Exhibit 4.1
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.,
Depositor
WILSHIRE CREDIT CORPORATION,
Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
----------
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 2006
----------
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2006-BC5
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS.................................................... 10
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES.. 60
SECTION 2.01. Conveyance of Mortgage Loans............................ 60
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans............. 63
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor............................................... 64
SECTION 2.04. Representations and Warranties of the Servicer.......... 67
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans Which
Are Not "Qualified Mortgages"........................... 68
SECTION 2.06. Authentication and Delivery of Certificates............. 69
SECTION 2.07. REMIC Elections......................................... 69
SECTION 2.08. Covenants of the Servicer............................... 74
SECTION 2.09. [RESERVED].............................................. 74
SECTION 2.10. [RESERVED].............................................. 74
SECTION 2.11. Permitted Activities of the Issuing Entity.............. 74
SECTION 2.12. Qualification of Special Purpose Entity................. 74
SECTION 2.13. Depositor Notification of NIM Notes..................... 74
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS............... 74
SECTION 3.01. Servicer to Service Mortgage Loans...................... 74
SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of Servicer................................. 76
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of
the Servicer............................................ 77
SECTION 3.04. Trustee to Act as Servicer.............................. 77
SECTION 3.05. Collection of Mortgage Loan Payments; Collection
Account; Certificate Account............................ 78
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts......................................... 81
SECTION 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans............................ 81
SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account..................................... 82
SECTION 3.09. [RESERVED].............................................. 84
SECTION 3.10. Maintenance of Hazard Insurance......................... 84
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.............................................. 85
i
TABLE OF CONTENTS
(continued)
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SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination
of Excess Proceeds...................................... 86
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files......... 90
SECTION 3.14. Documents Records and Funds in Possession of Servicer
to be Held for the Trustee.............................. 91
SECTION 3.15. Servicing Compensation.................................. 91
SECTION 3.16. Access to Certain Documentation......................... 92
SECTION 3.17. Annual Statement as to Compliance....................... 92
SECTION 3.18. Assessment of Compliance; Accountant's Attestation...... 92
SECTION 3.19. Subordination Liens..................................... 95
SECTION 3.20. Periodic Filings........................................ 95
SECTION 3.21. Indemnification by Trustee.............................. 99
SECTION 3.22. Indemnification by Servicer............................. 99
SECTION 3.23. Prepayment Charge Reporting Requirements................ 100
SECTION 3.24. Statements to Trustee................................... 100
SECTION 3.25. Further Indemnification by the Servicer................. 100
SECTION 3.26. Solicitation............................................ 101
SECTION 3.27. Existing Servicing Agreement............................ 101
SECTION 3.28. High Cost Mortgage Loans................................ 101
SECTION 3.29. [RESERVED].............................................. 101
ARTICLE IV DISTRIBUTIONS................................................. 101
SECTION 4.01. Advances................................................ 101
SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.......................... 102
SECTION 4.03. Distributions on the REMIC Interests.................... 102
SECTION 4.04. Distributions........................................... 103
SECTION 4.05. Monthly Statements to Certificateholders................ 111
ARTICLE V THE CERTIFICATES............................................... 115
SECTION 5.01. The Certificates........................................ 115
SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates................................ 116
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates....... 120
SECTION 5.04. Persons Deemed Owners................................... 120
ii
TABLE OF CONTENTS
(continued)
PAGE
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SECTION 5.05. Access to List of Certificateholders' Names and
Addresses............................................... 121
SECTION 5.06. Book-Entry Certificates................................. 121
SECTION 5.07. Notices to Depository................................... 122
SECTION 5.08. Definitive Certificates................................. 122
SECTION 5.09. Maintenance of Office or Agency......................... 122
ARTICLE VI THE DEPOSITOR AND THE SERVICER................................ 123
SECTION 6.01. Respective Liabilities of the Depositor and the
Servicer................................................ 123
SECTION 6.02. Merger or Consolidation of the Depositor or the
Servicer................................................ 123
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer
and Others.............................................. 123
SECTION 6.04. Limitation on Resignation of Servicer................... 124
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.......... 124
ARTICLE VII DEFAULT; TERMINATION OF SERVICER............................. 124
SECTION 7.01. Events of Default....................................... 124
SECTION 7.02. [RESERVED].............................................. 126
SECTION 7.03. Trustee to Act; Appointment of Successor................ 126
SECTION 7.04. Notification to Certificateholders...................... 127
ARTICLE VIII CONCERNING THE TRUSTEE...................................... 127
SECTION 8.01. Duties of Trustee....................................... 127
SECTION 8.02. Certain Matters Affecting the Trustee................... 128
SECTION 8.03. Trustee Not Liable for Mortgage Loans................... 130
SECTION 8.04. Trustee May Own Certificates............................ 130
SECTION 8.05. Trustee's Fees.......................................... 130
SECTION 8.06. Indemnification of Trustee; Expenses.................... 130
SECTION 8.07. Eligibility Requirements for Trustee.................... 131
SECTION 8.08. Resignation and Removal of Trustee...................... 132
SECTION 8.09. Successor Trustee....................................... 132
SECTION 8.10. Merger or Consolidation of Trustee...................... 133
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee........... 133
SECTION 8.12. Tax Matters............................................. 134
ARTICLE IX TERMINATION................................................... 136
SECTION 9.01. Termination upon Liquidation or Repurchase of all
Mortgage Loans.......................................... 136
SECTION 9.02. Final Distribution on the Certificates.................. 138
iii
TABLE OF CONTENTS
(continued)
PAGE
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SECTION 9.03. Additional Termination Requirements..................... 139
ARTICLE X MISCELLANEOUS PROVISIONS....................................... 140
SECTION 10.01. Amendment.............................................. 140
SECTION 10.02. Counterparts........................................... 142
SECTION 10.03. Governing Law.......................................... 142
SECTION 10.04. Intention of Parties................................... 142
SECTION 10.05. Notices................................................ 143
SECTION 10.06. Severability of Provisions............................. 143
SECTION 10.07. Assignment............................................. 144
SECTION 10.08. Limitation on Rights of Certificateholders............. 144
SECTION 10.09. Inspection and Audit Rights............................ 144
SECTION 10.10. Certificates Nonassessable and Fully Paid.............. 145
SECTION 10.11. [RESERVED]............................................. 145
SECTION 10.12. [RESERVED]............................................. 145
SECTION 10.13. Third Party Rights..................................... 145
SECTION 10.14. Assignment; Sales; Advance Facilities.................. 145
iv
EXHIBIT A FORMS OF OFFERED CERTIFICATES
EXHIBIT B-1 MORTGAGE LOAN SCHEDULE - MORTGAGE POOL
EXHIBIT B-2 MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
EXHIBIT B-3 MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
EXHIBIT C [RESERVED]
EXHIBIT D FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1 FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2 FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F FORM OF TRANSFEROR CERTIFICATE FOR CLASS P AND CLASS C
CERTIFICATES
EXHIBIT G FORM OF INVESTMENT LETTER
EXHIBIT H FORM OF RULE 144A INVESTMENT LETTER
EXHIBIT I REQUEST FOR RELEASE OF DOCUMENTS
EXHIBIT J FORM OF POWER OF ATTORNEY
EXHIBIT K FORM OF BACK-UP CERTIFICATION OF TRUSTEE
EXHIBIT L FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M [RESERVED]
EXHIBIT N FORM OF AUCTION PROCEDURES
EXHIBIT O-1 FORM OF CLASS A-1 CAP CONTRACT
EXHIBIT O-2 FORM OF CLASS A-2 CAP CONTRACT
EXHIBIT O-3 FORM OF SUBORDINATE CERTIFICATE CONTRACT
EXHIBIT O-4 FORM OF CREDIT SUPPORT ANNEX FOR THE CAP CONTRACTS
EXHIBIT P-1 ONE MONTH LIBOR CAP TABLE - A-1 CAP CONTRACT
EXHIBIT P-2 ONE MONTH LIBOR CAP TABLE - A-2 CAP CONTRACT
EXHIBIT P-3 ONE MONTH LIBOR CAP TABLE - SUBORDINATE CERTIFICATE CAP CONTRACT
EXHIBIT Q FORM OF ASSESSMENT OF COMPLIANCE
EXHIBIT R SERVICING CRITERIA TO BE ADDRESSED
EXHIBIT S FORM OF XXXXXXXX-XXXXX CERTIFICATION
EXHIBIT T FORM OF ITEM 1123 CERTIFICATION OF SERVICER
EXHIBIT U-1 FORM OF SWAP AGREEMENT
EXHIBIT U-2 FORM OF CREDIT SUPPORT ANNEX FOR THE SWAP AGREEMENT
SCHEDULE V ITEMS FOR FORM 8-K
SCHEDULE W ITEMS FOR FORM 10-D
SCHEDULE X ITEMS FOR FORM 10-K
POOLING AND SERVICING AGREEMENT, dated as of November 1, 2006 (the
"Agreement"), among XXXXXXX XXXXX MORTGAGE INVESTORS, INC., a Delaware
corporation, as depositor (the "Depositor"), WILSHIRE CREDIT CORPORATION, a
Nevada corporation, as servicer (the "Servicer"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as trustee (the "Trustee").
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 (i) three real estate mortgage investment conduits in a
tiered structure, (ii) the right to receive the payments distributable to the
Class P Certificates pursuant to Section 4.04(b)(i) hereof, (iii) each Cap
Contract and the Cap Contract Account, (iv) the grantor trusts described in
Section 2.07 hereof and (v) the Supplemental Interest Trust, which in turn will
hold the Swap Agreement. The SWAP REMIC will consist of all of the assets
constituting the Trust Fund (other than the assets described in clauses (ii),
(iii), (iv) and (v) above, other than the SWAP REMIC Regular Interests and other
than the Lower Tier REMIC Regular Interests) and will be evidenced by the SWAP
REMIC Regular Interests (which will be uncertificated and will represent the
"regular interests" in the SWAP REMIC) and the Class SWR Interest as the single
"residual interest" in the SWAP REMIC. The Lower Tier REMIC will consist of SWAP
REMIC Regular Interests and will be evidenced by the Lower Tier REMIC Regular
Interests (which will be uncertificated and will represent the "regular
interests" in the Lower Tier REMIC) and the Class LTR Interest as the single
"residual interest" in the Lower Tier REMIC. The Trustee will hold the Lower
Tier REMIC Regular Interests. The Upper Tier REMIC will consist of the Lower
Tier REMIC Regular Interests and will be evidenced by the REMIC Regular
Interests (which will represent the "regular interests" in the Upper Tier REMIC)
and the Residual Interest as the single "residual interest" in the Upper Tier
REMIC. The Class R Certificate will represent beneficial ownership of the Class
SWR Interest, the Class LTR Interest and the Residual Interest. The "latest
possible maturity date" for federal income tax purposes of all interests created
hereby will be the Latest Possible Maturity Date.
All covenants and agreements made by the Sponsor in the Sale Agreement and
by the Depositor and the Trustee herein with respect to the Mortgage Loans and
the other property constituting the Trust Fund are for the benefit of the
Holders from time to time of the Certificates.
THE SWAP REMIC
The following table sets forth the designations, initial principal balances and
interest rates for each interest in the SWAP REMIC:
Initial Principal Interest
Class Balance Rate
----- ----------------- --------
1-SW1 $55,138,715.328 (1)
1-SW1A $ 3,866,167.534 (2)
1-SW1B $ 3,866,167.534 (3)
1-SW2A $ 4,300,659.612 (2)
1-SW2B $ 4,300,659.612 (3)
1-SW3A $ 5,025,184.703 (2)
1-SW3B $ 5,025,184.703 (3)
1-SW4A $ 5,331,011.642 (2)
1-SW4B $ 5,331,011.642 (3)
1-SW5A $ 5,024,881.019 (2)
1-SW5B $ 5,024,881.019 (3)
1-SW6A $ 4,558,355.959 (2)
1
1-SW6B $ 4,558,355.959 (3)
1-SW7A $ 4,141,141.112 (2)
1-SW7B $ 4,141,141.112 (3)
1-SW8A $ 3,818,567.604 (2)
1-SW8B $ 3,818,567.604 (3)
1-SW9A $ 3,587,797.520 (2)
1-SW9B $ 3,587,797.520 (3)
1-SW10A $ 3,369,839.059 (2)
1-SW10B $ 3,369,839.059 (3)
1-SW11A $ 3,174,483.287 (2)
1-SW11B $ 3,174,483.287 (3)
1-SW12A $ 2,994,412.162 (2)
1-SW12B $ 2,994,412.162 (3)
1-SW13A $ 2,878,223.966 (2)
1-SW13B $ 2,878,223.966 (3)
1-SW14A $ 3,943,592.066 (2)
1-SW14B $ 3,943,592.066 (3)
1-SW15A $ 6,785,052.013 (2)
1-SW15B $ 6,785,052.013 (3)
1-SW16A $ 7,695,185.167 (2)
1-SW16B $ 7,695,185.167 (3)
1-SW17A $ 6,173,514.861 (2)
1-SW17B $ 6,173,514.861 (3)
1-SW18A $ 4,703,335.290 (2)
1-SW18B $ 4,703,335.290 (3)
1-SW19A $ 3,753,267.287 (2)
1-SW19B $ 3,753,267.287 (3)
1-SW20A $ 3,113,734.700 (2)
1-SW20B $ 3,113,734.700 (3)
1-SW21A $ 2,720,283.132 (2)
1-SW21B $ 2,720,283.132 (3)
1-SW22A $ 2,560,132.153 (2)
1-SW22B $ 2,560,132.153 (3)
1-SW23A $ 2,387,332.378 (2)
1-SW23B $ 2,387,332.378 (3)
1-SW24A $ 2,201,717.645 (2)
1-SW24B $ 2,201,717.645 (3)
1-SW25A $ 2,087,282.695 (2)
1-SW25B $ 2,087,282.695 (3)
1-SW26A $ 2,089,771.806 (2)
1-SW26B $ 2,089,771.806 (3)
1-SW27A $ 2,601,561.489 (2)
1-SW27B $ 2,601,561.489 (3)
1-SW28A $ 3,207,287.642 (2)
1-SW28B $ 3,207,287.642 (3)
1-SW29A $ 764,271.217 (2)
1-SW29B $ 764,271.217 (3)
1-SW30A $ 588,705.916 (2)
2
1-SW30B $ 588,705.916 (3)
1-SW31A $ 1,810,342.822 (2)
1-SW31B $ 1,810,342.822 (3)
1-SW32A $ 1,585,235.033 (2)
1-SW32B $ 1,585,235.033 (3)
1-SW33A $ 1,447,409.542 (2)
1-SW33B $ 1,447,409.542 (3)
1-SW34A $ 1,342,301.696 (2)
1-SW34B $ 1,342,301.696 (3)
1-SW35A $ 1,231,189.222 (2)
1-SW35B $ 1,231,189.222 (3)
1-SW36A $ 1,126,022.129 (2)
1-SW36B $ 1,126,022.129 (3)
1-SW37A $ 1,040,697.691 (2)
1-SW37B $ 1,040,697.691 (3)
1-SW38A $977,607.519 (2)
1-SW38B $977,607.519 (3)
1-SW39A $937,174.573 (2)
1-SW39B $937,174.573 (3)
1-SW40A $897,041.192 (2)
1-SW40B $897,041.192 (3)
1-SW41A $852,266.622 (2)
1-SW41B $852,266.622 (3)
1-SW42A $19,430,949.443 (2)
1-SW42B $19,430,949.443 (3)
2-SW2 $85,393,396.972 (4)
2-SW1A $ 5,987,538.466 (5)
2-SW1B $ 5,987,538.466 (6)
2-SW2A $ 6,660,436.888 (5)
2-SW2B $ 6,660,436.888 (6)
2-SW3A $ 7,782,509.797 (5)
2-SW3B $ 7,782,509.797 (6)
2-SW4A $ 8,256,144.358 (5)
2-SW4B $ 8,256,144.358 (6)
2-SW5A $ 7,782,039.481 (5)
2-SW5B $ 7,782,039.481 (6)
2-SW6A $ 7,059,531.541 (5)
2-SW6B $ 7,059,531.541 (6)
2-SW7A $ 6,413,390.388 (5)
2-SW7B $ 6,413,390.388 (6)
2-SW8A $ 5,913,820.396 (5)
2-SW8B $ 5,913,820.396 (6)
2-SW9A $ 5,556,426.480 (5)
2-SW9B $ 5,556,426.480 (6)
2-SW10A $ 5,218,873.941 (5)
2-SW10B $ 5,218,873.941 (6)
2-SW11A $ 4,916,326.213 (5)
2-SW11B $ 4,916,326.213 (6)
3
2-SW12A $ 4,637,449.838 (5)
2-SW12B $ 4,637,449.838 (6)
2-SW13A $ 4,457,509.034 (5)
2-SW13B $ 4,457,509.034 (6)
2-SW14A $ 6,107,445.934 (5)
2-SW14B $ 6,107,445.934 (6)
2-SW15A $10,508,018.487 (5)
2-SW15B $10,508,018.487 (6)
2-SW16A $11,917,542.833 (5)
2-SW16B $11,917,542.833 (6)
2-SW17A $ 9,560,930.139 (5)
2-SW17B $ 9,560,930.139 (6)
2-SW18A $ 7,284,061.210 (5)
2-SW18B $ 7,284,061.210 (6)
2-SW19A $ 5,812,689.713 (5)
2-SW19B $ 5,812,689.713 (6)
2-SW20A $ 4,822,244.800 (5)
2-SW20B $ 4,822,244.800 (6)
2-SW21A $ 4,212,905.868 (5)
2-SW21B $ 4,212,905.868 (6)
2-SW22A $ 3,964,879.847 (5)
2-SW22B $ 3,964,879.847 (6)
2-SW23A $ 3,697,264.622 (5)
2-SW23B $ 3,697,264.622 (6)
2-SW24A $ 3,409,802.855 (5)
2-SW24B $ 3,409,802.855 (6)
2-SW25A $ 3,232,577.305 (5)
2-SW25B $ 3,232,577.305 (6)
2-SW26A $ 3,236,432.194 (5)
2-SW26B $ 3,236,432.194 (6)
2-SW27A $ 4,029,041.511 (5)
2-SW27B $ 4,029,041.511 (6)
2-SW28A $ 4,967,130.358 (5)
2-SW28B $ 4,967,130.358 (6)
2-SW29A $ 1,183,627.783 (5)
2-SW29B $ 1,183,627.783 (6)
2-SW30A $ 911,729.584 (5)
2-SW30B $ 911,729.584 (6)
2-SW31A $ 2,803,680.178 (5)
2-SW31B $ 2,803,680.178 (6)
2-SW32A $ 2,455,055.467 (5)
2-SW32B $ 2,455,055.467 (6)
2-SW33A $ 2,241,604.958 (5)
2-SW33B $ 2,241,604.958 (6)
2-SW34A $ 2,078,824.304 (5)
2-SW34B $ 2,078,824.304 (6)
2-SW35A $ 1,906,744.278 (5)
2-SW35B $ 1,906,744.278 (6)
4
2-SW36A $ 1,743,871.871 (5)
2-SW36B $ 1,743,871.871 (6)
2-SW37A $ 1,611,729.809 (5)
2-SW37B $ 1,611,729.809 (6)
2-SW38A $ 1,514,021.981 (5)
2-SW38B $ 1,514,021.981 (6)
2-SW39A $ 1,451,403.427 (5)
2-SW39B $ 1,451,403.427 (6)
2-SW40A $ 1,389,248.808 (5)
2-SW40B $ 1,389,248.808 (6)
2-SW41A $ 1,319,906.378 (5)
2-SW41B $ 1,319,906.378 (6)
2-SW42A $30,092,735.557 (5)
2-SW42B $30,092,735.557 (6)
SWR (7) (7)
(1) The interest rate on the Class 1-SW1 Interest shall be a per annum rate
equal to the Group One Net WAC.
(2) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "1" and ending with the designation
"A" shall be a per annum rate equal to 2 times the Group One Net WAC,
subject to a maximum rate of 2 times the REMIC Swap Rate for such
Distribution Date.
(3) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "1" and ending with the designation
"B" shall be a per annum rate equal to the greater of (x) the excess, if
any, of (i) 2 times the Group One Net WAC over (ii) 2 times the REMIC Swap
Rate for such Distribution Date and (y) 0.00%.
(4) The interest rate on the Class 2-SW2 Interest shall be a per annum rate
equal to the Group Two Net WAC.
(5) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "2" and ending with the designation
"A" shall be a per annum rate equal to 2 times the Group Two Net WAC,
subject to a maximum rate of 2 times the REMIC Swap Rate for such
Distribution Date.
(6) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "2" and ending with the designation
"B" shall be a per annum rate equal to the greater of (x) the excess, if
any, of (i) 2 times the Group Two Net WAC over (ii) 2 times the REMIC Swap
Rate for such Distribution Date and (y) 0.00%.
(7) The Class SWR Interest shall have no principal amount and shall bear no
interest.
THE LOWER TIER REMIC
The following table sets forth the designations, initial principal
balances, interest rates, Corresponding Classes of Certificates and related
Mortgage Group for each interest in the Lower Tier REMIC:
Class(es) of
Corresponding
Initial Certificates or
Principal Interest Related Mortgage
Class Balance Rate Group
----- --------- -------- ----------------
LTA-1 (1) (8) A-1, R
LTA-2A (1) (8) A-2A
5
LTA-2B (1) (8) A-2B
LTA-2C (1) (8) A-2C
LTA-2D (1) (8) A-2D
LTA-2E (1) (8) A-2E
LTM-1 (1) (8) M-1
LTM-2 (1) (8) M-2
LTM-3 (1) (8) M-3
LTM-4 (1) (8) M-4
LTM-5 (1) (8) M-5
LTM-6 (1) (8) M-6
LTB-1 (1) (8) B-1
LTB-2 (1) (8) B-2
LTB-3 (1) (8) B-3
LTIX (2) (8) N/A
LTII1A (3) (8) Group One
LTII1B (4) (9) Group One
LTII2A (5) (8) Group Two
LTII2B (6) (10) Group Two
LTIIX (7) (8) N/A
LT-IO (11) (11) N/A
LTR (12) (12) N/A
(1) The initial principal balance of each of these Lower Tier REMIC Regular
Interests shall equal 1/4 of the initial Certificate Principal Balance of
its Corresponding Certificates.
(2) The initial principal balance of the Class LTIX Interest shall equal the
excess of (i) 50% of the aggregate Cut-off Date Principal Balance of the
Mortgage Loans over (ii) the initial principal balance of the Lower Tier
REMIC I Marker Interests.
(3) The initial principal balance of the Class LTII1A Interest shall equal
0.05% of the excess of (i) the aggregate Cut-off Date Principal Balance of
the Group One Mortgage Loans over (ii) the aggregate of the initial
Certificate Principal Balances of Certificate Group One.
(4) The initial principal balance of the Class LTII1B Interest shall equal
0.05% of the aggregate Cut-off Date Principal Balance of the Group One
Mortgage Loans.
(5) The initial principal balance of the Class LTII2A Interest shall equal
0.05% of the excess of (i) the aggregate Cut-off Date Principal Balance of
the Group Two Mortgage Loans over (ii) the aggregate of the initial
Certificate Principal Balances of Certificate Group Two.
(6) The initial principal balance of the Class LTII2B Interest shall equal
0.05% of the aggregate Cut-off Date Principal Balance of the Group Two
Mortgage Loans.
(7) The initial principal balance of the Class LTIIX Interest shall equal the
excess of (i) 50% of the aggregate Cut-off Date Principal Balance of the
Mortgage Loans over (ii) the initial principal balance of the Lower Tier
REMIC II Marker Interests.
(8) For each Distribution Date, the interest rate for each of the Lower Tier
REMIC Regular Interests (other than the Class LTII1B, the Class LTII2B and
the Class LT-IO Interests) shall be a per annum rate (but not less than
zero) equal to the product of (i) the weighted average of the interest
rates on the SWAP REMIC Regular Interests for such Distribution Date and
(ii) a fraction the numerator of which is 30 and the denominator of which
is the actual number of days in the Accrual Period for the LIBOR
Certificates, provided however, that for any Distribution Date on which the
Class LT-IO Interest is entitled to a portion of interest accruals on a
SWAP REMIC Regular Interest
6
ending with a designation "A" as described in footnote 11 below, such
weighted average shall be computed by first subjecting the rate on such
SWAP REMIC Regular Interest to a cap equal to Swap LIBOR for such
Distribution Date.
(9) For each Distribution Date, the interest rate for the Class LTII1B Interest
shall be a per annum rate equal to the product of (i) the weighted average
of the interest rates on the SWAP REMIC Regular Interests beginning with
the designation "1" for such Distribution Date and (ii) a fraction the
numerator of which is 30 and the denominator of which is the actual number
of days in the Accrual Period for the LIBOR Certificates, provided,
however, that for any Distribution Date on which the Class LT-IO Interest
is entitled to a portion of interest accruals on a SWAP REMIC Regular
Interest ending with a designation "A" as described in footnote 11 below,
such weighted average shall be computed by first subjecting the rate on
such SWAP REMIC Regular Interest to a cap equal to Swap LIBOR for such
Distribution Date.
(10) For each Distribution Date, the interest rate for the Class LTII2B Interest
shall be a per annum rate equal to the product of (i) the weighted average
of the interest rates on the SWAP REMIC Regular Interests beginning with
the designation "2" for such Distribution Date and (ii) a fraction the
numerator of which is 30 and the denominator of which is the actual number
of days in the Accrual Period for the LIBOR Certificates, provided,
however, that for any Distribution Date on which the Class LT-IO Interest
is entitled to a portion of interest accruals on a SWAP REMIC Regular
Interest ending with a designation "A" as described in footnote 11 below,
such weighted average shall be computed by first subjecting the rate on
such SWAP REMIC Regular Interest to a cap equal to Swap LIBOR for such
Distribution Date.
(11) The Class LT-IO Interest is an interest-only class that does not have a
principal balance. For only those Distribution Dates listed in the first
column of the table below, the Class LT-IO Interest shall be entitled to
interest accrued on the SWAP REMIC Regular Interest listed in the second
column below at a per annum rate equal to the excess, if any, of (i) the
interest rate for such SWAP REMIC Regular Interest for such Distribution
Date over (ii) Swap LIBOR for such Distribution Date.
Distribution SWAP REMIC
Date Regular Interest
------------ ----------------
7 Class 1-SW1A
Class 2-SW1A
7-8 Class 1-SW2A
Class 2-SW2A
7-9 Class 1-SW3A
Class 2-SW3A
7-10 Class 1-SW4A
Class 2-SW4A
7-11 Class 1-SW5A
Class 2-SW5A
7-12 Class 1-SW6A
Class 2-SW6A
7-13 Class 1-SW7A
Class 2-SW7A
7-14 Class 1-SW8A
Class 2-SW8A
7-15 Class 1-SW9A
Class 2-SW9A
7-16 Class 1-SW10A
Class 2-SW10A
7-17 Class 1-SW11A
Class 2-SW11A
7-18 Class 1-SW12A
Class 2-SW12A
7-19 Class 1-SW13A
Class 2-SW13A
7
7-20 Class 1-SW14A
Class 2-SW14A
7-21 Class 1-SW15A
Class 2-SW15A
7-22 Class 1-SW16A
Class 2-SW16A
7-23 Class 1-SW17A
Class 2-SW17A
7-24 Class 1-SW18A
Class 2-SW18A
7-25 Class 1-SW19A
Class 2-SW19A
7-26 Class 1-SW20A
Class 2-SW20A
7-27 Class 1-SW21A
Class 2-SW21A
7-28 Class 1-SW22A
Class 2-SW22A
7-29 Class 1-SW23A
Class 2-SW23A
7-30 Class 1-SW24A
Class 2-SW24A
7-31 Class 1-SW25A
Class 2-SW25A
7-32 Class 1-SW26A
Class 2-SW26A
7-33 Class 1-SW27A
Class 2-SW27A
7-34 Class 1-SW28A
Class 2-SW28A
7-35 Class 1-SW29A
Class 2-SW29A
7-36 Class 1-SW30A
Class 2-SW30A
7-37 Class 1-SW31A
Class 2-SW31A
7-38 Class 1-SW32A
Class 2-SW32A
7-39 Class 1-SW33A
Class 2-SW33A
7-40 Class 1-SW34A
Class 2-SW34A
7-41 Class 1-SW35A
Class 2-SW35A
7-42 Class 1-SW36A
Class 2-SW36A
7-43 Class 1-SW37A
Class 2-SW37A
7-44 Class 1-SW38A
Class 2-SW38A
7-45 Class 1-SW39A
Class 2-SW39A
7-46 Class 1-SW40A
Class 2-SW40A
7-47 Class 1-SW41A
Class 2-SW41A
8
7-48 Class 1-SW42A
Class 2-SW42A
(12) The Class LTR Interest shall have no principal amount and shall bear no
interest.
UPPER TIER REMIC
The following table sets forth the designation, the initial principal balances,
the interest rates and Classes of Related Certificates for each of the interests
in the Upper Tier REMIC.
Initial Class of
Principal Related
Class Balance Rate Certificates
----- --------- ---- ------------
UTA-1 (1) (2) A-1
UTA-2A (1) (2) A-2A
UTA-2B (1) (2) A-2B
UTA-2C (1) (2) A-2C
UTA-2D (1) (2) A-2D
UTA-2E (1) (2) A-2E
UTM-1 (1) (2) M-1
UTM-2 (1) (2) M-2
UTM-3 (1) (2) M-3
UTM-4 (1) (2) M-4
UTM-5 (1) (2) M-5
UTM-6 (1) (2) M-6
UTB-1 (1) (2) B-1
UTB-2 (1) (2) B-2
UTB-3 (1) (2) B-3
Uncertificated Class C Interest (3) (3) N/A
UT-IO (4) (4) N/A
Residual Interest (1) (2) R
(1) The initial principal balance of each of these REMIC Regular Interests
shall equal the initial principal balance of its Class of Related
Certificates.
(2) The interest rates on each of these REMIC Regular Interests shall be an
annual rate equal to the Pass-Through Rate for the Class of Related
Certificates, provided that in lieu of the applicable Available Funds Caps
set forth in the definition of an applicable Pass-Through Rate, the
applicable Upper Tier REMIC Net WAC Cap shall be used.
(3) The Uncertificated Class C Interest shall have an initial principal balance
equal to the initial Overcollateralization Amount. The Uncertificated Class
C Interest shall accrue interest on a notional balance set forth in the
definition of Class C Current Interest at a rate equal to the Class C
Distributable Interest Rate. The Uncertificated Class C Interest shall be
represented by the Class C Certificates.
(4) The Class UT-IO Interest shall have no principal amount and will not have
an interest rate, but will be entitled to 100% of the interest accrued with
respect to the Class LT-IO Interest. The Class UT-IO Interest shall be
represented by the Class C Certificates.
THE CERTIFICATES
The following table sets forth the Class designation, interest rate and initial
Class principal amount for each Class of Certificates comprising interests in
the Trust Fund.
9
Initial
Class
Principal Interest
Class Amount Rate
----- --------- --------
A-1 (1) (2)
A-2A (1) (2)
A-2B (1) (2)
A-2C (1) (2)
A-2D (1) (2)
A-2E (1) (2)
M-1 (1) (2)
M-2 (1) (2)
M-3 (1) (2)
M-4 (1) (2)
M-5 (1) (2)
M-6 (1) (2)
B-1 (1) (2)
B-2 (1) (2)
B-3 (1) (2)
C (3) (3)
P (4) (4)
R (1) (2)(5)
(1) Each of these Classes of Certificates shall have initial principal balances
as set forth in Section 5.01 hereof.
(2) Each of these Classes of Certificates shall bear interest at a per annum
rate equal to the Pass-Through Rate for such Certificates set forth in the
definitions herein.
(3) For federal income tax purposes, the Class C Certificate shall represent
(i) the right to receive all distributions with respect to the REMIC
Regular Interests represented by the Uncertificated Class C Interest and
the Class UT-IO Interest and (ii) certain rights and obligations with
respect to notional principal contracts as described in Section 2.07.
(4) The Class P Certificates shall be entitled to the amounts distributable
pursuant to Section 4.04(b) hereof and shall not represent a REMIC regular
interest.
(5) The Class R Interest represents ownership of the Class SWR Interest, the
Class LTR Interest and the Residual Interest.
In consideration of the mutual agreements herein contained, the Depositor,
the Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage servicing practices of prudent mortgage
lending institutions that service for their own
10
account mortgage loans of the same type as the Mortgage Loans in the
jurisdictions in which the related Mortgaged Properties are located.
Accountant's Attestation: As defined in Section 3.18 hereof.
Accrual Period: With respect to each Class of the LIBOR Certificates, their
Corresponding REMIC Regular Interests and the Lower Tier REMIC Interests and any
Distribution Date, the period commencing on the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the Closing
Date) and ending on the day immediately preceding such Distribution Date, and
with respect to the SWAP REMIC Regular Interests and any Distribution Date, the
calendar month immediately preceding the month in which such Distribution Date
occurs. All calculations of interest on each Class of the LIBOR Certificates,
their Corresponding REMIC Regular Interests and the Lower Tier REMIC Interests
will be made on the basis of the actual number of days elapsed in the related
Accrual Period and a 360 day year, and all calculations of interest on the SWAP
REMIC Regular Interests will be made on the basis of a 360-day year consisting
of twelve 30-day months.
Additional Form 10-D Disclosure: As defined in Section 3.20 hereof.
Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate that is adjustable.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.
Advance: The aggregate of the advances required to be made by the Servicer
with respect to any Distribution Date pursuant to Section 4.01, the amount of
any such advances being equal to the sum of the aggregate amount of all payments
of principal and interest (or, with respect to interest-only Mortgage Loans,
payments of scheduled interest) (net of the Servicing Fee) on the Mortgage Loans
that were due during the applicable Due Period and not received as of the close
of business on the related Determination Date, except as provided in Section
4.01 hereof, less the aggregate amount of any such Delinquent payments that the
Servicer has determined would constitute a Non-Recoverable Advance were an
advance to be made with respect thereto; provided, however, that with respect to
(i) any Mortgage Loan that is 150 days delinquent or more (whether or not the
Mortgage Loan has been converted to an REO Property), (ii) shortfalls due to
bankruptcy proceedings or the application of the Relief Act or similar law and
(iii) the principal portion of any amount paid on a Balloon Loan, there will be
no obligation to make advances and, provided further, however, that with respect
to any Mortgage Loan that has been converted to an REO Property which is less
than 150 days delinquent, the obligation to make Advances shall only be to
payments of interest (subject to the exceptions described above and net of the
related Servicing Fees), to be calculated after taking into account rental
income.
Advance Facility: A financing or other facility as described in Section
10.14(a).
Advance Facility Notice: As defined in Section 10.14(b).
Advance Financing Person: As defined in Section 10.14(a).
Advance Reimbursement Amounts: As defined in Section 10.14(a).
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
11
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Certificate Principal Balance: For any date of determination, the
sum of the Class A-1 Certificate Principal Balance, the Class A-2A Certificate
Principal Balance, the Class A-2B Certificate Principal Balance, the Class A-2C
Certificate Principal Balance, the Class A-2D Certificate Principal Balance, the
Class A-2E Certificate Principal Balance, the Class R Certificate Principal
Balance, the Class M-1 Certificate Principal Balance, the Class M-2 Certificate
Principal Balance, the Class M-3 Certificate Principal Balance, the Class M-4
Certificate Principal Balance, the Class M-5 Certificate Principal Balance, the
Class M-6 Certificate Principal Balance, the Class B-1 Certificate Principal
Balance, the Class B-2 Certificate Principal Balance, and the Class B-3
Certificate Principal Balance, in each case as of such date of determination.
Agreement: This Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance with the terms herein.
Applied Realized Loss Amount: With respect to any Distribution Date, the
amount, if any, by which, the sum of (i) the Aggregate Certificate Principal
Balance and (ii) the Class C Certificate Principal Balance after distributions
of principal on such Distribution Date exceeds the aggregate Stated Principal
Balance of the Mortgage Loans as of such Distribution Date.
Appraised Value: With respect to a Mortgage Loan the proceeds of which were
used to purchase the related Mortgaged Property, the "Appraised Value" of a
Mortgaged Property is the lesser of (1) the appraised value based on an
appraisal made for the Sponsor by an independent fee appraiser at the time of
the origination of the related Mortgage Loan, and (2) the sales price of such
Mortgaged Property at such time of origination. With respect to a Mortgage Loan
the proceeds of which were used to refinance an existing mortgage loan, the
"Appraised Value" is the appraised value of the Mortgaged Property based upon
the appraisal obtained at the time of refinancing.
