect to the first
Distribution Date, and (b) thereafter, the lesser of (i) LIBOR plus 0.450% and (ii) 8.500%, subject to a minimum rate of 0.450%. 

 

45 

	(5)	 	The Notional Amount of the Class II-A-3 Certificates with respect to any Distribution Date will equal the Class Certificate Balance of the Class II-A-2 Certificates
immediately preceding such Distribution Date. 

	(6)	 	The Pass-Through Rate with respect to any Distribution Date for the Class II-A-3 Certificates is the per annum rate equal to (a) 6.740% with respect to the first
Distribution Date, and (b) thereafter, 8.050% minus LIBOR, subject to a minimum rate of 0.000%. 

	(7)	 	The Pass-Through Rate on each Class of Subordinated Certificates is variable and will be equal to the weighted average of the Designated Mortgage Pool Rates,
weighted on the basis of the Group Subordinate Amount for each Mortgage Pool. The initial Pass-Through rate on each Class of Subordinated Certificates for the first Interest Accrual Period will equal 5.401% per annum. 

 
On each Distribution Date Available Funds shall be distributed
with respect to the Lower REMIC Interests and the Class I-A-RL Certificate in a manner such that: 
 

	 	(i)	 	interest accrued on each Lower REMIC Interest is distributed with respect to each such Lower REMIC Interest in the same manner that Accrued Certificate Interest is
distributed with respect to the Corresponding Class or Classes of Certificates pursuant to Section 4.2(a)(i) and (ii); 

 

	 	(ii)	 	interest accrued on the Class I-A-RU and Class I-A-RL Certificates is distributed in the manner provided in Section 4.2(a)(i) and (ii); 

 

	 	(iii)	 	principal is distributed on each Lower REMIC Interest, such that the principal balance of each such Lower REMIC Interest always equals the principal balance of its
Corresponding Class of Certificates; and 

 

	 	(iv)	 	principal is distributed on the Class I-A-RU and Class I-A-RL Certificates as provided in Section 4.2(c)(i). 

 
Losses allocated to the Certificates pursuant to Section 4.4 shall be
allocated to the corresponding class of Lower REMIC Interest in the same manner that principal is allocated among such interests as set forth in the above table. 
 
SECTION 2.8 Covenants of the Master Servicer. 
 
The Master Servicer hereby covenants to the Depositor and the Trustee as follows: 
 

	 	(a)	 	the Master Servicer shall comply in the performance of its obligations under this Agreement with all reasonable rules and requirements of the insurer under each
Required Insurance Policy; and 

 

	 	(b)	 	no written information, certificate of an officer, statement furnished in writing or written report delivered to the Depositor, any affiliate of the Depositor or the
Trustee and prepared by the Master Servicer pursuant to this Agreement will contain any untrue statement of a material fact or omit to state a material fact necessary to make such information, certificate, statement or report not misleading.

 

46 

 
ARTICLE III

 
ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS 
 
SECTION 3.1 Master Servicer to Service
Mortgage Loans. 
 
For and on behalf of the
Certificateholders, the Master Servicer shall service and administer the Mortgage Loans in accordance with the terms of (i) the Servicing Rights Transfer and Subservicing Agreement, pursuant to which First Tennessee Mortgage Services, Inc. engaged
the Master Servicer to subservice the Mortgage Loans, (ii) this Agreement, and (iii) the customary and usual standards of practice of prudent mortgage loan servicers; provided that if there is a conflict between the terms of the Servicing Agreement
and the Servicing Rights Transfer and Subservicing Agreement, on the one hand, and this Agreement, on the other hand, the terms of this Agreement shall prevail. In connection with such servicing and administration, the Master Servicer shall have
full power and authority, acting alone and/or through Subservicers as provided in Section 3.2 hereof, to do or cause to be done any and all things that it may deem necessary or desirable in connection with such servicing and administration,
including but not limited to, the power and authority, subject to the terms hereof (i) to execute and deliver, on behalf of the Certificateholders and the Trustee, customary consents or waivers and other instruments and documents, (ii) to consent to
transfers of any Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages (but only in the manner provided in this Agreement), (iii) to collect any Insurance Proceeds and other Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property securing any Mortgage Loan; provided that the Master Servicer shall not take any action that is inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders in any Mortgage Loan or the rights and interests of the Depositor, the Trustee and the Certificateholders under this Agreement. The Master Servicer shall represent and protect the interests of the Trust Fund in the same manner as
it protects its own interests in mortgage loans in its own portfolio in any claim, proceeding or litigation regarding a Mortgage Loan, and shall not make or permit any modification, waiver or amendment of any Mortgage Loan which would cause any
REMIC created hereunder to fail to qualify as a REMIC or result in the imposition of any tax under Section 860F(a) or Section 860G(d) of the Code. Without limiting the generality of the foregoing, the Master Servicer, in its own name or in the name
of the Depositor and the Trustee, is hereby authorized and empowered by the Depositor and the Trustee, when the Master Servicer believes it appropriate in its reasonable judgment, to execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge and all other comparable instruments, with respect to the Mortgage Loans, and with respect to the Mortgaged
Properties held for the benefit of the Certificateholders. The Master Servicer shall prepare and deliver to the Depositor and/or the Trustee such documents requiring execution and delivery by either or both of them as are necessary or appropriate to
enable the Master Servicer to service and administer the Mortgage Loans to the extent that the Master Servicer is not permitted to execute and deliver such documents pursuant to the preceding sentence. Upon receipt of such documents, the Depositor
and/or the Trustee shall execute such documents and deliver them to the Master Servicer. 
 
In accordance with the standards of the preceding paragraph, the Master Servicer shall advance or cause to be advanced funds as necessary for the purpose of effecting the payment of 

 

47 

taxes and assessments on the Mortgaged Properties, which advances shall be reimbursable in the first instance from related collections from
the Mortgagors pursuant to Section 3.6, and further as provided in Section 3.8. The costs incurred by the Master Servicer, if any, in effecting the timely payments of taxes and assessments on the Mortgaged Properties and related insurance premiums
shall not, for the purpose of calculating monthly distributions to the Certificateholders, be added to the Stated Principal Balances of the related Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so permit. 
 
SECTION 3.2 Subservicing; Enforcement of the Obligations of
Servicers. 
 

	 	(a)	 	The Master Servicer may arrange for the subservicing of any Mortgage Loan by a Subservicer pursuant to a subservicing agreement; provided, however, that such
subservicing arrangement and the terms of the related subservicing agreement must provide for the servicing of such Mortgage Loans in a manner consistent with the servicing arrangements contemplated hereunder. Unless the context otherwise requires,
references in this Agreement to actions taken or to be taken by the Master Servicer in servicing the Mortgage Loans include actions taken or to be taken by a Subservicer on behalf of the Master Servicer. Notwithstanding the provisions of any
subservicing agreement, any of the provisions of this Agreement relating to agreements or arrangements between the Master Servicer and a Subservicer or reference to actions taken through a Subservicer or otherwise, the Master Servicer shall remain
obligated and liable to the Depositor, the Trustee and the Certificateholders for the servicing and administration of the Mortgage Loans in accordance with the provisions of this Agreement without diminution of such obligation or liability by virtue
of such subservicing agreements or arrangements or by virtue of indemnification from the Subservicer and to the same extent and under the same terms and conditions as if the Master Servicer alone were servicing and administering the Mortgage Loans.
All actions of each Subservicer performed pursuant to the related subservicing agreement shall be performed as an agent of the Master Servicer with the same force and effect as if performed directly by the Master Servicer.

 

	 	(b)	 	For purposes of this Agreement, the Master Servicer shall be deemed to have received any collections, recoveries or payments with respect to the Mortgage Loans that
are received by a Subservicer regardless of whether such payments are remitted by the Subservicer to the Master Servicer. 

 
SECTION 3.3 Rights of the Depositor and the Trustee in Respect of the Master Servicer. 
 
The Depositor may, but is not obligated to, enforce the
obligations of the Master Servicer hereunder and may, but is not obligated to, perform, or cause a designee to perform, any defaulted obligation of the Master Servicer hereunder and in connection with any such defaulted obligation to exercise the
related rights of the Master Servicer hereunder; provided that the Master Servicer shall not be relieved of any of its obligations hereunder by virtue of such performance by the Depositor or its designee. Neither the Trustee nor the Depositor shall
have any responsibility or liability for any action or failure to act by the Master Servicer nor shall the 

 

48 

Trustee or the Depositor be obligated to supervise the performance of the Master Servicer hereunder or otherwise. 
 
SECTION 3.4 Trustee to Act as Master Servicer. 
 
In the event that the Master Servicer shall for any reason no
longer be the Master Servicer hereunder (including by reason of an Event of Default), the Trustee or its successor shall thereupon assume all of the rights and obligations of the Master Servicer hereunder arising thereafter (except that the Trustee
shall not be (i) liable for losses of the Master Servicer pursuant to Section 3.9 hereof or any acts or omissions of the predecessor Master Servicer hereunder), (ii) obligated to make Advances if it is prohibited from doing so by applicable law,
(iii) obligated to effectuate repurchases or substitutions of Mortgage Loans hereunder including, but not limited to, repurchases or substitutions of Mortgage Loans pursuant to Section 2.2 or 2.3 hereof, (iv) responsible for expenses of the Master
Servicer pursuant to Section 2.3 or (v) deemed to have made any representations and warranties of the Master Servicer hereunder). Any such assumption shall be subject to Section 7.2 hereof. If the Master Servicer shall for any reason no longer be
the Master Servicer (including by reason of any Event of Default), the Trustee or its successor shall succeed to any rights and obligations of the Master Servicer under each subservicing agreement. 
 
The Master Servicer shall, upon request of the Trustee, but at
the expense of the Master Servicer, deliver to the assuming party all documents and records relating to each subservicing agreement or substitute subservicing agreement and the Mortgage Loans then being serviced thereunder and an accounting of
amounts collected or held by it and otherwise use its best efforts to effect the orderly and efficient transfer of the substitute subservicing agreement to the assuming party. 
 
SECTION 3.5 Collection of Mortgage Loan Payments; Certificate Account; Distribution Account. 
 

	 	(a)	 	 The Master Servicer shall make reasonable efforts in accordance with the customary and usual standards of practice of prudent mortgage servicers 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
Master Servicer may in its discretion (i) waive any late payment charge or any prepayment charge or penalty interest in connection with the prepayment of a Mortgage Loan and (ii) extend the due dates for payments due on a Mortgage Note for a period
not greater than 180 days; provided, however, that the Master Servicer cannot extend the maturity of any such Mortgage Loan past the date on which the final payment is due on the latest maturing Mortgage Loan as of the Cut-off Date. In the event of
any such arrangement, the Master Servicer shall make Advances on the related Mortgage Loan in accordance with the provisions of Section 4.1 during the scheduled period in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements. The Master Servicer shall not be required to institute or join in litigation with respect to collection of any payment (whether 

 

49 

	 	 
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. 

 

	 	(b)	 	The Master Servicer shall establish and maintain the Certificate Account. The Certificate Account shall consist of two separate subaccounts, each of which shall
relate to a particular Mortgage Pool. No later than two Business Days after receipt, except as otherwise specifically provided herein, the Master Servicer shall deposit or shall cause to be deposited into the applicable subaccount of the Certificate
Account the following payments and collections remitted by Subservicers or received by it in respect of the Mortgage Loans in the related Mortgage Pool subsequent to the Cut-off Date (other than in respect of principal and interest due on such
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 on the Mortgage Loans in the related Mortgage Pool, including Principal Prepayments; 

 

	 	(ii)	 	all payments on account of interest on the Mortgage Loans in the related Mortgage Pool, net of the related Master Servicing Fee, any Prepayment Interest Excess and,
for so long as First Horizon is the Master Servicer, any Retained Yield; 

 

	 	(iii)	 	all Insurance Proceeds and Liquidation Proceeds in respect of the related Mortgage Loans in the related Mortgage Pool, other than proceeds to be applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor in accordance with the Master Servicer’s normal servicing procedures; 

 

	 	(iv)	 	any amount required to be deposited by the Master Servicer in respect of the related Mortgage Pool pursuant to Section 3.5(c) in connection with any losses on
Permitted Investments; 

 

	 	(v)	 	any amounts required to be deposited by the Master Servicer in respect of the related Mortgage Pool pursuant to Section 3.9(b), 3.9(d), and in respect of net monthly
rental income from any related REO Property pursuant to Section 3.11 hereof; 

 

	 	(vi)	 	all Substitution Adjustment Amounts in respect of the related Mortgage Pool; 

 

	 	(vii)	 	all Advances in respect of the related Mortgage Pool made by the Master Servicer pursuant to Section 4.1; and 

 

	 	(viii)	 	any other amounts required to be deposited hereunder in respect of the related Mortgage Pool. 

 

50 

 
In addition, with respect to any Mortgage Loan that is subject to a buydown agreement, on each Due Date for such Mortgage Loan, in addition to the monthly payment remitted by the Mortgagor, the Master Servicer shall cause funds to be
deposited into the applicable subaccount of the Certificate Account in an amount required to cause an amount of interest to be paid with respect to such Mortgage Loan equal to the amount of interest that has accrued on such Mortgage Loan from the
preceding Due Date at the related Adjusted Mortgage Rate on such date. 
 
The foregoing requirements for remittance by the Master Servicer shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments in the nature of
prepayment penalties, late payment charges, assumption fees or amounts attributable to reimbursements of Advances, if collected, need not be remitted by the Master Servicer. In the event that the Master Servicer shall remit any amount not required
to be remitted, it may at any time withdraw or direct the institution maintaining the Certificate Account to withdraw such amount from the Certificate Account, any provision herein to the contrary notwithstanding. Such withdrawal or direction may be
accomplished by delivering written notice thereof to the Trustee or such other institution maintaining the Certificate Account which describes the amounts deposited in error in the Certificate Account. The Master Servicer shall maintain adequate
records with respect to all withdrawals made pursuant to this Section. All funds deposited in the Certificate Account shall be held in trust for the Certificateholders until withdrawn in accordance with Section 3.8. 
 

	 	(c)	 	The Trustee shall establish and maintain, on behalf of the Certificateholders, the Distribution Account. The Distribution Account shall consist of two separate
subaccounts, each of which shall relate to a particular Mortgage Pool. The Trustee shall, promptly upon receipt, deposit in the Distribution Account and retain therein the following: 

 

	 	(i)	 	the aggregate amount remitted by the Master Servicer to the Trustee in respect of a Mortgage Pool pursuant to Section 3.8(a)(ix); 

 

	 	(ii)	 	any amount deposited by the Master Servicer pursuant to this Section 3.5(c) in connection with any losses on Permitted Investments; and 

 

	 	(iii)	 	any other amounts deposited hereunder which are required to be deposited in the Distribution Account. 

 
In the event that the Master Servicer shall
remit any amount not required to be remitted, it may at any time direct the Trustee to withdraw such amount from the applicable subaccount of the Distribution Account, any provision herein to the contrary notwithstanding. Such direction may be
accomplished by delivering an Officer’s Certificate to the Trustee which describes the amounts deposited in error in the Distribution Account. All funds deposited in the Distribution Account shall be held by the Trustee in trust for the related
Certificateholders until disbursed in accordance with this Agreement or withdrawn in accordance with Section 3.8. In no event shall the 

 

51 

Trustee incur liability for withdrawals from the Distribution Account at the direction of the Master Servicer. 
 

	 	(iv)	 	The institutions at which the Certificate Account and the Distribution Account are maintained shall invest funds as directed by the Master Servicer in Permitted
Investments which in both cases shall mature not later than (i) in the case of the Certificate Account, the second Business Day next preceding the related Distribution Account Deposit Date (except that if such Permitted Investment is an obligation
of the institution that maintains such account, then such Permitted Investment shall mature not later than the Business Day next preceding such Distribution Account Deposit Date) and (ii) in the case of the Distribution Account, the Business Day
next preceding the Distribution Date (except that if such Permitted Investment is an obligation of the institution that maintains such fund or account, then such Permitted Investment shall mature not later than such Distribution Date) and, in each
case, shall not be sold or disposed of prior to its maturity. All such Permitted Investments shall be made in the name of the Trustee, for the benefit of the Certificateholders. All income and gain net of any losses realized from any such investment
of funds on deposit in the Certificate Account shall be for the benefit of the Master Servicer as servicing compensation and all income and gain net of any losses realized from any such investment of funds on deposit in the Distribution Account
shall be for the benefit of the Trustee. The amount of any Realized Losses in the Certificate Account in respect of any such investments shall promptly be deposited by the Master Servicer in the Certificate Account and the amount of any Realized
Losses in the Distribution Account in respect of any such investments shall promptly be deposited by the Trustee into the Distribution Account. All reinvestment income earned on amounts on deposit in the Distribution Account shall be for the benefit
of the Trustee. The Trustee in its fiduciary capacity shall not be liable for the amount of any loss incurred in respect of any investment or lack of investment of funds held in the Certificate Account and made in accordance with this Section 3.5.