Assessment of Compliance: As defined in Section 3.18 hereof.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction where the related Mortgaged Property is located to reflect of
record the sale and assignment of the Mortgage Loan to the Trustee, which
assignment, notice of transfer or equivalent instrument may, if permitted by
law, be in the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county.
Auction Termination: The termination of the Trust Fund hereunder pursuant
to Section 9.01(a)(i) hereof.
Auction Termination Amount: The purchase price received by the Trustee in
connection with any purchase of all of the Mortgage Loans pursuant to Section
9.01(a) (i).
Auction Termination Date: The first Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans (or if such Mortgage
Loan is an REO Property, the fair market value of such REO Property) is equal to
or less than 10% of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.
Auction Termination Price: In the case of an Auction Termination, as of the
initial Distribution Date on or after the Auction Termination Date, an amount
equal to the sum of (a) the aggregate Stated
12
Principal Balance of each Mortgage Loan (other than any Mortgage Loan that has
become an REO Property), plus accrued interest thereon at the applicable
Mortgage Rate through the Due Date preceding distribution of the proceeds, (b)
the fair market value of any REO Property, plus accrued interest thereon at the
applicable Mortgage Rate, (c) any unreimbursed fees, indemnification amounts,
out-of-pocket costs and expenses owed to the Trustee or the Servicer (including
any costs and expenses incurred in connection with the Auction Termination) and
any unreimbursed Servicing Fees, Advances and Servicing Advances, (d) all
interest accrued on, as well as amounts necessary to retire, the principal
balance of any NIM Notes, (e) any costs and damages incurred by the Issuing
Entity (or the Trustee on behalf of the Issuing Entity) in connection with any
violation of any anti-predatory or anti-abusive lending laws and (f) any Swap
Termination Payment, other than a Defaulted Swap Termination Payment, owed to
the Swap Counterparty; such Swap Termination Payment shall include any payment
resulting from the termination of the Swap Agreement after the Auction
Termination Date but prior to the final distribution to the Certificates.
Available Funds Cap: Any of the Class A-1 Available Funds Cap, the Class
A-2 Available Funds Cap, and the Subordinate Certificate Available Funds Cap.
Balloon Loan: A Mortgage Loan having an original term to stated maturity of
approximately 15 or 30 years which provides for level monthly payments of
principal and interest based on a 30-, 40-, 45- or 50-year amortization
schedule, with a balloon payment of the remaining outstanding principal balance
due on such Mortgage Loan at its stated maturity.
Book-Entry Certificates: Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the books of a Person maintaining
an account with the Depository (directly, as a "Depository Participant", or
indirectly, as an indirect participant in accordance with the rules of the
Depository and as described in Section 5.06). As of the Closing Date, each of
the Class A, Class M and Class B Certificates constitute a Class of Book-Entry
Certificates.
Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a day
on which banking institutions in the State of Oregon or Minnesota or in the City
of New York, New York are authorized or obligated by law or executive order to
be closed.
Cap Contract: Any of the Class A-1 Cap Contract, the Class A-2 Cap Contract
or the Subordinate Certificate Cap Contract.
Cap Contract Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.04(j) in the name of the Trustee for the
benefit of the Issuing Entity and designated "U.S. Bank National Association, as
trustee, in trust for registered holders of Specialty Underwriting and
Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series
2006-BC5." Funds in the Cap Contract Account shall be held in trust for the
Issuing Entity for the uses and purposes set forth in this Agreement.
Cap Contract Counterparty: The Bank of New York, and any successor thereto.
Cap Contract Notional Balance: Any of the Class A-1 Cap Contract Notional
Balance, the Class A-2 Cap Contract Notional Balance or the Subordinate
Certificate Cap Contract Notional Balance.
Cap Contract Termination Date: Any of the Class A-1 Cap Contract
Termination Date, the Class A-2 Cap Contract Termination Date or the Subordinate
Certificate Cap Contract Termination Date.
13
Cap Posted Collateral Account: The segregated collateral account that may
be created and maintained by the Trustee pursuant to Section 4.04(j)(iv) in the
name of the Trustee for the benefit of the Issuing Entity and designated "U.S.
Bank National Association, as trustee, in trust for registered holders of
Specialty Underwriting and Residential Finance Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-BC5." Funds in the Post Collateral Account shall be
held in trust for the Issuing Entity for the uses and purposes set forth in this
Agreement.
Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee in substantially the forms attached
hereto as Exhibit A.
Certificate Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05(f) in the name of the Trustee for the
benefit of the Certificateholders and designated "U.S. Bank National
Association, as trustee, in trust for registered holders of Specialty
Underwriting and Residential Finance Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-BC5." Funds in the Certificate Account shall be held
in trust for the Certificateholders for the uses and purposes set forth in this
Agreement.
Certificate Group: Either of Certificate Group One or Certificate Group
Two.
Certificate Group One: The Class A-1 and Class R Certificates. For purposes
of Section 2.07 hereof, Certificate Group One shall be related to Group One.
Certificate Group Two: The Class A-2 Certificates. For purposes of Section
2.07 hereof, Certificate Group Two shall be related to Group Two.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate Principal Balance of such Certificate
less the sum of (1) all amounts distributed with respect to such Certificate in
reduction of the Certificate Principal Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss Amounts
allocated to such Certificate on previous Distribution Dates pursuant to Section
4.04(h). On each Distribution Date, after all distributions of principal on such
Distribution Date, a portion of the Class C Interest Carry Forward Amount in an
amount equal to the excess of the Overcollateralization Amount on such
Distribution Date over the Overcollateralization Amount as of the preceding
Distribution Date (or, in the case of the first Distribution Date, the initial
Overcollateralization Amount (based on the Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date)) will be added to the aggregate
Certificate Principal Balance of the Class C Certificates (on a pro rata basis).
Notwithstanding the immediately preceding sentence, however, to the extent any
excess referred to in the immediately preceding sentence is attributable to
distributions of proceeds of the Swap Agreement, such sentence shall be applied
by substituting the "Class C Unpaid Realized Loss Amount" for the "Class C
Interest Carry Forward Amount". Notwithstanding the foregoing on any
Distribution Date relating to a Due Period in which a Subsequent Recovery has
been received by the Servicer, the Certificate Principal Balance of any Class of
Certificates then outstanding for which any Applied Realized Loss Amount has
been allocated will be increased, in order of seniority, by an amount equal to
the lesser of (i) the Unpaid Realized Loss Amount for such Class of Certificates
and (ii) the total of any Subsequent Recovery distributed on such date to the
Certificateholders (reduced by the amount of the increase in the Certificate
Principal Balance of any more senior Class of Certificates pursuant to this
sentence on such Distribution Date).
Certificate Register: The register maintained pursuant to Section 5.02
hereof.
14
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any Class of Regular Certificates or the Class R
Certificate, except that solely for the purpose of giving any consent pursuant
to this Agreement, any Certificate registered in the name of the Depositor or
any Affiliate of the Depositor 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.
Class: All Certificates bearing the same Class designation as set forth in
Section 5.01 hereof.
Class A Certificate Principal Balance: For any date of determination, the
sum of the Class A-1 Certificate Principal Balance, the Class A-2A Certificate
Principal Balance, the Class A-2B Certificate Principal Balance, the Class A-2C
Certificate Principal Balance, the Class A-2D Certificate Principal Balance and
the Class A-2E Certificate Principal Balance.
Class A Certificates: Any of the Class A-1, Class A-2A, Class A-2B, Class
A-2C, Class A-2D and Class A-2E Certificates.
Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on which a Stepdown
Trigger Event exists, 100% of the Principal Distribution Amount for such
Distribution Date and (2) on or after the Stepdown Date where a Stepdown Trigger
Event does not exist, the excess of (A) the Certificate Principal Balance of the
Class A and Class R Certificates immediately prior to such Distribution Date
over (B) the lesser of (1) 52.10% of the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date, and (2) the excess of the Stated
Principal Balances of the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount; provided, however, that in no
event will the Class A Principal Distribution Amount with respect to any
Distribution Date exceed the aggregate Certificate Principal Balance of the
Class A and Class R Certificates.
Class A-1 Available Funds Cap: With respect to a Distribution Date, the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x) the total
scheduled interest on the Mortgage Loans in Group One based on the Net Mortgage
Rates in effect on the related Due Date, less the pro rata portion (calculated
based on the ratio of the Stated Principal Balance of the Mortgage Loans in
Group One to the Stated Principal Balance of the total pool of Mortgage Loans)
allocable to the Mortgage Loans in Group One of any Net Swap Payments or Swap
Termination Payments (other than Defaulted Swap Termination Payments) owed to
the Swap Counterparty for such Distribution Date, and (y) the aggregate Stated
Principal Balance of the Mortgage Loans in Group One as of the first day of the
related Accrual Period (or, in the case of the first Distribution Date, as of
the Cut-off Date) and (iii) a fraction, the numerator of which is 30, and the
denominator of which is the actual number of days in the related Accrual Period.
The Class A-1 Available Funds Cap shall be related to the Class A-1 Certificates
and the Class R Certificates.
Class A-1 Cap Contract: The confirmation and agreement (together with the
schedule thereto) and any related credit support annex (in the form of Exhibit
O-4 hereto), between the Trustee, on behalf of the Issuing Entity, and the Cap
Contract Counterparty (in the form of Exhibit O-1 hereto), with respect to the
Class A-1 Certificates.
15
Class A-1 Cap Contract Notional Balance: With respect to any Distribution
Date, the Class A-1 Cap Contract Notional Balance set forth for such
Distribution Date in the Class A-1 One Month LIBOR Cap Table attached hereto as
Exhibit P-1.
Class A-1 Cap Contract Termination Date: The Distribution Date after the
Distribution Date in May 2007.
Class A-1 Certificate: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class A-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-1 Certificates.
Class A-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1 Pass-Through Rate on
the Class A-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-1
Current Interest or a Class A-1 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-1
Certificates.
Class A-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-1 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-1 Pass-Through Rate for the
related Accrual Period.
Class A-1 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.1400% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.2800% per annum.
Class A-1 Maximum Rate Cap: With respect to a Distribution Date, the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x) the total
scheduled interest that would have been due on the Group One Mortgage Loans had
the Adjustable Rate Mortgage Loans provided for interest at their maximum
lifetime Net Mortgage Rates and the Fixed Rate Mortgage Loans provided for
interest at their Net Mortgage Rates less the pro rata portion (calculated based
on the ratio of the Stated Principal Balance of the Group One Mortgage Loans to
the Stated Principal Balance of the total pool of Mortgage Loans) allocable to
the Group One Mortgage Loans of any Net Swap Payments or Swap Termination
Payments owed to the Swap Counterparty for such Distribution Date (other than
Defaulted Swap Termination Payments), and (y) the aggregate Stated Principal
Balance of the Group One Mortgage Loans as of the first day of the related
Accrual Period and (iii) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days in the related Accrual Period.
The Class A-1 Maximum Rate Cap shall be related to the Class A-1 Certificates
and Class R Certificates.
Class A-1 Pass-Through Rate: For the first Distribution Date, 5.460% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-1 Margin, (2) the Class A-1 Available Funds Cap, and (3) the
Class A-1 Maximum Rate Cap for such Distribution Date.
Class A-1 Upper Collar: With respect to each Distribution Date with respect
to which payments are received on the Class A-1 Cap Contract, a rate equal to
the lesser of One-Month Cap LIBOR and 10.860% per annum.
16
Class A-2 Available Funds Cap: With respect to a Distribution Date, the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x) the total
scheduled interest on the Mortgage Loans in Group Two based on the Net Mortgage
Rates in effect on the related Due Date, less the pro rata portion (calculated
based on the ratio of the Stated Principal Balance of the Mortgage Loans in
Group Two to the Stated Principal Balance of the total pool of Mortgage Loans)
allocable to the Mortgage Loans in Group Two of any Net Swap Payments or Swap
Termination Payments (other than Defaulted Swap Termination Payments) owed to
the Swap Counterparty for such Distribution Date, and (y) the aggregate Stated
Principal Balance of the Mortgage Loans in Group Two as of the first day of the
related Accrual Period (or, in the case of the first Distribution Date, as of
the Cut-off Date) and, (iii) a fraction, the numerator of which is 30, and the
denominator of which is the actual number of days in the related Accrual Period.
The Class A-2 Available Funds Cap shall be related to the Class A-2
Certificates.
Class A-2 Cap Contract: The confirmation and agreement (together with the
schedule thereto) and any related credit support annex (in the form of Exhibit
O-4 hereto), between the Trustee, on behalf of the Issuing Entity, and the Cap
Contract Counterparty (in the form of Exhibit O-2 hereto), with respect to the
Class A-2 Certificates.
Class A-2 Cap Contract Notional Balance: With respect to any Distribution
Date, the Class A-2 Cap Contract Notional Balance set forth for such
Distribution Date in the Class A-2 One Month LIBOR Cap Table attached hereto as
Exhibit P-2.
Class A-2 Cap Contract Termination Date: The Distribution Date after the
Distribution Date in May 2007.
Class A-2 Certificates: The Class A-2A, Class A-2B, Class A-2C, Class A-2D
and Class A-2E Certificates.
Class A-2 Maximum Rate Cap: With respect to a Distribution Date, the per
annum rate equal to the product of (i) 12 and (ii) the quotient of (x) the total
scheduled interest that would have been due on the Group Two Mortgage Loans had
the Adjustable Rate Mortgage Loans provided for interest at their maximum
lifetime Net Mortgage Rates and the Fixed Rate Mortgage Loans provided for
interest at their Net Mortgage Rates less the pro rata portion (calculated based
on the ratio of the Stated Principal Balance of the Group Two Mortgage Loans to
the total pool of Stated Principal Balance of the Mortgage Loans) allocable to
the Group Two Mortgage Loans of any Net Swap Payments or Swap Termination
Payments owed to the Swap Counterparty for such Distribution Date (other than
Defaulted Swap Termination Payments), and (y) the aggregate Stated Principal
Balance of the Group Two Mortgage Loans as of the first day of the related
Accrual Period and (iii) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days in the related Accrual Period.
The Class A-2 Maximum Rate Cap shall be related to the Class A-2 Certificates.
Class A-2 Upper Collar: With respect to each Distribution Date with respect
to which payments are received on the Class A-2 Cap Contract, a rate equal to
the lesser of One-Month Cap LIBOR and 10.370% per annum.
Class A-2A Certificate: Any Certificate designated as a "Class A-2A
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class A-2A Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2A Certificates.
17
Class A-2A Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2A Pass-Through Rate on
the Class A-2A Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-2A
Current Interest or a Class A-2A Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-2A
Certificates.
Class A-2A Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2A Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2A Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-2A Pass-Through Rate for the
related Accrual Period.
Class A-2A Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.0700% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.1400% per annum.
Class A-2A Pass-Through Rate: For the first Distribution Date, 5.390% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2A Margin, (2) the Class A-2 Available Funds Cap and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class A-2B Certificate: Any Certificate designated as a "Class A-2B
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class A-2B Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2B Certificates.
Class A-2B Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2B Pass-Through Rate on
the Class A-2B Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-2B
Current Interest or a Class A-2B Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-2B
Certificates.
Class A-2B Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2B Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2B Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-2B Pass-Through Rate for the
related Accrual Period.
Class A-2B Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.0450% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.0900% per annum.
Class A-2B Pass-Through Rate: For the first Distribution Date, 5.365% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2B Margin, (2) the Class A-2 Available Funds Cap and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
18
Class A-2C Certificate: Any Certificate designated as a "Class A-2C
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class A-2C Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2C Certificates.
Class A-2C Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2C Pass-Through Rate on
the Class A-2C Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-2C
Current Interest or a Class A-2C Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-2C
Certificates.
Class A-2C Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2C Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2C Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-2C Pass-Through Rate for the
related Accrual Period.
Class A-2C Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.1000% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.2000% per annum.
Class A-2C Pass-Through Rate: For the first Distribution Date, 5.420% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2C Margin, (2) the Class A-2 Available Funds Cap and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class A-2D Certificate: Any Certificate designated as a "Class A-2D
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class A-2D Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2D Certificates.
Class A-2D Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2D Pass-Through Rate on
the Class A-2D Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-2D
Current Interest or a Class A-2D Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-2D
Certificates.
Class A-2D Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2D Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2D Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-2D Pass-Through Rate for the
related Accrual Period.
Class A-2D Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.1500% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.3000% per annum.
19
Class A-2D Pass-Through Rate: For the first Distribution Date, 5.470% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2D Margin, (2) the Class A-2 Available Funds Cap and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class A-2E Certificate: Any Certificate designated as a "Class A-2E
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class A-2E Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2E Certificates.
Class A-2E Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2E Pass-Through Rate on
the Class A-2E Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-2E
Current Interest or a Class A-2E Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-2E
Certificates.
Class A-2E Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2E Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2E Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-2E Pass-Through Rate for the
related Accrual Period.
Class A-2E Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.2100% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.4200% per annum.
Class A-2E Pass-Through Rate: For the first Distribution Date, 5.530% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2E Margin, (2) the Class A-2 Available Funds Cap and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class B Certificates: The Class B-1 Certificates, Class B-2 Certificates,
and the Class B-3 Certificates.
Class B-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-1 Certificates.
Class B-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-1 Certificates.
Class B-1 Certificates: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class B-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class B-1
Current Interest or a Class B-1 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class B-1
Certificates.
20
Class B-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-1 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class B-1 Pass-Through Rate for the
related Accrual Period.
Class B-1 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.7800% per annum and, as of any
Distribution Date after the Auction Termination Date, 1.1700% per annum.
Class B-1 Pass-Through Rate: For the first Distribution Date, 6.100% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-1 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class B-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R and Class M Certificates have been reduced to zero and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the Certificate Principal Balances of the Class A
and Class R Certificates (after taking into account distributions of the Class A
Principal Distribution Amount on such Distribution Date), (B) the Class M-1
Certificate Principal Balance, the Class M-2 Certificate Principal Balance and
the Class M-3 Certificate Principal Balance (after taking into account
distributions of the Class M-1/M-2/M-3 Principal Distribution Amount on such
Distribution Date), (C) the Class M-4 Certificate Principal Balance (after
taking into account distributions of the Class M-4 Principal Distribution Amount
on such Distribution Date), (D) the Class M-5 Certificate Principal Balance
(after taking into account distributions of the Class M-5 Principal Distribution
Amount on such Distribution Date), (E) the Class M-6 Certificate Principal
Balance (after taking into account distributions of the Class M-6 Principal
Distribution Amount on such Distribution Date), and (F) the Class B-1
Certificate Principal Balance immediately prior to such Distribution Date over
(2) the lesser of (A) 86.90% of the Stated Principal Balances of the Mortgage
Loans as of such Distribution Date and (B) the excess of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date over the Minimum
Required Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of the Class A Certificates, Class R Certificate and Class
M Certificates has been reduced to zero, the Class B-1 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class B-1 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class R and Class M
Certificates and (II) in no event will the Class B-1 Principal Distribution
Amount with respect to any Distribution Date exceed the Class B-1 Certificate
Principal Balance.
Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class B-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-2 Certificates.
21
Class B-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-2 Certificates.
Class B-2 Certificates: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class B-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class B-2
Current Interest or a Class B-2 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class B-2
Certificates.
Class B-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-2 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class B-2 Pass-Through Rate for the
related Accrual Period.
Class B-2 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 1.1800% per annum and, as of any
Distribution Date after the Auction Termination Date, 1.7700% per annum.
Class B-2 Pass-Through Rate: For the first Distribution Date, 6.500% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-2 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class B-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M and Class B-1 Certificates have been reduced to zero and a
Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event does not
exist, the excess of (1) the sum of (A) the Certificate Principal Balances of
the Class A and Class R Certificates (after taking into account distributions of
the Class A Principal Distribution Amount on such Distribution Date), (B) (B)
the Class M-1 Certificate Principal Balance, the Class M-2 Certificate Principal
Balance and the Class M-3 Certificate Principal Balance (after taking into
account distributions of the Class M-1/M-2/M-3 Principal Distribution Amount on
such Distribution Date), (C) the Class M-4 Certificate Principal Balance (after
taking into account distributions of the Class M-4 Principal Distribution Amount
on such Distribution Date), (D) the Class M-5 Certificate Principal Balance
(after taking into account distributions of the Class M-5 Principal Distribution
Amount on such Distribution Date), (E) the Class M-6 Certificate Principal
Balance (after taking into account distributions of the Class M-6 Principal
Distribution Amount on such Distribution Date), (F) the Class B-1 Certificate
Principal Balance (after taking into account distributions of the Class B-1
Principal Distribution Amount on such Distribution Date, and (G) the Class B-2
Certificate Principal Balance immediately prior to such Distribution Date over
(2) the lesser of (A) 88.90% of the Stated Principal Balances of the Mortgage
Loans as of such Distribution Date and (B) the excess of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date over the Minimum
Required Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of the Class A Certificates, Class R Certificate, Class M
Certificates and Class B-1 Certificates has been reduced to zero, the Class B-2
Principal Distribution Amount will equal the lesser of (x) the outstanding
22
Certificate Principal Balance of the Class B-2 Certificates and (y) 100% of the
Principal Distribution Amount remaining after any distributions on such Class A,
Class R, Class M and Class B-1 Certificates and (II) in no event will the Class
B-2 Principal Distribution Amount with respect to any Distribution Date exceed
the Class B-2 Certificate Principal Balance.
Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class B-3 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-3 Certificates.
Class B-3 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-3 Certificates.
Class B-3 Certificates: Any Certificate designated as a "Class B-3
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class B-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-3 Pass-Through Rate on
the Class B-3 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class B-3
Current Interest or a Class B-3 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class B-3
Certificates.
Class B-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-3 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class B-3 Pass-Through Rate for the
related Accrual Period.
Class B-3 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 2.100% per annum and, as of any
Distribution Date after the Auction Termination Date, 3.1500% per annum.
Class B-3 Pass-Through Rate: For the first Distribution Date, 7.420% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-3 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class B-3 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M, Class B-1 and Class B-2 Certificates have been reduced to zero
and a Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event does
not exist, the excess of (1) the sum of (A) the Certificate Principal Balances
of the Class A and Class R Certificates (after taking into account distributions
of the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance, the Class M-2 Certificate Principal
23
Balance and the Class M-3 Certificate Principal Balance (after taking into
account distributions of the Class M-1/M-2/M-3 Principal Distribution Amount on
such Distribution Date), (C) the Class M-4 Certificate Principal Balance (after
taking into account distributions of the Class M-4 Principal Distribution Amount
on such Distribution Date), (D) the Class M-5 Certificate Principal Balance
(after taking into account distributions of the Class M-5 Principal Distribution
Amount on such Distribution Date), (E) the Class M-6 Certificate Principal
Balance (after taking into account distributions of the Class M-6 Principal
Distribution Amount on such Distribution Date), (F) the Class B-1 Certificate
Principal Balance (after taking into account distributions of the Class B-1
Principal Distribution Amount on such Distribution Date, (G) the Class B-2
Certificate Principal Balance (after taking into account distributions of the
Class B-2 Principal Distribution Amount on such Distribution Date, and (H) the
Class B-3 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 91.70% of the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of the Stated
Principal Balances of the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which the Certificate
Principal Balance of each Class of the Class A Certificates, Class R
Certificate, Class M Certificates, Class B-1 and Class B-2 Certificates has been
reduced to zero, the Class B-3 Principal Distribution Amount will equal the
lesser of (x) the outstanding Certificate Principal Balance of the Class B-3
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A, Class R, Class M, Class B-1 and Class B-2
Certificates and (II) in no event will the Class B-3 Principal Distribution
Amount with respect to any Distribution Date exceed the Class B-3 Certificate
Principal Balance.
Class B-3 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-3 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-3 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class C Applied Realized Loss Amount: As of any Distribution Date, the sum
of all Applied Realized Loss Amounts with respect to the Mortgage Loans which
have been applied to the reduction of the Certificate Principal Balance of the
Class C Certificates.
Class C Certificate: Any Certificate designated as a "Class C Certificate"
on the face thereof, executed by the Trustee and authenticated by the Trustee in
substantially the form set forth in Exhibit A, representing the right to
distributions as set forth herein.
Class C Certificate Principal Balance: As of any date of determination, the
aggregate Certificate Principal Balance of the Class C Certificates.
Class C Current Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the Class C Distributable Interest Rate on
a notional amount equal to the aggregate principal balance of the Lower Tier
REMIC Regular Interests immediately prior to such Distribution Date plus the
interest portion of any previous distributions on such Class that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class C
Certificates.
Class C Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on the Lower Tier REMIC Regular Interests
(other than the Class LT-IO Interest) over (b) two times the weighted average of
the interest rates on the Lower Tier REMIC I Marker Interests and the Class LTIX
Interest (treating for purposes of this clause (b) the interest rate on each of
the Lower Tier REMIC I Marker Interests as being subject to a cap and a floor
equal to the interest rate of the Corresponding
24
REMIC Regular Interest of the Corresponding Certificates (as adjusted, if
necessary, for the length of the Accrual Period for the LIBOR Certificates) and
treating the Class LTIX Interest as being capped at zero). The averages
described in the preceding sentence shall be weighted on the basis of the
respective principal balances of the Lower Tier REMIC Regular Interests
immediately prior to any date of determination.
Class C Interest Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest with respect to prior Distribution
Dates over (B) the amount actually distributed to the Class C Certificates with
respect to interest on such prior Distribution Dates or added to the aggregate
Certificate Principal Balance of the Class C Certificates (other than amounts so
added attributable to Subsequent Recoveries or proceeds of the Swap Agreement).
Class C Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class C Unpaid Realized Loss Amount on all
previous Distribution Dates and (y) all increases in the Certificate Principal
Balance of such Class C Certificates (A) pursuant to the last sentence of the
definition of "Certificate Principal Balance" or (B) attributable to
distributions of proceeds of the Swap Agreement.
Class LTA-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificates and an interest rate equal to the Net
Rate.
Class LTA-2A Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTA-2B Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTA-2C Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTA-2D Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTA-2E Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTB-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTB-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
25
Class LTB-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LT-IO Interest: An uncertificated regular interest in the Lower Tier
REMIC with the characteristics set forth in the description of the Lower Tier
REMIC in the Preliminary Statement.
Class LTII1A Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% of the excess of (i) the
aggregate Cut-off Date Principal Balance of the Group One Mortgage Loans over
(ii) the aggregate of the initial Certificate Principal Balances of Certificate
Group One, and with an interest rate equal to the Net Rate.
Class LTII1B Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% of the aggregate Cut-off
Date Principal Balance of the Group One Mortgage Loans, and with an interest
rate equal to the rate set forth in footnote 9 to the description of the Lower
Tier REMIC in the Preliminary Statement.
Class LTII2A Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% of the excess of (i) the
aggregate Cut-off Date Principal Balance of the Group Two Mortgage Loans over
(ii) the aggregate of the initial Certificate Principal Balances of Certificate
Group Two, and with an interest rate equal to the Net Rate.
Class LTII2B Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% of the aggregate Cut-off
Date Principal Balance of the Group Two Mortgage Loans, and with an interest
rate equal to the rate set forth in footnote 10 to the description of the Lower
Tier REMIC in the Preliminary Statement.
Class LTIX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) 50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over (ii) the
initial principal balance of the Lower Tier REMIC I Marker Interests, and with
an interest rate equal to the Net Rate.
Class LTIIX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) 50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over (ii) the
initial principal balance of the Lower Tier REMIC II Marker Interests, and with
an interest rate equal to the Net Rate.
Class LTM-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
26
Class LTM-4 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-5 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-6 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTR Interest: The sole class of "residual interest" in the Lower Tier
REMIC.
Class M Certificates: Any of the Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5 and Class M-6 Certificates.
Class M-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-1 Certificates.
Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class M-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-1 Certificates.
Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-1
Current Interest or a Class M-1 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-1
Certificates.
Class M-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-1 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-1 Pass-Through Rate for the
related Accrual Period.
Class M-1 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.2400% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.3600% per annum.
Class M-1 Pass-Through Rate: For the first Distribution Date, 5.560% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin and (2) the Subordinate Certificate Available Funds
Cap and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution
Date.
27
Class M-1/M-2/M-3 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Certificate Principal
Balances of the Class A and Class R Certificates have been reduced to zero and a
Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event does not
exist, the excess of (1) the sum of (A) the Certificate Principal Balances of
the Class A and Class R Certificates (after taking into account distributions of
the Class A Principal Distribution Amount on such Distribution Date) and (B) the
Class M-1 Certificate Principal Balance, the Class M-2 Certificate Principal
Balance and the Class M-3 Certificate Principal Balance immediately prior to
such Distribution Date over (2) the lesser of (A) 73.50% of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date and (B) the excess
of the Stated Principal Balances for the Mortgage Loans as of such Distribution
Date over the Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date on which the
Certificate Principal Balance of each Class of the Class A Certificates and
Class R Certificate has been reduced to zero, the Class M-1/M-2/M-3 Principal
Distribution Amount will equal the lesser of (x) the outstanding Certificate
Principal Balance of the Class M-1, Class M-2 and Class M-3 Certificates and (y)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A Certificates and Class R Certificate and (II) in no event will the
Class M-1/M-2/M-3 Principal Distribution Amount with respect to any Distribution
Date exceed the Class M-1, Class M-2 and Class M-3 Certificate Principal
Balance.
Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-2 Certificates.
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class M-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-2 Certificates.
Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-2
Current Interest or a Class M-2 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-2
Certificates.
Class M-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-2 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-2 Pass-Through Rate for the
related Accrual Period.
28
Class M-2 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.2900% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.4350% per annum.
Class M-2 Pass-Through Rate: For the first Distribution Date, 5.610% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-3 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-3 Certificates.
Class M-3 Certificate: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class M-3 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-3 Certificates.
Class M-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-3 Pass-Through Rate on
the Class M-3 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-3
Current Interest or a Class M-3 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-3
Certificates.
Class M-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-3 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-3 Pass-Through Rate for the
related Accrual Period.
Class M-3 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.3200% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.4800% per annum.
Class M-3 Pass-Through Rate: For the first Distribution Date, 5.640% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-3 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class M-3 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-3 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the
29
Certificate Principal Balance of such Class M-3 Certificates pursuant to the
last sentence of the definition of "Certificate Principal Balance."
Class M-4 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-4 Certificates.
Class M-4 Certificate: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class M-4 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-4 Certificates.
Class M-4 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-4 Pass-Through Rate on
the Class M-4 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-4
Current Interest or a Class M-4 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-4
Certificates.
Class M-4 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-4 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-4 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-4 Pass-Through Rate for the
related Accrual Period.
Class M-4 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.3700% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.5550% per annum.
Class M-4 Pass-Through Rate: For the first Distribution Date, 5.690% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-4 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class M-4 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M-1, Class M-2 and Class M-3 Certificates have been reduced to
zero and a Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event
does not exist, the excess of (1) the sum of (A) the Certificate Principal
Balances of the Class A and Class R Certificates (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance, the Class M-2
Certificate Principal Balance and the Class M-3 Certificate Principal Balance
(after taking into account distributions of the Class M-1/M-2/M-3 Principal
Distribution Amount on such Distribution Date) and (C) the Class M-4 Certificate
Principal Balance immediately prior to such Distribution Date over (2) the
lesser of (A) 77.60% of the Stated Principal Balances of the Mortgage Loans as
of such Distribution Date and (B) the excess of the Stated Principal Balances
for the Mortgage Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of the Class A Certificates, the Class R Certificate, the
Class M-1 Certificates, the Class M-2 and the Class
30
M-3 Certificates has been reduced to zero, the Class M-4 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class M-3 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class R, Class M-1,
Class M-2 and Class M-3 Certificates and (II) in no event will the Class M-4
Principal Distribution Amount with respect to any Distribution Date exceed the
Class M-4 Certificate Principal Balance.
Class M-4 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-4 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-4 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-4 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-5 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-5 Certificates.
Class M-5 Certificate: Any Certificate designated as a "Class M-5
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class M-5 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-5 Certificates.
Class M-5 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-5 Pass-Through Rate on
the Class M-5 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-5
Current Interest or a Class M-5 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-5
Certificates.
Class M-5 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-5 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-5 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-5 Pass-Through Rate for the
related Accrual Period.
Class M-5 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.3900% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.5850% per annum.
Class M-5 Pass-Through Rate: For the first Distribution Date, 5.710% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-5 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class M-5 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M-1, Class M-2, Class M-3 and Class M-4 Certificates have been
reduced to zero and a Stepdown Trigger Event exists, or as long as a Stepdown
Trigger Event does not exist, the excess of (1) the sum of (A) the Certificate
Principal Balances of the Class A and Class R Certificates (after taking into
account distributions of the Class A Principal Distribution Amount on
31
such Distribution Date), (B) the Class M-1 Certificate Principal Balance, the
Class M-2 Certificate Principal Balance and the Class M-3 Certificate Principal
Balance (after taking into account distributions of the Class M-1/M-2/M-3
Principal Distribution Amount on such Distribution Date), (C) the Class M-4
Certificate Principal Balance (after taking into account distributions of the
Class M-4 Principal Distribution Amount on such Distribution Date) and (D) the
Class M-5 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 81.60% of the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of the Stated
Principal Balances for the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which the Certificate
Principal Balance of each Class of the Class A Certificates, the Class R
Certificate, the Class M-1 Certificates, the Class M-2, the Class M-3 and the
Class M-4 Certificates has been reduced to zero, the Class M-5 Principal
Distribution Amount will equal the lesser of (x) the outstanding Certificate
Principal Balance of the Class M-5 Certificates and (y) 100% of the Principal
Distribution Amount remaining after any distributions on such Class A, Class R,
Class M-1, Class M-2, Class M-3 and Class M-4 Certificates and (II) in no event
will the Class M-5 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-5 Certificate Principal Balance.
Class M-5 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-5 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-5 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-5 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-6 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-6 Certificates.
Class M-6 Certificate: Any Certificate designated as a "Class M-6
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class M-6 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-6 Certificates.
Class M-6 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-6 Pass-Through Rate on
the Class M-6 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-6
Current Interest or a Class M-6 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-6
Certificates.
Class M-6 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-6 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-6 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-6 Pass-Through Rate for the
related Accrual Period.
Class M-6 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.4500% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.6750% per annum.
32
Class M-6 Pass-Through Rate: For the first Distribution Date, 5.770% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-6 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class M-6 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M-1, Class M-2, Class M-3, Class M-4 and Class M-5 Certificates
have been reduced to zero and a Stepdown Trigger Event exists, or as long as a
Stepdown Trigger Event does not exist, the excess of (1) the sum of (A) the
Certificate Principal Balances of the Class A and Class R Certificates (after
taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance, the
Class M-2 Certificate Principal Balance and the Class M-3 Certificate Principal
Balance (after taking into account distributions of the Class M-1/M-2/M-3
Principal Distribution Amount on such Distribution Date), (C) the Class M-4
Certificate Principal Balance (after taking into account distributions of the
Class M-4 Principal Distribution Amount on such Distribution Date), (D) the
Class M-5 Certificate Principal Balance (after taking into account distributions
of the Class M-5 Principal Distribution Amount on such Distribution Date) and
(E) the Class M-6 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 84.40% of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date and (B) the excess
of the Stated Principal Balances for the Mortgage Loans as of such Distribution
Date over the Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date on which the
Certificate Principal Balance of each Class of the Class A Certificates, the
Class R Certificate, the Class M-1 Certificates, the Class M-2, the Class M-3,
the Class M-4 and the Class M-5 Certificates has been reduced to zero, the Class
M-6 Principal Distribution Amount will equal the lesser of (x) the outstanding
Certificate Principal Balance of the Class M-6 Certificates and (y) 100% of the
Principal Distribution Amount remaining after any distributions on such Class A,
Class R, Class M-1, Class M-2, Class M-3, Class M-4 and Class M-5 Certificates
and (II) in no event will the Class M-6 Principal Distribution Amount with
respect to any Distribution Date exceed the Class M-6 Certificate Principal
Balance.
Class M-6 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-6 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-6 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-6 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class P Certificate: Any Certificate designated as a "Class P Certificate"
on the face thereof, executed by the Trustee and authenticated by the Trustee in
substantially the form set forth in Exhibit A, representing the right to
distributions as set forth herein.
Class R Certificate: Any Certificate designated as a "Class R Certificate"
on the face thereof, executed by the Trustee and authenticated by the Trustee in
substantially the form set forth in Exhibit A, representing the right to
distributions as set forth herein.
Class R Certificate Principal Balance: As of any date of determination, the
aggregate Certificate Principal Balance of the Class R Certificate.
Class R Current Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the Class R Pass-Through Rate on the Class
R Certificate Principal Balance as of such Distribution Date plus the portion of
any previous distributions on such Class in respect of Class R Current Interest
or a Class R Interest Carry Forward Amount that is recovered as a voidable
preference by
33
a trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class R Certificate.
Class R Interest Carry Forward Amount: As of any Distribution Date, the sum
of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class R
Certificate with respect to Current Interest or Interest Carry Forward Amounts
on such prior Distribution Dates and (2) interest on such excess (to the extent
permitted by applicable law) at the Class R Pass-Through Rate for the related
Accrual Period.
Class R Margin: As of any Distribution Date up to and including the Auction
Termination Date for the Certificates, 0.1400% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.2800% per annum.
Class R Pass-Through Rate: For the first Distribution Date, 5.460% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Class A-1 Available Funds Cap for such
Distribution Date and (3) the Class A-1 Maximum Rate Cap.
Class SWR Interest: The sole class of "residual interest" in the SWAP
REMIC.
Clean Up Call: The termination of the Trust Fund hereunder pursuant to
Section 9.01(a)(ii).
Clean Up Call Date: The second Distribution Date immediately following the
Auction Termination Date.
Clean Up Call Price: An amount equal to the sum of (a) the aggregate Stated
Principal Balance of each Mortgage Loan (other than any Mortgage Loan that is an
REO Property), plus accrued interest thereon at the applicable Mortgage Rate
through the Due Date preceding distribution of the proceeds, (b) the fair market
value of any REO Property, plus accrued interest thereon, (c) any unreimbursed
fees, out-of-pocket expenses owed to the Trustee or the Servicer (including the
costs and expenses of conducting the auction described in Section 9.01(a)) and
any unreimbursed Servicing Fees, Advances or Servicing Advances, (d) all
interest accrued on, as well as amounts necessary to retire, the principal
balance of the NIM Notes, (e) any costs and damages incurred by the Issuing
Entity (or the Trustee on behalf of the Issuing Entity) in connection with any
violation by the affected Mortgage Loan of any anti-predatory or anti-abusive
lending laws and (f) any Swap Termination Payment, other than a Defaulted Swap
Termination Payment, owed to the Swap Counterparty; such Swap Termination
Payment shall include any payment resulting from the termination of the Swap
Agreement after the Clean Up Call Date but prior to the final distribution to
the Certificates.
Closing Date: November 28, 2006.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(d) in the name of the
Trustee for the benefit of the Certificateholders and designated "Wilshire
Credit Corporation, in trust for registered holders of Specialty Underwriting
and Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series
2006-BC5". Funds in the Collection Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Combined Loan-to-Value Ratio: For any Mortgage Loan in a second lien
position, the fraction, expressed as a percentage, the numerator of which is the
sum of (1) the original principal balance of the
34
related Mortgage Loan and (2) any outstanding principal balances of Mortgage
Loans the liens on which are senior to the lien on such related Mortgage Loan
(such sum calculated at the date of origination of such related Mortgage Loan)
and the denominator of which is the lesser of (A) the Appraised Value of the
related Mortgaged Property and (B) the sales price of the related Mortgaged
Property at time of origination.
Commission: The Securities and Exchange Commission.
Compensating Interest: For any Distribution Date and all Principal
Prepayments in full in respect of a Mortgage Loan that are received during the
period from the first day of the related Prepayment Period through the last day
of the calendar month preceding such Distribution Date, a payment made by the
Servicer in an amount not to exceed the product of (a) one-twelfth of 0.25% and
(b) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date, equal to the amount of interest at the Net Mortgage Rate for
that Mortgage Loan from the date of prepayment through the last day of such
preceding calendar month.
Condemnation Proceeds: All awards or settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or condemnation, to the extent not required to be
released either to a Mortgagor in accordance with the terms of the related
mortgage loan documents or to the holder of a senior lien on the Mortgaged
Property.
Corresponding Certificates: With respect to the Class LTA-1 Interest, the
Class A-1 and Class R Certificates. With respect to the Class LTA-2A Interest,
the Class A-2A Certificates. With respect to the Class LTA-2B Interest, the
Class A-2B Certificates. With respect to the Class LTA-2C Interest, the Class
A-2C Certificates. With respect to the Class LTA-2D Interest, the Class A-2D
Certificates. With respect to the Class LTA-2E Interest, the Class A-2E
Certificates. With respect to the Class LTM-1 Interest, the Class M-1
Certificates. With respect to the Class LTM-2 Interest, the Class M-2
Certificates. With respect to the Class LTM-3 Interest, the Class M-3
Certificates. With respect to the Class LTM-4 Interest, the Class M-4
Certificates. With respect to the Class LTM-5 Interest, the Class M-5
Certificates. With respect to the Class LTM-6 Interest, the Class M-6
Certificates. With respect to the Class LTB-1 Interest, the Class B-1
Certificates. With respect to the Class LTB-2 Interest, the Class B-2
Certificates. With respect to the Class LTB-3 Interest, the Class B-3
Certificates.
Corresponding REMIC Regular Interest: For each Class of Certificates, the
interest in the Upper Tier REMIC listed on the same row in the table entitled
"Upper Tier REMIC" in the Preliminary Statement.
Current Interest: Any of the Class A-1 Current Interest, the Class A-2A
Current Interest, the Class A-2B Current Interest, the Class A-2C Current
Interest, the Class A-2D Current Interest, the Class A-2E Current Interest, the
Class R Current Interest, the Class M-1 Current Interest, the Class M-2 Current
Interest, the Class M-3 Current Interest, the Class M-4 Current Interest, the
Class M-5 Current Interest, the Class M-6 Current Interest, the Class B-1
Current Interest, the Class B-2 Current Interest, the Class B-3 Current Interest
and the Class C Current Interest.
Cut-off Date: November 1, 2006.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates after
the Cut-off Date.
35
Defaulted Swap Termination Payment: Any payment required to be made by the
Supplemental Interest Trust to the Swap Counterparty pursuant to the Swap
Agreement as a result of an event of default under the Swap Agreement with
respect to which the Swap Counterparty is the defaulting party or a termination
event (including a Downgrade Termination Event) under that agreement (other than
illegality or a tax event) with respect to which the Swap Counterparty is the
sole Affected Party (as defined in the Swap Agreement).
Definitive Certificates: As defined in Section 5.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is
not made pursuant to the terms of such Mortgage Loan by the close of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
Denomination: With respect to each Certificate, the amount set forth on the
face thereof as the "Initial Principal Balance of this Certificate."
Depositor: Xxxxxxx Xxxxx Mortgage Investors, Inc., a Delaware corporation,
or any successor in interest.
Depository: The initial Depository shall be The Depository Trust Company
("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.
Depository Agreement: With respect to Classes of Book-Entry Certificates,
the agreement between the Trustee and the initial Depository.
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 Transaction: A transaction in which the assets underlying the
Certificates consist of single-family residential, multi-family residential,
home equity, manufactured housing and/or commercial mortgage obligations that
are secured by single family residential, multi-family residential, commercial
real property or leasehold interests therein.
Determination Date: With respect to any Distribution Date, the 15th day of
the month of such Distribution Date or, if such 15th day is not a Business Day,
the immediately preceding Business Day.
Disqualified Organization: (1) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing, (2) any organization
(other than a cooperative described in Section 521 of the Code) which is exempt
from tax under Chapter 1 of Subtitle A of the Code unless such organization is
subject to the tax
36
imposed by Section 511 of the Code and (3) any organization described in Section
1381(a)(2)(C) of the Code.
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 December 2006.
Downgrade Termination Event: An event whereby (x) the Swap Counterparty (or
its guarantor) ceases to have short term unsecured and/or long term debt ratings
at least equal to the levels specified in the Swap Agreement, and (y) at least
one of the following events has not occurred (except to the extent otherwise
approved by the Rating Agencies): (i) (i) the Swap Counterparty fails to post
collateral securing its obligations under the Swap Agreement, (ii) the Swap
Counterparty fails to post collateral securing its obligations under the Swap
Agreement and/or fails to obtain a guarantor or a substitute swap counterparty
acceptable to the Supplemental Interest Trust Trustee and the Rating Agencies
(if required under the Swap Agreement) that will assume the obligations of the
Swap Counterparty under the Swap Agreement or (iii) the Swap Counterparty is
defaulting on certain obligations required as a result of the ratings downgrade
and the Supplemental Interest Trust Trustee obtains a guarantor or secures a
substitute swap counterparty acceptable to the Rating Agencies (if required
under the Swap Agreement) that will assume the obligations of the Swap
Counterparty under the Swap Agreement.
Due Date: With respect to any Distribution Date and any Mortgage Loan, the
day during the related Due Period on which a Scheduled Payment is due.
Due Period: With respect to any Distribution Date, the period beginning on
the second day of the calendar month preceding the calendar month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.
Eligible Account: An account that is (i) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (ii) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by Xxxxx'x and (B) is either the Depositor or the corporate trust
department of a national banking association or banking corporation which has a
rating of at least A-1 by S&P or F1 by Fitch, or (iii) an account or accounts
the deposits in which are fully insured by the FDIC, or (iv) an account or
accounts, acceptable to each Rating Agency without reduction or withdrawal of
the rating of any Class of Certificates, as evidenced in writing, by a
depository institution in which such accounts are insured by the FDIC (to the
limit established by the FDIC), the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
and acceptable to the Trustee and each Rating Agency, the Certificateholders
have a claim with respect to the funds in such account and a perfected first
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 with which such account is
maintained, or (v) maintained at an eligible institution whose commercial paper,
short-term debt or other short-term deposits are rated at least A-1+ by S&P and
F-1+ by Fitch, or (vi) maintained with a federal or state chartered depository
institution the deposits in which are insured by the FDIC to the applicable
limits and the short-term unsecured debt obligations of which (or, in the case
of a depository institution that is a subsidiary of a holding company, the
short-term unsecured debt obligations of such holding company) are rated A-1 by
S&P or Prime-1 by Xxxxx'x at the time any deposits are held on deposit therein,
or (vii) a segregated trust account or accounts maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary
capacity, or (viii) otherwise acceptable to each Rating Agency, as evidenced by
a letter from each Rating Agency to the Trustee.
37
ERISA: The Employee Retirement Income Security Act of 1974, including any
successor or amendatory provisions.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that would satisfy the requirements of
Prohibited Transaction Exemption 90-29, Exemption Application No. D-8012, 55
Fed. Reg. 21459 (1990), as amended, granted to the Underwriter by the United
States Department of Labor (or any other applicable underwriter's exemption
granted by the United States Department of Labor), except, in relevant part, for
the requirement that the certificates have received a rating at the time of
acquisition that is in one of the three (or four, in the case of a "designated
transaction") highest generic rating categories by at least one of the Rating
Agencies.
ERISA Restricted Certificates: The Class C and Class P Certificates and any
other Certificate, as long as the acquisition and holding of such other
Certificate is not covered by and exempt under any applicable underwriter's
exemption granted by the United States Department of Labor.
Escrow Account: As defined in Section 3.06 hereof.
Event of Default: As defined in Section 7.01 hereof.
Exception Report: As defined in Section 2.02 hereof.
Excess Interest: On any Distribution Date, for any Class of the Class A
Certificates, Class R Certificates, Class M Certificates and Class B
Certificates, the excess, if any, of (1) the amount of interest such Class of
Certificates is entitled to receive on such Distribution Date over (2) the
amount of interest such Class of Certificates would have been entitled to
receive on such Distribution Date at an interest rate equal to the REMIC
Pass-Through Rate.
Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in
the month in which such Liquidation Proceeds are required to be distributed on
the unpaid principal balance of such Liquidated Loan outstanding during each Due
Period as to which such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Existing Servicing Agreement: The Servicing Agreement between Xxxxxxx Xxxxx
Mortgage Lending, Inc., as Owner, and Wilshire Credit Corporation, as Servicer,
dated as of January 1, 2005, as at any time amended and in effect.
Extra Principal Distribution Amount: (1) Prior to the Stepdown Date, the
excess of (A) the sum of (i) the Aggregate Certificate Principal Balance
immediately preceding such Distribution Date reduced by the Principal Funds with
respect to such Distribution Date and (ii) $35,897,516 over (B) the Pool Stated
Principal Balance of the Mortgage Loans as of such Distribution Date and (2) on
and after the Stepdown Date, the excess, if any, of (A) the sum of (i) the
Aggregate Certificate Principal Balance immediately preceding such Distribution
Date, reduced by the Principal Funds with respect to such Distribution Date and
(ii) the greater of (a) 8.30% of the Pool Stated Principal Balance of the
Mortgage Loans and (b) the Minimum Required Overcollateralization Amount less
(B) the Pool Stated Principal Balance of the Mortgage Loans as of such
Distribution Date; provided, however, that if on any Distribution Date a
Stepdown Trigger Event is in effect, the Extra Principal Distribution Amount
will not be reduced to the applicable percentage of the then-current Stated
Principal Balance of the Mortgage
38
Loans as of the Due Date immediately prior to the Stepdown Trigger Event until
the next Distribution Date on which the Stepdown Trigger Event is not in effect.
Xxxxxx Mae: A federally chartered and privately owned corporation organized
and existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage Loan
Schedule as having a Mortgage Rate which is fixed.
Floating Rate Certificate Carryover: With respect to a Distribution Date,
in the event that the Pass-Through Rate for a Class of Class A, Class R, Class M
or Class B Certificates is based upon the related Available Funds Cap or the
related Maximum Rate Cap, the sum of (A) the excess of (1) the amount of
interest that such Class would have been entitled to receive on such
Distribution Date had the Pass-Through Rate for that Class not been calculated
based on the related Available Funds Cap or the related Maximum Rate Cap, up to
but not exceeding the greater of (a) the related Maximum Rate Cap or (b) the sum
of (i) the related Available Funds Cap and (ii) the product of (AA) a fraction,
the numerator of which is 360 and the denominator of which is the actual number
of days in the related Accrual Period and (BB) the sum of (x) the quotient of
(I) an amount equal to the proceeds, if any, payable under the related Cap
Contract and (II) the aggregate Certificate Principal Balance of each Class of
Certificates to which such Cap Contract relates for such Distribution Date and
(y) the quotient obtained by dividing (I) an amount equal to any Net Swap
Payments owed by the Swap Counterparty for such Distribution Date by (II) the
aggregate Stated Principal Balance of the Mortgage Loans as of the immediately
preceding Distribution Date over (2) the amount of interest such Class was
entitled to receive on such Distribution Date based on the applicable Available
Funds Cap; (B) the unpaid portion of any such excess from prior Distribution
Dates (and interest accrued thereon at the then applicable Pass-Through Rate,
without giving effect to the applicable Available Funds Cap) and (C) any amount
previously distributed with respect to Floating Rate Certificate Carryover for
such Class that is recovered as a voidable preference by a trustee in
bankruptcy.
Xxxxxxx Mac: 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.
Grantor Trusts: The grantor trusts described in Section 2.07 hereof.
Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.
Group One: The portion of the Mortgage Pool identified as "Group One" in
the Prospectus Supplement.
Group One Mortgage Loan: Any Mortgage Loan at any time identified in the
Group One Mortgage Loan Schedule attached hereto as Exhibit B-2.
Group One Net WAC: The Net WAC of Group One.
39
Group One Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (i) the aggregate Certificate Principal Balance of
the Class A-1 and Class R Certificates and (ii) the product of (x) the Group One
Principal Distribution Percentage and (y) the Class A Principal Distribution
Amount; provided, however, that (A) with respect to any Distribution Date on
which the Class A-1 and Class R Certificates are outstanding and the Certificate
Principal Balance of the Class A-2 Certificates has been reduced to zero, the
Group Two Principal Distribution Amount in excess of the amount necessary to
reduce the Certificate Principal Balance of the Class A-2 Certificates to zero
will be applied to increase the Group One Principal Distribution Amount and (B)
with respect to any Distribution Date thereafter, the Group One Principal
Distribution Amount will equal the Class A Principal Distribution Amount.
Group One Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds received with respect to Mortgage Loans in
Group One and the denominator of which is the amount of Principal Funds received
from all of the Mortgage Loans in the mortgage pool.
Group Two: The portion of the Mortgage Pool identified as "Group Two" in
the Prospectus Supplement.
Group Two Mortgage Loan: Any Mortgage Loan at any time identified in the
Group Two Mortgage Loan Schedule attached hereto as Exhibit B-3.
Group Two Net WAC: The Net WAC of Group Two.
Group Two Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (i) the aggregate Certificate Principal Balance of
the Class A-2 Certificates and (ii) the product of (x) the Group Two Principal
Distribution Percentage and (y) the Class A Principal Distribution Amount;
provided, however, that (A) with respect to any Distribution Date on which the
Class A-2 Certificates are outstanding and the Certificate Principal Balances of
the Class A-1 and Class R Certificates have been reduced to zero, the Group One
Principal Distribution Amount in excess of the amount necessary to reduce the
Certificate Principal Balance of the Class A-1 Certificates and Class R
Certificates to zero will be applied to increase the Group Two Principal
Distribution Amount and (B) with respect to any Distribution Date thereafter,
the Group Two Principal Distribution Amount will equal the Class A Principal
Distribution Amount.
Group Two Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds received with respect to Mortgage Loans in
Group Two and the denominator of which is the amount of Principal Funds received
from all of the Mortgage Loans in the mortgage pool.
Indenture: An indenture relating to the issuance of NIM Notes.
Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the first
Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Principal Balance: With respect to any Certificate
(other than the Class P Certificates), the Certificate Principal Balance of such
Certificate or any predecessor Certificate on the Closing Date as set forth in
Section 5.01 hereof.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.
40
Insurance Policy: With respect to any Mortgage Loan included in the Trust
Fund, any insurance policy, including all riders and endorsements thereto in
effect with respect to such Mortgage Loan, including any replacement policy or
policies for any insurance policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans pursuant
to any Insurance Policy or any other insurance policy covering a Mortgage Loan,
to the extent such proceeds are payable to the mortgagee under the Mortgage, the
Servicer or the trustee under the deed of trust and are not applied to the
restoration of the related Mortgaged Property or released to either the
Mortgagor or to the holder of a senior lien on the related Mortgage Property in
accordance with the procedures that the Servicer would follow in servicing
mortgage loans held for its own account, in each case other than any amount
included in such Insurance Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Carry Forward Amount: Any of the Class A-1 Interest Carry Forward
Amount, the Class A-2A Interest Carry Forward Amount, the Class A-2B Interest
Carry Forward Amount, the Class A-2C Interest Carry Forward Amount, the Class
A-2D Interest Carry Forward Amount, the Class A-2E Interest Carry Forward
Amount, the Class R Interest Carry Forward Amount, the Class M-1 Interest Carry
Forward Amount, the Class M-2 Interest Carry Forward Amount, the Class M-3
Interest Carry Forward Amount, the Class M-4 Interest Carry Forward Amount, the
Class M-5 Interest Carry Forward Amount, the Class M-6 Interest Carry Forward
Amount, the Class B-1 Interest Carry Forward Amount, the Class B-2 Interest
Carry Forward Amount, the Class B-3 Interest Carry Forward Amount or the Class C
Interest Carry Forward Amount, as the case may be.
Interest Determination Date: With respect to the LIBOR Certificates, for
any Accrual Period, the second LIBOR Business Day preceding the commencement of
such Accrual Period.
Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance Date or advanced on or before
the related Servicer Remittance Date less the Servicing Fee, (2) all Advances
relating to interest with respect to the Mortgage Loans, (3) all Compensating
Interest with respect to the Mortgage Loans, (4) Liquidation Proceeds with
respect to the Mortgage Loans (to the extent such Liquidation Proceeds relate to
interest) collected during the related Prepayment Period, (5) proceeds of any
purchase pursuant to Sections 2.02, 2.03 or 9.01 (to the extent such proceeds
relate to interest) and (6) prepayment charges received with respect to the
Mortgage Loans during the related Prepayment Period less (A) all Non-Recoverable
Advances relating to interest and (B) other amounts reimbursable to the Servicer
and the Trustee pursuant to this Agreement and allocable to interest.
Issuing Entity: Specialty Underwriting and Residential Finance Trust,
Series 2006-BC5.
Last Scheduled Distribution Date: With respect to any Class of
Certificates, the Distribution Date in November 2037.
Latest Possible Maturity Date: The first Distribution Date following the
third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date.
Lender: As defined in Section 10.14(a).
41
LIBOR Business Day: Any day on which banks in the City of London, England
and New York City, U.S.A. are open and conducting transactions in foreign
currency and exchange.
LIBOR Certificates: The Class A, Class M, Class B and Class R Certificates.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that either (a) pursuant to Section 3.12 has been realized upon or
liquidated through deed-in-lieu of foreclosure, foreclosure sale, trustee's sale
or other realization as provided by applicable law governing the real property
subject to the related Mortgage and any security agreements and as to which the
Servicer has certified (in accordance with Section 3.12) in the related
Prepayment Period that it has received all amounts it expects to receive in
connection with such liquidation or (b) as to which is not a first lien Mortgage
Loan and is delinquent 180 days or longer, the Servicer has certified in a
certificate of an officer of the Servicer delivered to the Depositor and the
Trustee that it does not believe that there is a reasonable likelihood that any
further net proceeds will be received or recovered with respect to such Mortgage
Loan.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of Mortgage Loans, whether
through trustee's sale, foreclosure sale, sale by the Servicer pursuant to this
Agreement 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 Advances,
Servicing Fees, Servicing Advances and any other expenses related to such
Mortgage Loan.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the lesser
of (x) the Appraised Value of the related Mortgaged Property and (y) the sales
price of the related Mortgaged Property at the time of origination.
Losses: Any losses, claims, damages, liabilities or expenses collectively.
Lower Tier REMIC: As described in the Preliminary Statement and Section
2.07.
Lower Tier REMIC I Marker Interests: Each of the classes of Lower Tier
REMIC Regular Interests other than the Class LTIX Interest, the Class LTIIX
Interest, the Class LTII1A Interest, the Class LTII1B Interest, the Class LTII2A
Interest, the Class LTII2B Interest and the Class LT-IO Interest.
Lower Tier REMIC II Marker Interests: Each of the Class LTII1A Interest,
the Class LTII1B Interest, the Class LTII2A Interest and the Class LTII2B
Interest.
Lower Tier REMIC Interests: Each of the Class LTA-1 Interest, the Class
LTA-2A Interest, the Class LTA-2B Interest, the Class LTA-2C Interest, the Class
LTA-2D Interest, the Class LTA-2E Interest, the Class LTM-1 Interest, the Class
LTM-2 Interest, the Class LTM-3 Interest, the Class LTM-4 Interest, the Class
LTM-5 Interest, the Class LTM-6 Interest, the Class LTB-1 Interest, the Class
LTB-2 Interest, the Class LTB-3 Interest, the Class LTII1A Interest, the Class
LTII1B Interest, the Class LTII2A Interest, the Class LTII2B Interest, the Class
LTIX Interest, the Class LTIIX Interest, the Class LT-IO Interest and the Class
LTR Interest.
Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC Interests
other than the Class LTR Interest.
42
Lower Tier REMIC Subordinate Balance Ratio: The ratio of (i) the principal
balance of the Class LTII1A Interest to (ii) the principal balance of the Class
LTII2A Interest that is equal to the ratio of (i) the excess of (A) the
aggregate Stated Principal Balance of Group One over (B) the current Certificate
Principal Balance of the Class A-1 and Class R Certificates to (ii) the excess
of (A) the aggregate Stated Principal Balance of Group Two over (B) the current
Certificate Principal Balance of the Class A-2 Certificates.
Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the maximum rate of interest set forth as such in the related Mortgage Note and
with respect to each Fixed Rate Mortgage Loan, the rate of interest set forth in
the related Mortgage Note.
Maximum Rate Cap: Any of the Class A-1 Maximum Rate Cap, the Class A-2
Maximum Rate Cap, or the Subordinate Certificate Maximum Rate Cap.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.
MERS System: The system of recording transfers of mortgage electronically
maintained by MERS.
MIN: The loan number for any MERS Loan.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the minimum rate of interest set forth as such in the related Mortgage Note.
Minimum Required Overcollateralization Amount: An amount equal to the
product of (x) 0.50% and (y) the Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.
MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee, solely
as nominee for the originator of such Mortgage Loan and its successors and
assigns.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's: Xxxxx'x Investors Service, Inc. or any successor in interest.
Mortgage: With respect to a Mortgage Loan, the mortgage, deed of trust or
other instrument creating a first or second lien or a first or second priority
ownership interest in an estate in fee simple in real property securing a
Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Group: Either of Group One or Group Two.
Mortgage Loan Schedule: The lists of Mortgage Loans (as from time to time
amended by the Sponsor to reflect the deletion of Deleted Mortgage Loans and the
addition of Replacement Mortgage Loans pursuant to the provisions of this
Agreement) transferred to the Trustee as part of the Trust Fund
43
and from time to time subject to this Agreement, attached hereto as Exhibits
X-0, X-0 and B-3, setting forth the following information with respect to each
Mortgage Loan:
(i) the loan number;
(ii) the unpaid principal balance of the Mortgage Loans;
(iii) the Initial Mortgage Rate;
(iv) the maturity date and the months remaining before maturity date;
(v) the original principal balance;
(vi) the Cut-off Date Principal Balance;
(vii) the first payment date of the Mortgage Loan;
(viii) the Loan-to-Value Ratio at origination with respect to a first lien
Mortgage Loan or the Combined Loan-to-Value Ratio with respect to a
second lien Mortgage Loan;
(ix) a code indicating whether the residential dwelling at the time of
origination was represented to be owner-occupied;
(x) a code indicating the property type;
(xi) with respect to each Adjustable Rate Mortgage Loan:
(a) the frequency of each Adjustment Date;
(b) the next Adjustment Date;
(c) the Maximum Mortgage Rate;
(d) the Minimum Mortgage Rate;
(e) the Mortgage Rate as of the Cut-off Date;
(f) the related Periodic Rate Cap;
(g) the Gross Margin; and
(h) the lifetime rate cap;
(xii) the location of the related Mortgaged Property;
(xiii) a code indicating whether a prepayment charge is applicable;
(a) the period during which such prepayment charge is in effect;
(b) the amount of such prepayment charge;
44
(c) any limitations or other conditions on the enforceability of such
prepayment charge; and
(d) any other information pertaining to the prepayment charge
specified in the related Mortgage Note;
(xiv) the Credit Score and date obtained; and
(xv) the MIN.
Mortgage Loans: Such of the mortgage loans transferred and assigned to the
Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.
Mortgage Note: The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan and all
amendments, modifications and attachments thereto.
Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note from
time to time.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per annum
rate equal to the then current Mortgage Rate less the Servicing Fee Rate.
Net Rate: The per annum rate set forth in footnote 8 to the description of
the Lower Tier REMIC in the Preliminary Statement hereto (such rate being based
on the weighted average of the interest rates on the SWAP REMIC Regular
Interests as adjusted and as set forth in such footnote).
Net Swap Payment: With respect to any Distribution Date, any net payment
(other than a Swap Termination Payment or Defaulted Swap Termination Payment)
made by the Supplemental Interest Trust to the Swap Counterparty on the related
Fixed Rate Payer Payment Date (as defined in the Swap Agreement) or made by the
Swap Counterparty to the Supplemental Interest Trust on the related Floating
Rate Payer Payment Date (as defined in the Swap Agreement). In each case, the
Net Swap Payment shall not be less than zero.
Net WAC: With respect to any Distribution Date and for any Mortgage Group,
the weighted average Net Mortgage Rate for the Mortgage Loans in such Mortgage
Group calculated based on the respective Net Mortgage Rates and the Stated
Principal Balances of such Mortgage Loans as of the preceding Distribution Date
(or, in the case of the first Distribution Date, as of the Cut-off Date).
NIM Notes: Any net interest margin or excess cashflow securities to be
issued pursuant to an Indenture.
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Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current delinquency, would not, be
ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise with respect to the related Mortgage Loan.
Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not or, in the case of a current Servicing
Advance, would not, be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise with respect to the related
Mortgage Loan.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Offered Certificates: The Class A Certificates, Class M Certificates, Class
B Certificates and Class R Certificates.
Officer's Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the
Servicer or the Trustee (or any other officer customarily performing functions
similar to those performed by any of the above designated officers and also to
whom, with respect to a particular matter, such matter is referred because of
such officer's knowledge of and familiarity with a particular subject) or (2),
if provided for in this Agreement, signed by a Servicing Officer, as the case
may be, and delivered to the Depositor, the Servicer or the Trustee, as the case
may be, as required by this Agreement.
One-Month Cap LIBOR: As defined in the related Cap Contract.
One-Month LIBOR: With respect to any Accrual Period, the rate determined by
the Trustee on the related Interest Determination Date on the basis of (a) the
offered rates for one-month United States dollar deposits, as such rates appear
on Telerate page 3750, as of 11:00 a.m. (London time) on such Interest
Determination Date or (b) if such rate does not appear on Telerate Page 3750 as
of 11:00 a.m. (London time), the offered rates of the Reference Banks for
one-month United States dollar deposits, as such rates appear on the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination
Date. If One-Month LIBOR is determined pursuant to clause (b) above, on each
Interest Determination Date, One-Month LIBOR for the related Accrual Period will
be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, One-Month LIBOR for
the related Accrual Period shall be the arithmetic mean of
such offered quotations (rounded upwards if necessary to the
nearest whole multiple of 0.03125%).
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, One-Month
LIBOR for the related Accrual Period shall be the higher of
(i) One-Month LIBOR as determined on the previous Interest
Determination Date and (ii) the Reserve Interest Rate.
Notwithstanding the foregoing, this definition of One-Month LIBOR for the
purposes of the Cap Contracts and Swap Agreement will be determined in
accordance with such agreements.
Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer, reasonably acceptable to each addressee of such
opinion; provided, however, that with respect to
46
Section 6.04 or 10.01, or the interpretation or application of the REMIC
Provisions, such counsel must (1) in fact be independent of the Depositor and
the Servicer, (2) not have any direct financial interest in the Depositor or the
Servicer or in any Affiliate of either, and (3) not be connected with the
Depositor or the Servicer as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (1) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in exchange for
which or in lieu of which other Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.
Overcollateralization Amount: As of any date of determination, the excess
of (1) the Stated Principal Balance of the Mortgage Loans over (2) the
Certificate Principal Balance of the Certificates (other than the Class P
Certificates and the Class C Certificates).
Overcollateralization Deficiency Amount: As of any date of determination,
if the Overcollateralization Amount is less than the Targeted
Overcollateralization Amount, then the amount equal to the Targeted
Overcollateralization Amount over the Overcollateralization Amount; otherwise,
zero.
Overcollateralization Release Amount: As of any date of determination, if
the Overcollateralization Amount is greater than the Targeted
Overcollateralization Amount, then the amount equal to the Overcollateralization
Amount over the Targeted Overcollateralization Amount; otherwise, zero.
Ownership Interest: As to any Certificate, any ownership interest in such
Certificate including any interest in such Certificate as the Holder thereof and
any other interest therein, whether direct or indirect, legal or beneficial.
Pass-Through Rate: With respect to any Class of Certificates, the
corresponding Pass-Through Rate for such Class of Certificates.
Percentage Interest: With respect to:
(i) any Class, the percentage interest in the undivided
beneficial ownership interest evidenced by such Class which
shall be equal to the Certificate Principal Balance of such
Class divided by the aggregate Certificate Principal Balance
of all Classes; and
(ii) any Certificate, the Percentage Interest evidenced thereby
of the related Class shall equal the percentage obtained by
dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of such
Class; except that in the case of any Class P Certificates,
the
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Percentage Interest with respect to such Certificate shown
on the face of such Certificate.
Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the related
Mortgage Note, the provision therein that limits permissible increases and
decreases in the Mortgage Rate on any Adjustment Date.
Permitted Activities: The primary activities of the Issuing Entity created
pursuant to this Agreement which shall be:
(i) holding Mortgage Loans transferred from the Depositor and other
assets of the Issuing Entity, including the Cap Contracts and the
Supplemental Interest Trust subtrust, which in turn holds the
Swap Agreement, and any credit enhancement and passive derivative
financial instruments that pertain to beneficial interests issued
or sold to parties other than the Depositor, its Affiliates, or
its agents;
(ii) issuing Certificates and other interests in the assets of the
Issuing Entity;
(iii) through the appropriate subtrust, as applicable, receiving
collections on the Mortgage Loans and the Swap Agreement and
making payments on such Certificates and interests in accordance
with the terms of this Agreement; and
(iv) engaging in other activities that are necessary or incidental to
accomplish these limited purposes, which activities cannot be
contrary to the status of the Issuing Entity as a qualified
special purpose entity under existing accounting literature.
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 rating the
Certificates;
(iii) commercial or finance company paper, other than commercial or
finance company paper issued by the Depositor, the Trustee or any
of their Affiliates, which is then receiving the highest
commercial or finance company paper rating of each such Rating
Agency;
(iv) certificates of deposit, demand or time deposits, or bankers'
acceptances (other than banker's acceptances issued by the
Trustee or any of its Affiliates) 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
are then rated one of the two highest long-term and the highest
short-term ratings of each such Rating Agency for such
securities;
(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;
48
(vi) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation rated in the two highest long-term
or the highest short-term ratings of each Rating Agency
containing, at the time of the issuance of such agreements, such
terms and conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by any
such Rating Agency as evidenced by a letter from each 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 (v) 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, other than the Trustee or any of its
Affiliates, incorporated under the laws of the United States or
any state thereof which, at the time of such investment, have one
of the two highest long term ratings of each Rating Agency;
(ix) interests in any money market fund (including those managed or
advised by the Trustee or its Affiliates) which at the date of
acquisition of the interests in such fund and throughout the time
such interests are held in such fund has the highest applicable
long term rating by each such Rating Agency; and
(x) short term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the
United States or any state thereof, including the Trustee or any
of its Affiliates, which on the date of acquisition has been
rated by each such Rating Agency in their respective highest
applicable rating category;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, (I) that no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Servicer but not
yet deposited in the Collection Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Servicer and/or the Trustee, shall receive an Opinion of
Counsel acceptable to the Servicer and/or the Trustee, at the expense of the
party requesting that such investment be made, to the effect that such
investment will not adversely affect the status of the any REMIC provided for
herein as a REMIC under the Code or result in imposition of a tax on the Issuing
Entity or any REMIC provided for herein and (II) any such investment must be a
"permitted investment" within the meaning of Section 860G(a)(5) of the Code.
Permitted Investments that are subject to prepayment or call may not be
purchased at a price in excess of par. Any Permitted Investment may be held by
or through the Trustee or any of its Affiliates.
Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on
49
unrelated business taxable income) on any excess inclusions (as defined in
Section 860E(c)(1) of the Code) with respect to the Class R Certificate, (iv)
rural electric and telephone cooperatives described in Section 1381(a)(2)(C) of
the Code, and (v) a Person that is not a citizen or resident of the United
States, a corporation or partnership (or other entity treated as a corporation
or partnership for United States federal income tax purposes) created or
organized in or under the laws of the United States or any State thereof or the
District of Columbia or an estate whose income from sources without the United
States is includable in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more United States persons have authority to control all substantial decisions
of the trust, unless, in the case of this clause (v), such Person has furnished
the transferor and the Trustee with a duly completed Internal Revenue Service
Form W-8ECI or applicable successor form. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in Section 7701
of the Code. A corporation will not be treated as an instrumentality of the
United States or of any State 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, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
Pool Stated Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balances, as of such Distribution Date, of the Mortgage
Loans that were Outstanding Mortgage Loans as of such date.
Posted Collateral: As defined in the Swap Agreement or the Cap Contracts,
as applicable.
Prepayment Assumption: A rate of prepayment, as described in the Prospectus
Supplement in the definition of "Modeling Assumptions," relating to the
Certificates.
Prepayment Interest Excess: With respect to any Servicer Remittance Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the portion of the related Prepayment Period occurring between the first
day of the calendar month in which such Servicer Remittance Date occurs and the
last day of the related Prepayment Period, an amount equal to interest (to the
extent received) at the applicable Net Mortgage Rate on the amount of such
Principal Prepayment for the number of days commencing on the first day of the
calendar month in which such Servicer Remittance Date occurs and ending on the
date on which such Principal Prepayment is so applied.
Prepayment Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a Principal Prepayment in full (other
than a Principal Prepayment in full resulting from the purchase of a Mortgage
Loan pursuant to Section 2.02, 2.03 or 9.01 hereof and other than a Principal
Prepayment in full on a Mortgage Loan received during the period from and
including the first day to and including the 14th day of the month of such
Distribution Date), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan as of the preceding Distribution Date exceeds (ii) the amount of interest
paid or collected in connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the period beginning with
the opening of business on the 15th day of the calendar month preceding the
month in which such Distribution Date occurs (or in the case of the first
Distribution Date, beginning with the opening of business on the Cut-off
50
Date) and ending on the close of business on the 14th day of the month in which
such Distribution Date occurs.
Principal Distribution Amount: With respect to each Distribution Date, the
sum of (i) the Principal Funds for such Distribution Date and (ii) any Extra
Principal Distribution Amount for such Distribution Date.