 

	 	(v)	 	The Master Servicer shall give notice to the Trustee, the Seller, each Rating Agency and the Depositor of any proposed change of the location of the Certificate
Account prior to any change thereof. The Trustee shall give notice to the Master Servicer, the Seller, each Rating Agency and the Depositor of any proposed change of the location of the Distribution Account prior to any change thereof.

 
SECTION 3.6 Collection of Taxes,
Assessments and Similar Items; Escrow Accounts. 
 

	 	(a)	 	 To the extent required by the related Mortgage Note and not violative of current law, the Master Servicer shall establish and maintain one or more accounts
(each, an “Escrow Account”) and deposit and retain therein all collections from the 

 

52 

	 	 
Mortgagors (or advances by the Master Servicer) for the payment of taxes, assessments, hazard insurance premiums or comparable items for the
account of the Mortgagors. Nothing herein shall require the Master Servicer to compel a Mortgagor to establish an Escrow Account in violation of applicable law. 

 

	 	(b)	 	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 Master Servicer out of related collections for any payments made pursuant to Sections 3.1 hereof (with respect to taxes and assessments and insurance premiums) and 3.9 hereof (with
respect to hazard insurance), to refund to any Mortgagors any sums determined to be overages, to pay interest, if required by law or the terms of the related Mortgage or Mortgage Note, to Mortgagors on balances in the Escrow Account or to clear and
terminate the Escrow Account at the termination of this Agreement in accordance with Section 9.1 hereof. The Escrow Accounts shall not be a part of the Trust Fund. 

 

	 	(c)	 	The Master Servicer shall advance any payments referred to in Section 3.6(a) that are not timely paid by the Mortgagors on the date when the tax, premium or other
cost for which such payment is intended is due, but the Master Servicer shall be required so to advance only to the extent that such advances, in the good faith judgment of the Master Servicer, will be recoverable by the Master Servicer out of
Insurance Proceeds, Liquidation Proceeds or otherwise. 

 
SECTION 3.7 Access to Certain Documentation and Information Regarding the Mortgage Loans. 
 
The Master Servicer shall afford the Depositor and the Trustee reasonable access to all records and documentation regarding the Mortgage
Loans and all accounts, insurance information and other matters relating to this Agreement, such access being afforded without charge, but only upon reasonable request and during normal business hours at the office designated by the Master Servicer.

 
Upon reasonable advance notice in writing, the
Master Servicer will provide to each Certificateholder which is a savings and loan association, bank or insurance company certain reports and reasonable access to information and documentation regarding the Mortgage Loans sufficient to permit such
Certificateholder to comply with applicable regulations of the OTS or other regulatory authorities with respect to investment in the Certificates; provided that the Master Servicer shall be entitled to be reimbursed by each such Certificateholder
for actual expenses incurred by the Master Servicer in providing such reports and access. 
 
SECTION 3.8 Permitted Withdrawals from the Certificate Account and Distribution Account. 
 

	 	(a)	 	The Master Servicer may from time to time make withdrawals from the applicable subaccount of the Certificate Account for the following purposes:

 

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	 	(i)	 	to the extent not previously retained by the Master Servicer, to pay to First Horizon the Retained Yield and to pay to the Master Servicer the master servicing
compensation to which it is entitled pursuant to Section 3.14, and earnings on or investment income with respect to funds in or credited to the Certificate Account as additional master servicing compensation; 

 

	 	(ii)	 	to the extent not previously retained by the Master Servicer, to reimburse the Master Servicer for unreimbursed Advances made by it in respect of the related
Mortgage Pool, such right of reimbursement pursuant to this subclause (ii) being limited to amounts received on the Mortgage Loan(s) in respect of which any such Advance was made; 

 

	 	(iii)	 	to reimburse the Master Servicer for any Nonrecoverable Advance previously made in respect of the related Mortgage Pool; 

 

	 	(iv)	 	to reimburse the Master Servicer for Insured Expenses from the related Insurance Proceeds in respect of the related Mortgage Pool; 

 

	 	(v)	 	to reimburse the Master Servicer for (a) unreimbursed Servicing Advances in respect of the related Mortgage Pool, the Master Servicer’s right to reimbursement
pursuant to this clause (a) with respect to any Mortgage Loan being limited to amounts received on such Mortgage Loan(s) which represent late recoveries of the payments for which such advances were made pursuant to Section 3.1 or Section 3.6 and (b)
for unpaid Master Servicing Fees as provided in Section 3.11 hereof; 

 

	 	(vi)	 	to pay to the Seller, with respect to each Mortgage Loan in respect of the related Mortgage Pool or property acquired in respect thereof that has been purchased
pursuant to Section 2.2, 2.3 or 3.11, all amounts received thereon after the date of such purchase; 

 

	 	(vii)	 	to reimburse the Seller, the Master Servicer or the Depositor for expenses incurred by any of them and reimbursable pursuant to Section 6.3 hereof;

 

	 	(viii)	 	to withdraw any amount deposited in the Certificate Account and not required to be deposited therein; 

 

	 	(ix)	 	on or prior to the Distribution Account Deposit Date, to withdraw an amount equal to the related Available Funds and the Trustee Fee for such Distribution Date and
remit such amount to the Trustee for deposit in the Distribution Account; and 

 

	 	(x)	 	to clear and terminate the Certificate Account upon termination of this Agreement pursuant to Section 9.1 hereof. 

 
The Master Servicer shall keep and maintain
separate accounting, on a Mortgage Loan by Mortgage Loan basis and on a Mortgage Pool by Mortgage Pool basis, for the purpose of justifying any withdrawal from the Certificate Account pursuant to such 

 

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subclauses (i), (ii), (iv), (v) and (vi). Prior to making any withdrawal from the Certificate Account pursuant to subclause (iii), the Master
Servicer shall deliver to the Trustee an Officer’s Certificate of a Servicing Officer indicating the amount of any previous Advance determined by the Master Servicer to be a Nonrecoverable Advance and identifying the related Mortgage Loans(s),
and their respective portions of such Nonrecoverable Advance. 
 
The Master Servicer shall distribute the Retained Yield, if any, to First Horizon on each Distribution Account Deposit Date during the term of this Agreement. 
 

	 	(b)	 	The Trustee shall withdraw funds from the applicable subaccount of the Distribution Account for distributions to the related Certificateholders in the manner
specified in this Agreement (and to withhold from the amounts so withdrawn, the amount of any taxes that it is authorized to withhold pursuant to the last paragraph of Section 8.11). In addition, the Trustee may prior to making the distribution
pursuant to Section 4.2 from time to time make withdrawals from the Distribution Account for the following purposes: 

 

	 	(i)	 	to pay to itself the Trustee Fee for the related Distribution Date; 

 

	 	(ii)	 	to pay to itself earnings on or investment income with respect to funds in the Distribution Account; 

 

	 	(iii)	 	to withdraw and return to the Master Servicer any amount deposited in the Distribution Account and not required to be deposited therein; and

 

	 	(iv)	 	to clear and terminate the Distribution Account upon termination of the Agreement pursuant to Section 9.1 hereof. 

 
SECTION 3.9 Maintenance of Hazard Insurance; Maintenance of
Primary Insurance Policies. 
 

	 	(a)	 	 The Master Servicer shall cause to be maintained, for each Mortgage Loan, hazard insurance with extended coverage in an amount that is at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such Mortgage Loan or (ii) the greater of (y) the outstanding principal balance of the Mortgage Loan and (z) an amount such that the proceeds of such policy shall be sufficient
to prevent the Mortgagor and/or the mortgagee from becoming a co-insurer. Each such policy of standard hazard insurance shall contain, or have an accompanying endorsement that contains, a standard mortgagee clause. Any amounts collected by the
Master Servicer under any such policies (other than the amounts to be applied to the restoration or repair of the related Mortgaged Property or amounts released to the Mortgagor in accordance with the Master Servicer’s normal servicing
procedures) shall be deposited in the applicable subaccount of the Certificate Account. Any cost incurred by the Master Servicer in maintaining any such insurance shall not, for the purpose of calculating monthly distributions to the
Certificateholders or remittances to the Trustee for their benefit, be added to the principal balance of the Mortgage Loan, 

 

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notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall be recoverable by the Master Servicer out of late payments by
the related Mortgagor or out of Liquidation Proceeds to the extent permitted by Section 3.8 hereof. 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 Mortgage Loan
in a federally designated special flood hazard area and such area is participating in the national flood insurance program, the Master Servicer 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 original principal balance of the related Mortgage Loan, (ii) the replacement value of the improvements which are part of such Mortgaged Property, and (iii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance program. 

 

	 	(b)	 	In the event that the Master Servicer 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, 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 Master Servicer shall, in the event that there shall not have been maintained on the related Mortgaged Property a policy complying with the first sentence of this
Section, and there shall have been a loss that would have been covered by such policy, deposit in the applicable subaccount of the Certificate Account the amount not otherwise payable under the blanket policy because of such deductible clause. In
connection with its activities as Master Servicer of the Mortgage Loans, the Master Servicer agrees to present, on behalf of itself, the Depositor, and the Trustee for the benefit of the Certificateholders, claims under any such blanket policy.

 

	 	(c)	 	The Master Servicer shall not take any action which would result in non-coverage under any applicable Primary Insurance Policy of any loss which, but for the actions
of the Master Servicer, would have been covered thereunder. The Master Servicer shall not cancel or refuse to renew any such Primary Insurance Policy that is in effect at the date of the initial issuance of the Certificates and is required to be
kept in force hereunder unless the replacement Primary Insurance Policy for such canceled or non-renewed policy is maintained with a Qualified Insurer. 

 
The Master Servicer shall not be required to maintain any Primary Insurance Policy (i) with respect to any
Mortgage Loan with a Loan-to-Value Ratio less than or equal to 80% as of any date of determination or, based on a new appraisal, the principal balance of such Mortgage Loan represents 80% or less of the new appraised value or (ii) if maintaining
such Primary Insurance Policy is prohibited by applicable law. 
 

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The Master
Servicer agrees to effect the timely payment of the premiums on each Primary Insurance Policy, and such costs not otherwise recoverable shall be recoverable by the Master Servicer from the related liquidation proceeds. 
 

	 	(d)	 	In connection with its activities as Master Servicer of the Mortgage Loans, the Master Servicer agrees to present on behalf of itself, the Trustee and
Certificateholders, claims to the insurer under any Primary Insurance Policies and, in this regard, to take such reasonable action as shall be necessary to permit recovery under any Primary Insurance Policies respecting defaulted Mortgage Loans. Any
amounts collected by the Master Servicer under any Primary Insurance Policies shall be deposited in the applicable subaccount of the Certificate Account. 

 
SECTION 3.10 Enforcement of Due-on-Sale Clauses; Assumption Agreements. 
 

	 	(a)	 	Except as otherwise provided in this Section, when any property subject to a Mortgage has been conveyed by the Mortgagor, the Master Servicer shall to the extent
that it has knowledge of such conveyance, enforce any due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent permitted under applicable law and governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any Required Insurance Policy. Notwithstanding the foregoing, the Master Servicer is not required to exercise such rights with respect to a 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 Master Servicer is prohibited by law from enforcing any such due-on-sale clause, or if coverage under any Required Insurance Policy would be
adversely affected, or if nonenforcement is otherwise permitted hereunder, the Master Servicer is authorized, subject to Section 3.10(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 Master Servicer enters such agreement) by the applicable Required Insurance Policies. The Master Servicer, subject to Section 3.10(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 Master Servicer shall not be deemed to be in default under this Section by reason of any transfer or assumption which the Master Servicer reasonably believes it is restricted by law from preventing, for any reason
whatsoever. 

 

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	 	(b)	 	Subject to the Master Servicer’s duty to enforce any due-on-sale clause to the extent set forth in Section 3.10(a) hereof, 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 Mortgage Loan, the Master Servicer shall prepare and deliver or cause to be prepared and delivered to the Trustee for signature and shall direct, in writing,
the Trustee to execute the assumption agreement with the Person to whom the Mortgaged Property is to be conveyed and such modification agreement or supplement to the Mortgage Note or Mortgage or other instruments as are reasonable or necessary to
carry out the terms of the Mortgage Note or Mortgage or otherwise to comply with any applicable laws regarding assumptions or the transfer of the Mortgaged Property to such Person. In connection with any such assumption, no material term of the
Mortgage Note may be changed. In addition, the substitute Mortgagor and the Mortgaged Property must be acceptable to the Master Servicer in accordance with its underwriting standards as then in effect. Together with each such substitution,
assumption or other agreement or instrument delivered to the Trustee for execution by it, the Master Servicer shall deliver an Officer’s Certificate signed by a Servicing Officer stating that the requirements of this subsection have been met in
connection therewith. The Master Servicer shall notify the Trustee that any such substitution or assumption agreement has been completed by forwarding to the Trustee the original of such substitution or assumption agreement, which in the case of the
original shall be added to the related Mortgage File and shall, for all purposes, be considered a part of such Mortgage File to the same extent as all other documents and instruments constituting a part thereof. Any fee collected by the Master
Servicer for entering into an assumption or substitution of liability agreement will be retained by the Master Servicer as additional servicing compensation. 

 
SECTION 3.11 Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans. 
 
The Master Servicer shall use reasonable efforts to foreclose
upon or otherwise comparably convert the ownership of 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. In connection
with such foreclosure or other conversion, the Master Servicer shall follow such practices and procedures as it shall deem necessary or advisable and as shall be normal and usual in its general mortgage servicing activities and meet the requirements
of the insurer under any Required Insurance Policy; provided, however, that the Master Servicer shall not be required to expend its own funds in connection with any foreclosure or towards the restoration of any property unless it shall determine (i)
that such restoration and/or foreclosure will increase the proceeds of liquidation of the 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 Certificate Account). The Master Servicer shall be responsible for all other costs and expenses incurred by it in any such proceedings; provided, however, that it shall be entitled to
reimbursement thereof 

 

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from the liquidation proceeds with respect to the related Mortgaged Property, as provided in the definition of Liquidation Proceeds. If the
Master Servicer has knowledge that a Mortgaged Property which the Master Servicer is contemplating acquiring in foreclosure or by deed in lieu of foreclosure is located within a 1 mile radius of any site listed in the Expenditure Plan for the
Hazardous Substance Clean Up Bond Act of 1984 or other site with environmental or hazardous waste risks known to the Master Servicer, the Master Servicer will, prior to acquiring the Mortgaged Property, consider such risks and only take action in
accordance with its established environmental review procedures. 
 
With respect to any REO Property, the deed or certificate of sale shall be taken in the name of the Trust Fund for the benefit of the Certificateholders, or its nominee, on behalf of the Certificateholders. The Master Servicer shall
ensure that the title to such REO Property references the Pooling and Servicing Agreement and the Trust Fund’s capacity thereunder. Pursuant to its efforts to sell such REO Property, the Master Servicer shall either itself or through an agent
selected by the Master Servicer protect and conserve such REO Property in the same manner and to such extent as is customary in the locality where such REO Property is located and may, incident to its conservation and protection of the interests of
the Certificateholders, rent the same, or any part thereof, as the Master Servicer deems to be in the best interest of the Certificateholders for the period prior to the sale of such REO Property. The Master Servicer 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 Certificate Account no later than the close of business on
each Determination Date. The Master Servicer shall perform the tax reporting and withholding required by Sections 1445 and 6050J of the Code with respect to foreclosures and abandonments, the tax reporting required by Section 6050H of the Code with
respect to the receipt of mortgage interest from individuals and any tax reporting required by Section 6050P of the Code with respect to the cancellation of indebtedness by certain financial entities, by preparing such tax and information returns as
may be required, in the form required, and delivering the same to the Trustee for filing. 
 
In the event that the Trust Fund acquires any Mortgaged Property as aforesaid or otherwise in connection with a default or imminent default on a Mortgage Loan, the Master Servicer shall dispose of such
Mortgaged Property prior to the close of the third taxable year after the taxable year of its acquisition by the Trust Fund unless the Trustee shall have been supplied with an Opinion of Counsel 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 any REMIC hereunder as defined in Section 860F of the Code or cause any REMIC created hereunder 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 Code or (ii) subject any REMIC hereunder to the imposition of any federal, 

 

59 

state or local income taxes on the income earned from such Mortgaged Property under Section 860G(c) of the Code or otherwise, unless the
Master Servicer has agreed to indemnify and hold harmless the Trust Fund with respect to the imposition of any such taxes. 
 
In the event of a default on a Mortgage Loan one or more of whose obligor is not a United States Person, as that term is defined in
Section 7701(a)(30) of the Code, in connection with any foreclosure or acquisition of a deed in lieu of foreclosure (together, “foreclosure”) in respect of such Mortgage Loan, the Master Servicer will cause compliance with the provisions
of Treasury Regulation Section 1.1445-2(d)(3) (or any successor thereto) necessary to assure that no withholding tax obligation arises with respect to the proceeds of such foreclosure except to the extent, if any, that proceeds of such foreclosure
are required to be remitted to the obligors on such Mortgage Loan. 
 
The decision of the Master Servicer to foreclose on a defaulted Mortgage Loan shall be subject to a determination by the Master Servicer that the proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. The income earned from the management of any REO Properties, net of reimbursement to the Master Servicer for expenses incurred (including any property or other taxes) in connection with such management and net of unreimbursed
Master Servicing Fees, Advances and Servicing Advances, shall be applied to the payment of principal of and interest on the related defaulted Mortgage Loans (with interest accruing as though such Mortgage Loans were still current) and all such
income shall be deemed, for all purposes in this Agreement, to be payments on account of principal and interest on the related Mortgage Notes and shall be deposited into the applicable subaccount of the Certificate Account. To the extent the net
income received during any calendar month is in excess of the amount attributable to amortizing principal and accrued interest at the related Mortgage Rate on the related Mortgage Loan for such calendar month, such excess shall be considered to be a
partial prepayment of principal of the related Mortgage Loan. 
 
The proceeds from any liquidation of a Mortgage Loan, as well as any income from an REO Property, will be applied in the following order of priority: first, to reimburse the Master Servicer for any related unreimbursed Servicing
Advances and Master Servicing Fees; second, to reimburse the Master Servicer for any unreimbursed Advances; third, to reimburse the applicable subaccount of the Certificate Account for any Nonrecoverable Advances (or portions thereof) that were
previously withdrawn by the Master Servicer pursuant to Section 3.8(a)(iii) that related to such Mortgage Loan; fourth, to accrued and unpaid interest (to the extent no Advance has been made for such amount or any such Advance has been reimbursed)
on the Mortgage Loan or related REO Property, at the Adjusted Net Mortgage Rate to the Due Date occurring in the month in which such amounts are required to be distributed; and fifth, as a recovery of principal of the Mortgage Loan. Excess Proceeds,
if any, from the liquidation of a Liquidated Mortgage Loan will be retained by the Master Servicer as additional servicing compensation pursuant to Section 3.14. 
 
The Master Servicer, with the consent of the Trustee, shall have the right to purchase for its own account
from the Trust Fund any Mortgage Loan which is 91 days or more delinquent at a price equal to the Purchase Price. The Purchase Price for any Mortgage Loan purchased hereunder shall be deposited in the applicable subaccount of the Certificate Account
and the Trustee, upon receipt of a certificate from the Master Servicer in the form of Exhibit M hereto, 

 

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shall release or cause to be released to the purchaser of such Mortgage Loan the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the purchaser of such Mortgage Loan, in each case without recourse, as shall be necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan released pursuant hereto and the purchaser
of such Mortgage Loan shall succeed to all the Trustee’s right, title and interest in and to such Mortgage Loan and all security and documents related thereto. Such assignment shall be an assignment outright and not for security. The purchaser
of such Mortgage Loan shall thereupon own such Mortgage Loan, and all security and documents, free of any further obligation to the Trustee or the Certificateholders with respect thereto. 
 
SECTION 3.12 Trustee to Cooperate; Release of Mortgage Files. 
 
Upon the payment in full of any Mortgage Loan, or the receipt
by the Master Servicer of a notification that payment in full will be escrowed in a manner customary for such purposes, the Master Servicer will immediately notify the Trustee by delivering, or causing to be delivered a “Request for
Release” substantially in the form of Exhibit M. Upon receipt of such request, the Trustee shall or shall cause the Custodian to promptly release the related Mortgage File to the Master Servicer, and the Trustee shall at the Master
Servicer’s direction execute and deliver to the Master Servicer the request for reconveyance, deed of reconveyance or release or satisfaction of mortgage or such instrument releasing the lien of the Mortgage in each case provided by the Master
Servicer, together with the Mortgage Note with written evidence of cancellation thereon. Expenses incurred in connection with any instrument of satisfaction or deed of reconveyance shall be chargeable to the related Mortgagor. From time to time and
as shall be appropriate for the servicing or foreclosure of any Mortgage Loan, including for such purpose, collection under any policy of flood insurance, any fidelity bond or errors or omissions policy, or for the purposes of effecting a partial
release of any Mortgaged Property from the lien of the Mortgage or the making of any corrections to the Mortgage Note or the Mortgage or any of the other documents included in the Mortgage File, the Trustee shall, upon delivery to the Trustee of a
Request for Release in the form of Exhibit L signed by a Servicing Officer, release the Mortgage File to the Master Servicer. Subject to the further limitations set forth below, the Master Servicer shall cause the Mortgage File or documents so
released to be returned to the Trustee or its Custodian when the need therefor by the Master Servicer no longer exists, unless the Mortgage Loan is liquidated and the proceeds thereof are deposited in the applicable subaccount of the Certificate
Account, in which case the Master Servicer shall deliver to the Trustee a Request for Release in the form of Exhibit M, signed by a Servicing Officer. 
 
If the Master Servicer at any time seeks to initiate a foreclosure proceeding in respect of any Mortgaged Property as authorized by this
Agreement, the Master Servicer shall deliver or cause to be delivered to the Trustee, for signature, as appropriate, any court pleadings, requests for trustee’s sale or other documents necessary to effectuate such foreclosure or any legal
action brought to obtain judgment against the Mortgagor on the Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce any other remedies or rights provided by the Mortgage Note or the Mortgage or otherwise available at law or
in equity. 
 

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SECTION 3.13
Documents Records and Funds in Possession of Master Servicer to be Held for the Trustee. 
 
Notwithstanding any other provisions of this Agreement, the Master Servicer shall transmit to the Trustee as required by this Agreement all documents and instruments in respect of a Mortgage Loan
coming into the possession of the Master Servicer from time to time and shall account fully to the Trustee for any funds received by the Master Servicer or which otherwise are collected by the Master Servicer as Liquidation Proceeds or Insurance
Proceeds in respect of any Mortgage Loan. 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, including but not limited to, any funds on deposit in the Certificate Account, shall be held by the Master Servicer for and on behalf of the Trustee and shall be and remain the sole and exclusive property of the Trustee,
subject to the applicable provisions of this Agreement. The Master Servicer also agrees that it shall not create, incur or subject any Mortgage File or any funds that are deposited in the Certificate Account, Distribution Account or 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 setoff against any Mortgage File or any funds collected on, or in connection with, a Mortgage Loan, except, however, that the Master Servicer shall be entitled to set off against and deduct from any such funds any
amounts that are properly due and payable to the Master Servicer under this Agreement. 
 
SECTION 3.14 Master Servicing Compensation. 
 
As compensation for its activities as Master Servicer hereunder and as a subservicer pursuant to the Servicing Rights Transfer and Subservicing Agreement, the Master Servicer shall be entitled to
retain or withdraw from the Certificate Account an amount equal to the Master Servicing Fee for each Mortgage Loan, provided that the aggregate Master Servicing Fee with respect to any Distribution Date shall be reduced (i) by the amount of any
Compensating Interest paid by the Master Servicer with respect to such Distribution Date, and (ii) with respect to the first Distribution Date, an amount equal to any amount to be deposited into the Distribution Account by the Depositor pursuant to
Section 2.1(a) and not so deposited. 
 
Additional
servicing compensation in the form of (i) Retained Yield, Excess Proceeds, Prepayment Interest Excess and all income and gain net of any losses realized from Permitted Investments and (ii) prepayment penalties, assumption fees and late payment
charges in each case under the circumstances and in the manner set forth in the applicable Mortgage Note or Mortgage shall be retained by the Master Servicer to the extent not required to be deposited in the Certificate Account pursuant to Section
3.5 hereof; provided that in the event the Master Servicer is terminated pursuant to Section 7.1, the Retained Yield shall be payable to First Horizon Home Loan Corporation in its individual capacity and shall not be payable to the Trustee or any
successor to the Master Servicer. The Master Servicer shall be required to pay all expenses incurred by it in connection with its master servicing activities hereunder (including payment of any premiums for hazard insurance and any Primary Insurance
Policy and maintenance of the other forms of insurance coverage required by this Agreement) and shall not be entitled to reimbursement therefor except as specifically provided in this Agreement. 
 

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SECTION 3.15
Access to Certain Documentation. 
 
The Master
Servicer shall provide to the OTS and the FDIC and to comparable regulatory authorities supervising Holders of Subordinated Certificates and the examiners and supervisory agents of the OTS, the FDIC and such other authorities, access to the
documentation regarding the Mortgage Loans required by applicable regulations of the OTS and the FDIC. Such access shall be afforded without charge, but only upon reasonable and prior written request and during normal business hours at the offices
designated by the Master Servicer. Nothing in this Section shall limit the obligation of the Master Servicer to observe any applicable law prohibiting disclosure of information regarding the Mortgagors and the failure of the Master Servicer to
provide access as provided in this Section as a result of such obligation shall not constitute a breach of this Section. 
 
SECTION 3.16 Annual Statement as to Compliance. 
 
The Master Servicer shall deliver to the Depositor and the Trustee on or before 120 days after the end of the Master Servicer’s
fiscal year, commencing with its 2003 fiscal year, an Officer’s Certificate stating, as to the signer thereof, that (i) a review of the activities of the Master Servicer during the preceding calendar year and of the performance of the Master
Servicer under this Agreement has been made under such officer’s supervision and (ii) to the best of such officer’s knowledge, based on such review, the Master Servicer has fulfilled all 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 officer and the nature and status thereof. The Trustee shall forward a copy of each such statement to each Rating Agency.

 
SECTION 3.17 Annual Independent Public
Accountants’ Servicing Statement; Financial Statements. 
 
On or before 120 days after the end of the Master Servicer’s fiscal year, commencing with its 2003 fiscal year, the Master Servicer at its expense shall cause a nationally or regionally recognized firm of independent public
accountants (who may also render other services to the Master Servicer, the Seller or any affiliate thereof) which is a member of the American Institute of Certified Public Accountants to furnish a statement to the Trustee and the Depositor to the
effect that-such firm has examined certain documents and records relating to the servicing of the Mortgage Loans under this Agreement or of mortgage loans under pooling and servicing agreements substantially similar to this Agreement (such statement
to have attached thereto a schedule setting forth the pooling and servicing agreements covered thereby) and that, on the basis of such examination, conducted substantially in compliance with the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages serviced for FNMA and FHLMC, such servicing has been conducted in compliance with such pooling and servicing agreements except for such significant exceptions or errors in records that, in the opinion of
such firm, the Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for Mortgages serviced for FNMA and FHLMC requires it to report. In rendering such statement, such firm may rely, as to matters relating to direct servicing
of mortgage loans by Subservicers, upon comparable statements for examinations conducted substantially in compliance with the Uniform Single Attestation Program for Mortgage Bankers or the Audit 

 

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Program for Mortgages serviced for FNMA and FHLMC (rendered within one year of such statement) of independent public accountants with respect
to the related Subservicer. Copies of such statement shall be provided by the Trustee to any Certificateholder upon request at the Master Servicer’s expense, provided such statement is delivered by the Master Servicer to the Trustee.

 
SECTION 3.18 Errors and Omissions Insurance;
Fidelity Bonds. 
 
The Master Servicer shall for
so long as it acts as master servicer under this Agreement, obtain and maintain in force (a) a policy or policies of insurance covering errors and omissions in the performance of its obligations as Master Servicer hereunder and (b) a fidelity bond
in respect of its officers, employees and agents. Each such policy or policies and bond shall, together, comply with the requirements from time to time of FNMA or FHLMC for persons performing servicing for mortgage loans purchased by FNMA or FHLMC.
In the event that any such policy or bond ceases to be in effect, the Master Servicer shall obtain a comparable replacement policy or bond from an insurer or issuer, meeting the requirements set forth above as of the date of such replacement.

 
ARTICLE IV 
 
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER

 
SECTION 4.1 Advances. 
 
The Master Servicer shall determine on the Business Day prior
to each Master Servicer Advance Date whether it is required to make an Advance pursuant to the definition thereof. If the Master Servicer determines it is required to make an Advance, it shall, on or before the Master Servicer Advance Date, either
(i) deposit into the applicable subaccount of the Certificate Account an amount equal to the Advance or (ii) make an appropriate entry in its records relating to the applicable subaccount of the Certificate Account that any Amount Held for Future
Distribution has been used by the Master Servicer in discharge of its obligation to make any such Advance. Any funds so applied shall be replaced by the Master Servicer by deposit in the applicable subaccount of the Certificate Account no later than
the close of business on the Business Day preceding the next Master Servicer Advance Date. The Master Servicer shall be entitled to be reimbursed from the applicable subaccount of the Certificate Account for all Advances of its own funds made
pursuant to this Section as provided in Section 3.8. The obligation to make Advances with respect to any Mortgage Loan shall continue until the ultimate disposition of the REO Property or Mortgaged Property relating to such Mortgage Loan. As to any
Distribution Date, the Master Servicer shall inform the Trustee in writingof the amount of the Advance to be made by the Master Servicer on each Master Servicer Advance Date no later 1:30 p.m. Central time on the second Business Day immediately
preceding such Distribution Date. 
 
The Master
Servicer shall deliver to the Trustee on the related Master Servicer Advance Date an Officer’s Certificate of a Servicing Officer indicating the amount of any proposed Advance determined by the Master Servicer to be a Nonrecoverable Advance.

 

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SECTION 4.2
Priorities of Distribution. 
 

	 	(a)	 	On each Distribution Date, the Trustee shall withdraw the Available Funds for each Certificate Group from the applicable subaccount of the Distribution Account and
apply such funds to distributions on the Certificates of the related Certificate Group in the following order and priority and, in each case, to the extent of Available Funds remaining: 

 

	 	(i)	 	to the Classes of Senior Certificates of the related Certificate Group, the Accrued Certificate Interest on each such Class for such Distribution Date, any shortfall
in available amounts being allocated among such Classes in proportion to the amount of Accrued Certificate Interest otherwise distributable thereon; provided, however, that on each Distribution Date through the applicable Accretion Termination Date,
such amounts with respect to the Accrual Certificates will not be distributed on such Certificates under this Section 4.2(a)(i) but will instead be added to the Class Certificate Balances thereof and distributed in accordance with Section 4.2(b) and
(c) below; 

 

	 	(ii)	 	to the Classes of Senior Certificates of the related Certificate Group, any Accrued Certificate Interest thereon remaining undistributed from previous Distribution
Dates, to the extent of remaining Available Funds from the related Mortgage Pool, any shortfall in available amounts being allocated among such Classes in proportion to the amount of such Accrued Certificate Interest remaining undistributed for each
such Class for such Distribution Date; provided, however, that on each Distribution Date through the applicable Accretion Termination Date, such amounts with respect to the Accrual Certificates will not be distributed on such Certificates under this
Section 4.2(a)(ii) but will instead be added to the Class Certificate Balances thereof, to the extent not previously added pursuant to Section 4.2(a)(i) above, and distributed in accordance with Section 4.2(b) and (c) below;

 

	 	(iii)	 	to the Classes of Senior Certificates of the related Certificate Group, in reduction of the Class Certificate Balances thereof, to the extent of remaining Available
Funds from the related Mortgage Pool, the related Senior Optimal Principal Amount for such Distribution Date, in the order of priority set forth below in Section 4.2(c) and (d), until the respective Class Certificate Balances thereof have been
reduced to zero; 

 

	 	(iv)	 	to the Class B-1 Certificates, to the extent of remaining Available Funds for both Mortgage Pools, but subject to the prior payment of amounts described under
Section 4.2(i), in the following order: (1) the Accrued Certificate Interest thereon for such Distribution Date, (2) any Accrued Certificate Interest thereon remaining undistributed from previous Distribution Dates and (3) such Class’ Allocable
Share for such Distribution Date; 

 

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	 	(v)	 	to the Class B-2 Certificates, to the extent of remaining Available Funds for both Mortgage Pools, but subject to the prior payment of amounts described under
Section 4.2(i), in the following order: (1) the Accrued Certificate Interest thereon for such Distribution Date, (2) any Accrued Certificate Interest thereon remaining undistributed from previous Distribution Dates and (3) such Class’ Allocable
Share for such Distribution Date; 

 

	 	(vi)	 	to the Class B-3 Certificates, to the extent of remaining Available Funds for both Mortgage Pools, but subject to the prior payment of amounts described under
Section 4.2(i), in the following order: (1) the Accrued Certificate Interest thereon for such Distribution Date, (2) any Accrued Certificate Interest thereon remaining undistributed from previous Distribution Dates and (3) such Class’ Allocable
Share for such Distribution Date; 

 

	 	(vii)	 	to the Class B-4 Certificates, to the extent of remaining Available Funds for both Mortgage Pools, but subject to the prior payment of amounts described under
Section 4.2(i), in the following order: (1) the Accrued Certificate Interest thereon for such Distribution Date, (2) any Accrued Certificate Interest thereon remaining undistributed from previous Distribution Dates and (3) such Class’ Allocable
Share for such Distribution Date; 

 

	 	(viii)	 	to the Class B-5 Certificates, to the extent of remaining Available Funds for both Mortgage Pools, but subject to the prior payment of amounts described under
Section 4.2(i), in the following order: (1) the Accrued Certificate Interest thereon for such Distribution Date, (2) any Accrued Certificate Interest thereon remaining undistributed from previous Distribution Dates and (3) such Class’ Allocable
Share for such Distribution Date; and 

 

	 	(ix)	 	to the Class B-6 Certificates, to the extent of remaining Available Funds for both Mortgage Pools, but subject to the prior payment of amounts described under
Section 4.2(i), in the following order: (1) the Accrued Certificate Interest thereon for such Distribution Date, (2) any Accrued Certificate Interest thereon remaining undistributed from previous Distribution Dates and (3) such Class’ Allocable
Share for such Distribution Date. 