Principal Funds: With respect to the Mortgage Loans and any Distribution
Date, the sum, without duplication, of (1) the scheduled principal due during
the related Due Period and received before the related Servicer Remittance Date
or advanced on or before the related Servicer Remittance Date, (2) prepayments
in full collected in the related Prepayment Period, (3) the Stated Principal
Balance of each Mortgage Loan that was purchased by the Depositor or the
Servicer during the related Prepayment Period or, in the case of a purchase
pursuant to Section 9.01, on the Business Day prior to such Distribution Date,
(4) the amount, if any, by which the aggregate unpaid principal balance of any
Replacement Mortgage Loan is less than the aggregate unpaid principal of the
related Deleted Mortgage Loans delivered by the Sponsor in connection with a
substitution of a Mortgage Loan pursuant to Section 2.03(c), (5) all Liquidation
Proceeds collected during the related Prepayment Period (to the extent such
Liquidation Proceeds relate to principal and represent payment in full), (6)
Subsequent Recoveries received during the related Due Period and (7) all other
collections and recoveries in respect of principal during the related Due
Period, less (A) all Non-Recoverable Advances relating to principal with respect
to the Mortgage Loans and (B) other amounts reimbursable to the Servicer and the
Trustee pursuant to this Agreement and allocable to principal.
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03 and 9.01 hereof) that is
received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement, dated November 22, 2006,
relating to the public offering of the Offered Certificates.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Sponsor pursuant to Section 2.02 or 2.03 hereof, or purchased
by the Servicer pursuant to Section 3.12(c) hereof, an amount equal to the sum
of (i) 100% of the unpaid principal balance of the Mortgage Loan as of the date
of such purchase together with any unreimbursed Servicing Advances, (ii) accrued
interest thereon at the applicable Mortgage Rate from (a) the date through which
interest was last paid by the Mortgagor to (b) 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 Issuing Entity (or the Trustee on behalf
of the Issuing Entity) in connection with any violation by the affected Mortgage
Loan of any anti-predatory or anti-abusive lending laws. With respect to any REO
Property purchased by the Servicer pursuant to Section 3.12(c) hereof, an amount
equal to the fair market value of such REO Property, as determined in good faith
by the Servicer.
Rating Agency: Either of Moody's or S&P. If any such organization or its
successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
51
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
Rating Agency Condition: As defined in the Swap Agreement.
Realized Loss: With respect to (1) a Liquidated Loan, the amount, if any,
by which the Stated Principal Balance and accrued interest thereon at the Net
Mortgage Rate exceeds the amount actually recovered by the Servicer with respect
thereto (net of reimbursement of Advances and Servicing Advances) at the time
such Mortgage Loan became a Liquidated Loan or (2) with respect to a Mortgage
Loan which is not a Liquidated Loan, any amount of principal that the Mortgagor
is no longer legally required to pay (except for the extinguishment of debt that
results from the exercise of remedies due to default by the Mortgagor).
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 the
applicable Distribution Date occurs (or with respect to the first Distribution
Date, the Closing Date).
Reference Banks: Barclays Bank PLC, U.S. Bank National Association,
Citibank, N.A., and NatWest, N.A.; provided that if any of the foregoing banks
are not suitable to serve as a Reference Bank, then any leading banks selected
by the Trustee which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, England and (ii) whose quotations appear on the Reuters Screen LIBO Page
on the relevant Interest Determination Date.
Regular Certificate: Any one of the Class A, Class R, Class M and Class B
Certificates.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed Reg. 1,506, 1.531 (Jan. 7, 2005)) or by the staff of
the Commission, or as may be provided by the Commission or its staff from time
to time.
Related Certificates: For each interest in the Upper Tier REMIC, the Class
of Certificates listed on the same row in the table entitled "Upper Tier REMIC"
in the Preliminary Statement.
Relief Act: The Servicemembers Civil Relief Act or any similar state laws
or regulations.
REMIC: A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code. References herein to "the REMICs" or "a REMIC" shall
mean any (or, as the context requires, all) of the SWAP REMIC, the Lower Tier
REMIC and the Upper Tier REMIC.
REMIC Pass-Through Rate: In the case of a Class of the Class A, Class M and
Class B Certificates, the Upper Tier REMIC Net WAC Cap for the Corresponding
REMIC Regular Interest.
REMIC Provisions: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at sections 860A through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions, and proposed,
temporary and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time as
well as provisions of applicable state laws.
52
REMIC Regular Interests: Each of the interests in the Upper Tier REMIC as
set forth in the Preliminary Statement other than the Residual Interest.
REMIC SWAP Rate: For each Distribution Date (and the related Accrual
Period), a per annum rate equal to the Fixed Rate under the Swap Agreement for
such Distribution Date, as set forth in the Prospectus Supplement.
Remittance Report: As defined in Section 4.04(k) hereof.
REO Property: A Mortgaged Property acquired by the Servicer, on behalf of
the Trustee for the benefit of the Certificateholders, through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor 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 I (1)
have a Stated Principal Balance (or in the case of a substitution of more than
one Mortgage Loan for a Deleted Mortgage Loan, an aggregate principal balance),
after deduction of the principal portion of the Scheduled Payment due in the
month of substitution, not in excess of, and not less than 90% of the Stated
Principal Balance of the Deleted Mortgage Loan; (2) with respect to any Fixed
Rate Mortgage Loan, have a Mortgage Rate not less than or no more than 1% per
annum higher than the Mortgage Rate of the Deleted Mortgage Loan and, with
respect to any Adjustable Rate Mortgage Loan: (A) have a Maximum Mortgage Rate
no more than 1% per annum higher or lower than the Maximum Mortgage Rate of the
Deleted Mortgage Loan; (B) have a Minimum Mortgage Rate no more than 1% per
annum higher or lower than the Minimum Mortgage Rate of the Deleted Mortgage
Loan; (C) have the same index and Periodic Rate Cap as that of the Deleted
Mortgage Loan and a Gross Margin not more than 1% per annum higher or lower than
that of the Deleted Mortgage Loan; (D) not permit conversion of the related
Mortgage Rate to a fixed Mortgage Rate and (F) currently be accruing interest at
a rate not more than 1% per annum higher or lower than that of the Deleted
Mortgage Loan; (3) have a similar or higher FICO score or credit grade than that
of the Deleted Mortgage Loan; (4) have a Loan-to-Value Ratio (or a Combined
Loan-to-Value Ratio, in the case of Mortgage Loans in a second lien position) no
higher than that of the Deleted Mortgage Loan; (5) have a remaining term to
maturity no greater than (and not more than one year less than) that of the
Deleted Mortgage Loan; (6) provide for a prepayment charge on terms
substantially similar to those of the prepayment charge, if any, of the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted Mortgage Loan; (8)
constitute the same occupancy type as the Deleted Mortgage Loan; and (9) comply
with each representation and warranty set forth in Section 2.03 hereof.
Request for Release: The Request for Release of Documents submitted by the
Servicer to the Trustee, substantially in the form of Exhibit I hereto.
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 Percentage: With respect to any Distribution Date following a
Stepdown Date, the quotient of (1) the excess of (A) the aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution Date, over (B)
the Certificate Principal Balance of the most senior Class of Certificates
outstanding as of such Distribution Date, prior to giving effect to
distributions to be made on such Distribution Date and (2) the aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution Date.
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Requirements: Any rules or regulations promulgated pursuant to the
Xxxxxxxx-Xxxxx Act of 2002 (as such may be amended from time to time).
Reserve Interest Rate: With respect to any Interest Determination Date, the
rate per annum that the Trustee determines to be (1) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (2)
in the event that the 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.
Residual Certificate: The Class R Certificate.
Residual Interest: An interest in the Upper Tier REMIC that is entitled to
all distributions of principal and interest on the Class R Certificate other
than (i) distributions in respect of the Class SWR Interest and the Class LTR
Interest, and (ii) distributions on the Class R Certificate in respect of Excess
Interest.
Responsible Officer: When used with respect to the Trustee or Servicer, any
officer of the Trustee or Servicer with direct responsibility for the
administration of this Agreement and also means any other officer 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.
Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks).
S&P: Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc., or its successor in interest.
Sale Agreement: The Mortgage Loan Sale and Assignment Agreement, dated as
of November 1, 2006, between the Depositor and the Sponsor.
Xxxxxxxx-Xxxxx Certification: As defined in Section 3.20 hereof.
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.
Section 302 Requirements: Any rules or regulations promulgated pursuant to
the Xxxxxxxx-Xxxxx Act of 2002 (as such may be amended from time to time).
Securities Act: The Securities Act of 1933, as amended.
Servicer: Wilshire Credit Corporation, a Nevada corporation, or its
successor in interest.
Servicer Advance Date: As to any Distribution Date, the related Servicer
Remittance Date.
Servicer Remittance Date: With respect to any Distribution Date, the later
of (x) the date that is two Business Days after the 15th day of the month in
which the related Distribution Date occurs and (y) the 18th day (or, if such day
is not a Business Day, the next succeeding Business Day) of the month in which
the related Distribution Date occurs.
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Servicer's Assignee: As defined in Section 10.14(a).
Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses incurred in the performance by the Servicer of its servicing
obligations hereunder, including, but not limited to, the cost of (1) the
preservation, restoration and protection of a Mortgaged Property, including
without limitation advances in respect of prior liens, real estate taxes and
assessments, (2) any collection, enforcement or judicial proceedings, including
without limitation foreclosures, collections and liquidations, (3) the
conservation, management, sale and liquidation of any REO Property (4) executing
and recording instruments of satisfaction, deeds of reconveyance, substitutions
of trustees on deeds of trust or assignments of mortgage to the extent not
otherwise recovered from the related Mortgagor or payable under this Agreement,
(5) correcting errors of prior servicers; tax tracking; title research; flood
certification; and lender paid mortgage insurance, (6) obtaining or correcting
any legal documentation required to be included in the Mortgage Files and
reasonably necessary for the Servicer to perform its obligations under this
Agreement and (7) compliance with the obligations under Sections 3.01 and 3.10.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time, and in Exhibit R of
this Agreement.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan as of the preceding Distribution Date
or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date for the period covered by such payment of interest.
Servicing Fee Rate: 0.500% per annum.
Servicing Officer: Any officer of the 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 Servicer on the Closing Date pursuant to this Agreement, as such
lists may from time to time be amended.
Servicing Rights Pledgee: One or more lenders, selected by the Servicer, to
which the Servicer may pledge and assign all of its right, title and interest
in, to and under this Agreement.
Servicing Transfer Costs: In the event that the Servicer does not reimburse
the Trustee under the this Agreement, all costs associated with the transfer of
servicing from the predecessor Servicer, including, without limitation, any
costs or expenses associated with the termination of the predecessor Servicer,
the appointment of a successor servicer, the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Trustee or any successor servicer to correct any errors
or insufficiencies in the servicing data or otherwise to enable the Trustee or
successor servicer to service the Mortgage Loans properly and effectively.
SFAS 140: Statement of Financial Accounting Standard No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.
Significance Estimate: With respect to any Distribution Date, and in
accordance with Item 1115 of Regulation AB, shall be an amount determined based
on the reasonable good-faith estimate by the Depositor or its affiliate of the
aggregate maximum probable exposure of the outstanding Certificates to the Swap
Agreement.
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Significance Percentage: With respect to any Distribution Date, and in
accordance with Item 1115 of Regulation AB, shall be a percentage equal to the
Significance Estimate divided by the aggregate outstanding Stated Principal
Balance of the Mortgage Loans, prior to the distribution of the Principal
Distribution Amount on such Distribution Date.
Sponsor: Xxxxxxx Xxxxx Mortgage Lending, Inc., a Delaware corporation, or
its successor in interest.
SPV: As defined in Section 10.14(a).
Startup Day: As defined in Section 2.07 hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related REO
Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance thereof,
and (2) as of any Distribution Date, such Cut-off Date Principal Balance, minus
the sum of (A) the principal portion of the Scheduled Payments (x) due with
respect to such Mortgage Loan during each Due Period ending prior to such
Distribution Date and (y) that were received by the Servicer as of the close of
business on the Determination Date related to such Distribution Date or with
respect to which Advances were made on the Servicer Advance Date prior to such
Distribution Date and (B) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.
Stepdown Date: The earlier to occur of (1) the first Distribution Date on
which the Class A Certificate Principal Balance and the Class R Certificate
Principal Balance have been reduced to zero and (2) the later to occur of (A)
the Distribution Date in December 2009 or (B) the first Distribution Date on
which the Class A Certificate Principal Balance (after giving effect to
distributions of the Principal Funds amount for such Distribution Date) is less
than or equal to 52.10% of the aggregate Stated Principal Balance of the
Mortgage Loans as of the end of the immediately preceding Due Period.
Stepdown Required Loss Percentage: For any Distribution Date, the
applicable percentage for such Distribution Date set forth in the following
table:
DISTRIBUTION DATE OCCURRING IN STEPDOWN REQUIRED LOSS PERCENTAGE
------------------------------ ---------------------------------
December 2008 - November 2009 1.70% with respect to December 2008, plus an additional
1/12th of 2.10% for each month thereafter
December 2009 - November 2010 3.80% with respect to December 2009, plus an additional
1/12th of 2.20% for each month thereafter
December 2010 - November 2011 6.00% with respect to December 2010, plus an additional
1/12th of 1.75% for each month thereafter
December 2011 - November 2012 7.75% with respect to December 2011, plus an additional
1/12th of 0.90% for each month thereafter
December 2012 and thereafter 8.65%
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Stepdown Trigger Event: With respect to the Certificates on or after the
Stepdown Date, a Distribution Date on which (1) the quotient of (A) the
aggregate Stated Principal Balance of all Mortgage Loans which are sixty (60) or
more days Delinquent measured on a rolling three month basis (including, for the
purposes of this calculation, Mortgage Loans in foreclosure, REO Properties and
Mortgage Loans with respect to which the applicable Mortgagor is in bankruptcy)
and (B) the Stated Principal Balance of the Mortgage Loans as of the preceding
Servicer Advance Date, equals or exceeds the product of (i) 33.40% and (ii)
Required Percentage or (2) the quotient (expressed as a percentage) of (A) the
aggregate Realized Losses incurred from the Cut-off Date through the last day of
the calendar month preceding such Distribution Date and (B) the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date exceeds the
Stepdown Required Loss Percentage.
Subcontractor: Any outsourcer that performs one or more discrete functions
identified in Item 1122(d) of Regulation AB with respect to 5% or more of the
Mortgage Loans under the direction or authority of a Servicer (measured by
aggregate Stated Principal Balance of the Mortgage Loans, annually at the
commencement of the calendar year prior to the year in which an Assessment of
Compliance is required to be delivered, multiplied by a fraction, the numerator
of which is the number of months during which such Subcontractor performs such
discrete functions and the denominator of which is 12, or, in the case of the
year in which the Closing Date occurs, the number of months elapsed in such
calendar year).
Subordinate Certificate Available Funds Cap: With respect to a Distribution
Date, the per annum rate equal to the weighted average (weighted in proportion
to the results of subtracting from the aggregate Stated Principal Balance of
each Mortgage Group, the current Certificate Principal Balance of the Class A-1
and Class R Certificates, in the case of Group One, or the Class A-2A, Class
A-2B, Class A-2C, Class A-2D and Class A-2E Certificates, in the case of Group
Two) of the Class A-1 Available Funds Cap and the Class A-2 Available Funds Cap.
Subordinate Certificate Cap Contract: The confirmation and agreement
(together with the schedule thereto) and any related credit support annex (in
the form of Exhibit O-4 hereto), between the Trustee, on behalf of the Issuing
Entity, and the Cap Contract Counterparty (in the form of Exhibit O-3 hereto),
with respect to the Subordinate Certificates.
Subordinate Certificate Cap Contract Notional Balance: With respect to any
Distribution Date, the Subordinate Certificate Cap Contract Notional Balance set
forth for such Distribution Date in the Subordinate Certificate One Month LIBOR
Cap Table attached hereto as Exhibit P-3.
Subordinate Certificate Cap Contract Termination Date: The day after the
Distribution Date in May 2007.
Subordinate Certificate Maximum Rate Cap: With respect to a Distribution
Date, the per annum rate equal to the weighted average (weighted in proportion
to the results of subtracting from the aggregate Stated Principal Balance of
each Mortgage Group, the current Certificate Principal Balance of the Class A-1
and Class R Certificates, in the case of Group One, or the Class A-2A, Class
A-2B, Class A-2C, Class A-2D and Class A-2E Certificates, in the case of Group
Two) of the Class A-1 Maximum Rate Cap and the Class A-2 Maximum Rate Cap.
Subordinate Certificate Upper Collar: With respect to each Distribution
Date with respect to which payments are received on the Subordinate Certificate
Cap Contract, a rate equal to the lesser of One-Month Cap LIBOR and 8.990% per
annum.
Subordinate Certificates: The Class M and Class B Certificates.
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Subsequent Recovery: The amount, if any, recovered by the Servicer with
respect to a Liquidated Loan with respect to which a Realized Loss has been
incurred after liquidation and disposition of such Mortgage Loan.
Subservicer: Any Person that services Mortgage Loans on behalf of the
Servicer pursuant to a subservicing agreement and is responsible for the
performance of the material servicing functions required to be performed by the
Servicer under this Agreement that are identified in Item 1122(d) of Regulation
AB with respect to 10% or more of the Mortgage Loans under the direction or
authority of the Servicer (measured by aggregate Stated Principal Balance of the
Mortgage Loans, annually at the commencement of the calendar year prior to the
year in which an Assessment of Compliance is required to be delivered,
multiplied by a fraction, the numerator of which is the number of months during
which such Subservicer services the related Mortgage Loans and the denominator
of which is 12, or, in the case of the year in which the Closing Date occurs,
the number of months elapsed in such calendar year). Any subservicer shall meet
the qualifications set forth in Section 3.02.
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03(c).
Supplemental Interest Trust: The separate trust, established pursuant to
Section 4.04(l) of this Agreement and held by the Trustee for the benefit of the
holders of the Certificates as a segregated subtrust of the Trust Fund, in which
the Swap Agreement will be held, out of which any Swap Termination Payments or
Net Swap Payments owed to the Swap Counterparty will be paid, certain
distributions to Certificateholders will be made, and into which any Swap
Termination Payments or Net Swap Payments received from the Swap Counterparty
will be deposited as set forth in Section 4.04 hereof.
Supplemental Interest Trust Trustee: U.S. Bank National Association, a
national banking association, not in its individual capacity, but solely in its
capacity as trustee of the Supplemental Interest Trust under this Agreement, and
any successor thereto, and any corporation or national banking association
resulting from or surviving any consolidation or merger to which it or its
successors may be a party and any successor trustee as may from time to time be
serving as successor trustee hereunder.
Swap Account: The separate Eligible Account created and maintained by the
Supplemental Interest Trust Trustee pursuant to Section 4.04(l) in the name of
the Supplemental Interest Trust Trustee for the benefit of the Trust Fund and
designated "U.S. Bank National Association, as trustee, in trust for registered
holders of Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-BC5." Funds in the Swap Account shall be
held in trust for the Issuing Entity for the uses and purposes set forth in this
Agreement.
Swap Agreement: The interest rate swap agreement (together with the
schedule thereto), including the credit support annex (in the form of Exhibit
U-2) and any related confirmation thereto, between the Swap Counterparty and the
Supplemental Interest Trust Trustee for the benefit of the Issuing Entity (in
the form of Exhibit U-1).
Swap Counterparty: The Bank of New York or any successor counterparty who
meets the requirements set forth in the Swap Agreement.
Swap LIBOR: With respect to any Distribution Date (and the related Accrual
Period) the product of (i) the Floating Rate Option (as defined in the Swap
Agreement for the related Swap Payment Date),
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(ii) two and (iii) the quotient of (a) the actual number of days in the Accrual
Period for the Lower Tier REMIC Interests divided by (b) 30.
Swap Payment Date: For so long as the Swap Agreement is in effect or
amounts remain unpaid thereunder, two Business Days immediately preceding each
Distribution Date.
Swap Posted Collateral Account: The segregated collateral account that may
be created and maintained by the Supplemental Interest Trust Trustee pursuant to
Section 4.04(l) in the name of the Supplemental Interest Trust Trustee for the
benefit of the Supplemental Interest Trust and designated "U.S. Bank National
Association, as trustee, in trust for registered holders of Specialty
Underwriting and Residential Finance Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-BC5." Funds in the Post Collateral Account shall be
held in trust for the Supplemental Interest Trust for the uses and purposes set
forth in this Agreement.
SWAP REMIC: As described in the Preliminary Statement and Section 2.07.
SWAP REMIC Interests: Each of the interests in the SWAP REMIC as set forth
in the Preliminary Statement.
SWAP REMIC Regular Interests: Each of the SWAP REMIC Interests other than
the Class SWR Interest.
Swap Termination Payment: Any payment payable by the Supplemental Interest
Trust or the Swap Counterparty upon termination of the Swap Agreement as a
result of termination of the Swap Agreement.
Targeted Overcollateralization Amount: As of any Determination Date, (a)
prior to the Stepdown Date, 4.15% of the Cut-Off Date Principal Balance of the
Mortgage Loans and (b) on or after the Stepdown Date, 8.30% of the Stated
Principal Balance of the Mortgage Loans.
Tax Matters Person: The Person designated as "tax matters person" in the
manner provided under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.
Transfer: Any direct or indirect transfer or sale of any Ownership Interest
in a Certificate.
Trust Fund: The corpus of the Issuing Entity created hereunder consisting
of (i) the Mortgage Loans and all interest and principal received on or with
respect thereto on and after the Cut-off Date to the extent not applied in
computing the Cut-off Date Principal Balance thereof, exclusive of interest not
required to be deposited in the Collection Account; (ii) the Collection Account
and the Certificate Account and all amounts deposited therein pursuant to the
applicable provisions of this Agreement; (iii) property that secured a Mortgage
Loan and has been acquired by foreclosure, deed in lieu of foreclosure or
otherwise; (iv) the mortgagee's rights under the Insurance Policies with respect
to the Mortgage Loans and/or the related Mortgaged Properties; (v) all proceeds
of the conversion, voluntary or involuntary, of any of the foregoing into cash
or other liquid property; (vi) the Cap Contracts and the Cap Contract Account;
and (vii) the Supplemental Interest Trust that in turn holds the Swap Agreement.
Trustee: U.S. Bank National Association, a national banking association,
not in its individual capacity, but solely in its capacity as trustee for the
benefit of the Certificateholders under this Agreement, and any successor
thereto, and any corporation or national banking association resulting from or
surviving any consolidation or merger to which it or its successors may be a
party and any successor trustee as may from time to time be serving as successor
trustee hereunder.
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Uncertificated Class C Interest: An uncertificated REMIC Regular Interest
having the characteristics described in the Preliminary Statement.
Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss Amount,
Class M-2 Unpaid Realized Loss Amount, Class M-3 Unpaid Realized Loss Amount,
Class M-4 Unpaid Realized Loss Amount, Class M-5 Unpaid Realized Loss Amount,
Class M-6 Unpaid Realized Loss Amount, Class B-1 Unpaid Realized Loss Amount,
Class B-2 Unpaid Realized Loss Amount, Class B-3 Unpaid Realized Loss Amount and
Class C Unpaid Realized Loss Amount, collectively.
Upper Collar: Any of the Class A-1 Upper Collar, the Class A-2 Upper Collar
or the Subordinate Certificate Upper Collar.
Upper Tier REMIC: As described in the Preliminary Statement and Section
2.07.
Upper Tier REMIC Net WAC Cap: In the case of the Class UTA-1 Interest and
the Residual Interest, a per annum rate equal to the weighted average of the
interest rate of the Class LTII1B Interest for such Distribution Date. In the
case of the Class UTA-2A, Class UTA-2B, Class UTA-2C, Class UTA-2D and Class
UTA-2E Interests, a per annum rate equal to the weighted average of the interest
rate for the Class LTII2B for such Distribution Date. In the case of the Class
UTM-1, Class UTM-2, Class UTM-3, Class UTM-4, Class UTM-5, Class UTM-6, Class
UTB-1, Class UTB-2 and Class UTB-3 Interests, a per annum rate equal to the
weighted average of the interest rates of Class LTII1B and Class LTII2B
Interests for such Distribution weighted, respectively, on the basis of the
uncertificated principal balances of the Class LTII1A and the Class LTII2A
Interests. In the case of any interest in the Upper Tier REMIC that accrues
interest on a "30/360" basis, the per annum rates described in this definition
shall be adjusted to reflect accruals on such basis.
Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 98% to the Offered Certificates, 2% to the Class C and Class
P Certificates, with the allocation among the Offered Certificates to be in
proportion to the Class Certificate Principal Balance of each Class relative to
the Class Certificate Principal Balance of all other Classes. Voting Rights will
be allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof, does
hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or with respect to the Mortgage Loans on or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage Loans on or before the Cut-off
Date).
In connection with such assignment, the Depositor does hereby deliver to,
and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan so assigned:
(a) all pages of the original Mortgage Note, signed by the borrower(s) and
endorsed, "Pay to the order of blank, without recourse" and signed in the name
of the prior holder by an authorized officer. Such signature on the endorsement
shall be an original signature of such authorized officer and have
60
printed the endorser's name, title and company name. To the extent that there is
no room on the face of the Mortgage Note for endorsements, the endorsement may
be contained on an allonge, if the law by which such Mortgage Note is governed
so permits. The Mortgage Note shall include all intervening endorsements showing
a complete chain of title from the originator to the Sponsor;
(b) all original pages of any riders referred to in the Mortgage Note;
(c) for each Mortgage Loan that is not a MOM Mortgage Loan, the original
recorded Mortgage, together with all riders referred to in the Mortgage, and
legal description, with evidence of recording thereon or if the original is not
available, a copy certified by the applicable public recording office. If the
original Mortgage has not yet been returned from the recording office, a copy of
the original Mortgage, together with all riders thereto, that has been delivered
for recording in the appropriate recording office of the jurisdiction in which
the Mortgaged Property is located;
(d) for each Mortgage Loan that is not a MERS Mortgage Loan, the original
Mortgage Assignment, executed in blank, in form and substance acceptable for
recording and signed in the name of the last endorsee by an authorized officer;
(e) the policy of title insurance (or a preliminary title report if the
original title insurance policy has not been received from the title insurance
company);
(f) for each Mortgage Loan that is not a MERS Mortgage Loan, originals of
any intervening Mortgage Assignments, with evidence of recording thereon, or if
the original is not available, a copy certified by the applicable public
recording office. If the original intervening assignment has not yet been
returned from the recording office, a copy of such assignment which has been
sent for recording in the appropriate jurisdiction in which the Mortgaged
Property is located, showing a complete chain of title from the originator to
the Seller;
(g) in the case of each MOM Loan, the original Mortgage, together with all
riders thereto, with evidence of recording thereon, noting the presence of the
MIN of the Mortgage Loan and language indicating that the Mortgage Loan is a MOM
Loan or if the original Mortgage is not available, a copy certified by the
applicable public recording office. If the original Mortgage has not yet been
returned from the recording office, a copy of such Mortgage which has been sent
for recording in the appropriate jurisdiction in which the Mortgaged Property is
located;
(h) in the case of each MERS Mortgage Loan that is not a MOM Loan, the
original Mortgage Assignment or if the original Mortgage is not available, a
copy certified by the applicable public recording office, with evidence of
recording thereon, and all intervening Mortgage Assignments, with evidence of
recording thereon, showing a complete chain of title from the originator to
MERS;
(i) all original pages of assumption, modification, consolidation or
extension agreements, if any, with evidence of recording thereon;
(j) with respect to a Mortgage Loan that, according to the Mortgage Loan
Schedule is covered by a primary mortgage insurance policy, the original or a
copy of the policy of primary mortgage insurance; and
(k) if the Mortgage Note or the Mortgage has been signed by any Person on
behalf of the Mortgagor, the original power of attorney or other instrument that
authorized and empowered such Person to sign, or a copy of such power of
attorney that has been delivered for recording in the appropriate recording
office of the jurisdiction in which the Mortgaged Property is located.
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If in connection with any Mortgage Loan, the Depositor cannot deliver the
Mortgage, Assignments of Mortgage or assumption, consolidation or modification,
as the case may be, with evidence of recording thereon, if applicable,
concurrently with the execution and delivery of this Agreement solely because of
a delay caused by the public recording office where such Mortgage, Assignments
of Mortgage or assumption, consolidation or modification, as the case may be,
has been delivered for recordation, the Depositor shall deliver or cause to be
delivered to the Trustee written notice stating that such Mortgage or
assumption, consolidation or modification, as the case may be, has been
delivered to the appropriate public recording office for recordation.
Thereafter, the Depositor shall deliver or cause to be delivered to the Trustee
such Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording indicated thereon,
if applicable, upon receipt thereof from the public recording office. To the
extent any required endorsement is not contained on a Mortgage Note or an
Assignment of Mortgage, the Depositor shall make or cause such endorsement to be
made.
With respect to any Mortgage Loan, none of the Depositor, the Servicer or
the Trustee shall be obligated to cause to be recorded the Assignment of
Mortgage referred to in this Section 2.01. In the event that any Assignment of
Mortgage is not recorded or is improperly recorded, the Servicer shall have no
liability for its failure to receive or act on notices related to such
Assignment of Mortgage.
The ownership of each Mortgage Note, the Mortgage and the contents of the
related Mortgage File is vested in the Trustee. Neither the Depositor nor the
Servicer shall take any action inconsistent with such ownership and shall not
claim any ownership interest therein. The Depositor and the Servicer shall
respond to any third party inquiries with respect to ownership of the Mortgage
Loans by stating that such ownership is held by the Trustee on behalf of the
Certificateholders. Mortgage documents relating to the Mortgage Loans not
delivered to the Trustee are and shall be held in trust by the Servicer, for the
benefit of the Trustee as the owner thereof, and the Servicer's possession of
the contents of each Mortgage File so retained is for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Servicer is in a custodial capacity only. The Depositor agrees to take no action
inconsistent with the Trustee's ownership of the Mortgage Loans, to promptly
indicate to all inquiring parties that the Mortgage Loans have been sold and to
claim no ownership interest in the Mortgage Loans.
It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Sponsor to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Sponsor deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Sponsor to the Depositor deemed to be secured by said pledge and that the
Trustee shall be deemed to be an independent custodian for purposes of
perfection of the security interest granted to the Depositor. If the conveyance
of the Mortgage Loans from the Depositor to the Trustee is characterized as a
pledge, it is the intention of this Agreement that this Agreement shall
constitute a security agreement under applicable law, and that the Depositor
shall be deemed to have granted to the Trustee a first priority security
interest in all of the Depositor's right, title and interest in, to and under
the Mortgage Loans, all payments of principal of or interest on such Mortgage
Loans, all other rights relating to and payments made in respect of the Trust
Fund, and all proceeds of any thereof. If the trust created by this Agreement
terminates prior to the satisfaction of the claims of any Person in any
Certificates, the security interest created hereby shall continue in full force
and effect and the Trustee shall be deemed to be the collateral agent for the
benefit of such Person.
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In addition to the conveyance made in the first paragraph of this Section
2.01, the Depositor does hereby convey, assign and set over to the Trustee for
the benefit of the Certificateholders its rights and interests under the Sale
Agreement, including the Depositor's right, title and interest in the
representations and warranties contained in the Sale Agreement and the benefit
of the repurchase obligations and the obligation of the Sponsor contained in the
Sale Agreement to take, at the request of the Depositor or the Trustee, all
action on its part which is reasonably necessary to ensure the enforceability of
a Mortgage Loan. The Trustee hereby accepts such assignment, and shall be
entitled to exercise all rights of the Depositor under the Sale Agreement as if,
for such purpose, it were the Depositor. The foregoing sale, transfer,
assignment, set-over, deposit and conveyance does not and is not intended to
result in creation or assumption by the Trustee of any obligation of the
Depositor, the Sponsor, or any other Person in connection with the Mortgage
Loans or any other agreement or instrument relating thereto.
The parties hereto agree and understand that it is not intended that any
Mortgage Loan be included in the Trust that is, without limitation, a "High-Cost
Home Loan" as defined by the Home Ownership and Equity Protection Act of 1994 or
any other applicable anti-predatory lending laws, including but not limited to
(i) a "High-Cost Home Loan" as defined in the New Jersey Home Ownership Act
effective November 27, 2003; (ii) a "High-Cost Home Loan" as defined in the New
Mexico Home Loan Protection Act effective January 1, 2004; (iii) a "High-Cost
Home Loan" as defined in the Massachusetts Predatory Home Loan Practices Act
effective November 7, 2004; (iv) a "High-Cost Home Loan" as defined by the
Indiana High Cost Home Loan Law effective January 1, 2005 or (v) a "High-Cost
Home Loan" as defined by the Illinois High Risk Home Loan Act effective January
1, 2004.
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.
Except as set forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it holds and
will hold such documents and any other documents constituting a part of the
Mortgage Files delivered to it in trust for the use and benefit of all present
and future Certificateholders. The Depositor will cause the Sponsor to
repurchase any Mortgage Loan to which a material exception was taken in the
Exception Report unless such exception is cured to the satisfaction of the
Depositor and the Trustee within 45 Business Days of the Closing Date.
The Trustee acknowledges receipt of the three Cap Contracts (forms of which
are attached hereto as Exhibits O-1, O-2 and O-3) and the Sale Agreement.
The Trustee acknowledges receipt of the Swap Agreement that will be held in
the Supplemental Interest Trust and is hereby instructed to enter into the Swap
Agreement, not in its individual capacity, but solely as Trustee for the Issuing
Entity and for the Supplemental Interest Trust.
The Trustee agrees, for the benefit of Certificateholders, to review each
Mortgage File delivered to it within sixty (60) days after the Closing Date to
ascertain and to certify, within seventy (70) days of the Closing Date, to the
Depositor and the Servicer that all documents required by Section 2.01, except
those listed on the exception report attached thereto, have been executed and
received, and that such documents relate to the Mortgage Loans identified in
Exhibit B that have been conveyed to it. If the Trustee finds any document or
documents constituting a part of a Mortgage File to be missing or defective
(that is, mutilated, damaged, defaced or unexecuted) in any material respect,
the Trustee shall promptly (and in any event within no more than five Business
Days) after such finding so notify the Servicer, the Sponsor and the Depositor.
In addition, the Trustee shall also notify the Servicer, the Sponsor and the
Depositor if the original Mortgage with evidence of recording thereon with
respect to a
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Mortgage Loan is not received within seventy (70) days of the Closing Date; if
it has not been received because of a delay caused by the public recording
office where such Mortgage has been delivered for recordation, the Depositor
shall deliver or cause to be delivered to the Trustee written notice stating
that such Mortgage has been delivered to the appropriate public recording
officer for recordation and thereafter the Depositor shall deliver or cause to
be delivered such Mortgage with evidence of recording thereon upon receipt
thereof from the public recording office. The Trustee shall request that the
Sponsor correct or cure such omission, defect or other irregularity, or
substitute a Mortgage Loan pursuant to the provisions of Section 2.03(c), within
ninety (90) days from the date the Sponsor was notified of such omission or
defect and, if the Sponsor does not correct or cure such omission or defect
within such period, that the Sponsor purchase such Mortgage Loan from the
Issuing Entity within ninety (90) days from the date the Trustee notified the
Sponsor of such omission, defect or other irregularity at the Purchase Price of
such Mortgage Loan. The Purchase Price for any Mortgage Loan purchased pursuant
to this Section 2.02 shall be paid to the Servicer and deposited by the Servicer
in the Collection Account promptly upon receipt, and, upon receipt by the
Trustee of written notification of such deposit signed by a Servicing Officer,
the Trustee, upon receipt of a Request for Release, shall promptly release to
the Sponsor the related Mortgage File and the Trustee shall execute and deliver
such instruments of transfer or assignment, without recourse, representation or
warranty, as shall be necessary to vest in the Sponsor or its designee, as the
case may be, any Mortgage Loan released pursuant hereto, and the Trustee shall
have no further responsibility with regard to such Mortgage Loan. It is
understood and agreed that the obligation of the Sponsor to purchase, cure or
substitute any Mortgage Loan as to which a material defect in or omission of a
constituent document exists shall constitute the sole remedy respecting such
defect or omission available to the Trustee on behalf of Certificateholders. The
preceding sentence shall not, however, limit any remedies available to the
Certificateholders, the Depositor or the Trustee pursuant to the Sale Agreement.