 

	 	(b)	 	On each Distribution Date prior to the Accretion Termination Date, before the payment of any Senior Optimal Principal Amount for Pool I, an amount equal to the
Accrual Amount for the Class I-A-10 Certificates on such date will be distributed to the following Classes in reduction of their Class Certificate Balances in the following order of priority: 

 

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	 	(i)	 	to the Class I-A-9 Certificates, until the Class Certificate Balance thereof has been reduced to zero; 

 

	 	(ii)	 	to the Class I-A-8 Certificates, until the Class Certificate Balance thereof has been reduced to zero; 

 

	 	(iii)	 	concurrently, as follows, 

 

	 	(1)	 	70.1114953268% of such amount, pro rata, to the Class I-A-1, Class I-A-2, Class I-A-3 and Class I-A-6 Certificates, until the respective Class Certificate
Balances thereof have been reduced to zero; and 

 

	 	(2)	 	29.8885046732% of such amount as follows: 

 
(A) concurrently, an amount up to the amount necessary to reduce the aggregate Class Certificate Balance of the Class
I-A-4 and Class I-A-5 Certificates to their aggregate Scheduled Balance set forth in Schedule 1 of the Principal Balance Schedules for that Distribution Date, as follows: 
 

	 	(a)	 	12.7% of such amount to the Class I-A-4 Certificates, until the Class Certificate Balance thereof has been reduced to zero; and 

 

	 	(b)	 	87.3% of such amount to the Class I-A-5 Certificates, until the Class Certificate Balance thereof has been reduced to zero; 

 
(B) concurrently, an amount up to the amount
necessary to reduce the aggregate Class Certificate Balance of the Class I-A-4 and Class I-A-5 Certificates to their aggregate Scheduled Balance set forth in Schedule 2 of the Principal Balance Schedules for that Distribution Date, as follows:

 

	 	(a)	 	25.3% of such amount to the Class I-A-4 Certificates, until the Class Certificate Balance thereof has been reduced to zero; and 

 

	 	(b)	 	74.7% of such amount to the Class I-A-5 Certificates, until the Class Certificate Balance thereof has been reduced to zero; 

 
(C) concurrently, an amount up to the amount
necessary to reduce the aggregate Class Certificate Balance of the Class I-A-4 and Class I-A-5 Certificates to their aggregate Scheduled Balance set forth in Schedule 3 of the Principal Balance Schedules for that Distribution Date, as follows:

 

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	 	(a)	 	28.6% of such amount to the Class I-A-4 Certificates, until the Class Certificate Balance thereof has been reduced to zero; and 

 

	 	(b)	 	71.4% of such amount to the Class I-A-5 Certificates, until the Class Certificate Balance thereof has been reduced to zero; 

 
(D) concurrently, an amount up to the amount
necessary to reduce the aggregate Class Certificate Balance of the Class I-A-4 and Class I-A-5 Certificates to their aggregate Scheduled Balance set forth in Schedule 4 of the Principal Balance Schedules for that Distribution Date, as follows:

 

	 	(a)	 	29.0% of such amount to the Class I-A-4 Certificates, until the Class Certificate Balance thereof has been reduced to zero; and 

 

	 	(b)	 	71.0% of such amount to the Class I-A-5 Certificates, until the Class Certificate Balance thereof has been reduced to zero; 

 
(E) concurrently, to the Class I-A-4 and
Class I-A-5 Certificates, without regard to any Scheduled Balance, as follows: 
 

	 	(a)	 	31.2% of such amount to the Class I-A-4 Certificates, until the Class Certificate Balance thereof has been reduced to zero; and 

 

	 	(b)	 	68.8% of such amount to the Class I-A-5 Certificates, until the Class Certificate Balance thereof has been reduced to zero; 

 
(F) sequentially, to the Class I-A-4 and
Class I-A-5 Certificates, in that order, until the respective Class Certificate Balances thereof have been reduced to zero; and 
 

	 	(iv)	 	to the Class I-A-10 Certificates, until the Class Certificate Balance thereof has been reduced to zero. 

 
The priority of payments described in Sections 4.2(b)(2)(A)
through (F) above are referred to herein as the “Scheduled Certificate Rules.” 
 

	 	(c)	 	Amounts allocated to the Group I Senior Certificates pursuant to Section 4.2(a)(iii) above will be distributed in the following order of priority:

 

	 	(i)	 	pro rata, to the Class I-A-RU and Class I-A-RL Certificates until their respective Class Certificate Balances have each been reduced to zero;

 

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	 	(ii)	 	to the Class I-A-11 Certificates, an amount up to the Class I-A-11 Principal Distribution Amount for such date, until the Class Certificate Balance thereof has been
reduced to zero; 

 

	 	(iii)	 	concurrently, as follows; 

 

	 	(1)	 	70.1114953268% of the remaining Senior Optimal Principal Amount for Pool I, pro rata, to the Class I-A-1, Class I-A-2, Class I-A-3 and Class I-A-6
Certificates, until the respective class certificate balances thereof have been reduced to zero; and 

 

	 	(2)	 	29.8885046732% of the remaining Senior Optimal Principal Amount for Pool I in accordance with the Scheduled Certificate Rules; 

 

	 	(iv)	 	sequentially, to the Class I-A-8, Class I-A-9 and Class I-A-10 Certificates, in that order, until the respective Class Certificate Balances thereof have been reduced
to zero; and 

 

	 	(v)	 	to the Class I-A-11 Certificates, without regard to the Class I-A-11 Principal Distribution Amount, until the Class Certificate Balance thereof has been reduced to
zero. 

 

	 	(d)	 	Amounts allocated to the Group II Senior Certificates pursuant to Section 4.2(a)(iii) above will be distributed, pro rata, to the Class II-A-1 and Class
II-A-2 Certificates, until their respective Class Certificate Balances have been reduced to zero. 

 

	 	(e)	 	On each Distribution Date, the Trustee shall distribute to the Holders of the Class I-A-RU and Class I-A-RL Certificates any Available Funds remaining in the related
REMIC for such Distribution Date after application of all amounts described in clauses (a), (b), (c) and (d) of this Section 4.2 on such Distribution Date. Any distributions pursuant to this subsection (e) shall not reduce the respective Class
Certificate Balances of the Class I-A-RU and Class I-A-RL Certificates. 

 

	 	(f)	 	On and after the Cross-Over Date, the amount distributable to the Senior Certificates of the related Certificate Group pursuant to Section 4.2(a)(iii) for the
related Distribution Date shall be allocated among the related Classes of Senior Certificates, pro rata, on the basis of their respective Class Certificate Balances immediately prior to such Distribution Date, regardless of the priorities and
amounts set forth in Section 4.2. 

 

	 	(g)	 	 If on any Distribution Date (i) the Class Certificate Balance of any Class of Subordinated Certificates (other than the Class of Subordinated Certificates with
the highest priority of distribution) for which the related Class Prepayment Distribution Trigger was satisfied on such Distribution Date is reduced to zero and (ii) amounts distributable to such Class or Classes of Subordinated 

 

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Certificates pursuant to clauses (2), (3) and (5) of the applicable Subordinated Optimal Principal Amount remain undistributed on such
Distribution Date after all amounts otherwise distributable on such date pursuant to clauses (iv) through (ix) of Section 4.2(a) have been distributed, such amounts, to the extent of such Class’ remaining Allocable Share, shall be distributed
on such Distribution Date to the remaining Classes of Subordinated Certificates on a pro rata basis, subject to the priority of payments described in Section 4.2(a). 

 

	 	(h)	 	In the event that in any calendar month the Master Servicer recovers an amount (an “Unanticipated Recovery”) in respect of principal of a Mortgage Loan
which had previously been allocated as a Realized Loss to any Class of Certificates pursuant to Section 4.4, on the Distribution Date in the next succeeding calendar month the Trustee, shall withdraw from the Distribution Account and distribute to
the Holders of each outstanding Class to which such Realized Loss had previously been allocated its share (determined as described in the succeeding paragraph) of such Unanticipated Recovery in an amount not to exceed the amount of such Realized
Loss previously allocated to such Class. When the Class Certificate Balance of a Class of Certificates has been reduced to zero, the Holders of such Class shall not be entitled to any share of an Unanticipated Recovery, and such Unanticipated
Recovery shall be allocated among all outstanding Classes of Certificates entitled thereto in accordance with the preceding sentence, subject to the remainder of this subsection (h). In the event that (i) any Unanticipated Recovery remains
undistributed in accordance with the preceding sentence or (ii) the amount of an Unanticipated Recovery exceeds the amount of the Realized Loss previously allocated to any outstanding Classes with respect to the related Mortgage Loan, on the
applicable Distribution Date the Trustee shall distribute to the Holders of all outstanding Classes of the related Certificates to which Realized Losses had previously been allocated and not reimbursed their pro rata share (determined as described
below) of such excess in an amount not to exceed the aggregate amount of any Realized Loss previously allocated to such Class with respect to any other Mortgage Loan that has not been recovered in accordance with this subsection (h). Any
distributions made pursuant to this subsection (h) shall not reduce the Class Certificate Balance of the related Certificate. 

 
For purposes of the preceding paragraph, the share of an Unanticipated Recovery allocable to any Class of Certificates
with respect to a Mortgage Loan shall be based on its pro rata share (in proportion to the Class Certificate Balances thereof with respect to such Distribution Date) of the principal portion of any such Realized Loss previously allocated with
respect to such Mortgage Loan (or Loans). 
 

	 	(i)	 	 On any Distribution Date on which any Certificate Group constitutes an Undercollateralized Group, all amounts otherwise distributable as principal on the
Subordinated Certificates, in reverse order of priority (or, following the Cross-over Date, such other amounts described in the immediately following sentence), will be distributed as principal to the Senior Certificates of such Undercollateralized
Group in accordance with the priorities set forth in Section 4.2(c), until the total Class Certificate Balance of such Senior Certificates equals 

 

70 

	 	 
the Pool Principal Balance of the related Mortgage Pool (such distribution, an “Undercollateralization Distribution”). If the
Senior Certificates of a Certificate Group constitute an Undercollateralized Group on any Distribution Date following the Cross-over Date, Undercollateralization Distributions will be made from the excess of the Available Funds for the other
Mortgage Pool remaining after all required amounts for that Distribution Date have been distributed to the Senior Certificates of the other Certificate Group. In addition, the amount of any unpaid Net Interest Shortfalls with respect to an
Undercollateralized Group (including any Net Interest Shortfalls for the related Distribution Date) will be distributed to the Senior Certificates of the Undercollateralized Group prior to the payment of any Undercollateralization Distributions from
amounts otherwise distributable as principal on the Subordinated Certificates, in reverse order of priority (or, following the Cross-over Date, as provided in the preceding sentence). 

 
In addition, if on any Distribution Date the total Class
Certificate Balance of the Senior Certificates of a Certificate Group (after giving effect to distributions to be made on that Distribution Date) has been reduced to zero, all amounts otherwise distributable as prepayments of principal to the
Subordinated Certificates, in reverse order of priority, will instead be distributed as principal to the Senior Certificates of the other Certificate Group unless (a) the weighted average of the Subordinated Percentages for both Mortgage Pools,
weighted on the basis of the stated principal balance of the Mortgage Loans in the related Mortgage Pool, is at least two times the weighted average of the initial Subordinate Percentage for both Mortgage Pools (calculated on such basis) and (b) the
aggregate Stated Principal Balance of all of the Mortgage Loans in both Mortgage Pools delinquent 60 days or more (including for this purpose any such Mortgage Loans in foreclosure or subject to bankruptcy proceedings and Mortgage Loans with respect
to which the related Mortgaged Property has been acquired by the Trust Fund), averaged over the preceding six month period, as a percentage of the then current aggregate Class Certificate Balance of the Subordinated Certificates, is less than 50%.
All distributions described above will be made in accordance with the priorities set forth in Section 4.2(c). 
 
SECTION 4.3 Method of Distribution. 
 

	 	(a)	 	All distributions with respect to each Class of Certificates on each Distribution Date shall be made pro rata among the outstanding Certificates of such Class, based
on the Percentage Interest in such Class represented by each Certificate. Payments to the Certificateholders on each Distribution Date will be made by the Trustee to the Certificateholders of record on the related Record Date by check or money order
mailed to a Certificateholder at the address appearing in the Certificate Register, or upon written request by such Certificateholder to the Trustee made not later than the applicable Record Date, by wire transfer to a U.S. depository institution
acceptable to the Trustee, or by such other means of payment as such Certificateholder and the Trustee shall agree. 

 

71 

 

	 	(b)	 	Each distribution with respect to a Book-Entry Certificate shall be paid to the Depository, which shall credit the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each Depository Participant shall be responsible for disbursing such distribution to the Certificate Owners that it represents and to each financial intermediary for which it acts as
agent. Each such financial intermediary shall be responsible for disbursing funds to the Certificate Owners that it represents. All such credits and disbursements with respect to a Book-Entry Certificate are to be made by the Depository and the
Depository Participants in accordance with the provisions of the applicable Certificates. Neither the Trustee nor the Master Servicer shall have any responsibility therefor except as otherwise provided by applicable law. 

 

	 	(c)	 	The Trustee shall withhold or cause to be withheld such amounts as it reasonably determines are required by the Code (giving full effect to any exemptions from
withholding and related certifications required to be furnished by Certificateholders or Certificate Owners and any reductions to withholding by virtue of any bilateral tax treaties and any applicable certification required to be furnished by
Certificateholders or Certificate Owners with respect thereto) from distributions to be made to Non-U.S. Persons. If the Trustee reasonably determines that a more accurate determination of the amount required to be withheld for a distribution can be
made within a reasonable period after the scheduled date for such distribution, it may hold such distribution in trust for a Holder of a Residual Certificate until such determination can be made. For the purposes of this paragraph, a “Non-U.S.
Person” is (i) an individual other than a citizen or resident of the United States, (ii) a partnership, corporation or entity treated as a partnership or corporation for U.S. federal income tax purposes not formed under the laws of the United
States, any state thereof or the District of Columbia (unless, in the case of a partnership, Treasury regulations provide otherwise), (iii) any estate, the income of which is not subject to U.S. federal income taxation, regardless of source, and
(iv) any trust, other than a trust that a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. Persons have the authority to control all substantial decisions of the trust.

 
SECTION 4.4 Allocation of Losses.

 

	 	(a)	 	On or prior to each Determination Date, the Master Servicer shall determine the amount of any Realized Loss in respect of each Mortgage Loan that occurred during the
immediately preceding calendar month. 

 

	 	(b)	 	With respect to any Distribution Date, the principal portion of each Realized Loss (other than any Excess Loss) shall be allocated in the following order of
priority: 

 
first, to the Class B-6 Certificates until the Class Certificate Balance thereof has been reduced to zero; 
 

72 

 
second, to the Class B-5 Certificates until the Class Certificate Balance thereof has been reduced to zero; 
 
third, to the Class B-4 Certificates until the Class Certificate Balance thereof has been reduced to zero;

 
fourth, to the Class
B-3 Certificates until the Class Certificate Balance thereof has been reduced to zero; 
 
fifth, to the Class B-2 Certificates until the Class Certificate Balance thereof has been reduced to zero;

 
sixth, to the Class B-1
Certificates until the Class Certificate Balance thereof has been reduced to zero; 
 
seventh, to the Classes of Senior Certificates of the related Certificate Group, pro rata, in accordance with their Class Certificate Balance; provided, that any such loss allocated to the
Accrual Certificates shall instead be allocated on the basis of the lesser of (x) the Class Certificate Balance thereof immediately prior to the applicable Distribution Date and (y) the Class Certificate Balance thereof on the Closing Date (as
reduced by any Realized Losses previously allocated thereto). 
 

	 	(c)	 	With respect to any Distribution Date, the principal portion of any Excess Loss with respect to a Mortgage Pool (other than Excess Bankruptcy Losses attributable to
Debt Service Reductions) shall be allocated pro rata to each Class of Certificates of the related Certificate Group based on their respective Class Certificate Balances (in the case of the Senior Certificates); provided, that any such loss allocated
to the Accrual Certificates shall instead be allocated on the basis of the lesser of (x) the Class Certificate Balance thereof immediately prior to the applicable Distribution Date and (y) the Class Certificate Balance thereof on the Closing Date
(as reduced by any Realized Losses previously allocated thereto). 

 

	 	(d)	 	Any Realized Losses allocated to a Class of Certificates pursuant to Section 4.4(b) or (c) shall be allocated among the Certificates of such Class in proportion to
their Certificate Principal Balances. Any allocation of Realized Losses pursuant to this paragraph (d) shall be accomplished by reducing the Certificate Principal Balances of the related Certificates on the related Distribution Date in accordance
with Section 4.4(e). 