The Trustee shall be under no duty or obligation to inspect, review and examine
such documents, instruments, certificates or other papers to determine that they
are genuine, enforceable, recordable or appropriate to the represented purpose,
or that they have actually been recorded, or that they are other than what they
purport to be on their face. The Trustee shall keep confidential the name of
each Mortgagor and the Trustee shall not solicit any such Mortgagor for the
purpose of refinancing the related Mortgage Loan. It is understood and agreed
that all rights and benefits relating to the solicitation of any Mortgagors and
the attendant rights, title and interest in and to the list of Mortgagors and
data relating to their Mortgages shall be retained by the Servicer.
Within seventy (70) days of the Closing Date, the Trustee shall deliver to
the Depositor and the Servicer the Trustee's Certification, substantially in the
form of Exhibit D attached hereto, evidencing the completeness of the Mortgage
Files, with any exceptions noted thereto.
SECTION 2.03. Representations, Warranties and Covenants of the Depositor.
(a) The Depositor hereby represents and warrants to the Servicer and the
Trustee as follows, as of the date hereof
(i) The Depositor is duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has full power and authority (corporate and other) necessary to own or hold
its properties and to conduct its business as now conducted by it and to
enter into and perform its obligations under this Agreement and the Sale
Agreement.
(ii) The Depositor has the full corporate power and authority to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and the Sale Agreement and has
duly authorized, by all necessary corporate action on its part, the
execution, delivery and performance of this Agreement and the Sale
Agreement; and this Agreement and the Sale Agreement, assuming the due
authorization, execution and delivery
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hereof by the other parties hereto, constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, subject, as to enforceability, to (i)
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and (ii) general principles of
equity, regardless of whether enforcement is sought in a proceeding in
equity or at law.
(iii) The execution and delivery of this Agreement and the Sale
Agreement by the Depositor, the consummation of the transactions
contemplated by this Agreement and the Sale Agreement, and the fulfillment
of or compliance with the terms hereof are in the ordinary course of
business of the Depositor and will not (A) result in a material breach of
any term or provision of the charter or by-laws of the Depositor or (B)
materially conflict with, result in a violation or acceleration of, or
result in a material default under, the terms of any other material
agreement or instrument to which the Depositor is a party or by which it
may be bound or (C) constitute a material violation of any statute, order
or regulation applicable to the Depositor of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Depositor; and the Depositor is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it which breach or
violation may materially impair the Depositor's ability to perform or meet
any of its obligations under this Agreement.
(iv) No litigation is pending or, to the best of the Depositor's
knowledge, threatened, against the Depositor that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement and the Sale Agreement or the ability of the Depositor to perform
its obligations under this Agreement and the Sale Agreement in accordance
with the terms hereof.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement and the Sale Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same. The Depositor
hereby represents and warrants to the Trustee with respect to each Mortgage
Loan as of the Closing Date, and following the transfer of the Mortgage
Loans to it by the Sponsor, the Depositor had good title to the Mortgage
Loans and the Mortgage Notes were subject to no offsets, claims, liens,
mortgage, pledge, charge, security interest, defenses or counterclaims.
(vi) Each Mortgage Loan in Group One has a Stated Principal Balance as
of the Cut-off Date that complies with the loan limitations of Xxxxxx Xxx
and Xxxxxxx Mac as in effect on the Cut-off Date.
(b) To the extent that any fact, condition or event with respect to a
Mortgage Loan constitutes a breach of a representation or warranty of the
Sponsor under the Sale Agreement, the only right or remedy of the Trustee or of
any Certificateholder shall be the Trustee's right to enforce the obligations of
the Sponsor under any applicable representation or warranty made by it. The
Trustee acknowledges that the Depositor shall have no obligation or liability
with respect to any breach of any representation or warranty with respect to the
Mortgage Loans (except as set forth in Section 2.03(a)(v)) under any
circumstances.
(c) Upon discovery by any of the Depositor, the Servicer, or the Trustee of
a breach of any of representations and warranties set forth in the Sale
Agreement that adversely and materially affects the
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value of the related Mortgage Loan, prepayment charges or the interests of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the other parties. Within ninety (90) days of the discovery of a
breach of any representation or warranty given to the Trustee by the Depositor,
the Sponsor and assigned by the Depositor to the Trustee, the Depositor, or the
Sponsor shall either (a) cure such breach in all material respects, (b)
repurchase such Mortgage Loan or any property acquired in respect thereof from
the Trustee at the Purchase Price or (c) within the two year period following
the Closing Date, substitute a Replacement Mortgage Loan for the affected
Mortgage Loan. In the event of discovery of a breach of any representation and
warranty of the Sponsor or the Depositor, the Trustee shall enforce its rights
under the Sale Agreement or thereunder for the benefit of Certificateholders. In
the event of a breach of the representations and warranties with respect to the
Mortgage Loans set forth in a Sale Agreement, the Trustee shall enforce the
right of the Issuing Entity to be indemnified for such breach of representation
and warranty. In the event that such breach relates solely to the
unenforceability of a prepayment charge, amounts received in respect of such
indemnity up to the amount of such prepayment charge shall be distributed
pursuant to Section 4.04(b)(i)(B). As provided in the Sale Agreement, if the
Sponsor substitutes for a Mortgage Loan for which there is a breach of any
representations and warranties which adversely and materially affects the value
of such Mortgage Loan and such substitute mortgage loan is not a Replacement
Mortgage Loan, under the terms of the Sale Agreement, the Sponsor will, in
exchange for such substitute Mortgage Loan, (i) provide the applicable Purchase
Price for the affected Mortgage Loan or (ii) within two years of the Closing
Date, substitute such affected Mortgage Loan with a Replacement Mortgage Loan.
Any such substitution shall not be effected prior to the additional delivery to
the Trustee of a Request for Release substantially in the form of Exhibit I and
shall not be effected unless it is within two years of the Startup Day. As
provided in the Sale Agreement, the Sponsor indemnifies and holds the Issuing
Entity, the Trustee, the Depositor, the Servicer and each Certificateholder
harmless against any and all taxes, claims, losses, penalties, fines,
forfeitures, reasonable legal fees and related costs, judgments, and any other
costs, fees and expenses that the Issuing Entity, the Trustee, the Depositor,
the Servicer and any Certificateholder may sustain in connection with any
actions of the Sponsor relating to a repurchase of a Mortgage Loan other than in
compliance with the terms of this Section 2.03 and the Sale Agreement, to the
extent that any such action causes (i) any federal or state tax to be imposed on
the Issuing Entity or any REMIC provided for herein, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the startup day" under Section
860G(d)(1) of the Code, or (ii) any REMIC created hereunder to fail to qualify
as a REMIC at any time that any Certificate is outstanding.
With respect to any Mortgage Loan repurchased by the Depositor pursuant to
this Agreement or by the Sponsor pursuant to the Sale Agreement, the principal
portion of the funds received by the Servicer in respect of such repurchase of a
Mortgage Loan will be considered a Principal Prepayment and shall be deposited
by the Servicer in the Certificate Account pursuant to Section 3.05. The
Trustee, upon receipt of the full amount of the Purchase Price for a Deleted
Mortgage Loan, or upon receipt of the Mortgage File for a Replacement Mortgage
Loan substituted for a Deleted Mortgage Loan, shall release or cause to be
released and reassign to the Depositor or the Sponsor, as applicable, the
related Mortgage File for the Deleted Mortgage Loan and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as shall be necessary to vest in such
party or its designee or assignee title to any Deleted Mortgage Loan released
pursuant hereto, free and clear of all security interests, liens and other
encumbrances created by this Agreement, which instruments shall be prepared by
the Trustee, and the Trustee shall not have any further responsibility with
respect to the Mortgage File relating to such Deleted Mortgage Loan.
With respect to each Replacement Mortgage Loan to be delivered to the
Trustee pursuant to the terms of this Article II in exchange for a Deleted
Mortgage Loan: (i) the Depositor or the Sponsor, as applicable, must deliver to
the Trustee the Mortgage File for the Replacement Mortgage Loan containing
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the documents set forth in Section 2.01 along with a written certification
certifying as to the delivery of such Mortgage File and containing the granting
language set forth in the first sentence of Section 2.01; and (ii) the Depositor
will be deemed to have made, with respect to such Replacement Mortgage Loan,
each of the representations and warranties made by it with respect to the
related Deleted Mortgage Loan. The Trustee shall review the Mortgage File with
respect to each Replacement Mortgage Loan and certify to the Depositor that all
documents required by Section 2.01 have been executed and received.
For any month in which the Sponsor substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Sponsor will
determine the amount (if any) by which the aggregate principal balance of all
such Replacement Mortgage Loans as of the date of substitution and the aggregate
prepayment charges with respect to such Replacement Mortgage Loans is less than
the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
prepayment charges of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") shall be delivered by the Sponsor to the
Servicer for deposit into the Collection Account on the Determination Date for
the Distribution Date relating to the Prepayment Period during which the related
Mortgage Loan became required to be purchased or replaced hereunder.
The Sponsor shall give or cause to be given written notice to the
Certificateholders that such substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of this Agreement and the substitution of the Replacement Mortgage
Loan or Replacement Mortgage Loans and shall deliver a copy of such amended
Mortgage Loan Schedule to the Trustee. Upon such substitution by the Sponsor,
such Replacement Mortgage Loan or Replacement Mortgage Loans shall constitute
part of the Mortgage Pool and shall be subject in all respects to the terms of
this Agreement and the Sale Agreement, including all applicable representations
and warranties thereof included in the Sale Agreement as of the date of
substitution.
In addition, the Sponsor shall obtain at its own expense and deliver to the
Trustee an Opinion of Counsel addressed to the Trustee to the effect that such
substitution will not (a) cause any federal tax to be imposed on the Issuing
Entity or any REMIC provided for herein, including without limitation, any
federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the startup day" under Section 860G(d)(1) of the
Code or (b) adversely affect the status of any REMIC provided for herein as a
REMIC. If any such Opinion of Counsel can not be delivered, then such
substitution may only be effected at such time as the required Opinion of
Counsel can be given.
(d) It is understood and agreed that the representations, warranties and
indemnification (i) set forth in this Section 2.03 and (ii) of the Sponsor and
the Depositor set forth in the Sale Agreement and assigned to the Trustee by the
Depositor hereunder shall each survive delivery of the Mortgage Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and shall continue
throughout the term of this Agreement.
SECTION 2.04. Representations and Warranties of the Servicer.
The Servicer hereby represents and warrants to the Depositor and the
Trustee as follows, as of the date hereof
(i) The Servicer is a duly formed corporation and is validly existing
and in good standing under the laws of the state of its formation and is
duly authorized and qualified to transact any and all business contemplated
by this Agreement to be conducted by the Servicer in any state in which a
Mortgaged Property is located or is otherwise not required under applicable
67
law to effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary to
ensure its ability to enforce each Mortgage Loan, to service the Mortgage
Loans in accordance with the terms of this Agreement and to perform any of
its other obligations under this Agreement in accordance with the terms
hereof.
(ii) The Servicer has the power and authority to service each Mortgage
Loan, and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by this Agreement and has duly authorized by
all necessary corporate action on the part of the Servicer the execution,
delivery and performance of this Agreement; and this Agreement, assuming
the due authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the Servicer,
enforceable against the Servicer in accordance with its terms, except that
(a) the enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought.
(iii) The execution and delivery of this Agreement by the Servicer,
the servicing of the Mortgage Loans under this Agreement, the consummation
of any other of the transactions contemplated by this Agreement, and the
fulfillment of or compliance with the terms hereof are in the ordinary
course of business of the Servicer and will not (A) result in a material
breach of any term or provision of the charter or by-laws of the Servicer
or (B) materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which the Servicer is a party or
by which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to the Servicer of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Servicer; and the Servicer is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair the
Servicer's ability to perform or meet any of its obligations under this
Agreement.
(iv) The Servicer is an approved servicer of mortgage loans for Xxxxxx
Xxx and is an approved servicer of mortgage loans for Xxxxxxx Mac.
(v) No litigation is pending or, to the best of the Servicer's
knowledge, threatened, against the Servicer that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Servicer to service the Mortgage Loans or
to perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the consummation of the transactions contemplated hereby, or
if any such consent, approval, authorization or order is required, the
Servicer has obtained the same.
(vii) The Servicer has fully furnished and will fully furnish (for the
period it serviced the Mortgage Loans), in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files
to Equifax, Experian and Trans Union Credit Information Company on a
monthly basis.
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SECTION 2.05. Substitutions and Repurchases of Mortgage Loans Which Are Not
"Qualified Mortgages".
Upon discovery by the Depositor, the 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 Depositor
shall, at the Depositor's option, either (i) substitute, if the conditions in
Section 2.03(c) with respect to substitutions are satisfied, a Replacement
Mortgage Loan for the affected Mortgage Loan, or (ii) repurchase the affected
Mortgage Loan within ninety (90) days of such discovery in the same manner as it
would a Mortgage Loan for a breach of representation or warranty contained in
Section 2.03. The Trustee shall reconvey to the Depositor the Mortgage Loan to
be released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section 2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, the Trustee has caused
to be authenticated and delivered to or upon the order of the Depositor, in
exchange for the Mortgage Loans, Certificates duly authenticated by the Trustee
in authorized denominations evidencing ownership of the entire 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 its duties set forth in this Agreement in accordance with the provisions
hereof.
SECTION 2.07. REMIC Elections.
(a) The Depositor hereby instructs and authorizes the Trustee to make an
appropriate election to treat each of the SWAP REMIC, the Lower Tier REMIC and
the Upper Tier REMIC as a REMIC. The Trustee shall sign the returns providing
for such elections and such other tax or information returns which are required
to be signed by the Trustee under applicable law. This Agreement shall be
construed so as to carry out the intention of the parties that each of the SWAP
REMIC, the Lower Tier REMIC and the Upper Tier REMIC be treated as a REMIC at
all times prior to the date on which the Trust Fund is terminated.
(b) The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Day," as defined in Section 860G(a)(9) of the Code, for
purposes of the REMIC Provisions shall be the Closing Date. Each REMIC's fiscal
year shall be the calendar year.
The SWAP REMIC shall consist of all of the assets of the Trust Fund, other
than (i) amounts distributable to the Class P Certificates pursuant to Section
4.04(b)(i) hereof, (ii) the interests issued by the SWAP REMIC and the interests
issued by the Lower Tier REMIC, (iii) the grantor trusts described in Section
2.07 hereof, (iv) each Cap Contract and the Cap Contract Account and (v) the
Swap Agreement and the Supplemental Interest Trust. The SWAP REMIC shall issue
the SWAP REMIC Regular Interests, which shall be designated as regular interests
of such REMIC, and shall issue the Class SWR Interest, which shall be designated
as the sole class of residual interest in the SWAP REMIC. Each of the SWAP REMIC
Regular Interests shall have the characteristics set forth in the Preliminary
Statement and this Section 2.07.
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The Lower Tier REMIC shall consist of the SWAP REMIC Regular Interests. The
Lower Tier REMIC shall issue the Lower Tier REMIC Regular Interests, which shall
be designated as regular interests of such REMIC and shall issue the Class LTR
Interest, which shall be designated as the sole class of residual interest in
the Lower Tier REMIC. Each of the Lower Tier REMIC Regular Interests shall have
the characteristics set forth in its definition and the Preliminary Statement.
The assets of the Upper Tier REMIC shall be the Lower Tier REMIC Regular
Interests. The REMIC Regular Interests shall be designated as the regular
interests in the Upper Tier REMIC and the Residual Interest shall be designated
as the sole class of residual interest in the Upper Tier REMIC. For federal
income tax purposes, the pass-through rate on each REMIC Regular Interest (other
than the Uncertificated Class C Interest and the Class UT-IO Interest) and on
the sole class of residual interest in the Upper Tier REMIC shall be subject to
a cap equal to the Upper Tier REMIC Net WAC Cap.
The beneficial ownership of the Class SWR Interest, the Class LTR Interest
and the Residual Interest shall be represented by the Class R Certificate. The
Class SWR Interest and the Class LTR Interest shall not have a principal balance
or bear interest.
(c) The "tax matters person" with respect to each REMIC for purposes of the
REMIC Provisions shall be the beneficial owner of the Class R Certificate;
provided, however, that the Holder of the Class R Certificate, by its acceptance
thereof, irrevocably appoints the Trustee as its agent and attorney-in-fact to
act as "tax matters person" with respect to each such REMIC for purposes of the
REMIC Provisions. If there is more than one beneficial owner of the Class R
Certificate, the "tax matters person" shall be the Person with the greatest
percentage interest in the Class R Certificate and, if there is more than one
such Person, shall be determined under Treasury regulation Section 1.860F-4(d)
and Treasury regulation Section 301.6231(a)(7)-1.
(d) (i) It is intended that the rights of the Class A Certificates, Class R
Certificate, Class M Certificates and Class B Certificates to receive payments
in respect of Excess Interest shall be treated as a right in interest rate cap
contracts written by the Class C Certificateholders in favor of the holders of
the Class A Certificates, Class R Certificate, Class M Certificates and Class B
Certificates, and such shall be accounted for as property held separate and
apart from the regular interests in the Upper Tier REMIC held by the holders of
the Class A Certificates, Class M Certificates and Class B Certificates and the
residual interest in the Upper Tier REMIC held by the holder of the Class R
Certificate. This provision is intended to satisfy the requirements of Treasury
Regulations Section 1.860G-2(i) for the treatment of property rights coupled
with REMIC interests to be separately respected and shall be interpreted
consistently with such regulation. On each Distribution Date, to the extent that
any of the Class A Certificates, Class R Certificate, Class M Certificates and
Class B Certificates receive payments in respect of Excess Interest, such
amounts, to the extent not derived from payments on the Cap Contracts or the
Swap Agreement, will be treated as distributed by the Upper Tier REMIC to the
Class C Certificates pro rata in payment of the amounts specified in Section
4.04(f) and then paid to the relevant Class of Certificates pursuant to the
related interest rate cap agreement.
(ii) It is intended that the beneficial owners of the Certificates
(other than the Class P and Class C Certificates) shall be treated as having
entered into a notional principal contract with respect to the beneficial owners
of the Class C Certificates. Pursuant to each such notional principal contract,
all beneficial owners of each Class of Certificates (other than the Class P and
Class C Certificates) shall be treated as having agreed to pay, on each
Distribution Date, to the beneficial owners of the Class C Certificates an
aggregate amount equal to the excess, if any, of (i) the amount payable on such
Distribution Date on the Corresponding REMIC Regular Interest of such Class of
Certificates over (ii) the amount payable on such Class of Certificates on such
Distribution Date (such excess, a "Class Payment Shortfall"). A Class Payment
Shortfall shall be allocated to each Class of Certificates to the extent that
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interest accrued on such Class for the related Accrual Period at the
Pass-Through Rate for a Class, computed by substituting "Upper Tier REMIC Net
WAC Cap" for the Available Funds Cap set forth in the definition thereof,
exceeds the amount of interest accrued on such Certificate at the Pass-Through
Rate (without such substitution) for the related Accrual Period, and a Class
Payment Shortfall payable from principal collections shall be allocated to the
most subordinate Class of Certificates with an outstanding principal balance to
the extent of such balance.
(e) The parties intend that the portion of the Trust Fund consisting of the
Uncertificated Class C Interest, the uncertificated Class UT-IO Interest, the
rights to receive payments deemed made by the Class A, Class R, Class M and
Class B Certificates in respect of notional principal contracts described in
Section 2.07(d)(ii), the Cap Contract Account, the Cap Contracts, the
Supplemental Interest Trust that holds the Swap Agreement and the obligation of
the holders of the Class C Certificates to pay amounts in respect of Excess
Interest to the holders of the Class A Certificates, Class R Certificate, Class
M Certificates and Class B Certificates shall be treated as a "grantor trust"
under the Code, for the benefit of the holders of the Class C Certificates, and
the provisions hereof shall be interpreted consistently with this intention. In
furtherance of such intention, the Trustee shall (i) furnish or cause to be
furnished to the holders of the Class C Certificates information regarding their
allocable share, if any, of the income with respect to such grantor trust, (ii)
file or cause to be filed with the Internal Revenue Service Form 1041 (together
with any necessary attachments) and such other forms as may be applicable and
(iii) comply with such information reporting obligations with respect to
payments from such grantor trust to the holders of Class A Certificates, Class R
Certificate, Class M Certificates, Class B Certificates and Class C Certificates
as may be applicable under the Code.
(f) The parties intend that the portion of the Trust Fund consisting of the
right to receive the payments distributable to the Class P Certificates pursuant
to Section 4.04(b)(i) hereof shall be treated as a "grantor trust" under the
Code, for the benefit of the holders of the Class P Certificates, and the
provisions hereof shall be interpreted consistently with this intention. In
furtherance of such intention, the Trustee shall (i) furnish or cause to be
furnished to the holders of the Class P Certificates information regarding their
allocable share of the income with respect to such grantor trust and (ii) file
or cause to be filed with the Internal Revenue Service Form 1041 (together with
any necessary attachments) and such other forms as may be applicable.
(g) The parties intend that amounts paid to the Swap Counterparty under the
Swap Agreement shall be deemed for federal income tax purposes to be paid by the
Class C Certificates first, out of funds deemed received in respect of the Class
UT-IO Interest, second, out of funds deemed received in respect of the
Uncertificated Class C Interest and third, out of funds deemed received in
respect of notional principal contracts described in Section 2.07(d)(ii), and
the provisions hereof shall be interpreted consistently with this intention. On
each Distribution Date, to the extent that amounts paid to the Swap Counterparty
are deemed paid out of funds received in respect of the Uncertificated Class C
Interest, such amounts will be treated as distributed by the Upper Tier REMIC to
the Class C Certificates pro rata in payment of the amounts specified in Section
4.04(f) and then paid to the Swap Counterparty pursuant to the Swap Agreement.
The Supplemental Interest Trust shall be an "outside reserve fund" for
federal income tax purposes and not an asset of any REMIC. Furthermore, the
Holders of the Class C Certificates shall be the beneficial owners of the
Supplemental Interest Trust for all federal income tax purposes, and shall be
taxable on all income earned thereon.
(h) All payments of principal and interest at the Net Mortgage Rate on each
of the Mortgage Loans (other than amounts distributable to the Class P
Certificates pursuant to Section 4.04(b)(i) hereof)
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received by the SWAP REMIC with respect to the Mortgage Loans shall be paid to
the SWAP REMIC Regular Interests until the principal balance of all such
interests have been reduced to zero and any losses allocated to such interests
have been reimbursed. Any available funds remaining in the SWAP REMIC on a
Distribution Date after distributions to the SWAP REMIC Regular Interests shall
be distributed to the Class R Certificates on account of the Class SWR Interest.
On each Distribution Date, the Trustee shall distribute the aggregate Interest
Funds (net of expenses and payments to the Class P Certificates) with respect to
each of the SWAP REMIC Regular Interests based on the interest rates for each
such SWAP REMIC Regular Interest. On each Distribution Date, the Trustee shall
distribute the aggregate Principal Funds with respect to the Group One Mortgage
Loans first to the Class 1-SW1 Interest until its principal balance is reduced
to zero and then sequentially to each of the other SWAP REMIC Regular Interests
beginning with designation "1" in ascending order of their numerical class
designation, in equal amounts to each such class in such numerical designation,
until the principal balance of each such class is reduced to zero. All losses
with respect to the Group One Mortgage Loans shall be allocated among the SWAP
REMIC Regular Interests beginning with the designation "1" in the same manner
that principal distributions are allocated. On each Distribution Date, the
Trustee shall distribute the aggregate Principal Funds with respect to the Group
Two Mortgage Loans first to the Class 2-SW2 Interest until its principal balance
is reduced to zero and then sequentially to each of the other SWAP REMIC Regular
Interests beginning with designation "2" in ascending order of their numerical
class designation, in equal amounts to each such class in such numerical
designation, until the principal balance of each such class is reduced to zero.
All losses with respect to the Group Two Mortgage Loans shall be allocated among
the SWAP REMIC Regular Interests beginning with the designation "2" in the same
manner that principal distributions are allocated. Subsequent Recoveries with
respect to the Group One and Group Two Mortgage Loans shall be allocated in the
reverse fashion from the manner in which losses are allocated.
All payments received by the Lower Tier REMIC with respect to the SWAP
REMIC Regular Interests shall be paid to the Lower Tier REMIC Regular Interests
until the principal balance of all such interests have been reduced to zero and
any losses allocated to such interests have been reimbursed. Any excess amounts
shall be distributed to the Class LTR Interest. On each Distribution Date,
payments and losses shall be allocated among the Lower Tier REMIC Regular
Interests so that (i) each of the Lower Tier REMIC I Marker Interests shall have
a principal balance equal to 25% of the principal balance of the Corresponding
Certificates, (ii) the Class LTIX Interest has a principal balance equal to the
excess of (x) 50% of the remaining principal balance of the Mortgage Loans over
(y) the aggregate principal balance of the Lower Tier REMIC I Marker Interests
(if necessary to reflect an increase in overcollateralization, accrued and
unpaid interest on the Class LTIX interest may be added to its principal amount
to achieve this result) and (iii) the aggregate principal amount of the Class
LTII1A Interest, Class LTII1B Interest, Class LTII2A Interest, Class LTII2B
Interest and Class LTIIX Interest shall equal 50% of the remaining principal
balance of the Mortgage Loans. Distributions and losses allocated to the Lower
Tier REMIC Regular Interests described in clause (iii) of the preceding sentence
will be allocated among such Lower Tier REMIC Regular Interests in the following
manner: (x) such distributions shall be deemed made to such Lower Tier REMIC
Regular Interests first, so as to keep the principal balance of the each such
Lower Tier REMIC Regular Interest with "B" at the end of its designation equal
to 0.05% of the aggregate scheduled principal balance of the Mortgage Loans in
the related Mortgage Group; second, to such Lower Tier REMIC Regular Interests
with "A" at the end of its designation so that the uncertificated principal
balance of each such Lower Tier REMIC Regular Interest is equal to 0.05% of the
excess of (I) the aggregate scheduled principal balance of the Mortgage Loans in
the related Mortgage Group over (II) the aggregate principal balance of
Certificate Group One, in the case of the Class LTII1A Interest, or Certificate
Group Two, in the case of the Class LTII2A Interest (except that if 0.05% of any
such excess is greater than the principal amount of the related Lower Tier REMIC
II Marker Interest with "A" at the end of its designation, the least amount of
principal shall be distributed to each Lower Tier REMIC II Marker Interest with
"A" at the end of its designation such that the Lower Tier REMIC Subordinate
Balance Ratio is maintained) and finally, any remaining distributions of
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principal to the Class LTIIX Interest and (y) such losses shall be allocated
among the Lower Tier REMIC Regular Interests described in clause (iii) of the
preceding sentence first, so as to keep the principal balance of the each such
Lower Tier REMIC Regular Interest with "B" at the end of its designation equal
to 0.05% of the aggregate scheduled principal balance of the Mortgage Loans in
the related Mortgage Group; second, to such Lower Tier REMIC Regular Interests
with "A" at the end of its designation so that the uncertificated principal
balance of each such Lower Tier REMIC Regular Interest is equal to 0.05% of the
excess of (I) the aggregate scheduled principal balance of the Mortgage Loans in
the related Mortgage Group over (II) the aggregate principal balance of
Certificate Group One, in the case of the Class LTII1A Interest, or Certificate
Group Two, in the case of the Class LTII2A Interest (except that if 0.05% of any
such excess is greater than the principal amount of the related Lower Tier REMIC
II Marker Interest with "A" at the end of its designation, the least amount of
losses shall be allocated to each Lower REMIC II Marker Interest with "A" at the
end of its designation such that the Lower Tier REMIC Subordinate Balance Ratio
is maintained) and finally, any remaining losses to the Class LTIIX Interest.
Notwithstanding the preceding two sentences, however, losses not allocated to
any Class of Certificates will not be allocated to any Lower Tier REMIC Regular
Interests. All computations with respect to the Lower Tier REMIC Regular
Interests shall be taken out to ten decimal places.
Any available funds remaining in the Lower Tier REMIC on a
Distribution Date after distributions to the Lower Tier REMIC Regular Interests
shall be distributed to the Class R Certificates in respect of the Class LTR
Interest.
If on any Distribution Date the Certificate Principal Balance of any
Class of Certificates is increased pursuant to the last sentence of the
definition of "Certificate Principal Balance", then there shall be an equivalent
increase in the principal amounts of the Lower Tier REMIC Regular Interests,
with such increase allocated (before the making of distributions and the
allocation of losses on the Lower Tier REMIC Regular Interests on such
Distribution Date) among the Lower Tier REMIC Regular Interests so that, to the
greatest extent possible, (i) each of the Lower Tier REMIC I Marker Interests
has a principal balance equal to 25% of the principal balance of the
Corresponding Certificates, (ii) the Class LTIX Interest has a principal balance
equal to the excess of (x) 50% of the remaining principal balance of the
Mortgage Loans over (y) the aggregate principal balance of the Lower Tier REMIC
I Marker Interests and (iii) the aggregate principal amount of the Lower Tier
REMIC II Marker Interests and the Class LTIIX Interest shall equal 50% of the
remaining principal balance of the Mortgage Loans. Allocations in connection
with clause (iii) shall be made so that, to the greatest extent possible, (a)
the principal balance of each Lower Tier REMIC II Marker Interest with "B" at
the end of its designation equals 0.05% of the aggregate scheduled principal
balance of the Mortgage Loans in related Mortgage Group, (b) the principal
balance of each Lower Tier REMIC II Marker Interest with "A" at the end of its
designation equals 0.05% of the excess of (x) the aggregate scheduled principal
balance of the Mortgage Loans in related Mortgage Group over (y) the aggregate
principal balance of Certificate Group One in the case of the Class LTII1A
Interest, or Certificate Group Two in the case of the Class LTII2A Interest and
(c) any remaining allocations are made to the Class LTIIX Interest.
For purposes of this Section 2.07, (i) the Class LTII1A Interest and
Class LTII1B Interest shall be related to Group One, and (ii) the Class LTII2A
Interest and Class LTII2B Interest shall be related to Group Two.
(i) In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein, the Servicer shall indemnify the Trustee and the
Issuing Entity against any and all Losses resulting from such negligence;
provided, however, that the Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Trustee, the Depositor or the
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Holder of the Class R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of the Class R Certificate
on which the Servicer has relied. The foregoing shall not be deemed to limit or
restrict the rights and remedies of the Holder of the Class R Certificate now or
hereafter existing at law or in equity. Notwithstanding the foregoing, however,
in no event shall the Servicer have any liability (1) for any action or omission
that is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than those arising out of a negligent performance by the Servicer of its
duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of principal
and interest on the Certificates).
(j) In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee of its duties and
obligations set forth herein, the Trustee shall indemnify the Issuing Entity
against any and all Losses resulting from such negligence; provided, however,
that the Trustee shall not be liable for any such Losses attributable to the
action or inaction of the Servicer, the Depositor or the Holder of the Class R
Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of the Class R Certificate on which the
Trustee has relied. The foregoing shall not be deemed to limit or restrict the
rights and remedies of the Holder of the Class R Certificate now or hereafter
existing at law or in equity. Notwithstanding the foregoing, however, in no
event shall the Trustee have any liability (1) for any action or omission that
is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than those arising out of a negligent performance by the Trustee of its
duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of principal
and interest on the Certificates).
SECTION 2.08. Covenants of the Servicer.
The Servicer hereby covenants to each of the other parties to this
Agreement that the 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.
SECTION 2.09. [RESERVED]
SECTION 2.10. [RESERVED]
SECTION 2.11. Permitted Activities of the Issuing Entity. The Issuing
Entity is created for the object and purpose of engaging in the Permitted
Activities. In furtherance of the foregoing, the Trustee is hereby authorized
and directed to execute and deliver, on behalf of the Issuing Entity, the Cap
Contracts and the Swap Agreement, and to execute and deliver on behalf of the
Issuing Entity, and to perform the duties and obligations of the Issuing Entity
under any agreement or instrument related to the Cap Contracts and the Swap
Agreement, in each case in such form as the Depositor shall direct or shall
approve in writing, the execution and delivery of any such agreement by the
Depositor to be conclusive evidence of its approval thereof.
SECTION 2.12. Qualification of Special Purpose Entity. For purposes of SFAS
140, the parties hereto intend that the Issuing Entity shall be treated as a
"qualifying special purpose entity" as such term is used in SFAS 140 and any
successor rule thereto and its power and authority as stated in Section 2.11 of
this Agreement shall be limited in accordance with paragraph 35 of SFAS 140.
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SECTION 2.13. Depositor Notification of NIM Notes. The Depositor shall
notify the Servicer and the Trustee if and when any NIM Notes are issued and
when such NIM Notes are no longer outstanding.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 3.01. Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Servicer shall service and
administer the Mortgage Loans in accordance with Accepted Servicing Practices.
In connection with such servicing and administration, the Servicer shall have
full power and authority, acting alone and/or through subservicers as provided
in Section 3.02 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) subject to Section 3.12(a), to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan; provided that, subject to Section 6.03, the
Servicer shall not take any action that is inconsistent with or prejudices the
interests of the Issuing Entity or the Certificateholders in any Mortgage Loan
serviced by it under this Agreement or the rights and interests of the other
parties to this Agreement except as otherwise required by this Agreement or by
law. The Servicer shall represent and protect the interest of the Issuing Entity
in the same manner as it currently protects its own interest in mortgage loans
in its own portfolio in any claim, proceeding or litigation regarding a Mortgage
Loan, but in any case not in any manner that is a lesser standard than that
provided in the first sentence of this Section 3.01. Notwithstanding anything in
this Agreement to the contrary, the Servicer shall not make or permit any
modification, waiver or amendment of any term of any Mortgage Loan which would
cause any of the REMICs provided for herein to fail to qualify as a REMIC or
result in the imposition of any tax under Section 860G(a) or 860G(d) of the
Code. Without limiting the generality of the foregoing, the 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 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, of partial or full release or
discharge, or of subordination 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 Servicer shall prepare and
deliver to the Depositor and/or the Trustee such documents requiring execution
and delivery by any or all of them as are necessary or appropriate to enable the
Servicer to service and administer the Mortgage Loans. If reasonably required by
the Servicer, the Trustee shall furnish the Servicer with a reasonable number of
powers of attorney in the form attached hereto as Exhibit J and execute such
other documents delivered to it by the Servicer that are necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement. Upon receipt of such documents, the Depositor
and/or the Trustee shall execute such documents and deliver them to the
Servicer. The Trustee shall have no liability with respect to any misuse of such
power of attorney and shall be indemnified by the Servicer for any costs,
liabilities or expenses incurred by the Trustee in connection therewith.
In accordance with the standards of the preceding paragraph, the Servicer
shall advance or cause to be advanced funds as necessary for the purpose of
effecting the payment of taxes and assessments on any first lien Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08.
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To the extent that a Mortgage does not provide for escrow payments, (i) the
Servicer shall determine whether any such payments are made by a first lien
Mortgagor in a manner and at a time that is necessary to avoid the loss of the
Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien and (ii) the Servicer shall ensure that all insurance required to be
maintained on a first lien Mortgaged Property pursuant to this Agreement is
maintained. If any such payment has not been made and the Servicer receives
notice of a tax lien with respect to the Mortgage Loan being imposed, the
Servicer will, to the extent required to avoid loss of the Mortgaged Property,
advance or cause to be advanced funds necessary to discharge such lien on the
Mortgaged Property subject to the Servicer's determination that such advances
will be recoverable. All costs incurred by the Servicer, if any, in effecting
the timely payment of taxes and assessments on the Mortgaged Properties and
related insurance premiums shall not, for the purpose of calculating monthly
distributions to the Certificateholders, be added to the Stated Principal
Balance under the related Mortgage Loans, notwithstanding that the terms of such
Mortgage Loans so permit.
The Servicer shall deliver a list of Servicing Officers and specimen
signatures to the Trustee by the Closing Date.
The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Xxxxxx Xxx Guide Announcement 97-02 and for each
Mortgage Loan, the Servicer agrees that it shall report one of the following
statuses each month as follows: current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.
The Servicer further is authorized and empowered by the Trustee, on behalf
of the Certificateholders and the Trustee, in its own name or in the name of the
Sub-Servicer, when the Servicer or the Sub-Servicer, as the case may be,
believes it is appropriate in its best judgment to register any Mortgage Loan on
the MERS System, or cause the removal from the registration of any Mortgage Loan
on the MERS System, to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of them, any and all instruments of assignment and
other comparable instruments with respect to such assignment or re-recording of
a Mortgage in the name of MERS, solely as nominee for the Trustee and its
successors and assigns. Any reasonable expenses incurred in connection with the
actions described in the preceding sentence or as a result of MERS discontinuing
or becoming unable to continue operations in connection with the MERS System,
shall be subject to withdrawal by the Servicer from the Collection Account
(provided that such expenses constitute "unanticipated expenses" within the
meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)).