 

	 	(e)	 	 Realized Losses allocated in accordance with this Section 4.4 shall be allocated on the Distribution Date in the month following the month in which such loss was
incurred and, (i) in the case of the principal portion thereof, after giving effect to the distributions made on such Distribution Date, and (ii) in the case of the interest portion thereof, after giving effect to the calculation of the Accrual
Amount for the Accrual Certificates for such Distribution Date. On each 

 

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Distribution Date, the Master Servicer shall determine the Subordinated Certificate Writedown Amount, if any. Any such Subordinated
Certificate Writedown Amount shall effect, without duplication of any other provision in this Section 4.4 that provides for a reduction in the Class Certificate Balance of the Subordinated Certificates, a corresponding reduction in the Class
Certificate Balance of the Subordinated Certificates, which reduction shall occur on such Distribution Date after giving effect to distributions made on such Distribution Date. 

 

	 	(f)	 	Notwithstanding the foregoing, no such allocation of any Realized Loss shall be made on a Distribution Date to a Class of Certificates to the extent that such
allocation would result in the reduction of the aggregate Certificate Principal Balances of all the Senior Certificates of a related Certificate Group as of such Distribution Date plus the Apportioned Principal Balances of the Subordinated
Certificates of such Certificate Group as of such Distribution Date, after giving effect to all distributions and prior allocations of Realized Losses on such date, to an amount less than the aggregate Scheduled Principal Balance of the Mortgage
Loans in the related Mortgage Pool as of the first day of the month of such Distribution Date, less any Deficient Valuations occurring on or prior to the Bankruptcy Coverage Termination Date (such limitation, the “Loss Allocation
Limitation”). 

 
SECTION 4.5
Reserved. 
 
SECTION 4.6 Monthly Statements to
Certificateholders. 
 

	 	(a)	 	Not later than each Distribution Date, the Trustee shall prepare and cause to be forwarded by first class mail to each Certificateholder, the Master Servicer, the
Depositor and each Rating Agency a statement setting forth with respect to the related distribution and/or may post such statement on its website located at www.mbsreporting.com: 

 

	 	(i)	 	the amount thereof allocable to principal, separately identifying the aggregate amount of any Principal Prepayments and Liquidation Proceeds included therein;

 

	 	(ii)	 	the amount thereof allocable to interest, the amount of any Compensating Interest included in such distribution and any remaining Net Interest Shortfalls after
giving effect to such distribution; 

 

	 	(iii)	 	if the distribution to the Holders of such Class of Certificates is less than the full amount that would be distributable to such Holders if there were sufficient
funds available therefor, the amount of the shortfall and the allocation thereof as between principal and interest; 

 

	 	(iv)	 	the Class Certificate Balance of each Class of Certificates after giving effect to the distribution of principal on such Distribution Date;

 

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	 	(v)	 	the Pool Principal Balance for each Mortgage Pool for the following Distribution Date; 

 

	 	(vi)	 	the Senior Percentage and Subordinated Percentage for each Certificate Group for the following Distribution Date; 

 

	 	(vii)	 	the amount of the Master Servicing Fees paid to or retained by the Master Servicer with respect to such Distribution Date; 

 

	 	(viii)	 	the Pass-Through Rate for each such Class of Certificates with respect to such Distribution Date; 

 

	 	(ix)	 	the amount of Advances for each Mortgage Pool included in the distribution on such Distribution Date and the aggregate amount of Advances for each Mortgage Pool
outstanding as of the close of business on such Distribution Date; 

 

	 	(x)	 	the number and aggregate principal amounts of Mortgage Loans (A) delinquent (exclusive of Mortgage Loans in foreclosure) (1) 1 to 30 days (2) 31 to 60 days (3) 61 to
90 days and (4) 91 or more days and (B) in foreclosure and delinquent (1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or more days, 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 in a Mortgage Pool that became an REO Property during the preceding calendar month, the loan number and Stated Principal Balance of
such Mortgage Loan as of the close of business on the Determination Date preceding such Distribution Date and the date of acquisition thereof; 

 

	 	(xii)	 	the total number and principal balance of any REO Properties (and market value, if available) in each Mortgage Pool as of the close of business on the Determination
Date preceding such Distribution Date; 

 

	 	(xiii)	 	the Senior Prepayment Percentage for each Certificate Group for the following Distribution Date; 

 

	 	(xiv)	 	the aggregate amount of Realized Losses incurred in respect of each Mortgage Pool during the preceding calendar month; 

 

	 	(xv)	 	the cumulative amount of Realized Losses applied in reduction of the principal balance of each class of Certificates since the Closing Date;

 

	 	(xvi)	 	the Special Hazard Loss Coverage Amount, the Fraud Loss Coverage Amount and the Bankruptcy Loss Coverage Amount, in each case as of the related Determination Date;
and 

 

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	 	(xvii)	 	with respect to the second Distribution Date, the number and aggregate balance of any Delay Delivery Mortgage Loans in each Mortgage Pool not delivered within thirty
days after the Closing Date. 

 

	 	(b)	 	The Trustee’s responsibility for disbursing the above information to the Certificateholders is limited to the availability, timeliness and accuracy of the
information provided by the Master Servicer. 

 

	 	(c)	 	On or before the fifth Business Day following the end of each Prepayment Period (but in no event later than the third Business Day prior to the related Distribution
Date), the Master Servicer shall deliver to the Trustee (which delivery may be by electronic data transmission) a report in substantially the form set forth as Schedule III hereto. 

 

	 	(d)	 	Within a reasonable period of time after the end of each calendar year, the Trustee shall cause to be furnished 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), (a)(ii) and (a)(vii) of this Section 4.6 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. 

 
SECTION 4.7 Determination
of Pass-Through Rates for LIBOR Certificates. 
 

	 	(a)	 	On each Interest Determination Date so long as any LIBOR Certificates are outstanding, the Trustee will determine LIBOR on the basis of the British Bankers’
Association (“BBA”) “Interest Settlement Rate” for one-month deposits in U.S. dollars as found on Telerate page 3750 as of 11:00 a.m. London time on each LIBOR Determination Date. Interest Settlement Rates currently are based on
rates quoted by sixteen BBA designated banks as being, in the view of such banks, the offered rate at which deposits are being quoted to prime banks in the London interbank market. Such Interest Settlement Rates are calculated by eliminating the
four highest rates and the four lowest rates, averaging the eight remaining rates, carrying the result (expressed as a percentage) out to six decimal places, and rounding to five decimal places. “Telerate Page 3750” means the display page
currently so designated on the Bridge Telerate Service (formerly the Dow Jones Markets) (or such other page as may replace that page on that service for the purpose of displaying comparable rates or prices.) 

 

	 	(b)	 	 If LIBOR cannot be determined as provided in paragraph (A) of this Section 4.07, the Trustee shall either (i) request each Reference Bank to inform the Trustee
of the quotation offered by its principal London office for making one-month United States dollar deposits in leading banks in the London interbank market, as of 11:00 a.m. (London time) on such Interest Determination Date or (ii) in lieu of making
any such request, rely on such Reference Bank quotations that appear at 

 

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such time on the Reuters Screen LIBO Page (as defined in the International Swap Dealers Association Inc. Code of Standard Wording,
Assumptions and Provisions for Swaps, 1986 Edition), to the extent available. LIBOR for the next Interest Accrual Period will be established by the Trustee on each interest Determination Date as follows: 

 

	 	(i)	 	If on any interest Determination Date two or more Reference Banks provide such offered quotations, LIBOR for the next Interest Accrual Period shall be the arithmetic
mean of such offered quotations (rounding such arithmetic mean upwards if necessary to the nearest whole multiple of 1/32%). 

 

	 	(ii)	 	If on any Interest Determination Date only one or none of the Reference Banks provides such offered quotations, LIBOR for the next Interest Accrual Period shall be
whichever is the higher of (i) LIBOR as determined on the previous Interest Determination Date or (ii) the Reserve Interest Rate. The “Reserve Interest Rate” shall be the rate per annum which the Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of 1/32%) of the one-month United States dollar lending rates that New York City banks selected by the Trustee are quoting, on the relevant Interest Determination Date, to
the principal London offices of at least two of the Reference Banks to which such quotations are, in the opinion of the Trustee, being so made, or (ii) in the event that the Trustee can determine no such arithmetic mean, the lowest one-month United
States dollar lending rate which New York City banks selected by the Trustee are quoting on such Interest Determination Date to leading European banks. 

 

	 	(iii)	 	If on any interest Determination Date the trustee is required but is unable to determine the Reserve Interest Rate in the manner provided in paragraph (b) above,
LIBOR shall be LIBOR as determined on the preceding Interest Determination Date. 

 
Until all of the LIBOR Certificates are paid in full, the Trustee will at all times retain at least four Reference Banks for the purpose of determining LIBOR with respect to each Interest Determination
Date. The Master Servicer shall designate the Reference Banks. Each “Reference Bank” shall be a leading bank engaged in transactions in Eurodollar deposits in the international Eurocurrency market, shall not control, be controlled by, or
be under common control with, the Trustee and shall have an established place of business in London. If any such Reference Bank should be unwilling or unable to act as such or if the Master Servicer should terminate its appointment as Reference
Bank, the Master Servicer shall promptly appoint or cause to be appointed another Reference Bank. The Trustee shall have no liability or responsibility to any Person for (i) the selection of any Reference Bank for purposes of determining LIBOR or
(ii) any inability to retain at least four Reference Banks which is caused by circumstances beyond its reasonable control. 
 

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	 	(c)	 	The Pass-Through Rate for each Class of LIBOR Certificates for each Interest Accrual Period shall be determined by the Trustee on each Interest Determination Date so
long as the LIBOR Certificates are outstanding on the basis of LIBOR and the respective formulae appearing in footnotes corresponding to the LIBOR Certificates in the table relating to the Certificates in the Preliminary Statement.

 
In determining LIBOR, any
Pass-Through Rate for the LIBOR Certificates, any Interest Settlement Rate, or any Reserve Interest Rate, the Trustee may conclusively rely and shall be protected in relying upon the offered quotations (whether written, oral or on the Dow Jones
Markets) from the BBA designated banks, the Reference Banks or the New York City banks as to LIBOR, the Interest Settlement Rate or the Reserve Interest Rate, as appropriate, in effect from time to time. The Trustee shall not have any liability or
responsibility to any Person for (i) the Trustee’s selection of New York City banks for purposes of determining any Reserve Interest Rate or (ii) its inability, following a good-faith reasonable effort, to obtain such quotations from, the BBA
designated banks, the Reference Banks or the New York City banks or to determine such arithmetic mean, all as provided for in this Section 4.07. 
 
The establishment of LIBOR and each Pass-Through Rate for the LIBOR Certificates by the Trustee shall (in the absence of manifest error)
be final, conclusive and binding upon each Holder of a Certificate and the Trustee. 
 
ARTICLE V 
 
THE CERTIFICATES 
 
SECTION
5.1 The Certificates. 
 
The Certificates shall be
substantially in the forms attached hereto as exhibits. The Certificates shall be issuable in registered form, in the minimum denominations, integral multiples in excess thereof (except that one Certificate in each Class may be issued in a different
amount which must be in excess of the applicable minimum denomination) and aggregate denominations per Class set forth in the Preliminary Statement. 
 
Subject to Section 9.2 hereof respecting the final distribution on the Certificates, on each Distribution Date the Trustee shall make
distributions to each Certificateholder of record on the preceding Record Date either (x) by wire transfer in immediately available funds to the account of such Holder at a bank or other entity having appropriate facilities therefor, if (i) such
Holder has so notified the Trustee at least five Business Days prior to the related Record Date and (ii) such Holder shall hold (A) 100% of the Class Certificate Balance of any Class of Certificates or (B) Certificates of any Class with aggregate
principal Denominations of not less than $1,000,000 or (y) by check mailed by first class mail to such Certificateholder at the address of such Holder appearing in the Certificate Register. 
 
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 countersignature and delivery of such Certificates or 

 

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did not hold such offices at the date of such Certificate. No Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless countersigned by 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 executed and delivered hereunder. All
Certificates shall be dated the date of their countersignature. On the Closing Date, the Trustee shall countersign the Certificates to be issued at the 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 5.2 Certificate Register; Registration of Transfer and Exchange of Certificates. 
 

	 	(a)	 	The Trustee shall maintain, or cause to be maintained in accordance with the provisions of Section 5.6 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 execute and deliver, in the name of the designated transferee or transferees, one or more new Certificates of the same Class and 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 which 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 cancelled and subsequently destroyed by the Trustee in accordance with the Trustee’s customary procedures. 
 

	 	(b)	 	 No transfer of a Private 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 said Act and such state securities laws. In the event that a transfer is to be 

 

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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 in writing the facts surrounding the transfer in substantially the forms set forth in Exhibit I
(the “Transferor Certificate”) and (i) deliver a letter in substantially the form of either Exhibit J (the “Investment Letter”) or Exhibit K (the “Rule 144A Letter”) or (ii) there shall be delivered to the Trustee at
the expense of the transferor an Opinion of Counsel that such transfer may be made pursuant to an exemption from the Securities Act. The Depositor shall provide to any Holder of a Private 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 and the Master Servicer shall cooperate with the Depositor in providing the Rule 144A information referenced in the preceding
sentence, including providing to the Depositor such information regarding the Certificates, the Mortgage Loans and other matters regarding the Trust Fund as the Depositor shall reasonably request to meet its obligation under the preceding sentence.
Each Holder of a Private Certificate desiring to effect such transfer shall, and does hereby agree to, indemnify the Trustee and 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 an ERISA-Restricted Certificate shall be made unless the Trustee shall have received either (i) a
representation from the transferee of such Certificate acceptable to and in form and substance satisfactory to the Trustee (in the event such Certificate is a Private Certificate, such requirement is satisfied only by the Trustee’s receipt of a
representation letter from the transferee substantially in the form of Exhibit J or Exhibit K), to the effect that such transferee is not an employee benefit plan or arrangement subject to Section 406 of ERISA or a plan or arrangement subject to
Section 4975 of the Code, nor a person acting on behalf of any such plan or arrangement, nor using the assets of any such plan or arrangement to effect such transfer, (ii) in the case of a Private Certificate or a Residual Certificate, if the
purchaser is an insurance company, a representation that the purchaser is an insurance company which is purchasing such Certificates with funds contained in an “insurance company general account” (as such term is defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 (“PTCE 95-60”)) and that the purchase and holding of such Certificates are covered under PTCE 95-60 or (iii) 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 or arrangement 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 or arrangement, or using such plan’s or arrangement’s assets, an Opinion of Counsel satisfactory to the Trustee, which Opinion of Counsel shall not be an expense of either the Trustee or the Trust Fund, addressed to the Trustee
to the effect that the purchase or holding of such ERISA-Restricted Certificate will not result in the assets 

 

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of the Trust Fund being deemed to be “plan assets” and subject to the prohibited transaction provisions of ERISA and the Code and
will not subject the Trustee to any obligation in addition to those expressly undertaken in this Agreement or to any liability. 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 ERISA or to the Code without the delivery to the Trustee of an Opinion of Counsel satisfactory to the Trustee as described above shall be void and of no effect. 
 
To the extent permitted under applicable law
(including, but not limited to, ERISA), the Trustee shall be under no liability to any Person for any registration of transfer of any ERISA-Restricted Certificate that is in fact not permitted by this Section 5.2(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 so long as the transfer was registered by the Trustee in accordance with the foregoing requirements. 
 

	 	(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 H. 

 

	 	(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 5.2(c) 

 

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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 5.2(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 5.2(b) and this Section 5.2(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, Transferor Certificate and, in the case of a
Residual Certificate which is also a Private Certificate, either the Rule 144A Letter or the Investment Letter. The Trustee shall be entitled but not obligated to recover from any Holder of a Residual Certificate that was in fact not a Permitted
Transferee at the time it became a Holder or, at such subsequent time as it became other than a Permitted Transferee, all payments made on such Residual Certificate at and after either such time. Any such payments so recovered by the Trustee shall
be paid and delivered by the Trustee to the last preceding Permitted Transferee of such Certificate. 

 

	 	(v)	 	The Depositor shall use its best efforts to make available, upon receipt 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 5.2(c)
shall cease to apply (and the applicable portions of the legend on a Residual Certificate may be deleted) with respect to Transfers occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion of Counsel shall not be an expense of
the Trust Fund, the Trustee, the Seller or the Master Servicer, to the effect that the elimination of such restrictions will not cause any REMIC created hereunder 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 which, based on an
Opinion of Counsel furnished to the Trustee, is reasonably necessary (a) to ensure that the record ownership of, or any beneficial interest in, a Residual Certificate is not transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the Transfer of a Residual Certificate which 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 5.2 in connection with transfer shall be at the expense of the
parties to such transfers. 