With respect to any Mortgage Loan, the Servicer may consent to the
refinancing of the prior senior lien relating to such Mortgage Loan, provided
that the following requirements are met:
(a) the resulting Combined Loan-to-Value Ratio of such Mortgage Loan is no
higher than the Combined Loan-to-Value Ratio prior to such refinancing; and
(b) the interest rate for the loan evidencing the refinanced senior lien is
no more than 2.0% higher than the interest rate on the loan evidencing the
existing senior lien immediately prior to the date of such refinancing; and
(c) the loan evidencing the refinanced senior lien is not subject to
negative amortization.
SECTION 3.02. Servicing and Subservicing; Enforcement of the Obligations of
Servicer.
(a) The Servicer may arrange for the subservicing of any Mortgage Loan by a
subservicer, which may be an Affiliate (each, a "subservicer"), pursuant to a
subservicing agreement (each, a
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"Subservicing Agreement"); provided, however, that (i) 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 and (ii) that such agreement would not
result in a withdrawal or downgrading by any Rating Agency of the ratings of any
Certificates evidenced by a letter to that effect delivered by each Rating
Agency to the Depositor. Notwithstanding the provisions of any subservicing
agreement, any of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and a subservicer or reference to actions
taken through a subservicer or otherwise, the 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 Servicer alone were servicing and administering
the Mortgage Loans. Every subservicing agreement entered into by the Servicer
shall contain a provision giving any successor servicer the option to terminate
such agreement in the event a successor servicer is appointed. All actions of
the each subservicer performed pursuant to the related subservicing agreement
shall be performed as an agent of the Servicer with the same force and effect as
if performed directly by the Servicer. The Servicer shall deliver to the Trustee
copies of all subservicing agreements.
(b) The Servicer may enter into a special servicing advisory agreement with
a holder of the Class R Certificate and/or one or more other class of
Subordinate Certificates issued by the Issuing Entity or of a net interest
margin trust holding certificates issued by the Issuing Entity and/or an advisor
designated by such holder. Pursuant to such agreement, the Servicer may provide
such holder or advisor, in its capacity as special servicing advisor, with
loan-level information with respect to the Mortgage Loans, and such holder or
the special servicing advisor designated by such holder may advise the Servicer
with regards to efforts to maximize recoveries with respect to such Mortgage
Loans, including without limitation the commencement of foreclosure proceedings
or other actions.
(c) For purposes of this Agreement, the 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 Servicer.
(d) The Servicer shall not permit a Subservicer to perform any servicing
responsibilities hereunder with respect to the Mortgage Loans unless that
Subservicer first agrees in writing with the Servicer to deliver an Assessment
of Compliance and an Accountant's Attestation in such manner and at such times
that permits that Servicer to comply with Section 3.17 of this Agreement.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.
Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.
SECTION 3.04. Trustee to Act as Servicer.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee or
its designee shall, within a period of time not to exceed ninety (90) days from
the date of notice of termination or resignation, thereupon assume all of the
rights and obligations of the Servicer hereunder arising thereafter except that
the Trustee shall not be (i) liable for losses of the Servicer pursuant to
Section 3.10 hereof or any acts or omissions of such predecessor Servicer
hereunder, (ii) obligated to make Advances or Servicing Advances if it is
prohibited from doing
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so by applicable law, (iii) obligated to effectuate repurchases or substitutions
of Mortgage Loans hereunder, including pursuant to Section 2.02, 2.03 or 2.05
hereof, (iv) responsible for any expenses of the Servicer pursuant to Section
2.03 or (v) deemed to have made any representations and warranties hereunder,
including pursuant to Section 2.04 or the first paragraph of Section 6.02
hereof; provided, however that the Trustee (subject to clause (ii) above) or its
designee, in its capacity as the successor servicer, shall immediately assume
the terminated or resigning Servicer's obligation to make Advances and Servicing
Advances. No such termination shall affect any obligation of the Servicer to pay
amounts owed under this Agreement and to perform its duties under this Agreement
until its successor assumes all of its rights and obligations hereunder. If the
Servicer shall for any reason no longer be the Servicer (including by reason of
any Event of Default), the Trustee (or any other successor servicer) may, at its
option, succeed to any rights and obligations of the Servicer under any
subservicing agreement in accordance with the terms thereof; provided, however,
that the Trustee (or any other successor servicer) shall not incur any liability
or have any obligations in its capacity as servicer under a subservicing
agreement arising prior to the date of such succession unless it expressly
elects to assume such obligations of the Servicer thereunder; and the Servicer
shall not thereby be relieved of any liability or obligations under the
subservicing agreement arising prior to the date of such succession. To the
extent any costs or expenses, including without limitation Servicing Transfer
Costs incurred by the Trustee in connection with this Section 3.04 are not paid
by the Servicer pursuant to this Agreement within thirty (30) days of the date
of the Trustee's invoice therefor, such amounts shall be payable out of the
Certificate Account; provided that the terminated Servicer shall reimburse the
Issuing Entity for any such expense incurred by the Issuing Entity upon receipt
of a reasonably detailed invoice evidencing such expenses. If the Trustee is
unwilling or unable to act as servicer, the Trustee shall seek to appoint a
successor servicer that is eligible in accordance with the criteria specified in
Section 7.03 of this Agreement.
The Servicer shall, upon request of the Trustee, but at the expense of the
Servicer, deliver to the assuming party all documents and records relating to
each subservicing agreement and the Mortgage Loans then being serviced and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of any Event of Default),
notwithstanding anything to the contrary above, the Trustee and the Depositor
hereby agree that within ten (10) Business Days or delivery to the Trustee by
the Servicing Rights Pledgee of a letter signed by the Servicer whereby the
Servicer shall resign as Servicer under this Agreement, the Servicing Rights
Pledgee or its designee shall be appointed as successor servicer (provided that
at the time of such appointment the Servicing Rights Pledgee or such designee
meets the requirements of a successor servicer set forth above) and the
Servicing Rights Pledgee agrees to be subject to the terms of this Agreement.
SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Certificate Account.
(a) The Servicer shall make reasonable efforts in accordance with Accepted
Servicing Practices 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 and subject to Section
3.01 hereof, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any default interest, or (ii) extend the due dates for
payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, subject to Section 4.01, the Servicer
shall make any Advances on the related Mortgage Loan during the scheduled period
in accordance with the
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amortization schedule of such Mortgage Loan without modification thereof by
reason of such arrangements. Notwithstanding the foregoing, in the event that
any Mortgage Loan is in default or, in the judgment of the Servicer, such
default is reasonably foreseeable, the Servicer, consistent with the standards
set forth in Section 3.01, may also waive, modify or vary any term of such
Mortgage Loan (including modifications that would change the Mortgage Rate,
forgive the payment of principal or interest or extend the final maturity date
of such Mortgage Loan), accept payment from the related Mortgagor of an amount
less than the Stated Principal Balance in final satisfaction of such Mortgage
Loan, or consent to the postponement of strict compliance with any such term or
otherwise grant indulgence to any Mortgagor (any and all such waivers,
modifications, variances, forgiveness of principal or interest, postponements,
or indulgences collectively referred to herein as "forbearance"), provided,
however, that in no event shall the Servicer grant any such forbearance (other
than as permitted by the second sentence of this Section) with respect to any
one Mortgage Loan more than once in any 12 month period or more than three times
over the life of such Mortgage Loan, and provided, further, that in determining
which course of action permitted by this sentence it shall pursue, the Servicer
shall adhere to the standards of Section 3.01. The Servicer's analysis
supporting any forbearance and the conclusion that any forbearance meets the
standards of Section 3.01 shall be reflected in writing in the Mortgage File.
(b) The Servicer will not waive any prepayment charge or portion thereof
unless, (i) the enforceability thereof shall have been limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) the prepayment of the
Mortgage Loan is made in connection with the involuntary sale of the related
Mortgaged Property, or (iv) in the Servicer's reasonable judgment as described
in Section 3.01 hereof, (x) such waiver relates to a default or a reasonably
foreseeable default and (y) such waiver would maximize recovery of total
proceeds taking into account the value of such prepayment charge and related
Mortgage Loan, or (v) the collection of such prepayment charge or portion
thereof, or of a similar type of prepayment charge, would be considered
"predatory" or "illegal" pursuant to written guidance published by any
applicable federal, state or local regulatory authority having jurisdiction over
such matters or has been challenged by any such authority, or, only to the
extent that there are no NIM Notes outstanding or to the extent that the
Depositor has notified the Servicer in writing that all previously issued NIM
Notes are no longer outstanding, there is a certificated class action in which a
similar type of prepayment charge is being challenged, or (vi) if sufficient
information is not made available to enable it to collect the prepayment charge.
Except as provided in the preceding sentence, in no event will the Servicer
waive a prepayment charge in connection with a refinancing of a Mortgage Loan
that is not related to a default or a reasonably foreseeable default. If the
Servicer waives or does not collect all or a portion of a prepayment charge
relating to a Principal Prepayment in full or in part due to any action or
omission of the Servicer, other than as provided above, the Servicer shall
deposit the amount of such prepayment charge (or such portion thereof as had
been waived for deposit) into the Collection Account for distribution in
accordance with the terms of this Agreement.
(c) The Servicer shall not be required to institute or join in litigation
with respect to collection of any payment (whether under a Mortgage, Mortgage
Note or otherwise or against any public or governmental authority with respect
to a taking or condemnation) if it reasonably believes that enforcing the
provision of the Mortgage or other instrument pursuant to which such payment is
required is prohibited by applicable law.
(d) The Servicer shall establish and initially maintain, on behalf of the
Trustee for the benefit of the Certificateholders, the Collection Account. The
Servicer shall deposit into the Collection Account daily, within two (2)
Business Days of receipt thereof, in immediately available funds, the following
payments and collections received or made by it on and after the Cut-off Date
with respect to the Mortgage Loans:
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(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans, other than principal due on the
Mortgage Loans on or prior to the Cut-off Date;
(ii) all payments on account of interest on the Mortgage Loans net of
the related Servicing Fee permitted under Section 3.15, other than interest
due on the Mortgage Loans on or prior to the Cut-off Date;
(iii) all Liquidation Proceeds, other than proceeds to be applied to
the restoration or repair of the Mortgaged Property or released to either
the Mortgagor or the holder of a senior lien on the Mortgaged Property in
accordance with the Servicer's normal servicing procedures;
(iv) all Subsequent Recoveries;
(v) all Compensating Interest;
(vi) any amount required to be deposited by the Servicer pursuant to
Section 3.05(g) in connection with any losses on Permitted Investments;
(vii) any amounts required to be deposited by the Servicer pursuant to
Section 3.10 hereof;
(viii) the Purchase Price and any Substitution Adjustment Amount;
(ix) all Advances made by the Servicer pursuant to Section 4.01;
(x) all prepayment charges; and
(xi) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, late payment charges,
insufficient funds charges and payments in the nature of assumption fees (i.e.
fees related to the assumption of a Mortgage Loan upon the purchase of the
related Mortgaged Property) and other similar ancillary fees (other than
prepayment charges) if collected, need not be remitted by the Servicer. In the
event that the Servicer shall remit any amount not required to be remitted and
not otherwise subject to withdrawal pursuant to Section 3.08 hereof, it may at
any time withdraw or direct the Trustee, or such other institution maintaining
the Collection Account, to withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding. The Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this Section.
All funds deposited in the Collection Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08. In no event
shall the Trustee incur liability for withdrawals from the Collection Account at
the direction of the Servicer.
(e) [Reserved]
(f) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit or cause to be deposited in the Certificate Account and retain
therein the following:
(i) the aggregate amount withdrawn by the Servicer from the Collection
Account and required to be deposited in the Certificate Account;
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(ii) any amount required to be deposited by the Trustee pursuant to
Section 3.05(g) in connection with any losses on Permitted Investments; and
(iii) the Auction Termination Amount or Clean Up Call Price payable
pursuant to Section 9.01.
Any amounts received by the Trustee prior to 2:00 p.m. New York City time
(or such earlier deadline for investment in the Permitted Investments designated
by the Trustee), which are required to be deposited in the Certificate Account
by the Servicer, may be invested in Permitted Investments on the Business Day on
which they were received. The foregoing requirements for remittance by the
Servicer and deposit by the Servicer into the Certificate Account shall be
exclusive. In the event that the Servicer shall remit any amount not required to
be remitted and not otherwise subject to withdrawal pursuant to Section 3.08
hereof, it may at any time withdraw such amount from the Certificate Account,
any provision herein to the contrary notwithstanding. All funds deposited in the
Certificate Account shall be held by the Trustee in trust for the
Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.08. In no event shall the Trustee incur
liability for withdrawals from the Certificate Account at the direction of the
Servicer.
(g) Each institution that maintains the Collection Account or the
Certificate Account shall invest the funds in each such account, as directed by
the Servicer or the Trustee, as applicable, in writing, in Permitted
Investments, which shall mature not later than (i) in the case of the Collection
Account the Business Day preceding the related Servicer Remittance Date (except
that if such Permitted Investment is an obligation of the institution that
maintains such Collection Account or is otherwise immediately available, then
such Permitted Investment shall mature not later than the Servicer Remittance
Date) and (ii) in the case of the Certificate Account, the Business Day
immediately preceding the first Distribution Date that follows the date of such
investment (except that if such Permitted Investment is an obligation of the
institution that maintains such Certificate Account or a fund for which such
institution serves as custodian or is otherwise immediately available, 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 Servicer or the Trustee,
as applicable, for the benefit of the Certificateholders. All income and gain
net of any losses realized from amounts on deposit in the Collection Account
shall be for the benefit of the Servicer as servicing compensation and shall be
remitted to it monthly as provided herein. The amount of any losses incurred in
the Collection Account in respect of any such investments shall be deposited by
the Servicer in the Collection Account out of the Servicer's own funds
immediately as realized. All income and gain net of any losses realized from
amounts on deposit in the Certificate Account shall be for the benefit of the
Trustee and shall be remitted to or withdrawn by it monthly as provided herein.
The amount of any losses incurred in the Certificate Account in respect of any
such investments shall be deposited by the Trustee in the Certificate Account.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.
To the extent required by a related first lien Mortgage Note, the Servicer
shall establish and maintain one or more accounts (each, an "Escrow Account")
and deposit and retain therein all collections from the Mortgagors (or advances
by the Servicer) for the payment of taxes, assessments, hazard insurance
premiums or comparable items for the account of the Mortgagors. Nothing herein
shall require the Servicer to compel a Mortgagor to establish an Escrow Account
in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
condominium or PUD association dues, or comparable items, to reimburse the
Servicer out of related collections for any payments made pursuant to Sections
3.01 hereof (with respect to taxes and assessments and insurance premiums) and
3.10
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hereof (with respect to hazard insurance), to refund to any Mortgagors any sums
as may be determined to be overages, to pay interest, if required by law or the
terms of the related Mortgage or Mortgage Note, to Mortgagors on balances in the
Escrow Account or to clear and terminate the Escrow Account at the termination
of this Agreement in accordance with Section 9.01 hereof. The Escrow Accounts
shall not be a part of the Trust Fund.
SECTION 3.07. Access to Certain Documentation and Information Regarding the
Mortgage Loans.
Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that 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 Servicer shall be entitled to
be reimbursed by each such Certificateholder for actual expenses incurred by the
Servicer in providing such reports and access.
The Servicer may from time to time provide the Depositor, and any person
designated by the Depositor, with reports and information regarding the Mortgage
Loans, including without limitation, information requested by the Depositor or
an originator of the Mortgage Loans for required institutional risk control. In
addition, subject to limitations of applicable privacy laws, the Servicer may
make public information regarding performance of the Mortgage Loans.
SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.
(a) The Servicer may from time to time, make withdrawals from the
Collection Account for the following purposes:
(i) to pay to the Servicer (to the extent not previously paid to or
withheld by the Servicer), as servicing compensation in accordance with
Section 3.15, that portion of any payment of interest that equals the
Servicing Fee for the period with respect to which such interest payment
was made, and, as additional servicing compensation, those other amounts
set forth in Section 3.15;
(ii) to reimburse the Servicer for Advances and Servicing Advances (to
the extent such Servicing Advances would constitute "unanticipated
expenses" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii) if paid by one of the REMICs provided for herein)
occurring after the Cut-off Date made by it with respect to the Mortgage
Loans, such right of reimbursement pursuant to this subclause (ii) being
limited to amounts received on particular Mortgage Loan(s) (including, for
this purpose, Condemnation Proceeds, Insurance Proceeds or Liquidation
Proceeds) that represent late recoveries of payments of principal and/or
interest on such particular Mortgage Loan(s) in respect of which any such
Advance was made;
(iii) to reimburse the Servicer for any Non-Recoverable Advance
previously made and, to the extent that such Non-Recoverable Servicing
Advances would constitute "unanticipated expenses" within the meaning of
Treasury Regulation Section 1.860G-1(b)(3)(ii) if paid by one of the REMICs
provided for herein, any Non-Recoverable Servicing Advance;
(iv) to pay to the Servicer earnings on or investment income with
respect to funds in or credited to the Collection Account;
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(v) to reimburse the Servicer from Insurance Proceeds for Insured
Expenses covered by the related Insurance Policy;
(vi) to pay to the Servicer any unpaid Servicing Fees and to reimburse
it for any unreimbursed Servicing Advances, the Servicer's right to
reimbursement of Servicing Advances pursuant to this subclause (vi) with
respect to any Mortgage Loan being limited to amounts received on
particular Mortgage Loan(s) (including, for this purpose, Liquidation
Proceeds and purchase and repurchase proceeds and including any Subsequent
Recoveries related to any liquidated Mortgage Loan) that represent late
recoveries of the payments for which such advances were made pursuant to
Section 3.01 or Section 3.06;
(vii) to pay to the Servicer any unpaid Servicing Fees for any
Mortgage Loan upon such Mortgage Loan being charged off and upon
termination of the obligations of the Servicer;
(viii) to pay to the Depositor or the Servicer, as applicable, with
respect to each Mortgage Loan or property acquired in respect thereof that
has been purchased pursuant to Section 2.02, 2.03 or 3.12, all amounts
received thereon and not taken into account in determining the related
Stated Principal Balance of such repurchased Mortgage Loan;
(ix) to reimburse the Servicer or the Depositor for expenses incurred
by either of them in connection with the Mortgage Loans or the Certificates
and reimbursable pursuant to Section 3.25 or Section 6.03 hereof;
(x) to reimburse the Trustee for enforcement expenses reasonably
incurred in respect of a breach or defect giving rise to the purchase
obligation in Section 2.03 that were incurred in the Purchase Price of the
Mortgage Loans including any expenses arising out of the enforcement of the
purchase obligation; provided that any such expenses will be reimbursable
under this subclause (x) only if such expenses would constitute
"unanticipated expenses" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii) if paid by one of the REMICs provided for herein;
(xi) to withdraw pursuant to Section 3.05 any amount deposited in the
Collection Account and not required to be deposited therein;
(xii) to clear and terminate the Collection Account upon termination
of this Agreement pursuant to Section 9.01 hereof; and
(xiii) to reimburse itself for Advances or Servicing Advances from
amounts in the Collection Account held for future distributions that were
not included in Available Funds for the preceding Distribution Date. An
amount equal to the amount withdrawn from the Collection Account pursuant
to this subclause (xiv) shall be deposited in the Collection Account by the
Servicer on the next succeeding Distribution Date that funds are to be
distributed to Certificateholders.
In addition, no later than 2:00 p.m. Eastern Time on the Servicer
Remittance Date, the Servicer shall cause to be withdrawn from the Collection
Account the Interest Funds and the Principal Funds (for this purpose only,
neither Interest Funds nor Principal Funds shall include a deduction for any
amount reimbursable to the Trustee unless such amounts have actually been
reimbursed from such funds), to the extent on deposit, and such amount shall be
deposited in the Certificate Account.
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The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account.
The Servicer shall provide written notification to the Trustee on or prior
to the next succeeding Servicer Remittance Date upon making any withdrawals from
the Collection Account pursuant to subclauses (iii) and (viii) above.
In the event of any failure by the Servicer to remit to the Trustee for
deposit into the Certificate Account any amounts (including any Advance)
required to be so remitted by the Servicer on the Servicer Remittance Date, the
Servicer shall pay to the Trustee, for its own account, interest on such amounts
at the "prime rate" (as specified in the New York edition of the Wall Street
Journal) until such failure is remedied.
(b) The Trustee shall withdraw funds from the Certificate Account for
distribution to the 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 retain pursuant to this Agreement). In addition, the Trustee
may from time to time make withdrawals from the Certificate Account for the
following purposes:
(i) to withdraw any amount deposited in the Certificate Account and
not required to be deposited therein;
(ii) to pay the Trustee any indemnification amounts owed it and to
clear and terminate the Certificate Account upon termination of the
Agreement pursuant to Section 9.01 hereof (including paying all amounts
necessary to the Trustee or the Servicer in connection with any such
termination);
(iii) to reimburse the Trustee for expenses incurred by the Trustee
and reimbursable pursuant to Section 8.06 hereof; and
(iv) to pay to the Trustee earnings on or investment income with
respect to funds in or credited to the Certificate Account.
SECTION 3.09. [RESERVED]
SECTION 3.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained, for each first lien Mortgage
Loan, hazard insurance with extended coverage in an amount, to the extent
permitted by applicable law, that is at least equal to the lesser of (i) the
estimated replacement value of the improvements that are part of such Mortgaged
Property, which may be the last known coverage, or (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such that
the proceeds of such policy shall be sufficient to prevent the related Mortgagor
and/or mortgagee from becoming a co-insurer or (iii) the amount required under
applicable HUD/FHA regulations. Each such policy of standard hazard insurance
shall contain, or have an accompanying endorsement that contains, a standard
mortgagee clause. The Servicer shall also cause flood insurance to be maintained
on property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, to the extent required under the standards described below.
Pursuant to Section 3.05 hereof, any amounts collected by the Servicer under any
such policies (other than the amounts to be applied to the restoration or repair
of the related Mortgaged Property or property thus acquired or amounts released
to the Mortgagor in accordance with the Servicer's normal servicing procedures)
shall be deposited in the Collection Account. Any cost incurred by the Servicer
in
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maintaining any such insurance shall not, for the purpose of calculating monthly
distributions to the Certificateholders or remittances to the Trustee for their
benefit, be added to the principal balance of the Mortgage Loan, notwithstanding
that the terms of the Mortgage Loan so permit. Such costs shall be recoverable
by the Servicer out of late payments by the related Mortgagor or out of
Liquidation Proceeds to the extent and as otherwise permitted by Section 3.08
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 a first lien 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 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
lesser of (i) the outstanding principal balance of the related Mortgage Loan,
(ii) the estimated replacement value of the improvements that are part of such
Mortgaged Property, which may be the last known coverage, or (iii) the maximum
amount of such insurance available for the related Mortgaged Property under the
Flood Disaster Protection Act of 1973, as amended.
In the event that the 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 3.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the 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 3.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Depositor and the Trustee for the benefit of the Certificateholders, claims
under any such blanket policy.
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.
(a) Except as otherwise provided in this Section 3.11(a), when any property
subject to a Mortgage has been or is about to be conveyed by the Mortgagor, the
Servicer shall to the extent that it has knowledge of such conveyance or
prospective conveyance, enforce any due-on-sale clause contained in any Mortgage
Note or Mortgage, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any Required Insurance Policy;
provided, however, that the Servicer shall not exercise any such right if the
due-on-sale clause, in the reasonable belief of the Servicer, is not enforceable
under applicable law. An Opinion of Counsel, which shall be reimbursable as a
Servicing Advance to the extent provided in Section 3.08(a)(ii) hereof,
delivered to the Trustee and the Depositor to the foregoing shall conclusively
establish the reasonableness of such belief, but which shall not be required. In
addition to the foregoing, the Servicer shall not be required to enforce any
"due-on-sale" clause if in the reasonable judgment of the Servicer, entering
into an assumption and modification agreement with a Person to whom such
property shall be conveyed and releasing the original Mortgagor from liability
would be in the best interest of the Certificateholders. In the event that the
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 Servicer is authorized,
subject to Section 3.11(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 law, the Mortgagor remains liable
thereon, provided that the Mortgage Loan shall continue to be covered (if so
covered before the Servicer enters such agreement) by the applicable Required
Insurance Policies. The Servicer, subject to Section 3.11(b), is also authorized
with the prior approval of the insurers under any
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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 Servicer shall not be
deemed to be in default under this Section 3.11(a) by reason of any transfer or
assumption that the Servicer reasonably believes it is restricted by law from
preventing.
(b) Subject to the Servicer's duty to enforce any due-on-sale clause to the
extent set forth in Section 3.11(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 Servicer shall prepare and
deliver or cause to be prepared and delivered to the Trustee for signature and
shall direct, in writing, the Trustee to execute the assumption agreement with
the Person to whom the Mortgaged Property is to be conveyed and such
modification agreement or supplement to the Mortgage Note or Mortgage or other
instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In connection with any such assumption, no material term of the Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of the Scheduled
Payment, the Maximum Rate, the Minimum Rate, the Gross Margin, the Periodic Rate
Cap, the Adjustment Date, any prepayment charge and any other term affecting the
amount or timing of payment on the Mortgage Loan) may be changed. The 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 Servicer for entering into
an assumption or substitution of liability agreement will be retained by the
Servicer as additional servicing compensation.
SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination of
Excess Proceeds.
(a) The Servicer shall use reasonable efforts consistent with the servicing
standard set forth in Section 3.01 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 Servicer shall follow such practices and procedures as
it shall deem necessary or advisable and as shall be normal and usual in its
general mortgage servicing activities and the requirements of the insurer under
any Required Insurance Policy; provided, however, that the Servicer shall not be
required to expend its own funds in connection with the restoration of any
property that shall have suffered damage due to an uninsured cause unless it
shall determine (i) that such restoration 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 Collection Account pursuant to Section 3.08 hereof). The 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 from the proceeds of liquidation of the related Mortgaged Property, as
contemplated in Section 3.08 hereof. If the Servicer has received written notice
that a Mortgaged Property that the Servicer is contemplating acquiring in
foreclosure or by deed-in-lieu of foreclosure is located within a one-mile
radius of any site with environmental or hazardous waste risks known to the
Servicer, the Servicer will, prior to acquiring the Mortgaged Property, consider
such risks and only take action in accordance with Accepted Servicing Practices.
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With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee or its nominee. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the 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 Servicer deems to
be in the best interest of the Servicer and the Certificateholders for the
period prior to the sale of such REO Property. The Servicer or an Affiliate may
receive usual and customary real estate referral fees for real estate brokers in
connection with the listing and disposition of REO Property. The Servicer shall
prepare 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 Servicer 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 Collection Account no later
than the close of business on each Determination Date. The Servicer shall
perform the tax reporting and withholding related to foreclosures, abandonments
and cancellation of indebtedness income as specified by Sections 1445, 6050J and
6050P of the Code by preparing and filing such tax and information returns, as
may be required.
In the event that the Issuing Entity acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
the expiration of three years from the end of the year of its acquisition by the
Issuing Entity or, at the expense of the Issuing Entity, obtain more than sixty
(60) days prior to the day on which such three-year period would otherwise
expire, an extension of the three-year grace period, in which case such property
must be disposed of prior to the end of such extension, unless the Trustee shall
have been supplied with an Opinion of Counsel addressed to the Trustee (such
Opinion of Counsel not to be an expense of the Trustee) to the effect that the
holding by the Issuing Entity of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of the Issuing Entity or any of the REMICs provided for herein as
defined in section 860F of the Code or cause any of the REMICs provided for
herein to fail to qualify as a REMIC at any time that any Certificates are
outstanding, in which case the Issuing Entity 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 Issuing Entity shall be held, rented (or allowed to
continue to be rented) or otherwise used for the production of income by or on
behalf of the Issuing Entity 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
the Issuing Entity or any REMIC provided for herein to the imposition of any
federal, state or local income taxes on the income earned from such Mortgaged
Property under section 860G(c) of the Code or otherwise, unless the Servicer or
the Depositor has agreed to indemnify and hold harmless the Issuing Entity with
respect to the imposition of any such taxes. The Servicer shall have no
liability for any losses resulting from a foreclosure on a second lien Mortgage
Loan in connection with the foreclosure of the related first lien mortgage loan
that is not a Mortgage Loan if the Servicer does not receive notice of such
foreclosure action.
The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal
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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 Collection Account. To the extent the income received during a
Prepayment Period is in excess of the amount attributable to amortizing
principal and accrued interest at the related Mortgage Rate on the related
Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.
Notwithstanding the foregoing provisions of this Section 3.12 or any other
provision of this Agreement, with respect to any Mortgage Loan as to which the
assistant vice president for foreclosures or the vice president of default
management of the Servicer has actual knowledge (which shall not be presumed due
to any documents received by the Servicer) of, the presence of any toxic or
hazardous substance on the related Mortgaged Property, the Servicer shall not,
on behalf of the Trustee, either (i) obtain title to such Mortgaged Property as
a result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire
possession of, or take any other action with respect to, such Mortgaged
Property, if, as a result of any such action, the Trustee, the Issuing Entity or
the Certificateholders would be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time,
or any comparable law, unless the Servicer believes, based on its reasonable
judgment and a report prepared by a Person who regularly conducts environmental
audits using customary industry standards, that:
(1) such Mortgaged Property is in material compliance with applicable
environmental laws or, if not, that it would be in the best economic interest of
the Issuing Entity to take such actions as are necessary to bring the Mortgaged
Property into compliance therewith; and
(2) it is probable that there are no circumstances present at such
Mortgaged Property relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based materials
for which additional investigation, testing, monitoring, containment, clean-up
or remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such action
could be required, that it would be in the best economic interest of the Issuing
Entity to take such actions with respect to the affected Mortgaged Property.
The Servicer shall forward a copy of the environmental audit report to the
Depositor and the Trustee. The cost of the environmental audit report
contemplated by this Section 3.12 shall be advanced by the Servicer, subject to
the Servicer's right to be reimbursed therefor from the Collection Account, such
right of reimbursement being prior to the rights of Certificateholders to
receive any amount in the Collection Account received in respect of the affected
Mortgage Loan or other Mortgage Loans.
If the Servicer determines, as described above, that it is in the best
economic interest of the Issuing Entity to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes or
petroleum-based materials affecting any such Mortgaged Property, then the
Servicer may take such action as it deems to be in the best economic interest of
the Issuing Entity; provided that any amounts disbursed by the Servicer pursuant
to this Section 3.12 shall constitute Advances. The cost of any such compliance,
containment, clean-up or remediation shall be advanced by the Servicer, subject
to the Servicer's right to be reimbursed therefor from the Collection Account,
such right of reimbursement being prior to the rights of Certificateholders to
receive any amount in the Collection Account received in respect of the affected
Mortgage Loan or other Mortgage Loans. If the Servicer decides not to take such
action, it may not obtain title to such Mortgaged Property.
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The Liquidation Proceeds from any liquidation of a Mortgage Loan, net of
any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.
The proceeds of any Liquidated Loan, as well as any recovery resulting from
a partial collection of Liquidation Proceeds, will be applied as between the
parties in the following order of priority: first, to reimburse the Servicer for
any related unreimbursed Servicing Advances and unpaid Servicing Fees, pursuant
to Section 3.08(a)(vi) or this Section 3.12; second, to reimburse the Servicer
for any unreimbursed Advances, pursuant to Section 3.08(a)(ii) or this Section
3.12; third, to accrued and unpaid interest (to the extent no Advance has been
made for such amount) on the Mortgage Loan, at the Net Mortgage Rate to the Due
Date occurring in the month in which such amounts are required to be
distributed; fourth, as a recovery of principal of the Mortgage Loan; and fifth,
to any prepayment charges.
The proceeds of any net income from an REO Property will be applied as
between the parties in the following order of priority: first, to reimburse the
Servicer for any related unreimbursed Servicing Advances and unpaid Servicing
Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to reimburse
the Servicer for any unreimbursed Advances, pursuant to Section 3.08(a)(ii) or
this Section 3.12; third, as a recovery of principal; and fourth, to accrued and
unpaid interest (to the extent no Advance has been made for such amount) on the
related REO Property, at the applicable Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed.
(b) On each Determination Date, the Servicer shall determine the respective
aggregate amounts of Excess Proceeds, if any, that occurred in the related
Prepayment Period.
(c) The Servicer, in its sole discretion, shall have the right to elect (by
written notice in the form of an Officer's Certificate sent to the Trustee,
which Officer's Certificate shall (i) set forth the affected Mortgage Loan or
REO Property and the Purchase Price, (ii) certify that the Purchase Price has
been deposited into the Collection Account and (iii) confirm that the purchase
complies in all respect with this Section 3.12(c)) to purchase for its own
account from the Issuing Entity any Mortgage Loan that is ninety-one (91) days
or more Delinquent or REO Property for which the Servicer has accepted a
deed-in-lieu of foreclosure at a price equal to the Purchase Price. The Purchase
Price for any Mortgage Loan or REO Property purchased hereunder shall thereafter
be delivered to the Trustee for deposit in the Certificate Account and the
Trustee, upon receipt of such deposit and a Request for Release from the
Depositor in the form of Exhibit I hereto, shall release or cause to be released
to the Servicer the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the Servicer, in each case
without recourse, representation or warranty, as shall be necessary to vest in
the Servicer any Mortgage Loan or REO Property released pursuant hereto and the
Servicer 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 Servicer
shall thereupon own such Mortgage Loan or REO Property, and all security and
documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto. The Servicer shall not use any
procedure in selecting Mortgage Loans to be repurchased that is materially
adverse to the interests of the Certificateholders.
In the event that the Servicer is acting as the servicer and the Servicer
(or an Affiliate of the Servicer) is the owner of more than 50% of the Class of
Certificates which is then currently in a first loss position and such party is
deemed to be the "Primary Beneficiary" as defined in FIN 46R, the provisions of
the preceding paragraph shall not apply and the Servicer (or an Affiliate of the
Servicer), in its sole discretion, shall have the right to elect (by written
notice in the form of an Officer's Certificate sent to the Trustee, which
Officer's Certificate shall (i) set forth the affected Mortgage Loan or REO
Property and the Purchase Price, (ii) certify that the Purchase Price has been
deposited into the Collection Account and
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(iii) confirm that the purchase complies in all respect with this Section
3.12(c)) to purchase for its own account from the Issuing Entity any Mortgage
Loan that is 120 days or more Delinquent or REO Property for which the Servicer
has accepted a deed-in-lieu of foreclosure, during the period commencing on the
first day of the calendar quarter succeeding the calendar quarter in which the
Initial Delinquency Date (as defined below) occurred with respect to such
Mortgage Loan and ending on the last Business Day of such calendar quarter. If
the Servicer (or an Affiliate of the Servicer) does not exercise its purchase
right with respect to a Mortgage Loan during the period specified in the
preceding sentence, such Mortgage Loan shall thereafter again become eligible
for purchase pursuant to the preceding sentence only after the Mortgage Loan
ceases to be 120 days or more Delinquent and thereafter becomes 120 days
Delinquent again. The "Initial Delinquency Date" of a Mortgage Loan shall mean
the date on which the Mortgage Loan first became 120 days Delinquent. Prior to
repurchase pursuant to this Section 3.12(c), the Servicer shall be required to
continue to make monthly advances pursuant to Section 4.01. The Servicer shall
not use any procedure in selecting Mortgage Loans to be repurchased which is
materially adverse to the interests of the Certificateholders. The Servicer
shall purchase any Mortgage Loan or REO Property pursuant to this paragraph at a
price equal to the Purchase Price. The Purchase Price for any Mortgage Loan or
REO Property purchased hereunder shall be delivered to the Trustee for deposit
in the Certificate Account and the Trustee, upon receipt of such deposit and a
Request for Release from the Depositor in the form of Exhibit I hereto, shall
release or cause to be released to the Servicer the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the Servicer, in each case without recourse, representation or warranty, as
shall be necessary to vest in the Servicer any Mortgage Loan or REO Property
released pursuant hereto and the Servicer shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. The provisions in this paragraph shall only apply if
Wilshire Credit Corporation is the servicer.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of such request, the Trustee or its designee shall
promptly release the related Mortgage File to the Servicer, and the Trustee or
its designee shall at the Servicer's written direction execute and deliver to
the 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 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 Mortgagor to the extent permitted by law, and otherwise to the Trust Fund to
the extent such expenses constitute "unanticipated expenses" within the meaning
of Treasury Regulations Section 1.860G-(1)(b)(3)(ii). 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 or its designee
shall, upon delivery to the Trustee or its designee of a Request for Release in
the form of Exhibit I signed by a Servicing Officer, release the Mortgage File
to the Servicer. Subject to the further limitations set forth below, the
Servicer shall cause the Mortgage File or documents so released to be returned
to the Trustee or its designee when the need therefor by the Servicer no longer
exists, unless the Mortgage Loan is liquidated and the proceeds thereof are
deposited in the Collection Account.