 

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	 	(e)	 	Except as provided below, the Book-Entry Certificates shall at all times remain registered in the name of the Depository or its nominee and at all times: (i)
registration of the Certificates may not be transferred by the Trustee except to another Depository; (ii) the Depository shall maintain book-entry records with respect to the Certificate Owners and with respect to ownership and transfers of such
Book-Entry Certificates; (iii) ownership and transfers of registration of the Book-Entry Certificates on the books of the Depository shall be governed by applicable rules established by the Depository; (iv) the Depository may collect its usual and
customary fees, charges and expenses from its Depository Participants; (v) the Trustee shall deal with the Depository, Depository Participants and indirect participating firms as representatives of the Certificate Owners of the Book-Entry
Certificates for purposes of exercising the rights of holders under this Agreement, and requests and directions for and votes of such representatives shall not be deemed to be inconsistent if they are made with respect to different Certificate
Owners; and (vi) the Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its Depository Participants and furnished by the Depository Participants with respect to indirect
participating firms and persons shown on the books of such indirect participating firms as direct or indirect Certificate Owners. 

 
All transfers by Certificate Owners of Book-Entry Certificates shall be made in accordance with the procedures established
by the Depository Participant or brokerage firm representing such Certificate Owner. Each Depository Participant shall only transfer Book-Entry Certificates of Certificate Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository’s normal procedures. 
 
If (x) (i) the Depository or the Depositor advises the Trustee in writing that the Depository is no longer willing or able to properly discharge its responsibilities as Depository, and (ii) the Trustee or the Depositor is
unable to locate a qualified successor, (y) the Depositor at its option advises the Trustee in writing that it elects to terminate the book-entry system through the Depository or (z) after the occurrence of an Event of Default, Certificate Owners
representing at least 51% of the Class Certificate Balance of the Book-Entry Certificates together advise the Trustee and the Depository through the Depository Participants in writing that the continuation of a book-entry system through the
Depository is no longer in the best interests of the Certificate Owners, the Trustee shall notify all Certificate Owners, through the Depository, of the occurrence of any such event and of the availability of definitive, fully-registered
Certificates (the “Definitive Certificates”) to Certificate Owners requesting the same. Upon surrender to the Trustee of the related Class of Certificates by the Depository, accompanied by the instructions from the Depository for
registration, the Trustee shall issue the Definitive Certificates. Neither the Master Servicer, the Depositor nor the Trustee shall be liable for any delay in delivery of such instruction and each may conclusively rely on, and shall be protected in
relying on, such instructions. The Master Servicer shall provide the Trustee with an adequate inventory of certificates to facilitate the issuance and transfer of Definitive Certificates. Upon the issuance of 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 

 

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Definitive Certificates and the Trustee shall recognize the Holders of the Definitive Certificates as Certificateholders hereunder; provided
that the Trustee shall not by virtue of its assumption of such obligations become liable to any party for any act or failure to act of the Depository. 
 
SECTION 5.3 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 (b) there is delivered to the Master Servicer and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice
to the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute, countersign 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 5.3, 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 5.3 shall constitute complete and indefeasible evidence of ownership, as if
originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. 
 
SECTION 5.4 Persons Deemed Owners. 
 
The Master Servicer, the Trustee and any agent of the Master Servicer 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 Master Servicer the Trustee nor any agent of the Master Servicer or the
Trustee shall be affected by any notice to the contrary. 
 
SECTION 5.5 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 which such Certificateholders propose to transmit, or if the Depositor or Master Servicer shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of such request, provide the Depositor, the Master Servicer or such Certificateholders at such recipients’ expense the most recent list of the Certificateholders of
such 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 5.6 Maintenance of Office or Agency. 
 
The Trustee will maintain or cause to be maintained at its expense an office or offices or agency or agencies in New York City where
Certificates may be surrendered for registration of transfer or exchange. The Trustee initially designates its Corporate Trust Office for such 

 

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purposes. The Trustee will give prompt written notice to the Certificateholders of any change in such location of any such office or agency.

 
ARTICLE VI 
 
THE DEPOSITOR AND THE MASTER SERVICER 
 
SECTION 6.1 Respective Liabilities of the Depositor and the
Master Servicer. 
 
The Depositor and the Master
Servicer shall each be liable in accordance herewith only to the extent of the obligations specifically and respectively imposed upon and undertaken by them herein. 
 
SECTION 6.2 Merger or Consolidation of the Depositor or the Master Servicer. 
 
The Depositor and the Master Servicer will each keep in full
effect its existence, rights and franchises as a corporation under the laws of the United States or under the laws of one of the states thereof and will each obtain and preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, or any of the Mortgage Loans and to perform its respective duties under this Agreement. 
 
Any Person into which the Depositor or the Master Servicer may
be merged or consolidated, or any Person resulting from any merger or consolidation to which the Depositor or the Master Servicer shall be a party, or any person succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master Servicer, as the case may be, hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Master Servicer shall be qualified to sell mortgage loans to, and to service mortgage loans on behalf of, FNMA or FHLMC. 
 
SECTION 6.3 Limitation on Liability of the Depositor, the Master Servicer and Others. 
 
None of the Depositor, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor or the Master Servicer shall be under any liability to the Certificateholders for any action taken or for refraining from the taking of any action in good faith pursuant to this Agreement, or
for errors in judgment; provided, however, that this provision shall not protect the Depositor, the Master Servicer or any such Person against any breach of representations or warranties made by it herein or protect the Depositor, the Master
Servicer or any such Person from any liability which would otherwise be imposed by reasons of willful misfeasance, bad faith or gross negligence in the performance of duties or by reason of reckless disregard of obligations and duties hereunder. The
Depositor, the Master Servicer and any director, officer, employee or agent of the Depositor or the Master Servicer may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor, the Master Servicer and any director, officer, employee or agent of the Depositor or the Master Servicer shall be indemnified by the Trust Fund and held harmless against any loss, liability or expense incurred in
connection with any audit, controversy or judicial proceeding relating to a governmental taxing authority or any 

 

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legal action relating to this Agreement or the Certificates, other than any loss, liability or expense related to any specific Mortgage Loan
or Mortgage Loans (except as any such loss, liability or expense shall be otherwise reimbursable pursuant to this Agreement) and any loss, liability or expense incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of obligations and duties hereunder. Neither the Depositor nor the Master Servicer shall be under any obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and which in its opinion may involve it in any expense or liability; provided, however, that either the Depositor or the Master Servicer may in its discretion undertake any such action that it may deem
necessary or desirable in respect of this Agreement and the rights and duties of the parties hereto and interests of the Trustee and the Certificateholders hereunder. In such event, the legal expenses and costs of such action and any liability
resulting therefrom shall be expenses, costs and liabilities of the Trust Fund, and the Depositor and the Master Servicer shall be entitled to be reimbursed therefor out of the applicable subaccount of the Certificate Account. 
 
SECTION 6.4 Limitation on Resignation of Master Servicer.

 
The Master Servicer shall not resign from the
obligations and duties hereby imposed on it except (a) upon appointment of a successor servicer and receipt by the Trustee of a letter from each Rating Agency that such a resignation and appointment will not result in a downgrading of the rating of
any of the Certificates, or (b) upon determination that its duties hereunder are no longer permissible under applicable law. Any such determination under clause (b) permitting the resignation of the Master Servicer shall be evidenced by an Opinion
of Counsel to such effect delivered to the Trustee. No such resignation shall become effective until the Trustee or a successor master servicer shall have assumed the Master Servicer’s responsibilities, duties, liabilities and obligations
hereunder. 
 
ARTICLE VII 
 
DEFAULT 
 
SECTION 7.1 Events of Default. 
 
“Event of Default,” wherever used herein, means any
one of the following events: 
 

	 	(i)	 	any failure by the Master Servicer to deposit in the applicable subaccount of the Certificate Account or remit to the Trustee any payment required to be made under
the terms of this Agreement, which failure shall continue unremedied for five days after the date upon which written notice of such failure shall have been given to the Master Servicer by the Trustee or the Depositor or to the Master Servicer and
the Trustee by the Holders of Certificates having 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, which failure materially affects the rights of Certificateholders, which failure continues unremedied for a 

 

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period of 60 days 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 Master Servicer and the Trustee by the Holders of Certificates evidencing not less than 25% of the Voting Rights evidenced by the Certificates; provided, however, that the 60-day cure period shall not apply to the initial
delivery of the Mortgage File for Delay Delivery Mortgage Loans nor the failure to substitute or repurchase in lieu thereof; 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 failure of the Master Servicer to remit any Advance required to be remitted by the Master Servicer pursuant to Section 4.1 which failure continues unremedied at
11:00 a.m., Central time, on the related Distribution Date. 

 
If an Event of Default described in clauses (i) to (v) of this Section 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, or at the direction
of the Holders of Certificates evidencing not less than 66 2/3% 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), 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. If an Event of Default described in clause (vi) of this Section shall occur,
the Trustee shall, by notice in writing to the Master Servicer (with a copy to each Rating Agency), terminate all of the rights and obligations of the Master Servicer under this Agreement and in and to the Mortgage Loans and proceeds thereof, other
than its rights as a Certificateholder hereunder. On and 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 another successor to the Master Servicer appointed by the Trustee pursuant to Section 

 

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7.2. The Trustee, in its capacity as successor to the Master Servicer, shall thereupon make any Advance which the Master Servicer failed to
make subject to Section 4.1 hereof. The Trustee is hereby authorized and empowered to execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all
other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and endorsement or assignment of the Mortgage Loans and related documents, or otherwise. 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. 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 Trustee of all cash amounts which shall at the time be credited to the Certificate Account, or thereafter be received with respect to the
Mortgage Loans. All expenses incurred in the transferring of the servicing duties from the Master Servicer to a Successor Servicer shall be paid by the Master Servicer, and if not paid by the Master Servicer, shall be paid from amounts on deposit in
the Certificate Account. 
 
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 which was due prior to the notice terminating such Master
Servicer’s rights and obligations as Master Servicer hereunder and received after such notice, that portion thereof to which such Master Servicer would have been entitled pursuant to Sections 3.8(a)(i) through (viii),and any other amounts
payable to such Master Servicer hereunder the entitlement to which arose prior to the termination of its activities hereunder. Any termination of the activities of the Master Servicer hereunder will simultaneously result in the termination of the
Master Servicer’s duties as a subservicer pursuant to the Servicing Rights Transfer and Subservicing Agreement. 
 
SECTION 7.2 Trustee to Act; Appointment of Successor. 
 
On and after the time the Master Servicer receives a notice of termination pursuant to Section 7.1 hereof,
the Trustee shall, subject to and to the extent provided in Section 3.4, be the successor to the Master Servicer under this Agreement and the transactions set forth or provided for herein and 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 the obligation to make Advances pursuant to Section 4.1. As compensation therefor, the Trustee shall be entitled to all funds
relating to the Mortgage Loans that the Master Servicer would have been entitled to charge to the Certificate Account or Distribution Account if the Master Servicer had continued to act hereunder. Notwithstanding the foregoing, if the Trustee has
become the successor to the Master Servicer in accordance with Section 7.1 hereof, the Trustee may, if it shall be unwilling to so act, or shall, if it is prohibited by applicable law from making Advances pursuant to Section 4.1 hereof or if it is
otherwise unable to so act, appoint, or petition a court of competent jurisdiction to appoint, any established mortgage loan servicing institution the appointment of which does not adversely affect the then current rating of the Certificates by each
Rating Agency as the successor to the Master Servicer hereunder in the assumption of all or any part of the responsibilities, duties or liabilities of the Master Servicer hereunder. Any successor to the Master Servicer shall be an institution which
is a FNMA and FHLMC approved seller/servicer in good standing, which has a net worth of at least $10,000,000, and which is willing to service the Mortgage Loans and executes and delivers to the Depositor and the Trustee 

 

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an agreement accepting such delegation and assignment, which contains an assumption by such Person of the rights, powers, duties,
responsibilities, obligations and liabilities of the Master Servicer (other than liabilities of the Master Servicer under Section 6.3 hereof incurred prior to termination of the Master Servicer under Section 7.1), with like effect as if originally
named as a party to this Agreement; and provided further that each Rating Agency acknowledges that its rating of the Certificates in effect immediately prior to such assignment and delegation will not be qualified or reduced, as a result of such
assignment and delegation. Pending appointment of a successor to the Master Servicer hereunder, the Trustee, unless the Trustee is prohibited by law from so acting, shall, subject to Section 3.4 hereof, act in such capacity as provided above. 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 as it and such successor shall agree; provided, however, that no such compensation shall
be in excess of the Master Servicing Fee 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. 
 
Any successor to the Master Servicer as master servicer shall
give notice to the Mortgagors of such change of servicer and shall, during the term of its service as master servicer maintain in force the policy or policies that the Master Servicer is required to maintain pursuant to Section 6.5. 
 
SECTION 7.3 Notification to Certificateholders. 
 

	 	(a)	 	Upon any termination of or appointment of a successor to the Master Servicer, the Trustee shall give prompt written notice thereof to Certificateholders and to each
Rating Agency. 

 

	 	(b)	 	Within 60 days after the occurrence of any Event of Default, 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. 

 
ARTICLE VIII 
 
CONCERNING THE TRUSTEE 
 
SECTION 8.1 Duties of Trustee. 
 
The Trustee, prior to the occurrence of an Event of Default of which a Responsible Officer of the Trustee has actual knowledge and after the curing of all Events of Default that may have occurred,
shall undertake to perform such duties and only such duties as are specifically set forth in this Agreement. In case an Event of Default of which a Responsible Officer of the Trustee has actual knowledge has occurred and remains uncured, the Trustee
shall exercise such 

 

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of the rights and powers vested in it by this Agreement, and use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of such person’s own affairs. 
 
The Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Trustee that are specifically required to be furnished
pursuant to any provision of this Agreement shall examine them to determine whether they are in the form required by this Agreement; provided, however, that the Trustee shall not be responsible for the accuracy or content of any such resolution,
certificate, statement, opinion, report, document, order or other instrument. If any such instrument is found not to conform in any material respect to the requirements of this Agreement, the Trustee shall notify the Certificateholders of such
instrument in the event that the Trustee, after so requesting, does not receive a satisfactorily corrected instrument. 
 
No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that: 
 

	 	(i)	 	unless an Event of Default of which a Responsible Officer of the Trustee has actual knowledge shall have occurred and be continuing, the duties and obligations of
the Trustee shall be determined solely by the express provisions of this Agreement, the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement which it believed in good faith to be genuine and to have been duly executed by the proper authorities respecting any matters arising hereunder; 

 

	 	(ii)	 	the Trustee shall not be liable for an error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be
finally proven that the Trustee was negligent in ascertaining the pertinent facts; 

 

	 	(iii)	 	the Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with the direction of Holders of
Certificates evidencing not less than 25% of the Voting Rights of Certificates relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee
under this Agreement; 

 

	 	(iv)	 	 the Trustee shall not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or the
exercise of any of its rights or powers if there is reasonable ground for believing that the repayment of such funds or 

 

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adequate indemnity against such risk or liability is not assured to it, and none of the provisions contained in this Agreement shall in any
event require the Trustee to perform, or be responsible for the manner of performance of, any of the obligations of the Master Servicer under this Agreement except during such time, if any, as the Trustee shall be the successor to, and be vested
with the rights, duties, powers and privileges of, the Master Servicer; and 

 

	 	(v)	 	without limiting the generality of this Section 8.1, the Trustee shall have no duty (A) to see to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation statement evidencing a security interest, or to see to the maintenance of any such recording or filing or deposit or to any rerecording, refiling or redepositing of any thereof,
(B) to see to any insurance, (C) to see to the payment or discharge of any tax, assessment, or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Trust Fund other than
from funds available in the Distribution Account (D) to confirm or verify the contents of any reports or certificates of the Servicer delivered to the Trustee pursuant to this Agreement believed by the Trustee to be genuine and to have been signed
or presented by the proper party or parties. 

 
SECTION 8.2 Certain Matters Affecting the Trustee. 
 
Except as otherwise provided in Section 8.1: 
 

	 	(i)	 	the Trustee may request and rely upon and shall be protected in acting or refraining from acting upon any resolution, Officers’ Certificate, certificate of
auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties
and the Trustee shall have no responsibility to ascertain or confirm the genuineness of any signature of any such party or parties; 

 

	 	(ii)	 	the Trustee may consult with counsel, financial advisers or accountants and the advice of any such counsel, financial advisers or accountants and any Opinion of
Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance with such Opinion of Counsel; 

 

	 	(iii)	 	the Trustee shall not be liable 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; 

 

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	 	(iv)	 	the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or document, unless requested in writing so to do by Holders of Certificates evidencing not less than 25% of the Voting Rights allocated to each Class of Certificates; provided, however,
that if the payment within a reasonable time to the Trustee 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, not assured to the Trustee by the security afforded
to it by the terms of this Agreement, the Trustee may require indemnity satisfactory to the Trustee against such cost, expense or liability as a condition to taking any such action. The reasonable expense of every such examination shall be paid by
the Master Servicer or, if paid by the Trustee, shall be repaid by the Master Servicer upon demand from the Servicer’s own funds. 

 

	 	(v)	 	the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, accountants or attorneys and
the Trustee shall not be responsible for any misconduct or negligence on the part of such agent, accountant or attorney appointed by the Trustee with due care; 

 

	 	(vi)	 	the Trustee shall not be required to risk or expend its own funds or otherwise incur any financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers hereunder if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not assured to it; 

 

	 	(vii)	 	the Trustee shall not be liable for any loss on any investment of funds pursuant to this Agreement (other than as issuer of the investment security);

 

	 	(viii)	 	the Trustee shall not be deemed to have knowledge of an Event of Default until a Responsible Officer of the Trustee shall have received written notice thereof and in
the absence of such notice, the Trustee may conclusively assume that there is no Event of Default; 

 

	 	(ix)	 	the Trustee shall be under no obligation to exercise any of the trusts, rights or powers vested in it by this Agreement or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or direction of any of the Certificateholders, pursuant to the provisions of this Agreement, unless such Certificateholders shall have offered to the Trustee reasonable security or
indemnity satisfactory to the Trustee against the costs, expenses and liabilities which may be incurred therein or thereby; 

 

	 	(x)	 	 the right of the Trustee to perform any discretionary act enumerated in this Agreement shall not be construed as a duty, and the Trustee shall not be 

 

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answerable for other than its negligence or willful misconduct in the performance of such act; and 

 

	 	(xi)	 	the Trustee shall not be required to give any bond or surety in respect of the execution of the Trust Fund created hereby or the powers granted hereunder.

 
SECTION 8.3 Trustee Not Liable for
Certificates or Mortgage Loans. 
 
The recitals
contained herein and in the Certificates shall be taken as the statements of the Depositor and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Agreement or
of the Certificates or of any Mortgage Loan or related document other than with respect to the Trustee’s execution and counter-signature of the Certificates. The Trustee shall not be accountable for the use or application by the Depositor or
the Master Servicer of any funds paid to the Depositor or the Master Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the Certificate Account by the Depositor or the Master Servicer. 
 
SECTION 8.4 Trustee May Own Certificates. 
 
The Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates with the same rights as it would have if it were not the Trustee. 
 
SECTION 8.5 Trustee’s Fees and Expenses. 
 
The Trustee, as compensation for its activities prior to making the distributions pursuant to Section 4.2 hereunder, shall be entitled to
withdraw from the Distribution Account on each Distribution Date an amount equal to the Trustee Fee for such Distribution Date. The Trustee and any director, officer, employee or agent of the Trustee shall be indemnified by the Master Servicer and
held harmless against any loss, liability or expense (including reasonable attorney’s fees) (i) incurred in connection with any claim or legal action relating to (a) this Agreement, (b) the Certificates or (c) in connection with the performance
of any of the Trustee’s duties hereunder, other than any loss, liability or expense incurred by reason of willful misfeasance, bad faith or negligence in the performance of any of the Trustee’s duties hereunder or incurred by reason of any
action of the Trustee taken at the direction of the Certificateholders and (ii) resulting from any error in any tax or information return prepared by the Master Servicer. Such indemnity shall survive the termination of this Agreement or the
resignation or removal of the Trustee hereunder. Without limiting the foregoing, the Master Servicer covenants and agrees, except as otherwise agreed upon in writing by the Depositor and the Trustee, and except for any such expense, disbursement or
advance as may arise from the Trustee’s negligence, bad faith or willful misconduct, to pay or reimburse the Trustee, for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement with respect to: (A) the reasonable compensation and the expenses and disbursements of its counsel not associated with the closing of the issuance of the Certificates, (B) the reasonable compensation, expenses and
disbursements of any accountant, engineer or appraiser that is not regularly employed by the Trustee, to the extent that the Trustee must engage such persons to perform acts or services hereunder and (C) printing and engraving expenses in 

 

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connection with preparing any Definitive Certificates. Except as otherwise provided herein, the Trustee shall not be entitled to payment or
reimbursement for any routine ongoing expenses incurred by the Trustee in the ordinary course of its duties as Trustee, Registrar, Tax Matters Person or Paying Agent hereunder or for any other expenses. 
 
SECTION 8.6 Eligibility Requirements for Trustee.

 
The Trustee hereunder shall at all times be a
corporation or 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 of at least $50,000,000, subject
to supervision or examination by federal or state authority and with a credit rating which would not cause either of the Rating Agencies to reduce their respective then current ratings of the Certificates (or having provided such security from time
to time as is sufficient to avoid such reduction). If such corporation or association 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 8.6 the combined capital and surplus of such corporation or association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section 8.6, the Trustee shall resign immediately in the manner and with the effect specified in Section 8.7 hereof. The entity serving as Trustee may have normal banking and trust
relationships with the Depositor and its affiliates or the Master Servicer and its affiliates; provided, however, that such entity cannot be an affiliate of the Master Servicer other than the Trustee in its role as successor to the Master Servicer.

 
SECTION 8.7 Resignation and Removal of Trustee.

 
The Trustee may at any time resign and be
discharged from the trusts hereby created by giving written notice of resignation to the Depositor and the Master Servicer and each Rating Agency not less than 60 days before the date specified in such notice when, subject to Section 8.8, such
resignation is to take effect, and acceptance by a successor trustee in accordance with Section 8.8 meeting the qualifications set forth in Section 8.6. If no successor trustee meeting such qualifications shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice or resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee. 
 
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.6 hereof and shall fail to resign after written request thereto by the Depositor, or if at any time the Trustee shall become incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, or a tax is imposed with
respect to the Trust Fund by any state in which the Trustee or the Trust Fund is located and the imposition of such tax would be avoided by the appointment of a different trustee, then the Depositor or the Master Servicer may remove the Trustee and
appoint a successor trustee by written instrument, in triplicate, one copy of which instrument shall be delivered to the Trustee, one copy of which shall be delivered to the Master Servicer and one copy to the successor trustee. 
 

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The Holders of
Certificates entitled to at least 51% of the Voting Rights may at any time remove the Trustee and appoint a successor trustee by written instrument or instruments, in triplicate, signed by such Holders or their attorneys-in-fact duly authorized, one
complete set of which instruments shall be delivered by the successor Trustee to the Master Servicer, one complete set to the Trustee so removed and one complete set to the successor so appointed. Notice of any removal of the Trustee shall be given
to each Rating Agency by the Successor Trustee. 
 
Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section 8.7 shall become effective upon acceptance of appointment by the successor trustee as provided in
Section 8.8 hereof. 
 
SECTION 8.8 Successor
Trustee. 
 
Any successor trustee appointed as
provided in Section 8.7 hereof shall execute, acknowledge and deliver to the Depositor and to its predecessor trustee and the Master Servicer an instrument accepting such appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, 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 herein. The Depositor, the Master Servicer and the predecessor trustee shall execute and deliver such instruments and do such other things as may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties, and obligations. 
 
No successor trustee shall accept appointment as provided in this Section 8.8 unless at the time of such acceptance such successor trustee shall be eligible under the provisions of Section 8.6 hereof
and its appointment shall not adversely affect the then current rating of the Certificates. 
 
Upon acceptance of appointment by a successor trustee as provided in this Section 8.8, the Depositor shall mail notice of the succession of such trustee hereunder to all Holders of Certificates. If the
Depositor fails to mail such notice within 10 days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Depositor. 
 
SECTION 8.9 Merger or Consolidation of Trustee. 
 
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the business of the Trustee, shall be the successor of
the Trustee hereunder, provided that such corporation shall be eligible under the provisions of Section 8.6 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. 
 

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SECTION 8.10
Appointment of Co-Trustee or Separate Trustee. 
 
Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the Master Servicer and the Trustee acting jointly shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Trustee to act as co-trustee or co-trustees jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and to vest in such Person or Persons, in such capacity and for the benefit of the Certificateholders, such title to the Trust Fund or any part thereof, whichever is
applicable, and, subject to the other provisions of this Section 8.10, 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 8.6 and no notice to Certificateholders of the appointment of any co-trustee or separate trustee shall be required under Section 8.8.

 
Every separate trustee and co-trustee shall, to
the extent permitted by law, be appointed and act subject to the following provisions and conditions: 
 

	 	(i)	 	To the extent necessary to effectuate the purposes of this Section 8.10, all rights, powers, duties and obligations conferred or imposed upon the Trustee shall be
conferred or imposed upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (whether as Trustee hereunder or as successor to the 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 applicable 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 such appointment shall not, and shall not be
deemed to, constitute any such separate trustee or co-trustee as agent of the Trustee; 

 

	 	(iii)	 	The Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee; and 

 

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	 	(iv)	 	The Master Servicer, and not the Trustee, shall be liable for the payment of reasonable compensation, reimbursement and indemnification to any such 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 separate trustees and co-trustees, when and 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 VIII. 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 8.11 Tax Matters. 
 
It is intended that the assets with respect to which each REMIC election is to be made, as set forth in the
preliminary statement shall constitute, and that the conduct of matters relating to such assets shall be such as to qualify such assets as, a “real estate mortgage investment conduit” as defined in and in accordance with the REMIC
Provisions. In furtherance of such intention, the Trustee covenants and agrees that it shall act as agent (and the Trustee is hereby appointed to act as agent) on behalf of any such REMIC and that in such capacity it shall: (a) prepare and file, or
cause to be prepared and filed, in a timely manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax Return (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 any 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) 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; (c) make or cause to be made elections that
such assets be treated as a REMIC on the federal tax return for its first taxable year (and, if necessary, under applicable state law); (d) 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 

 

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provided to them in accordance with the REMIC Provisions, including without limitation, the calculation of any original issue discount using
the prepayment assumption; (e) 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 Non-Permitted Transferee, or a pass-through entity in which a Non-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) to
the extent that they are under its control conduct matters relating to such assets at all times that any Certificates are outstanding so as to maintain the status as a REMIC under the REMIC Provisions; (g) not knowingly or intentionally take any
action or omit to take any action that would cause the termination of any REMIC status; (h) pay, from the sources specified in the last paragraph of this Section 8.11, the amount of any federal or state tax, including prohibited transaction taxes as
described below, imposed on any such REMIC prior to its termination when and as the same shall be due and payable (but such obligation shall not prevent the Trustee or any other appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Trustee from withholding payment of such tax, if permitted by law, pending the outcome of such proceedings); (i) ensure that federal, state or local income tax or information returns shall be signed by the
Trustee or such other person as may be required to sign such returns by the Code or state or local laws, regulations or rules; (j) maintain records relating to any such REMIC, including but not limited to the income, expenses, assets and liabilities
thereof and the fair market value and adjusted basis of the assets determined at such intervals as may be required by the Code, as may be necessary to prepare the foregoing returns, schedules, statements or information; and (k) as and when necessary
and appropriate, represent any such REMIC 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 such REMIC, enter
into settlement agreements with any governmental taxing agency, extend any statute of limitations relating to any tax item of any such REMIC, and otherwise act on behalf of any such REMIC in relation to any tax matter or controversy involving it.

 
In order to enable the Trustee to perform its
duties as set forth herein, the Depositor shall provide, or cause to be provided, to the Trustee within ten (10) days after the Closing Date all information or data that the Trustee 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 promptly upon written request therefor, any such additional information or data that the Trustee may, from time to time, reasonably request in order to enable the Trustee to perform its duties as set forth herein. The Depositor hereby
indemnifies the Trustee for any losses, liabilities, damages, claims or expenses of the Trustee arising from any errors or miscalculations of the Trustee that result from any failure of the Depositor to provide, or to cause to be provided, accurate
information or data to the Trustee on a timely basis. 
 
In the event that any tax is imposed on “prohibited transactions” of any REMIC as defined in Section 860F(a)(2) of the Code, on the “net income from foreclosure property” of any REMIC as defined in Section 860G(c)
of the Code, on any contribution to any REMIC after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax is imposed, if not paid as otherwise provided for herein, such tax shall be paid by (i) the Trustee, if any such other tax

 

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arises out of or results from a breach by the Trustee of any of its obligations under this Agreement which breach was caused by its
negligence or willful misconduct, (ii) the Master Servicer, in the case of any such minimum tax, or if such tax arises out of or results from a breach by the Master Servicer of any of their obligations under this Agreement, (iii) the Seller, if any
such tax arises out of or results from the Seller’s obligation to repurchase a Mortgage Loan pursuant to Section 2.2 or 2.3 or (iv) in all other cases, or in the event that the Trustee, the Master Servicer or the Seller fails to honor its
obligations under the preceding clauses (i), (ii) or (iii), any such tax will be paid with amounts otherwise to be distributed to the Certificateholders, as provided in Section 3.8(b). 
 
SECTION 8.12 Periodic Filings. 
 
The Depositor hereby directs the Trustee to prepare, execute (pursuant to a limited power of attorney given
to the Trustee by the Depositor) and file on behalf of the Depositor all periodic reports required under the Securities Exchange Act of 1934 in conformity with the terms of the “no-action” relief granted by the SEC to issuers of
asset-backed securities such as the Certificates and the Trustee hereby agrees to do so. The Master Servicer will also prepare and execute any certifications to be filed with the Form 10-K as required under the Sarbanes-Oxley Act of 2002. In
connection with the preparation and filing of such periodic reports, the Depositor and the Master Servicer shall timely provide to the Trustee all material information available to them which is required to be included in such reports and not known
to them to be in the possession of the Trustee and such other information as the Trustee reasonably may request from either of them and otherwise reasonably shall cooperate with the Trustee. The Trustee shall have no liability with respect to any
failure to properly prepare or file such periodic reports resulting from or relating to the Trustee’s inability or failure to obtain any information not resulting from its own negligence or willful misconduct. 
 
ARTICLE IX 
 
TERMINATION 
 
SECTION 9.1 Termination upon Liquidation or Purchase of all
Mortgage Loans. 
 
Subject to Section 9.3, the
obligations and responsibilities of the Depositor, the Master Servicer and the Trustee created hereby with respect to the Trust Fund shall terminate upon the earlier of (a) the purchase by the Master Servicer of all Mortgage Loans (and REO
Properties) remaining in the Trust Fund at the price equal to the sum of (i) 100% of the Stated Principal Balance of each Mortgage Loan (other than a Mortgage Loan that has been foreclosed and subject to clause (ii)) plus one month’s accrued
interest thereon at the applicable Adjusted Mortgage Rate and (ii) the lesser of (x) the appraised value of any REO Property as determined by the higher of two appraisals completed by two independent appraisers selected by the Master Servicer at the
expense of the Master Servicer and (y) the Stated Principal Balance of each Mortgage Loan related to any REO Property, in each case plus accrued and unpaid interest thereon at the applicable Adjusted Mortgage Rate, plus any costs and damages
incurred by the Trust in connection with the noncompliance of such Mortgage Loan with any specifically applicable predatory or abusive lending law, 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 

 

99 

of all amounts required to be distributed to them pursuant to this Agreement. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the survivor of the descendants of Joseph P. Kennedy, the late Ambassador of the United States to the Court of St. James’s, living on the date hereof, and (ii) the Latest Possible
Maturity Date. The right to purchase all Mortgage Loans and REO Properties pursuant to clause (a) above shall be conditioned upon the Pool Principal Balance for both Mortgage Pools, at the time of any such repurchase, aggregating less than ten
percent of the aggregate Cut-off Date Principal Balance of the Mortgage Loans. 
 
SECTION 9.2 Final Distribution on the Certificates. 
 
If on any Determination Date, 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 Certificate Account, the Master Servicer shall direct the Trustee promptly to send a final distribution notice to each Certificateholder. If the Master Servicer elects to terminate the Trust Fund pursuant
to clause (a) of Section 9.1, at least 20 days prior to the date notice is to be mailed to the affected Certificateholders, the Master Servicer shall notify the Depositor and the Trustee of the date the Master Servicer intends to terminate the Trust
Fund and of the applicable repurchase price of the Mortgage Loans and REO Properties. 
 
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 Trustee by letter to Certificateholders mailed not earlier than the 10th day and no later than the 15th day of the month next 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 Master Servicer 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 Certificate Account to be remitted to the Trustee for
deposit in the applicable subaccounts of the Distribution Account on the Business Day prior to the applicable Distribution Date in an amount equal to the final distribution in respect of the Certificates. Upon such final deposit with respect to the
Trust Fund and the receipt by the Trustee of a Request for Release therefor, the Trustee shall promptly release to the Master Servicer the Mortgage Files for the Mortgage Loans. 
 
Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to the
Certificateholders of each Class, in the order set forth in Section 4.2 hereof, on the final Distribution Date, in the case of the Certificateholders, in proportion to their respective Percentage Interests, with respect to Certificateholders of the
same Class, an amount equal to (i) as to each Class of Regular Certificates, the Class Certificate Balance thereof plus accrued interest thereon (or on their Notional Amount, if applicable) in the case of an interest bearing Certificate, and (ii) as
to the Residual Certificates, the amount, if any, which remains on deposit 

 

100 

in the Distribution Account (other than the amounts retained to meet claims) after application pursuant to clause (i) above. 
 