Each Request for Release may be delivered to the Trustee or its designee
(i) via mail or courier, (ii) via facsimile or (iii) by such other means,
including, without limitation, electronic or computer readable medium, as the
Servicer and the Trustee or its designee shall mutually agree. The Trustee or
its
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designee shall make reasonable efforts to release the related Mortgage File(s)
within three (3) Business Days of receipt of a properly completed Request for
Release pursuant to clauses (i), (ii) or (iii) above and shall so release within
four (4) Business Days. Receipt of a properly completed Request for Release
(including any Request for Release delivered in an electronic format pursuant to
(iii) above) shall be authorization to the Trustee or its designee to release
such Mortgage Files, provided the Trustee or its designee has determined that
such Request for Release has been executed, with respect to clauses (i) or (ii)
above, or approved, with respect to clause (iii) above, by an authorized
Servicing Officer of the Servicer, and so long as the Trustee or its designee
complies with its duties and obligations under the agreement. If the Trustee or
its designee is unable to release the Mortgage Files within the period
previously specified, the Trustee or its designee shall immediately notify the
Servicer indicating the reason for such delay. If the Servicer is required to
pay penalties or damages due to the Trustee or its designee's negligent failure
to release the related Mortgage File or the Trustee or its designee's negligent
failure to execute and release documents within four (4) Business Days after its
receipt of a Request for Release, the Trustee or its designee, shall be liable
for such penalties or damages directly caused by it and shall have no liability
for penalties or damages attributable to the Servicer's actions or inactions.
If the Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property as authorized by this Agreement, the Servicer
shall deliver or cause to be delivered to the Trustee or its designee, 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. Notwithstanding the foregoing, the Servicer shall cause
possession of any Mortgage File or of the documents therein that shall have been
released by the Trustee or its designee to be returned to the Trustee promptly
after possession thereof shall have been released by the Trustee or its designee
unless (i) the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Collection Account, and
the Servicer shall have delivered to the Trustee or its designee a Request for
Release in the form of Exhibit I or (ii) the Mortgage File or document shall
have been delivered to an attorney or to a public trustee or other public
official as required by law for purposes of initiating or pursuing legal action
or other proceedings for the foreclosure of the Mortgaged Property and the
Servicer shall have delivered to the Trustee or its designee an Officer's
Certificate of a Servicing Officer certifying as to the name and address of the
Person to which the Mortgage File or the documents therein were delivered and
the purpose or purposes of such delivery.
SECTION 3.14. Documents Records and Funds in Possession of Servicer to be
Held for the Trustee.
All Mortgage Files and funds collected or held by, or under the control of,
the 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 Collection Account, shall be held by the
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 Servicer also agrees that it shall not create, incur or subject
any Mortgage File or any funds that are deposited in the Collection Account or
Certificate Account or in any Escrow Account, or any funds that otherwise are or
may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, a Mortgage Loan, except, however, that the Servicer shall
be entitled to set off against and deduct from any such funds any amounts that
are properly due and payable to the Servicer under this Agreement.
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SECTION 3.15. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date.
Additional servicing compensation in the form of any Excess Proceeds,
Prepayment Interest Excess, late payment fees, assumption fees (i.e. fees
related to the assumption of a Mortgage Loan upon the purchase of the related
Mortgaged Property) and similar fees payable by the Mortgagor, all income and
gain net of any losses realized from Permitted Investments in the Collection
Account, and other benefits arising from the Collection Account or Escrow
Account shall be retained by the Servicer to the extent not required to be
deposited in the Collection Account pursuant to Section 3.05 or 3.12(a) hereof
or the Escrow Account pursuant to Section 3.06 hereof. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of any premiums for hazard insurance, as
required by Section 3.10 hereof and maintenance of the other forms of insurance
coverage required by Section 3.10 hereof) and shall not be entitled to
reimbursement therefor except as specifically provided in Sections 3.08 and 3.12
hereof.
SECTION 3.16. Access to Certain Documentation.
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to 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 of the Servicer designated by it provided, that
the Servicer shall be entitled to be reimbursed by each such Certificateholder
for actual expenses incurred by the Servicer in providing such reports and
access. Nothing in this Section shall limit the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.
SECTION 3.17. Annual Statement as to Compliance.
Not later than (a) March 12 of each calendar year (other than the calendar
year during which the Closing Date occurs) or (b) with respect to any calendar
year during which an annual report on Form 10-K is not required to be filed
pursuant to Section 3.20 on behalf of the Issuing Entity, by April 15 of each
calendar year (or if such day is not a Business Day, the immediately succeeding
Business Day), the Servicer shall deliver to the Trustee and the Depositor an
Officer's Certificate in the form attached hereto as Exhibit T stating, as to
each signatory thereof, that (i) a review of the activities of the Servicer
during the preceding calendar year and of the performance of the 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 Servicer has
fulfilled all its obligations under this Agreement in all material respects
throughout such year or a portion thereof, or, if there has been a failure to
fulfill any such obligation in any material respect, specifying each such
failure known to such officer and the nature and status thereof. With respect to
any Subservicer that meets the criteria of Item 1108(a)(2)(i) through (iii) of
Regulation AB, the Servicer shall deliver, on behalf of that Subservicer, the
Officer's Certificate set forth in this Section 3.17 as and when required with
respect to such Subservicer.
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SECTION 3.18. Assessment of Compliance; Accountant's Attestation.
(a) Not later than (i) March 12 of each calendar year (other than the
calendar year during which the Closing Date occurs) or (ii) with respect to any
calendar year during which an annual report on Form 10-K is not required to be
filed pursuant to Section 3.20 on behalf of the Issuing Entity, by April 15 of
each calendar year (or if such day is not a Business Day, the immediately
succeeding Business Day), the Servicer, at its own expense, shall deliver to the
Trustee and the Depositor an officer's assessment of its compliance with the
Servicing Criteria during the preceding calendar year as required by Rules
13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB (the
"Assessment of Compliance"), which assessment shall be substantially in the form
of Exhibit Q hereto.
(b) Not later than (i) March 12 of each calendar year (other than the
calendar year during which the Closing Date occurs) or (ii) with respect to any
calendar year during which an annual report on Form 10-K is not required to be
filed pursuant to Section 3.20 on behalf of the Issuing Entity, April 15 of each
calendar year (or if such day is not a Business Day, the immediately succeeding
Business Day), the Servicer, at its own expense, shall cause a nationally or
regionally recognized firm of independent registered public accountants (who may
also render other services to any Servicer, the Sponsor 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 that attests
to and reports on the Assessment of Compliance provided by such Servicer
pursuant to Section 3.18(a) (the "Accountant's Attestation"). Such Accountant's
Attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange Act.
(c) The Servicer shall deliver on behalf of any Subservicer and each
Subcontractor (unless, in the case of any Subcontractor, the Depositor has
notified the Servicer and the Trustee in writing that such compliance statement
is not required by Regulation AB) not later than March 12 of each calendar year
(other than the calendar year during which the Closing Date occurs) with respect
to any calendar year during which the Issuing Entity's annual report on Form
10-K is required to be filed in accordance with the Exchange Act and the rules
and regulations of the Commission, to the Trustee and the Depositor an
Assessment of Compliance, which assessment shall be substantially in the form of
Exhibit Q hereto. The Servicer shall deliver on behalf of any Subservicer (other
than the calendar year during which the Closing Date occurs) with respect to any
calendar year during which the Issuing Entity's annual report on Form 10-K is
not required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, by April 15 of each calendar year (or, in each
case, if such day is not a Business Day, the immediately succeeding Business
Day) to the Trustee and the Depositor an Assessment of Compliance, which
assessment shall be substantially in the form of Exhibit Q hereto.
(d) Not later than March 12 of each calendar year (other than the calendar
year during which the Closing Date occurs) with respect to any calendar year
during which the Issuing Entity's annual report on Form 10-K is required to be
filed in accordance with the Exchange Act and the rules and regulations of the
Commission, the Servicer shall cause each Subservicer and each Subcontractor
(unless, in the case of any Subcontractor, the Depositor has notified the
Trustee and Servicer in writing that such compliance statement is not required
by Regulation AB) to deliver to the Trustee and the Depositor an Accountant's
Attestation by a registered public accounting firm that attests to, and reports
on, the Assessment of Compliance pursuant to Section 3.18(c) above. Other than
the calendar year during which the Closing Date occurs, with respect to any
calendar year during which the Issuing Entity's annual report on Form 10-K is
not required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, not later than April 15 of each calendar year
(or, in each case, if such day is not a Business Day, the immediately succeeding
Business Day), the Servicer shall cause each Subservicer to deliver to the
Trustee and the Depositor an Accountant's Attestation by a registered public
accounting firm that attests to, and reports on, the Assessment of Compliance
pursuant to Section 3.18(c) above.
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(e) Not later than, with respect to any calendar year during which the
Issuing Entity's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the
Commission, March 15 (or, in each case, if such day is not a Business Day, the
immediately succeeding Business Day), the Trustee shall deliver to the Depositor
and the Servicer an Assessment of Compliance with regard to the Servicing
Criteria applicable to the Trustee during the preceding calendar year, which
assessment shall be substantially in the form of Exhibit Q hereto.
(f) Not later than, with respect to any calendar year during which the
Issuing Entity's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the
Commission, March 15 (or, in each case, if such day is not a Business Day, the
immediately succeeding Business Day), the Trustee shall deliver to the Depositor
and the Servicer an Accountant's Attestation by a registered public accounting
firm that attests to, and reports on, the Assessment of Compliance pursuant to
Section 3.18(e) above.
(g) Not later than, with respect to any calendar year during which the
Issuing Entity's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the
Commission, fifteen (15) calendar days before the date on which the Issuing
Entity's annual report on Form 10-K with respect to the transactions
contemplated by this Agreement is required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission (or, in each case,
if such day is not a Business Day, the immediately preceding Business Day), the
Depositor shall cause each custodian, if any, to deliver to the Depositor, the
Servicer and the Trustee an Assessment of Compliance with regard to the
Servicing Criteria applicable to such custodian during the preceding calendar
year, which assessment shall be substantially in the form of Exhibit Q hereto.
(h) Not later than March 12 (or, in each case, if such day is not a
Business Day, the immediately succeeding Business Day), of any calendar year
(other than the calendar year during which the Closing Date occurs) during which
the Issuing Entity's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the
Commission, the Depositor shall cause each custodian, if any, to deliver to the
Depositor, the Servicer and the Trustee an Accountant's Attestation by a
registered public accounting firm that attests to, and reports on, the
Assessment of Compliance pursuant to Section 3.18(g) above.
(i) [Reserved]
(j) [Reserved]
(k) The Depositor agrees to cause the custodian, if any, to indemnify and
hold harmless the Trustee and the Servicer and each Person, if any, who
"controls" the Trustee or the Servicer within the meaning of the Securities Act
and its officers, directors and Affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses that such Person may sustain
arising out of third party claims based on (i) the failure of the custodian, if
any, to deliver when required any information required of it pursuant to Section
3.18 or 3.20 or (ii) any material misstatement or omission contained in any
information provided on its behalf pursuant to Section 3.18 or 3.20.
(l) Copies of such Assessments of Compliance and Accountant's Attestations
shall be available on the Trustee's website xxxx://xxx.xxxxxx.xxx/xxx to any
Certificateholder, provided such statement is delivered to the Trustee. The
initial Assessments of Compliance and Accountant's Attestations required
pursuant to this Section 3.18 shall be delivered to the Trustee and the
Depositor, as applicable, by each party no later than March 12, 2007. The
Trustee will post such copies on the Trustee's
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website within five (5) Business Days after filing with the Commission. This
requirement will be satisfied to the extent that the Issuing Entity's Form 10-K
is available on such website.
(m) Each of the parties hereto acknowledges and agrees that the purpose of
this Section 3.18 is to facilitate compliance by the Sponsor and the Depositor
with the provisions of Regulation AB, as such may be amended or clarified from
time to time. Therefore, each of the parties agrees that the parties'
obligations hereunder will be supplemented and modified as necessary to be
consistent with any such amendments, interpretive advice or guidance, convention
or consensus among active participants in the asset-backed securities markets,
advice of counsel, or otherwise in respect of the requirements of Regulation AB
and the parties shall comply with requests made by the Sponsor or the Depositor
for delivery of additional or different information as the Sponsor or the
Depositor may determine in good faith is necessary to comply with the provisions
of Regulation AB, provided that such information is available to such party
without unreasonable effort or expense and within such timeframe as may be
reasonably requested. Any such supplementation or modification shall be made in
accordance with Section 10.01 without the consent of the Certificateholders, and
may result in a change in the reports filed by the Trustee on behalf of the
Issuing Entity under the Exchange Act.
SECTION 3.19. Subordination Liens.
In connection with any governmental program under which a Mortgagor may
obtain a benefit in the event the related Mortgaged Property is subject to a
disaster provided that the Mortgagor files a covenant or other lien against the
Mortgaged Property and is required to obtain the subordination thereto of the
Mortgage, the Servicer may cause such subordination to be executed and filed
provided that either (i) the related Mortgage Loan is in default or default with
respect to such Mortgage Loan is imminent or (ii) such subordination and
participation in such governmental program will not result in a change in
payment expectations with respect to such Mortgage Loan. For purposes of the
preceding sentence, a change in payment expectations occurs if, as a result of
such subordination and participation in such governmental program, (1) there is
a substantial enhancement of the Mortgagor's capacity to meet the payment
obligations under the Mortgage Loan and that capacity was primarily speculative
prior to such subordination and participation in such governmental program and
is adequate after such subordination and participation in such governmental
program or (2) there is a substantial impairment of the Mortgagor's capacity to
meet the payment obligations under the Mortgage Loan and that capacity was
adequate prior to such subordination and participation in such governmental
program and is primarily speculative after such subordination and participation
in such governmental program. The preceding sentence and clause (ii) of the
second preceding sentence are intended to comply with Treasury Regulations
Section 1.1001-3(e)(4) and shall be interpreted in accordance therewith.
SECTION 3.20. Periodic Filings.
As set forth on Schedule V hereto, for so long as the Issuing Entity is
subject to the Exchange Act reporting requirements, no later than the end of
business on the second Business Day after the occurrence of an event requiring
disclosure on Form 8-K (a "reportable event"), the Depositor, the Sponsor or the
Servicer, as applicable, shall have (i) timely notified the Trustee of an item
reportable on a Form 8-K (unless such item is specific to the Trustee, in which
case the Trustee will be deemed to have notice) and (ii) delivered to the
Trustee all information, data, and exhibits required to be provided or filed
with such Form 8-K in an XXXXX-compatible format agreed upon by the Trustee and
Depositor, Sponsor or Servicer. In the event that the reportable event does not
pertain to the Servicer, at the time such notice is provided to the Trustee, the
Depositor or the Trustee, to the extent the reportable item pertains to such
party, shall notify the Servicer thereof by telephone. The Trustee shall not be
responsible for determining what information is required to be filed on a Form
8-K in connection with the transactions contemplated by this Agreement (unless
such information is specific to the Trustee, in which case the Trustee will be
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responsible for consulting with the Depositor or Servicer in making such a
determination) or what events shall cause a Form 8-K to be required to be filed
(unless such event is specific to the Trustee, in which case the Trustee will be
responsible for consulting with the Depositor or Servicer before causing such
Form 8-K to be filed) and shall not be liable for any late filing of a Form 8-K
in the event that it does not receive all information, data and exhibits
required to be provided or filed on or prior to the second Business Day prior to
the applicable filing deadline. After preparing the Form 8-K on behalf of the
Depositor, the Trustee shall forward electronically a draft copy of the Form 8-K
to the Depositor and the Servicer for review. No later than the end of business
on the second Business Day after receiving a final copy of the Form 8-K from the
Trustee, a duly authorized representative of the Servicer shall sign the Form
8-K and return an electronic or fax copy of such signed Form 8-K (with an
original executed hard copy to follow by overnight mail) to the Trustee and the
Trustee shall file such Form 8-K within two (2) Business Days; provided that the
Depositor has notified the Trustee in writing that it approves of the form and
substance of such Form 8-K. If a Form 8-K cannot be filed on time or if a
previously filed Form 8-K needs to be amended, the Trustee will follow the
procedures set forth in this Agreement. After filing a Form 8-K with the
Commission, the Trustee will make available on its internet website a final
executed copy of each Form 8-K. The Trustee will have no obligation to prepare,
execute or file such Form 8-K or any liability with respect to any failure to
properly prepare, execute or file such Form 8-K resulting from the Trustee's
inability or failure to obtain or receive any information or signatures needed
to prepare, arrange for execution or file such Form 8-K within the time frames
required by this paragraph, not resulting from its own negligence, bad faith or
willful misconduct.
Within fifteen (15) days after each Distribution Date, the Trustee shall,
on behalf of the Issuing Entity and in accordance with industry standards, file
with the Commission via the Electronic Data Gathering and Retrieval System
(XXXXX), a Form 10-D with a copy of the report to the Certificateholders for
such Distribution Date as an exhibit thereto. Any other information provided to
the Trustee by the Servicer or Depositor to be included in Form 10-D shall be
determined and prepared by and at the direction of the Depositor pursuant to the
following paragraph, and the Trustee will have no duty or liability for any
failure hereunder to determine or prepare any additional information on Form
10-D ("Additional Form 10-D Disclosure") as set forth in the next paragraph.
The Depositor shall notify the Trustee of its intent to provide Additional
Form 10-D Disclosure prior to the related Distribution Date. As set forth in
Schedule W hereto, within five (5) calendar days after the related Distribution
Date (i) the parties hereto, as applicable, will be required to provide to the
Depositor and the Servicer, to the extent known to such party, any Additional
Form 10-D Disclosure (including any breaches of pool asset representations and
warranties or transaction covenants of which the party has written notice and
which has not been included on the monthly distribution report for the period),
if applicable, and (ii) the Depositor, to the extent it deems necessary, will
forward to the Trustee in XXXXX-compatible form (with a copy to the Servicer),
or in such other form as otherwise agreed upon by the Trustee and the Depositor,
the form and substance of the Additional Form 10-D Disclosure by the fifth (5th)
calendar day after the related Distribution Date. The Depositor will be
responsible for any reasonable fees and expenses incurred by the Trustee in
connection with including any Additional Form 10-D Disclosure on Form 10-D
pursuant to this paragraph.
After preparing the Form 10-D at the direction of the Depositor, the
Trustee will forward electronically a draft copy of the Form 10-D to the
Depositor and the Servicer for review by the ninth (9th) calendar day after the
Distribution Date. No later than two (2) Business Days after receipt of a final
copy after the related Distribution Date, unless the Servicer receives a notice
from the Trustee as described below or a written notice from the Depositor that
it has discovered a material deficiency or irregularity with respect to such
Form 10-D, a duly authorized representative of the Servicer shall sign the Form
10-D and return an electronic or fax copy of such Form 10-D (with an original
executed hard copy to follow by overnight mail) to the Trustee, and the Trustee
shall file such Form 10-D within two (2) Business Days.
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Unless the Servicer shall have received notice from the Trustee to the contrary,
the Trustee will be deemed to have represented to the Servicer that, assuming
that the information provided to the Trustee by the Servicer is correct, the
monthly statement has been properly prepared by the Trustee, and the Servicer
may rely upon the accuracy thereof in it execution of the Form 10-D. If a Form
10-D cannot be filed on time (because of notice from the Trustee per the
previous sentence or otherwise) or if a previously filed Form 10-D needs to be
amended, the Trustee will follow the procedures set forth in this Section. After
filing with the Commission, the Trustee will make available on its internet
website a final executed copy of each Form 10-D. The Trustee will have no
liability (1) with respect to any failure to properly prepare, execute or file
such Form 10-D resulting from the Trustee's inability or failure to obtain or
receive any information needed to prepare, arrange for execution or file such
Form 10-D on a timely basis and (2) with respect to the date of filing so long
as filing occurs by the Commission's deadline.
Prior to Xxxxx 00, 0000 (xxx, if applicable, prior to the ninetieth (90th)
calendar day after the end of the fiscal year for the Issuing Entity), the
Trustee shall, on behalf of the Issuing Entity and in accordance with industry
standards, prepare and file with the Commission via XXXXX a Form 10-K with
respect to the Issuing Entity. Such Form 10-K shall include the following items,
in each case to the extent they have been delivered to the Trustee within the
applicable time frames set forth in this Agreement, (i) an annual compliance
statement for the Servicer and each Subservicer, as described in Section 3.17 of
the Agreement, (ii)(A) the annual reports on Assessment of Compliance with
Servicing Criteria for each Servicer, Subservicer and Subcontractor (unless the
Depositor has notified the Trustee that it has determined that such compliance
statement is not required by Regulation AB), as described in Section 3.18 of the
Agreement, and (B) if any Reporting Servicer's report on Assessment of
Compliance with Servicing Criteria described in Section 3.18 identifies any
material instance of noncompliance, disclosure identifying such instance of
noncompliance as set forth on the Reporting Servicer's report on Assessment of
Compliance or if any report on Assessment of Compliance with Servicing Criteria
described in Section 3.18 of the Agreement is not included as an exhibit to such
Form 10-K, disclosure that such report is not included and an explanation why
such report is not included, (iii)(A) the registered public accounting firm
attestation report for the Servicer and each Subservicer, as described in
Section 3.18 of the Agreement, and (B) if any registered public accounting firm
attestation report described in the Section 3.18 of the Agreement identifies any
material instance of noncompliance, disclosure identifying such instance of
noncompliance, or if any such registered public accounting firm attestation
report is not included as an exhibit to such Form 10-K, disclosure that such
report is not included and an explanation why such report is not included, and
(iv) a certification (the "Xxxxxxxx-Xxxxx Certification") in the form attached
hereto as Exhibit S, executed by the senior officer in charge of securitizations
of the Servicer. In addition to (i) through (iv) above, any Additional Form 10-K
Disclosure shall be determined and prepared by and at the direction of the
Depositor pursuant to the following paragraph, and the Trustee will have no duty
or liability for any failure hereunder to determine or prepare any Additional
Form 10-K Disclosure, except as set forth in the next paragraph.
As set forth in Schedule X hereto, no later than March 12 (other than the
Trustee, who shall not be required to deliver any information until March 15) of
each year that the Issuing Entity is subject to the Exchange Act reporting
requirements, commencing in 2007, (i) certain parties to the transaction shall
be required to provide to the Depositor and the Servicer, to the extent known,
any Additional Form 10-K Disclosure, if applicable, and (ii) the Depositor
shall, to the extent it deems necessary, forward to the Trustee in
XXXXX-compatible form, or in such other form as otherwise agreed upon by the
Trustee and the Depositor, the form and substance of the Additional Form 10-K
Disclosure by March 15. The Depositor will be responsible for any reasonable
fees and expenses incurred by the Trustee in connection with including any
Additional Form 10-K Disclosure on Form 10-K pursuant to this paragraph.
After preparing the Form 10-K, the Trustee shall forward electronically a
draft copy of the Form 10-K to the Depositor and the Servicer for review. Upon
the request of the Servicer, the Depositor shall
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confirm that it has reviewed the Form 10-K, that it has been properly prepared
and that the Servicer may rely on the accuracy thereof (other than with respect
to any portion of the Form 10-K or exhibit thereto provided by the Servicer
(other than any portion thereof with respect to which the Servicer has relied on
the Trustee)). No later than 5:00 p.m. EST on the third Business Day following
receipt of a final copy of the Form 10-K, and if requested, the above described
confirmation from the Depositor, a senior officer of the Servicer shall sign the
Form 10-K and return an electronic or fax copy of such signed Form 10-K (with an
original executed hard copy to follow by overnight mail) to the Trustee, and the
Trustee shall file such Form 10-K by March 20. If a Form 10-K cannot be filed on
time or if a previously filed Form 10-K needs to be amended, the Trustee will
follow the procedures set forth in this Section. After filing with the
Commission, the Trustee will, pursuant to the Agreement, make available on its
internet website a final executed copy of each Form 10-K. The Trustee shall have
no liability (1) with respect to any failure to properly prepare, execute or
file such Form 10-K resulting from the Trustee's inability or failure to obtain
or receive any information or signatures needed to prepare, arrange for
execution or file such Form 10-K on a timely basis and (2) with respect to the
date of filing so long as the filing occurs by the Commission's deadline.
Each Form 10-K shall include a Xxxxxxxx-Xxxxx Certification in the form
attached hereto as Exhibit S. The Servicer will cause its senior officer in
charge of securitization to execute the Xxxxxxxx-Xxxxx Certification required
pursuant to Rule 13a -14 under the Securities Exchange Act of 1934, as amended,
and to deliver the original executed Xxxxxxxx-Xxxxx Certification to the Trustee
by March 12 of each year in which the Issuing Entity is subject to the reporting
requirements of the Exchange Act. In connection therewith, each of the Trustee
and the Servicer shall sign an Officer's Certificate (in the form attached
hereto as Exhibit K and Exhibit L, respectively) for the benefit of the Servicer
and its officers, directors and Affiliates regarding certain aspects of the
Xxxxxxxx-Xxxxx Certification. To the extent any information or exhibits required
to be included in the Form 10 -K are not timely received by the Trustee prior to
March 30, the Trustee shall, on behalf of the Issuing Entity, file a Form 12B-25
and one or more amended Form 10-Ks, to the extent such amendments are accepted
pursuant to the Exchange Act, to include such missing information or exhibits
promptly after receipt thereof by the Trustee.
Promptly following the first date legally permissible under applicable
regulations and interpretations of the Commission, the Trustee shall, on behalf
of the Issuing Entity and in accordance with industry standards, file with the
Commission via XXXXX a Form 15 Suspension Notification with respect to the
Issuing Entity, if applicable.
The Servicer agrees to furnish to the Trustee promptly, from time to time
upon request of the Depositor, such further information, reports, and financial
statements within its control related to this Agreement and the Mortgage Loans
as is reasonably necessary to prepare and file all necessary reports with the
Commission. The Trustee shall have no responsibility to file any items with the
Commission other than those specified in this Section 3.20, and the Servicer
shall execute any and all Form 8-Ks, Form 10-Ds and Form 10-Ks required
hereunder.
If the Commission issues additional interpretative guidance or promulgates
additional rules or regulations with respect to Regulation AB or otherwise, or
if other changes in applicable law occur, that would require the reporting
arrangements, or the allocation of responsibilities with respect thereto,
described in this Section 3.20, to be conducted differently than as described,
the Depositor, the Servicer, and the Trustee will reasonably cooperate to amend
the provisions of this Section 3.20 in order to comply with such amended
reporting requirements and such amendment of this Section 3.20. Any such
amendment shall be made in accordance with Section 10.01 without the consent of
the Certificateholders, and may result in a change in the reports filed by the
Trustee on behalf of the Issuing Entity under the Exchange Act. Notwithstanding
the foregoing, the Depositor, the Servicer, and the Trustee shall not be
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obligated to enter into any amendment pursuant to this Section 3.20 that
adversely affects its obligations and immunities under this Agreement.
The Depositor, the Servicer and the Trustee agree to use their good faith
efforts to cooperate in complying with the requirements of this Section 3.20.
In the event that the Trustee is unable to timely file with the Commission
all or any required portion of any Form 8-K, Form 10-D or Form 10-K required to
be filed pursuant to this Agreement because required disclosure information was
either not delivered to it or delivered to it after the delivery deadlines set
forth in this Agreement, the Trustee will immediately notify the Depositor and
the Servicer. In the case of Form 10-D and 10-K, the Depositor, Servicer and
Trustee will thereupon cooperate to prepare and file a Form 12b-25 and a Form
10-DA and Form 10-KA, as applicable, pursuant to Rule 12b-25 of the Exchange
Act. In the case of Form 8-K, the Trustee will, upon receipt of all disclosure
information required to be included on Form 8-K, include such disclosure
information on the next Form 10-D. In the event that any previously filed Form
8-K, Form 10-D or Form 10-K needs to be amended, the party to this Agreement
deciding that an amendment to such Form 8-K, Form 10-D or Form 10-K is required
will notify the Depositor, the Trustee and the Servicer and such parties will
cooperate to prepare any necessary Form 8-KA, Form 10-DA or Form 10-KA. Any Form
15, Form 12b-25 or any amendment to Form 8-K, Form 10-D or Form 10-K shall be
signed by an officer of the Servicer. Each party acknowledges that the
performance by any party of its duties under this Section 3.20 related to the
timely preparation and filing of Form 15, a Form 12b-25 or any amendment to Form
8-K, Form 10-D or Form 10-K is contingent upon the other parties observing all
applicable deadlines (and the related grace periods thereto) in the performance
of their duties under this Section 3.20 and Sections 3.17 and 3.18. No party
shall have liability for any loss, expense, damage, claim arising out of or with
respect to any failure to properly prepare and/or timely file any such Form 15,
Form 12b-25 or any amendments to Forms 8-K, Form 10-D or Form 10-K, where such
failure results from another party's inability or failure to obtain or receive,
on a timely basis, any information from any party hereto needed to prepare,
arrange for execution or file such Form 15, Form 12b-25 or any amendments to
Forms 8-K, Form 10-D or Form 10-K, not resulting from its own negligence, bad
faith or willful misconduct.
SECTION 3.21. Indemnification by Trustee.
The Trustee shall indemnify and hold harmless the Depositor, the Servicer
and their respective officers, directors, agents and Affiliates from and against
any losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach by the Trustee or any of its officers, directors, agents or
Affiliates of its obligations under Sections 3.17, 3.18 (other than Section
3.18(f)) and 3.20, any material misstatement or omission in any documents
prepared thereunder (to the extent the Trustee is responsible for providing
information or calculating amounts included in such information), the failure of
the Trustee to deliver when required any Assessment of Compliance or
Accountant's Attestation required of it pursuant to Section 3.18 or Annual
Statement of Compliance required pursuant to Section 3.17, as applicable, or any
material misstatement or omission contained in any Assessment of Compliance,
Accountant's Attestation or Annual Statement of Compliance provided on its
behalf pursuant to Section 3.17 or 3.18, as applicable, or the negligence, bad
faith or willful misconduct of the Trustee in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the indemnified parties, then the Trustee agrees that it shall
contribute to the amount paid or payable by the indemnified parties as a result
of the losses, claims, damages or liabilities of the indemnified parties in such
proportion as is appropriate to reflect the relative fault of the Trustee on the
one hand and of the indemnified parties on the other. Failure by the Trustee to
deliver an Accountant's Attestation when required under Section 3.18(f) will be
grounds for immediate removal of the Trustee under Section 8.08; in the event of
such failure, the Trustee shall pay
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certain costs and expenses of the Depositor caused by such failure as separately
agreed to by the Depositor and the Trustee.
SECTION 3.22. Indemnification by Servicer.
The Servicer shall indemnify and hold harmless the Trustee and the
Depositor and their respective officers, directors, agents and Affiliates from
and against any losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach by the Servicer or any of its officers, directors, agents or
Affiliates of its obligations under Sections 3.17, 3.18 and 3.20, any material
misstatement or omission in any documents prepared thereunder (to the extent the
Servicer is responsible for providing information or calculating amounts
included in such information), the failure of the Servicer to deliver when
required any Assessment of Compliance or Accountant's Attestation required of it
pursuant to Section 3.18 or Annual Statement of Compliance required pursuant to
Section 3.17, as applicable, or any material misstatement or omission contained
in any Assessment of Compliance, Accountant's Attestation or Annual Statement of
Compliance provided on its behalf pursuant to Section 3.17 or 3.18, as
applicable (to the extent the Servicer is responsible for providing information
or calculating amounts included in such information), or the negligence, bad
faith or willful misconduct of the Servicer in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the indemnified parties, then the Servicer agrees that it shall
contribute to the amount paid or payable by the indemnified parties as a result
of the losses, claims, damages or liabilities of the indemnified parties in such
proportion as is appropriate to reflect the relative fault of the Servicer on
the one hand and the indemnified parties on the other.
Notwithstanding the foregoing, the Servicer shall be entitled to rely
conclusively on the accuracy of the information or data provided to the Servicer
by the Trustee or the Depositor in connection with the document preparation
under Sections 3.17, 3.18 and 3.20, and the Servicer shall be entitled to rely
conclusively upon and shall have no liability for any errors in such
information.
SECTION 3.23. Prepayment Charge Reporting Requirements.
(a) Promptly after each Distribution Date, the Servicer shall provide to
the Depositor the following information with regard to each Mortgage Loan that
has prepaid during the related Prepayment Period:
(i) loan number;
(ii) current Mortgage Rate;
(iii) current principal balance;
(iv) original principal balance;
(v) prepayment charge amount due;
(vi) prepayment charge amount collected; and
(vii) reason why full prepayment charge amount was not collected, if
applicable.
SECTION 3.24. Statements to Trustee. Not later than the Servicer Remittance
Date, the Servicer shall furnish to the Trustee an electronic file providing
loan level accounting data for the period
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ending on the last Business Day of the preceding month in the format mutually
agreed upon between the Servicer and the Trustee, including but not limited to
information described in Section 4.05(a).
SECTION 3.25. Further Indemnification by the Servicer.
The Servicer shall indemnify the Sponsor, the Issuing Entity, Trustee (in
its individual capacity and in its capacity as Trustee) and the Depositor and
hold each of them harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses that any of such
parties may sustain in any way related to the failure of the Servicer to perform
its duties and service the Mortgage Loans in compliance with the terms of this
Agreement by reason of breach of representations of the Servicer or willful
misfeasance, bad faith or negligence, or by reason of reckless disregard of
obligations and duties hereunder. The Servicer promptly shall notify the
Sponsor, the Trustee and the Depositor or any other relevant party if a claim is
made by a third party with respect to such party and this Agreement or the
Mortgage Loans and, if subject to this indemnification obligation, assume (with
the prior written consent of the indemnified party, which consent shall not be
unreasonably withheld or delayed) the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against it or
any of such parties in respect of such claim. The Servicer shall provide the
Trustee and the Depositor with a written report of all expenses and advances
incurred by the Servicer pursuant to this Section 3.25, and the Servicer from
the assets of the Trust Fund in the Collection Account promptly shall reimburse
itself for all amounts advanced by it pursuant to the second sentence of this
Section 3.25 except when the claim in any way relates to the gross negligence,
bad faith or willful misconduct of the Servicer. The provisions of this
paragraph shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
SECTION 3.26. Solicitation.
The Servicer may solicit or refer to a mortgage originator, who may or may
not be an affiliate of the Depositor or the Servicer, any Mortgagor for
refinancing or otherwise take action to encourage refinancing.
SECTION 3.27. Existing Servicing Agreement.
The Servicer acknowledges the transfer on the Closing Date of the servicing
of the Mortgage Loans from the Existing Servicing Agreement to this Agreement
pursuant to the Existing Servicing Agreement.
SECTION 3.28. High Cost Mortgage Loans.
In the event that the Servicer reasonably determines that a Mortgage Loan
may be a "high cost mortgage loan," "high cost home," "covered," "high cost,"
"high risk home," "predatory" or similarly classified loan under any applicable
state, federal or local law, the Servicer may notify the Depositor and the
Trustee, and if the Servicer so notifies such parties, the Servicer may cease
its initiation of collection efforts thereon; and such determination shall be
deemed to materially and adversely affect the interests of the
Certificateholders in such Mortgage Loan and the Sponsor will repurchase the
Mortgage Loan within a 90-day period from the date of the notice in the manner
described in Section 2.05.
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SECTION 3.29. [RESERVED]
ARTICLE IV
DISTRIBUTIONS
SECTION 4.01. Advances.
Subject to the conditions of this Article IV, the Servicer, as required
below, shall make an Advance and deposit such Advance in the Collection Account.
Each such Advance shall be remitted to the Collection Account no later than 2:00
p.m. New York City time on the Servicer Advance Date in immediately available
funds. The Servicer shall be obligated to make any such Advance only to the
extent that such advance would not be a Non-Recoverable Advance. If the Servicer
shall have determined that it has made a Non-Recoverable Advance or that a
proposed Advance or a lesser portion of such Advance would constitute a
Non-Recoverable Advance, the Servicer shall deliver (i) to the Trustee for the
benefit of the Certificateholders funds constituting the remaining portion of
such Advance, if applicable, and (ii) to the Depositor, each Rating Agency and
the Trustee an Officer's Certificate setting forth the basis for such
determination. The Servicer may, in its sole discretion, make an Advance with
respect to the principal portion of the final Scheduled Payment on a Balloon
Loan, but the Servicer is under no obligation to do so; provided, however, that
nothing in this sentence shall affect the Servicer's obligation under this
Section 4.01 to Advance the interest portion of the final Scheduled Payment with
respect to a Balloon Loan as if such Balloon Loan were a fully amortizing
Mortgage Loan. If a Mortgagor does not pay its final Scheduled Payment on a
Balloon Loan for a first lien Mortgage when due, the Servicer shall Advance
(unless it determines in its good faith judgment that such amounts would
constitute a Non Recoverable Advance) a full month of interest (net of the
Servicing Fee) on the Stated Principal Balance thereof each month until its
Stated Principal Balance is reduced to zero.