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 Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within six months after the second notice all the applicable Certificates shall not have been surrendered for cancellation, the Trustee 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 which 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 Holders of each of the Class I-A-RU and Class I-A-RL Certificates shall be entitled to all unclaimed funds and other assets of the Trust Fund,
held for distribution to such Certificateholders, which remain subject hereto. 
 
SECTION 9.3 Additional Termination Requirements. 
 

	 	(a)	 	In the event the Master Servicer exercises its purchase option as provided in Section 9.1, the Trust Fund and each REMIC created hereunder shall be terminated in
accordance with the following additional requirements, unless the Trustee has been supplied with an Opinion of Counsel, at the expense of the Master Servicer, to the effect that the failure to comply with the requirements of this Section 9.3 will
not (i) result in the imposition of taxes on “prohibited transactions” on any REMIC as defined in Section 860F of the Code, or (ii) cause any REMIC to fail to qualify as a REMIC at any time that any Certificates are outstanding:

 
(A) Within 90
days prior to the final Distribution Date set forth in the notice given by the Master Servicer under Section 9.2, the Master Servicer shall prepare and the Trustee, at the expense of the “tax matters person,” shall adopt a plan of complete
liquidation within the meaning of Section 860F(a)(4) of the Code for each REMIC created hereunder which, as evidenced by an Opinion of Counsel addressed to the Trustee (which opinion shall not be an expense of the Trustee or the Tax Matters Person),
meets the requirements of a qualified liquidation; and 
 
(B) Within 90 days after the time of adoption of such plans of complete liquidation, the Trustee shall sell all of the assets of the Trust Fund to the Master Servicer for cash in accordance with Section 9.1. 
 

	 	(b)	 	The Trustee as agent for any REMIC established hereunder hereby agrees to adopt and sign such a plan of complete liquidation upon the written request of the Master
Servicer, and the receipt of the Opinion of Counsel referred to in Section 9.3(a)(1) and to take such other action in connection therewith as may be reasonably requested by the Master Servicer. 

 

101 

 

	 	(c)	 	By their acceptance of the Certificates, the Holders thereof hereby authorize the Master Servicer to prepare and the Trustee to adopt and sign plans of complete
liquidation. 

 
ARTICLE X

[RESERVED] 
 
ARTICLE XI 
 
MISCELLANEOUS PROVISIONS 
 
SECTION 11.1 Amendment. 
 
This Agreement may be amended from time to time by the Depositor, the Master Servicer and the Trustee without the consent of any of the
Certificateholders (i) to cure any ambiguity or mistake, (ii) to correct any defective provision herein or to supplement any provision herein which may be inconsistent with any other provision herein, (iii) to add to the duties of the Depositor, the
Seller or the Master Servicer, (iv) to add any other provisions with respect to matters or questions arising hereunder or (v) to modify, alter, amend, add to or rescind any of the terms or provisions contained in this Agreement; provided that any
action pursuant to clauses (iv) or (v) above shall not, as evidenced by an Opinion of Counsel delivered to the Trustee (which Opinion of Counsel shall not be an expense of the Trustee or the Trust Fund), adversely affect in any material respect the
interests of any Certificateholder; provided, however, that the amendment shall not be deemed to adversely affect in any material respect the interests of the Certificateholders if the Person requesting the amendment obtains a letter from each
Rating Agency stating that the amendment would not result in the downgrading or withdrawal of the respective ratings then assigned to the Certificates; it being understood and agreed that any such letter in and of itself will not represent a
determination as to the materiality of any such amendment and will represent a determination only as to the credit issues affecting any such rating. The Trustee, the Depositor and the Master Servicer also may at any time and from time to time amend
this Agreement without the consent of the Certificateholders to modify, eliminate or add to any of its provisions to such extent as shall be necessary or helpful to (i) maintain the qualification of any REMIC established hereunder as a REMIC under
the Code, (ii) avoid or minimize the risk of the imposition of any tax on any REMIC established hereunder pursuant to the Code that would be a claim at any time prior to the final redemption of the Certificates or (iii) comply with any other
requirements of the Code, provided that the Trustee 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 or the Trust Fund, to the
effect that such action is necessary or helpful to, as applicable, (i) maintain such qualification, (ii) avoid or minimize the risk of the imposition of such a tax or (iii) comply with any such requirements of the Code. 
 
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer and the Trustee with the consent of the Holders of a Majority in Interest of each Class of Certificates affected thereby 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, however, 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) adversely affect in 

 

102 

any material respect the interests of the Holders of any Class of Certificates in a manner other than as described in (i), without the
consent of the Holders of Certificates of such Class evidencing, as to such Class, Percentage Interests aggregating 66%, or (iii) reduce the aforesaid percentages of Certificates the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all such Certificates then outstanding. 
 
Notwithstanding any contrary provision of this Agreement, the Trustee shall not consent to any amendment to this Agreement unless it shall have first received an Opinion of Counsel, which opinion shall
not be an expense of the Trustee or the Trust Fund, to the effect that such amendment will not cause the imposition of any tax on any REMIC established hereunder or the Certificateholders or cause any REMIC established hereunder to fail to qualify
as a REMIC at any time that any Certificates are outstanding. 
 
Promptly after the execution of any amendment to this Agreement requiring the consent of Certificateholders, the Trustee shall furnish written notification of the substance or a copy of such amendment to each Certificateholder and
each Rating Agency. 
 
It shall not be necessary
for the consent of Certificateholders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Certificateholders shall be subject to such reasonable regulations as the Trustee may prescribe. 
 
Nothing in this Agreement shall require the Trustee to enter into an amendment without receiving an Opinion of Counsel (which Opinion
shall not be an expense of the Trustee or the Trust Fund), 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 have been complied with; and
(ii) either (A) the amendment does not adversely affect in any material respect the interests of any Certificateholder or (B) the conclusion set forth in the immediately preceding clause (A) is not required to be reached pursuant to this Section
11.1. 
 
SECTION 11.2 Recordation of Agreement;
Counterparts. 
 
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 Master Servicer at its expense, but only upon direction a majority of the Certificateholders to the effect that such recordation materially and beneficially affects 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 (by facsimile or otherwise) 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. 
 

103 

 
SECTION 11.3
Governing Law. 
 
THIS AGREEMENT (OTHER THAN
SECTION 2.1 HEREOF) 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. SECTION 2.1 OF THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED IN THE STATE OF DELAWARE AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS UNDER SUCH SECTION SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. 
 
SECTION 11.4 Intention of Parties. 
 

	 	(a)	 	It is the express intent of the parties hereto that the conveyance of the Trust Fund by the Depositor to the Trustee be, and be construed as, absolute sales thereof
to the Trustee. It is, further, not the intention of the parties that such conveyances be deemed a pledge thereof 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 Depositor, 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) the conveyance provided for in this Agreement shall be deemed to be an assignment and a grant by the Depositor to the Trustee, for the benefit of the Certificateholders, of a security interest in all of the assets
that constitute the Trust Fund, whether now owned or hereafter acquired. 

 
The Depositor, for the benefit of the Certificateholders, shall, to the extent consistent with this Agreement, take such
actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the 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. The Depositor shall arrange for filing any Uniform Commercial Code continuation statements in connection with any security interest granted or assigned to the Trustee for the benefit of the
Certificateholders. 
 
SECTION 11.5 Notices.

 

	 	(a)	 	The Trustee shall use its best efforts to promptly provide notice to each Rating Agency with respect to each of the following of which it has actual knowledge:

 

	 	(1)	 	Any material change or amendment to this Agreement; 

 

	 	(2)	 	The occurrence of any Event of Default that has not been cured; 

 

104 

 

	 	(3)	 	The resignation or termination of the Master Servicer or the Trustee and the appointment of any successor; 

 

	 	(4)	 	The repurchase or substitution of Mortgage Loans pursuant to Section 2.3; and 

 

	 	(5)	 	The final payment to Certificateholders. 

 

	 	(6)	 	Any rating action involving the long-term credit rating of the Master Servicer, which notice shall be made by first-class mail within two Business Days after the
Trustee gains actual knowledge thereof. 

 
In addition, the Trustee shall promptly furnish to each Rating Agency copies of the following: 
 

	 	(7)	 	Each report to Certificateholders described in Section 4.6; 

 

	 	(8)	 	Each annual statement as to compliance described in Section 3.16; 

 

	 	(9)	 	Each annual independent public accountants’ servicing report described in Section 3.17; and 

 

	 	(10)	 	Any notice of a purchase of a Mortgage Loan pursuant to Section 2.2, 2.3 or 3.11. 

 

	 	(b)	 	All directions, demands, authorizations, consents, waivers, communications and notices hereunder shall be in writing and shall be deemed to have been duly given when
delivered to by first class mail, facsimile or courier (a) in the case of the Depositor, First Horizon Asset Securities Inc., 4000 Horizon Way, Irving, Texas 75063, Attention: Wade Walker; (b) in the case of the Master Servicer, First Horizon Home
Loan Corporation, 4000 Horizon Way, Irving, Texas 75063, Attention: Larry P. Cole or such other address as may be hereafter furnished to the Depositor and the Trustee by the Master Servicer in writing; (c) in the case of the Trustee, The Bank of New
York, 101 Barclay Street, 8W, New York, New York 10286, Attention: Karon Greene, or such other address as the Trustee may hereafter furnish to the Depositor or Master Servicer; and (d) in the case of the Rating Agencies, the address specified
therefor in the definition corresponding to the name of such Rating Agency. Notices to Certificateholders shall be deemed given when mailed, first class postage prepaid, to their respective addresses appearing in the Certificate Register.

 
SECTION 11.6 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 

 

105 

of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof. 
 
SECTION
11.7 Assignment. 
 
Notwithstanding anything to
the contrary contained herein, except as provided in Section 6.2, this Agreement may not be assigned by the Master Servicer without the prior written consent of the Trustee and Depositor. 
 
SECTION 11.8 Limitation on Rights of Certificateholders. 
 
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the trust created hereby, 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 created hereby, 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 a written notice of an
Event of Default and of the continuance thereof, as herein provided, and unless 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 to
institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses, and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of indemnity shall have neglected or refused to institute any such action, suit or proceeding; it being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no one or more Holders of Certificates shall have any right in any manner whatever by virtue or by availing itself or themselves of any provisions of this Agreement to
affect, disturb or prejudice the rights of the Holders of any other of the Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Agreement, except in the manner herein
provided and for the common benefit of all Certificateholders. For the protection and enforcement of the provisions of this Section 11.8, each and every Certificateholder and the Trustee shall be entitled to such relief as can be given either at law
or in equity. 
 
SECTION 11.9 Inspection and Audit
Rights. 
 
The Master Servicer agrees that, on
reasonable prior notice, it will permit and will cause each Subservicer to permit any representative of the Depositor or the Trustee during the Master 

 

106 

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 the
Mortgage Loans with its officers, employees and independent public accountants (and by this provision the Master Servicer hereby authorizes said accountants to discuss with such representative such affairs, finances and accounts), all at such
reasonable times and as often as may be reasonably requested. Any out-of-pocket expense incident to the exercise by the Depositor or the Trustee of any right under this Section 11.9 shall be borne by the party requesting such inspection; all other
such expenses shall be borne by the Master Servicer or the related Subservicer. 
 
SECTION 11.10 Certificates Nonassessable and Fully Paid. 
 
It is the intention of the Depositor that Certificateholders shall not be personally liable for obligations of the Trust Fund, that the
interests in the Trust Fund represented by the Certificates shall be nonassessable for any reason whatsoever, and that the Certificates, upon due authentication thereof by the Trustee pursuant to this Agreement, are and shall be deemed fully paid.

 
SECTION 11.11 Limitations on Actions; No
Proceedings. 
 

	 	(a)	 	Other than pursuant to this Agreement, or in connection with or incidental to the provisions or purposes of this Agreement, the trust created hereunder shall not (i)
issue debt or otherwise borrow money, (ii) merge or consolidate with any other entity reorganize, liquidate or transfer all or substantially all of its assets to any other entity, or (iii) otherwise engage in any activity or exercise any power not
provided for in this Agreement. 

 

	 	(b)	 	Notwithstanding any prior termination of this Agreement, the Trustee, the Master Servicer and the Depositor shall not, prior to the date which is one year and one
day after the termination of this Agreement, acquiesce, petition or otherwise invoke or cause any Person to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Depositor or the Trust
Fund under any federal or state bankruptcy, insolvency or other similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Depositor or the Trust Fund or any substantial part of
their respective property, or ordering the winding up or liquidation of the affairs of the Depositor or the Trust Fund. 

 
SECTION 11.12 Acknowledgment of Seller. 
 
Seller hereby acknowledges the provisions of this Agreement, including the obligations under Sections 2.1(a), 2.2, 2.3(b) and 8.11 of this
Agreement and further acknowledges the Depositor’s assignment of its rights and remedies for the breach of the representations and warranties made by the Seller under the MLPA. 
 

107 

 
* * * * * *

 
 

108 

 
IN WITNESS
WHEREOF, the Depositor, the Trustee and the Master Servicer have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written. 
 

	 FIRST HORIZON ASSET SECURITIES INC.,

	 as Depositor

	
	 By:
	 	  

	 	 	 Wade Walker

	 	 	 Senior Vice President—Asset Securitization

	
	 THE BANK OF NEW YORK,

	 not in its individual capacity, but solely as Trustee

	
	 By:
	 	  

	 	 	 Diane Picket

	 	 	 Vice President

	
	 FIRST HORIZON HOME LOAN

	 CORPORATION, in its capacity as Master Servicer

	
	 By:
	 	  

	 	 	 Wade Walker

	 	 	 Senior Vice President—Asset Securitization

 

	
	 The foregoing agreement is hereby
 acknowledged and accepted as of the
 date first above written:

	
	 FIRST HORIZON HOME LOAN CORPORATION,

	 in its capacity as Seller

	
	 By:
	 	  

	 	 	 Wade Walker

	 	 	 Senior Vice President—Asset Securitization

 
SCHEDULE I

 
First Horizon Asset Securities Inc. 
Mortgage Pass-Through Certificates Series 2003-4 
 
Mortgage Loan Schedule 
 
[Available Upon Request from Trustee] 
 

I-1 

 
SCHEDULE II

 
First Horizon Asset Securities Inc. 
Mortgage Pass-Through Certificates Series 2003-4 
 
Representations and Warranties of the Master Servicer 
 
First Horizon Home Loan Corporation (“First Horizon”) hereby makes the representations and
warranties set forth in this Schedule II to the Depositor and the Trustee, as of the Closing Date, or if so specified herein, as of the Cut-off Date. Capitalized terms used but not otherwise defined in this Schedule II shall have the meanings
ascribed thereto in the Pooling and Servicing Agreement (the “Pooling and Servicing Agreement”) relating to the above-referenced Series, among First Horizon, as master servicer, First Horizon Asset Securities Inc., as depositor, and The
Bank of New York, as trustee. 
 
(1) First Horizon is duly organized as a Kansas corporation and is validly existing and in good standing under the laws of the State of Kansas and is duly authorized and qualified to transact any and all business contemplated by the
Pooling and Servicing Agreement to be conducted by First Horizon 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 the Pooling and Servicing Agreement and to perform any of its other
obligations under the Pooling and Servicing Agreement in accordance with the terms thereof. 
 
(2) First Horizon 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 the Pooling and Servicing Agreement and has duly authorized by all necessary corporate action on the part of First Horizon the execution, delivery and performance of the
Pooling and Servicing Agreement; and the Pooling and Servicing Agreement, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitutes a legal, valid and binding obligation of First Horizon, enforceable
against First Horizon in accordance with its terms, except that (a) the enforceability thereof 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. 
 
(3) The execution and delivery of the Pooling
and Servicing Agreement by First Horizon, the servicing of the Mortgage Loans by First Horizon under the Pooling and Servicing Agreement, the consummation of any other of the transactions contemplated by the Pooling and Servicing Agreement, and the
fulfillment of or compliance with the terms thereof are in the ordinary course of business of First Horizon and will not (A) result in a material breach of any term or provision of the charter or by-laws of First Horizon 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 First Horizon is a party or by which it may be bound, 

 

II-1 

or (C) constitute a material violation of any statute, order or regulation applicable to First Horizon of any court, regulatory body,
administrative agency or governmental body having jurisdiction over First Horizon; and First Horizon 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 First Horizon’s ability to perform or meet any of its obligations under the Pooling
and Servicing Agreement. 
 
(4) No
litigation is pending or, to the best of First Horizon’s knowledge, threatened against First Horizon that would prohibit the execution or delivery of, or performance under, the Pooling and Servicing Agreement by First Horizon. 
 
 

II-2 

 
SCHEDULE III

 
First Horizon Asset Securities Inc. 
Mortgage Pass-Through Certificates Series 2003-4 
 
Form of Monthly Master Servicer Report 
 
[Begins on Next Page] 
 

III-1 

 
SCHEDULE IV

 
First Horizon Asset Securities Inc. 
Mortgage Pass-Through Certificates Series 2003-4 
 
Principal Balance Schedules 
 
[Begins on Next Page]

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