In lieu of making all or a portion of such Advance from its own funds, the
Servicer may (i) cause to be made an appropriate entry in its records relating
to the Collection Account that any amount held for future distribution has been
used by the Servicer in discharge of its obligation to make any such Advance and
(ii) transfer such funds from the Collection Account to the Certificate Account.
In addition, the Servicer shall have the right to reimburse itself for any such
Advance from amounts held from time to time in the Collection Account to the
extent such amounts are not then required to be distributed. Any funds so
applied and transferred pursuant to the previous two sentences shall be replaced
by the Servicer by deposit in the Collection Account no later than the close of
business on the Servicer Advance Date on which such funds are required to be
distributed pursuant to this Agreement. The Servicer shall be entitled to be
reimbursed from the Collection Account for all Advances of its own funds made
pursuant to this Section as provided in Section 3.08. The obligation to make
Advances with respect to any Mortgage Loan shall continue until such Mortgage
Loan is paid in full or the related Mortgaged Property or related REO Property
has been liquidated or until the purchase or repurchase thereof (or substitution
therefor) from the Issuing Entity pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section 4.01.
SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a Prepayment Interest
Shortfall, the Servicer shall, from amounts in respect of the Servicing Fee for
such Distribution Date, deposit into the Collection Account, as a reduction of
the Servicing Fee for such Distribution Date, no later than the Servicer Advance
Date immediately preceding such Distribution Date, an amount up to the
Prepayment Interest
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Shortfall; provided that the amount so deposited with respect to any
Distribution Date shall be limited to the product of (x) one-twelfth of 0.25%
per annum and (y) the aggregate Stated Principal Balance of the Mortgage Loans.
In case of such deposit, the Servicer shall not be entitled to any recovery or
reimbursement from the Depositor, the Trustee, the Issuing Entity or the
Certificateholders. With respect to any Distribution Date, to the extent that
the Prepayment Interest Shortfall exceeds Compensating Interest (such excess, a
"Non-Supported Interest Shortfall"), such Non-Supported Interest Shortfall shall
reduce the Current Interest with respect to each Class of Certificates, pro rata
based upon the amount of interest each such Class would otherwise be entitled to
receive on such Distribution Date. Notwithstanding the foregoing, there shall be
no reduction of the Servicing Fee in connection with Prepayment Interest
Shortfalls related to the Relief Act and the Servicer shall not be obligated to
pay Compensating Interest with respect to Prepayment Interest Shortfalls related
to the Relief Act.
SECTION 4.03. Distributions on the REMIC Interests.
On each Distribution Date, amounts on deposit in the Certificate Account
shall be treated for federal income tax purposes as applied to distributions on
the interests in each of the SWAP REMIC and the Lower Tier REMIC in an amount
sufficient to make the distributions on the respective Certificates on such
Distribution Date in accordance with the provisions of Section 4.04.
SECTION 4.04. Distributions.
(a) [Reserved]
(b) On each Distribution Date (or in the case of any Net Swap Payments owed
to the Swap Counterparty, two "business days" (as defined in the Swap Agreement)
prior to such Distribution Date), the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Interest
Funds in the following order of priority:
(i) to the Class P Certificates, any prepayment charges collected on
the Mortgage Loans and (A) any amounts paid by the Sponsor or the Servicer
in respect of prepayment charges pursuant to this Agreement or (B) any
amounts received in respect of any indemnification paid as a result of a
prepayment charge being unenforceable in breach of the representations and
warranties set forth in the Sale Agreement received during the related
Prepayment Period;
(ii) to the Supplemental Interest Trust, any Net Swap Payments owed to
the Swap Counterparty;
(iii) to the Supplemental Interest Trust, any Swap Termination Payment
owed by the Issuing Entity to the Swap Counterparty (other than any
Defaulted Swap Termination Payment);
(iv) to each Class of the Class R and Class A Certificates, the
Current Interest and any Interest Carry Forward Amount with respect to each
such Class; provided, however, if such amount is not sufficient to make a
full distribution of the Current Interest and the aggregate Interest Carry
Forward Amount to each of the Class R and Class A Certificates, such amount
will be distributed pro rata among each Class of the Class R and Class A
Certificates based on the ratio of (x) the Current Interest and Interest
Carry Forward Amount for such Class to (y) the total amount of Current
Interest and any Interest Carry Forward Amount for the Class R and Class A
Certificates in the aggregate;
(v) to the Class M-1 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
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(vi) to the Class M-2 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(vii) to the Class M-3 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(viii) to the Class M-4 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(ix) to the Class M-5 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(x) to the Class M-6 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(xi) to the Class B-1 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(xii) to the Class B-2 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(xiii) to the Class B-3 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class; and
(xiv) any remainder pursuant to Section 4.04(e) hereof.
On each Distribution Date, subject to the proviso in (b)(iv) above, Interest
Funds received on the Group One Mortgage Loans will be deemed to be distributed
to the Class R and Class A-1 Certificates and Interest Funds received on the
Group Two Mortgage Loans will be deemed to be distributed to the Class A-2
Certificates, in each case, until the related Current Interest and Interest
Carry Forward Amount of each such Class of Certificates for such Distribution
Date has been paid in full. Thereafter, Interest Funds not required for such
distributions are available to be applied, if necessary, to the Class or Classes
of Certificates that are not related to such group of Mortgage Loans.
(c) All amounts representing prepayment charges in respect of the Mortgage
Loans, and amounts paid by the Servicer in respect of prepayment charges
pursuant to this Agreement will be distributed by the Trustee to the Holders of
the Class P Certificates pursuant to Section 4.04(b).
(d) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Principal
Distribution Amount in the following order of priority, and each such
distribution shall be made only after all distributions pursuant to Section
4.04(b) above shall have been made until such amount shall have been fully
distributed for such Distribution Date:
(i) to the Supplemental Interest Trust, any Net Swap Payment owed by
the Issuing Entity to the Swap Counterparty to the extent no paid pursuant
to Section 4.04(b)(ii);
(ii) to the Supplemental Interest Trust, any Swap Termination Payment
owed by the Issuing Entity to the Swap Counterparty (other than any
Defaulted Swap Termination Payment) to the extent no paid pursuant to
Section 4.04(b)(iii);
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(iii) to the Class A and Class R Certificates, the Class A Principal
Distribution Amount shall be distributed as follows:
(1) the Group One Principal Distribution Amount shall be
distributed sequentially as follows: first, to the Class R
Certificate until its Certificate Principal Balance has been
reduced to zero, and second, to the Class A-1 Certificates until
the Certificate Principal Balance of the Class A-1 Certificates
has been reduced to zero;
(2) the Group Two Principal Distribution Amount shall be
distributed as follows:
(a) concurrently, pro rata based on their respective Certificate
Principal Balance, (x) to the Class A-2A Certificates until
the Certificate Principal Balance thereof has been reduced
to zero, and (y) to the Class A-2B Certificates and the
Class A-2C Certificates, sequentially, to the Class A-2B
Certificates until the Certificate Principal Balance thereof
has been reduced to zero and then to the Class A-2C
Certificates until the Certificate Principal Balance thereof
has been reduced to zero;
(b) then to the Class A-2D Certificates until the Certificate
Principal Balance thereof has been reduced to zero; and
(c) then to the Class A-2E Certificates until the Certificate
Principal Balance thereof has been reduced to zero;
provided, however, that on and after the Distribution Date on
which the aggregate Certificate Principal Balance of the
Subordinate Certificates and the Class C Certificates has been
reduced to zero, any principal distributions allocated to the
Class A-2A, Class A-2B, Class A-2C, Class A-2D and Class A-2E
Certificates are required to be allocated pro rata, among such
classes of Certificates, based on their respective Certificate
Principal Balances, until their Certificate Principal Balances
have been reduced to zero;
(iv) sequentially, to the Class M-1 Certificates, the Class M-2
Certificates and the Class M-3 Certificates, in that order, until the
Certificate Principal Balance of each such class has been reduced to zero,
an amount equal to the Class M-1/M-2/M-3 Principal Distribution Amount;
(v) to the Class M-4 Certificates, the Class M-4 Principal
Distribution Amount;
(vi) to the Class M-5 Certificates, the Class M-5 Principal
Distribution Amount;
(vii) to the Class M-6 Certificates, the Class M-6 Principal
Distribution Amount;
(viii) to the Class B-1 Certificates, the Class B-1 Principal
Distribution Amount;
(ix) to the Class B-2 Certificates, the Class B-2 Principal
Distribution Amount;
(x) to the Class B-3 Certificates, the Class B-3 Principal
Distribution Amount; and
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(xi) any remainder pursuant to Section 4.04(e) hereof.
(e) On each Distribution Date, the Trustee shall make the following
distributions up to the following amounts from the Certificate Account of the
remainders pursuant to Section 4.04(b)(xiv) and 4.04(d)(xi) hereof, and each
such distribution shall be made only after all distributions pursuant to
Sections 4.04(b) and (d) above shall have been made until such remainders shall
have been fully distributed for such Distribution Date:
(i) to the Class A and Class R Certificates, any amounts due as
described in and in the same order of priority as set forth in Section
4.04(b)(iv), to the extent unpaid from Interest Funds;
(ii) to the Subordinate Certificates, any amount due and in the same
priority as set forth pursuant to Section 4.04(b)(v) through Section
4.04(b)(xiii), to the extent unpaid from Interest Funds;
(iii) for distribution as part of the Principal Distribution Amount,
the Extra Principal Distribution Amount;
(iv) to the Class M-1 Certificates, the Class M-1 Unpaid Realized Loss
Amount;
(v) to the Class M-2 Certificates, the Class M-2 Unpaid Realized Loss
Amount;
(vi) to the Class M-3 Certificates, the Class M-3 Unpaid Realized Loss
Amount;
(vii) to the Class M-4 Certificates, the Class M-4 Unpaid Realized
Loss Amount;
(viii) to the Class M-5 Certificates, the Class M-5 Unpaid Realized
Loss Amount;
(ix) to the Class M-6 Certificates, the Class M-6 Unpaid Realized Loss
Amount;
(x) to the Class B-1 Certificates, the Class B-1 Unpaid Realized Loss
Amount;
(xi) to the Class B-2 Certificates, the Class B-2 Unpaid Realized Loss
Amount;
(xii) to the Class B-3 Certificates, the Class B-3 Unpaid Realized
Loss Amount;
(xiii) to the Class A, Class R, Class M and Class B Certificates, on a
pro rata basis, the Floating Rate Certificate Carryover for each such Class
in proportion to such amounts; and
(xiv) the remainder pursuant to Section 4.04(f) hereof.
(f) on each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(e)(xiv) as follows:
(i) to the Supplemental Interest Trust, any Defaulted Swap Termination
Payment;
(ii) to the Class C Certificates in the following order of priority,
(I) the Class C Current Interest, (II) the Class C Interest Carry Forward
Amount, (III) as principal on the Class C Certificate until the Certificate
Principal Balance of the Class C Certificates has been reduced to zero and
(IV) the Class C Unpaid Realized Loss Amount; and
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(iii) the remainder pursuant to Section 4.04(g) hereof.
(g) On each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(f)(iii) hereof, (i) to the Trustee to reimburse amounts
or pay indemnification amounts owing to the Trustee from the Issuing Entity
pursuant to Section 8.06 to the extent such amounts shall have exceeded the cap
set forth in Section 8.06(c), and (ii) thereafter, to the Class R Certificate
and such distributions shall be made only after all preceding distributions
shall have been made until such remainder shall have been fully distributed.
(h) On each Distribution Date, after giving effect to distributions on such
Distribution Date, the Trustee shall allocate the Applied Realized Loss Amount
for the Certificates to reduce the Certificate Principal Balances of the Class C
Certificates and Subordinate Certificates in the following order of priority:
(i) to the Class C Certificates until the Class C Certificate
Principal Balance is reduced to zero;
(ii) to the Class B-3 Certificates until the Class B-3 Certificate
Principal Balance is reduced to zero;
(iii) to the Class B-2 Certificates until the Class B-2 Certificate
Principal Balance is reduced to zero;
(iv) to the Class B-1 Certificates until the Class B-1 Certificate
Principal Balance is reduced to zero;
(v) to the Class M-6 Certificates until the Class M-6 Certificate
Principal Balance is reduced to zero;
(vi) to the Class M-5 Certificates until the Class M-5 Certificate
Principal Balance is reduced to zero;
(vii) to the Class M-4 Certificates until the Class M-4 Certificate
Principal Balance is reduced to zero;
(viii) to the Class M-3 Certificates until the Class M-3 Certificate
Principal Balance is reduced to zero;
(ix) to the Class M-2 Certificates until the Class M-2 Certificate
Principal Balance is reduced to zero; and
(x) to the Class M-1 Certificates until the Class M-1 Certificate
Principal Balance is reduced to zero.
(i) Subject to Section 9.02 hereof respecting the final distribution, on
each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee at least five (5) Business Days prior to the related Record Date or,
if not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to
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Certificates registered in the name of a Depository shall be made to such
Depository in immediately available funds.
All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective Initial Certificate Principal Balances (or Percentage
Interests).
(j) The Trustee is hereby directed by the Depositor to execute the Cap
Contracts on behalf of the Issuing Entity in the forms presented to it by the
Depositor and shall have no responsibility for the contents of such Cap
Contracts, including, without limitation, the representations and warranties
contained therein. Any funds payable by the Trustee under the Cap Contracts at
closing shall be paid by the Depositor. Notwithstanding anything to the contrary
contained herein or in the Cap Contracts, the Trustee shall not be required to
make any payments to the Cap Contract Counterparty under the Cap Contracts. Any
payments received under the terms of the related Cap Contract will be available
to pay the holders of the related Classes of Certificates up to the amount of
any Floating Rate Certificate Carryovers remaining after all other distributions
required under this Section 4.04 are made on such Distribution Date, other than
Floating Rate Certificate Carryovers attributable to the fact that Applied
Realized Loss Amounts are not allocated to the Class A and Class R Certificates.
Any amounts received under the terms of any Cap Contract on a Distribution Date
that are not used to pay such Floating Rate Certificate Carryovers will be
distributed to the holders of the Class C Certificates. Payments in respect of
such Floating Rate Certificate Carryovers from proceeds of the Cap Contracts
shall be paid to the related Classes of Certificates, pro rata based upon such
Floating Rate Certificate Carryovers for each such Class of Offered
Certificates.
(i) The Trustee shall establish and maintain, for the benefit of the
Issuing Entity and the Certificateholders, the Cap Contract Account. On or
prior to the related Cap Contract Termination Date, amounts, if any,
received by the Trustee for the benefit of the Issuing Entity in respect of
any Cap Contract shall be deposited by the Trustee into the Cap Contract
Account and will be used to pay Floating Rate Certificate Carryovers on the
related Classes of Certificates as provided in this Section 4.04(j). With
respect to any Distribution Date on or prior to the related Cap Contract
Termination Date, the amount, if any, payable by the Cap Contract
Counterparty under the applicable Cap Contract will equal the product of
(i) the excess of (x) One-Month Cap LIBOR (as determined by the Cap
Contract Counterparty and subject to a cap equal to the rate with respect
to such Distribution Date as shown under the heading "1ML Upper Collar" in
the schedule to the applicable Cap Contract), over (y) the rate with
respect to such Distribution Date as shown under the heading "1ML Lower
Collar" in the schedule to the applicable Cap Contract, (ii) an amount
equal to the lesser of (A) the related Cap Contract Notional Balance for
such Distribution Date as shown in the schedule to the applicable Cap
Contract and (B) the Certificate Principal Balance of (I) in the case of
the Class A-1 Cap Contract, the Class A-1 and Class R Certificates, (II) in
the case of the Class A-2 Cap Contract, the Class A-2 Certificates and
(III) in the case of the Subordinate Certificate Cap Contract, the
Subordinate Certificates, and (iii) the number of days in such Accrual
Period, divided by 360. If a payment is made to the Issuing Entity under a
Cap Contract and the Trustee is required to distribute excess amounts to
the holders of the Class C Certificates as described above, the Trustee
shall, on the monthly statement to Certificateholders described in Section
4.05 below, report the amounts paid with respect to Floating Rate
Certificate Carryovers and the amount due to the holders of the Class C
Certificates.
(ii) Amounts on deposit in the Cap Contract Account will remain
uninvested pending distribution to Certificateholders.
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(iii) Each Cap Contract is scheduled to remain in effect until its
respective Cap Contract Termination Date and will be subject to early
termination only in limited circumstances. Such circumstances include
certain insolvency or bankruptcy events in relation to the Cap Contract
Counterparty (after a grace period of three Business Days, as defined in
the applicable Cap Contract, after notice of such failure is received by
the Cap Contract Counterparty) to make a payment due under the applicable
Cap Contract, the failure by the Cap Contract Counterparty (after a cure
period of twenty (20) days after notice of such failure is received) to
perform any other agreement made by it under the applicable Cap Contract,
the termination of the Trust Fund and the applicable Cap Contract becoming
illegal or subject to certain kinds of taxation.
(iv) The Cap Contract Counterparty and the Trustee will enter into a
credit support annex in relation to the Cap Contracts to protect the
Issuing Entity.
Pursuant to and in accordance with the terms and provisions of
the Cap Contracts, the Cap Contract Counterparty may be required to post
additional collateral in connection with its obligations under the Cap
Contracts. In connection with the foregoing, the Trustee shall, when
required, establish a Cap Posted Collateral Account on behalf of the
holders of the Offered Certificates on the Closing Date.
The Cap Contract Counterparty shall remit any Posted Collateral
to the Trustee to the extent required under the Cap Contracts, and the
Trustee shall, upon receipt of the Posted Collateral, deposit the Posted
Collateral into the Cap Posted Collateral Account and shall hold such
amounts in accordance with the terms and provisions of the Cap Contracts.
Where a termination event occurs with respect to the Cap Contract
Counterparty under the Cap Contracts, or where the Cap Contract
Counterparty fulfills certain obligations to the Issuing Entity such as
finding a replacement cap contract counterparty or a guarantor that meets
the criteria described in the Cap Contracts, the Trustee may be required to
make payments from the Cap Posted Collateral Account to the Cap Contract
Counterparty. Amounts held in the Cap Posted Collateral Account will not be
part of the Trust Fund and will not be available for distribution to any
Certificateholders.
(k) In accordance with this Agreement, the Servicer shall prepare and
deliver a report (the "Remittance Report") to the Trustee in the form of a
computer readable magnetic tape (or by such other means as the Servicer and the
Trustee may agree from time to time) containing such data and information such
as to permit the Trustee to prepare the Monthly Statement to Certificateholders
and make the required distributions for the related Distribution Date.
(l) On the Closing Date, the Supplemental Interest Trust shall be
established and maintained pursuant to this Agreement, as a separate trust, the
corpus of which shall be held by Supplemental Interest Trust Trustee for the
benefit of the holders of the Certificates as a segregated subtrust of the Trust
Fund. The Supplemental Interest Trust shall contain the Swap Account, which
shall be an Eligible Account, and funds deposited therein shall be held separate
and apart from, and shall not be commingled with, any other moneys, including,
without limitation, other moneys of the Trustee held pursuant to this Agreement.
In no event shall any funds deposited in the Swap Account be credited to or made
available to any other account of the Trust Fund. The records of the Trustee
shall at all times reflect that the Supplemental Interest Trust is a subtrust of
the Trust Fund, the assets of which are segregated from other assets of the
Trust Fund.
The Supplemental Interest Trust Trustee is hereby directed by the
Depositor to execute the Swap Agreement on behalf of the Issuing Entity in the
forms presented to it by the Depositor and shall have no responsibility for the
contents of such Swap Agreement, including, without limitation, the
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representations and warranties contained therein. The Supplemental Interest
Trust Trustee shall have all of the rights and protections of the Trustee
hereunder.
The Supplemental Interest Trust Trustee shall enforce all of the
rights of the Supplemental Interest Trust and exercise any remedies under the
Swap Agreement and, in the event the Swap Agreement is terminated as a result of
the designation by either party thereto of an Early Termination Date (as defined
in the Swap Agreement), find a replacement counterparty to enter into a
replacement swap agreement utilizing the amounts of the net Swap Termination
Payments received.
For each Distribution Date, through and including the Distribution
Date in November 2010, the Trustee shall, based on the Significance Estimate
(which shall be provided in writing to the Trustee by the Depositor within five
(5) Business Days prior to the Distribution Date), calculate the Significance
Percentage of the Swap Agreement. If on any such Distribution Date, the
Significance Percentage is equal to or greater than 9%, the Trustee shall
promptly notify the Depositor and the Depositor, on behalf of the Trustee, shall
obtain the financial information required to be delivered by the Swap
Counterparty pursuant to the terms of the Swap Agreement. If, on any succeeding
Distribution Date through and including the Distribution Date in November 2010,
the Significance Percentage is equal to or greater than 10%, the Trustee shall
promptly notify the Depositor and the Depositor shall, within five (5) Business
Days of such Distribution Date, deliver to the Trustee the financial information
provided to it by the Swap Counterparty for inclusion in the Form 10-D relating
to such Distribution Date.
Any Swap Termination Payment received by the Supplemental Interest
Trust Trustee shall be deposited in the Swap Account and shall be used to make
any upfront payment required under a replacement swap agreement and any upfront
payment received from the counterparty to a replacement swap agreement shall be
used to pay any Swap Termination Payment owed to the Swap Counterparty.
Notwithstanding anything contained herein, in the event that a
replacement swap agreement cannot be obtained within thirty (30) days after
receipt by the Trustee of the Swap Termination Payment paid by the terminated
Swap Counterparty, the Trustee shall deposit such Swap Termination Payment into
a separate, segregated non-interest bearing subtrust established by the Trustee
and the Trustee shall, on each Distribution Date following receipt of such Swap
Termination Payment, withdraw from such subtrust, an amount equal to the Net
Swap Payment, if any, that would have been paid to the Supplemental Interest
Trust by the original Swap Counterparty (computed in accordance with the
original Swap Agreement) and distribute such amount in accordance with Section
4.04(l)(i)-(viii) of this Agreement. Any such subtrust shall not be an asset of
any REMIC. Any amounts remaining in such subtrust shall be distributed to the
holders of the Class C Certificates on the Distribution Date following the
earlier of (i) the termination of the Trust Fund pursuant to Section 9.01 and
(ii) November 25, 2010.
On any Distribution Date (or in the case of any Net Swap Payments owed
to the Swap Counterparty, two "business days" (as defined in the Swap Agreement)
prior to such Distribution Date), any Swap Termination Payments or Net Swap
Payments owed to the Swap Counterparty will be paid out of, or any Net Swap
Payments or Swap Termination Payments received from the Swap Counterparty will
be deposited into, the Swap Account. The Supplemental Interest Trust will not be
an asset of any REMIC. Funds in the Swap Account within the Supplemental
Interest Trust shall be distributed in the following order of priority by the
Trustee:
(i) to the Swap Counterparty, all Net Swap Payments, if any, owed to
the Swap Counterparty for such Distribution Date;
(ii) to the Swap Counterparty, any Swap Termination Payment, other
than a Defaulted Swap Termination Payment, if any, owed to the Swap
Counterparty;
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(iii) to each class of the Class A and Class R Certificates, on a pro
rata basis, any Current Interest and any Interest Carry Forward Amount with
respect to such class to the extent unpaid;
(iv) sequentially, to the Class M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the
Class M-5 Certificates, the Class M-6 Certificates, the Class B-1
Certificates, the Class B-2 Certificates and the Class B-3 Certificates, in
that order, any Current Interest for such class to the extent unpaid;
(v) sequentially, to the Class M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the
Class M-5 Certificates, the Class M-6 Certificates, the Class B-1
Certificates, the Class B-2 Certificates and the Class B-3 Certificates, in
that order, any Interest Carry Forward with respect to such class to the
extent unpaid;
(vi) to the Class A, Class R, Class M and Class B Certificates, to pay
principal as described and in the same manner and order of priority as set
forth in Sections 4.04(d)(iii) through 4.04(d)(x) in order to restore
levels of the Overcollateralization Amount, and after giving effect to
distributions from Principal Distribution Amount for each such Class;
(vii) sequentially, to the Class M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the
Class M-5 Certificates, the Class M-6 Certificates, the Class B-1
Certificates, the Class B-2 Certificates and the Class B-3 Certificates, in
that order, any Unpaid Realized Loss Amount for such class to the extent
unpaid;
(viii) to the Class A, Class R, Class M and Class B Certificates, any
Floating Rate Certificate Carryover to the extent not paid based on the
amount of such unpaid Floating Rate Certificate Carryover;
(ix) to the Swap Counterparty, any Defaulted Swap Termination Payment
owed to the Swap Counterparty to the extent not already paid; and
(x) to the Class C Certificates any remaining amount.
Notwithstanding the foregoing, however, after giving effect to
proposed distributions on any Distribution Date, the sum of the cumulative
amounts distributed pursuant to clause (vi) above and the cumulative amounts
distributed pursuant to clause (vii) above shall be limited to the aggregate
amount of cumulative Realized Losses incurred from the Cut-off Date through the
last day of the related Prepayment Period.
Upon termination of the Trust Fund, any amounts remaining in the Swap
Account within the Supplemental Interest Trust shall be distributed pursuant to
the priorities set forth in this Section 4.04(l).
With respect to the failure of the Swap Counterparty to perform any of
its obligations under the Swap Agreement, the breach by the Swap Counterparty of
any of its representations and warranties made pursuant to the Swap Agreement,
or the termination of the Swap Agreement, the Trustee shall send any notices and
make any demands required hereunder (to the extent that a Responsible Officer of
the Trustee has actual knowledge or written notice of any such failure, breach
or termination).
The Swap Counterparty and the Supplemental Interest Trust Trustee will
enter into a credit support annex in relation to the Swap Agreement to protect
the Supplemental Interest Trust from
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certain ratings downgrades that might hinder the ability of the Swap
Counterparty to continue its obligations under the Swap Agreement.
Pursuant to and in accordance with the terms and provisions of the
Swap Agreement, the Swap Counterparty may be required to post additional
collateral in connection with its obligations under the Swap Agreement. In
connection with the foregoing, the Supplemental Interest Trust Trustee shall
establish, when required, a Swap Posted Collateral Account on behalf of the
holders of the Offered Certificates on the Closing Date.
The Swap Counterparty shall remit any Posted Collateral to the
Supplemental Interest Trust Trustee to the extent required under the Swap
Agreement, and the Supplemental Interest Trust Trustee shall, upon receipt of
the Posted Collateral, deposit the Posted Collateral into the Swap Posted
Collateral Account and shall hold such amounts in accordance with the terms and
provisions of the Swap Agreement. Where a termination event occurs with respect
to the Swap Counterparty under the Swap Agreement, or where the Swap
Counterparty fulfills certain obligations to the Supplemental Interest Trust
such as finding a replacement swap counterparty or a guarantor that meets
established criteria of the Rating Agencies, the Supplemental Interest Trust
Trustee may be required to make payments from the Swap Posted Collateral Account
to the Swap Counterparty if amounts are due to such party under the terms and
provisions of the Swap Agreement. Amounts held in the Swap Posted Collateral
Account will not be part of the Trust Fund and will not be available for
distribution to any Certificateholders.
SECTION 4.05. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date based in part on information
provided by the Servicer, the Trustee shall prepare and make available on its
website located at xxxx://xxx.xxxxxx.xxx/xxx to each Holder of a Class of
Certificates of the Issuing Entity, the Servicer, the Rating Agencies and the
Depositor a statement setting forth for the Certificates the following
information; provided, however, that, with respect to any calendar year during
which an annual report on Form 10-K is not required to be filed with the
Commission on behalf of the Issuing Entity, the information set forth in items
(xxvi) through (xxxiii) below are not required to be included in such statement
during such calendar year:
(i) the amount of the related distribution to Holders of each Class of
Certificates allocable to principal, separately identifying (A) the
aggregate amount of any Principal Prepayments included therein, (B) the
aggregate amount of all scheduled payments of principal included therein
and (C) any Extra Principal Distribution Amount, in the aggregate and with
respect to the Group One Mortgage Loans and Group Two Mortgage Loans;
(ii) the amount of such distribution to Holders of each Class of
Certificates allocable to interest, together with any Non-Supported
Interest Shortfalls allocated to each Class;
(iii) with respect to each Class of Certificates, any Interest Carry
Forward Amount with respect to such Distribution Date for each such Class,
any Interest Carry Forward Amount paid for each such Class and any
remaining Interest Carry Forward Amount for each such Class;
(iv) the Certificate Principal Balance of each Class of Certificates
after giving effect to all distributions allocable to principal on such
Distribution Date;
(v) the Pool Stated Principal Balance for such Distribution Date;
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(vi) the amount of the Servicing Fee paid to or retained by the
Servicer and the amount of investment income earned on funds on deposit in
the Certificate Account for the related Due Period;
(vii) the Pass-Through Rate for each Class of Certificates for such
Distribution Date;
(viii) the amount of Advances included in the distribution on such
Distribution Date;
(ix) the cumulative amount of (A) Realized Losses and (B) Applied
Realized Loss Amounts to date, in the aggregate;
(x) the amount of (A) Realized Losses and (B) Applied Realized Loss
Amounts with respect to such Distribution Date, in the aggregate;
(xi) the number and aggregate principal amounts of Mortgage Loans (A)
Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 31 to 60 days,
(2) 61 to 90 days and (3) 91 or more days, and (B) in foreclosure and
Delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, in
each case as of the close of business on the last day of the calendar month
preceding such Distribution Date, in the aggregate and with respect to the
Group One Mortgage Loans and Group Two Mortgage Loans;
(xii) with respect to any Mortgage Loan 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 and the date of acquisition thereof, in the aggregate;
(xiii) whether a Stepdown Trigger Event has occurred and is in effect;
(xiv) the total number and principal balance of any REO Properties as
of the close of business on the related Determination Date, in the
aggregate;
(xv) the aggregate Stated Principal Balance of all Liquidated Loans as
of the preceding Distribution Date, in the aggregate
(xvi) any Floating Rate Certificate Carryover paid and all Floating
Rate Certificate Carryover remaining on each Class of the Offered
Certificates on such Distribution Date and Stated Principal Balance (as of
the preceding Distribution Date) of any Mortgage Loans which were purchased
or repurchased during the preceding Due Period and since the Cut-off Date;
(xvii) the number and amount of prepayment charges and the amount of
late payment fees received during the related Prepayment Period in the
aggregate;
(xviii) as of each Distribution Date, the amount, if any, received
pursuant to each Cap Contract and the amount thereof, if any, to be paid to
each Class of Certificates;
(xix) as of each Distribution Date, the amount, if any, to be
deposited in the Swap Account within the Supplemental Interest Trust
pursuant to the Swap Agreement as described in Section 4.04(l) and the
amount thereof to be paid to the Certificates;
(xx) the number of Mortgage Loans with respect to which (i) a
reduction in the Mortgage Rate has occurred or (ii) the related borrower's
obligation to repay interest on a
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monthly basis has been suspended or reduced pursuant to the Relief Act or
the California Military and Veterans Code, as amended; and (iii) the amount
of interest not required to be paid with respect to any such Mortgage Loans
during the related Due Period as a result of such reductions in the
aggregate and with respect to the Group One Mortgage Loans and Group Two
Mortgage Loans;
(xxi) the number of Mortgage Loans for which prepayment charges were
received during the related Prepayment Period and, for each such Mortgage
Loan, the amount of prepayment charges received during the related
Prepayment Period and in the aggregate of such amounts for all such
Mortgage Loans since the Cut-off Date;
(xxii) the amount and purpose of any withdrawal from the Collection
Account pursuant to Section 3.08(a)(iv);
(xxiii) the amount of any payments to each Class of Certificates that
are treated as payments received in respect of a REMIC Regular Interest or
REMIC "residual interest" and the amount of any payments to each Class of
Certificates that are not treated as payments received in respect of a
REMIC Regular Interest or REMIC "residual interest".
(xxiv) the aggregate amount of all Advances recovered during the
related Due Period;
(xxv) the allocation to each Class of Certificate of any Realized
Losses during the related Due Period;
(xxvi) with respect to each Class of Certificates, the amount of any
Non-Supported Interest Shortfalls on such Distribution Date;
(xxvii) the number and outstanding principal balance of pool assets at
the beginning and ending of each period, and updated pool composition
information;
(xxviii) any material changes to methodology regarding calculations of
delinquencies and charge-offs;
(xxix) the amount of Servicing Advances made during the related Due
Period and the amount of Servicing Advances recovered during the related
Due Period out of (a) principal and interest collections and (b) other
amounts collected from the related Mortgagors;
(xxx) any material modifications, extensions or waivers to pool asset
terms, fees, penalties or payments during the distribution period or that
have cumulatively become material over time, of which the Trustee has
received written notice thereof from the Servicer;
(xxxi) material breaches of pool asset representations or warranties
or transaction covenants to the extent that the Trustee has received
written notice thereof;
(xxxii) information on ratio, coverage or other tests used for
determining any early amortization, liquidation or other performance
trigger and whether the trigger was met;
(xxxiii) the Overcollateralization Amount, the Targeted
Overcollateralization Amount and the Overcollateralization Deficiency
Amount or the Overcollateralization Release Amount (as applicable) as of
such Distribution Date;
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(xxxiv) the amount of Excess Interest for any class of the LIBOR
Certificates;
(xxxv) the Extra Principal Distribution Amount for such Distribution
Date; and
(xxxvi) information regarding any pool asset changes (other than in
connection with a pool asset converting into cash in accordance with its
terms), such as additions or removals in connection with a prefunding or
revolving period and pool asset substitutions and repurchases (and purchase
rates, if applicable).
Notwithstanding the foregoing, such statement shall also include, with
respect to each Distribution Date, the related Record Date, Determination Date,
Distribution Date and the Accrual Period.
(b) The Trustee will make the Monthly Statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, other parties to this Agreement and
any other interested parties via the Trustee's Internet website. The Trustee's
Internet website shall initially be located at xxx.xxxxxx.xxx/xxx. The Trustee
shall have the right to change the way the monthly statements to
Certificateholders are distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Trustee shall
provide timely and adequate notification to all above parties regarding any such
changes.
The foregoing information and reports shall be prepared and determined
by the Trustee based on Mortgage Loan data and other information provided to the
Trustee by the Servicer, Swap Counterparty or any other third party required to
deliver information hereunder. In preparing or furnishing the foregoing
information, the Trustee shall be entitled to rely conclusively on the accuracy
of the information or data provided to the Trustee by the Servicer, Swap
Counterparty or any other third party required to deliver information and the
Trustee shall be entitled to rely conclusively upon and shall have no liability
for any errors in any such information.
As a condition to access the Trustee's internet website, the Trustee
may require registration and the acceptance of a disclaimer. The Trustee will
not be liable for the dissemination of information in accordance with this
Agreement.
(c) Within a reasonable period of time after the end of each calendar year,
the Trustee shall cause to be furnished each Person who at any time during the
calendar year was a Certificateholder, a statement containing the information
set forth in clauses (a)(i) and (a)(ii) of this Section 4.05 aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code from time to
time in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holder of the Class R Certificate each Form 1066 and each Form
1066Q and shall respond promptly to written requests made not more frequently
than quarterly by any Holder of a Class R Certificate with respect to the
following matters:
(i) The original projected principal and interest cash flows on the
Closing Date on each Class of regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment Assumption;
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(ii) The projected remaining principal and interest cash flows as of
the end of any calendar quarter with respect to each Class of regular and
residual interests created hereunder and the Mortgage Loans, based on the
Prepayment Assumption;
(iii) The Prepayment Assumption and any interest rate assumptions used
in determining the projected principal and interest cash flows described
above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to each Class of regular or residual
interests created hereunder and to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of the REMICs with
respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the REMICs;
and
(vii) Any taxes (including penalties and interest) imposed on the
REMICs, including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or local
income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above shall be
provided by the Depositor pursuant to Section 8.12.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. 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
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate of each Class may be issued in a different amount which must be
in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:
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Minimum Integral Multiples in Original Certificate
Class Denomination Excess of Minimum Principal Balance
----- ------------ --------------------- --------------------
A-1 $25,000.00 $1.00 $258,105,000
A-2A $25,000.00 $1.00 $200,000,000
A-2B $25,000.00 $1.00 $ 65,383,000
A-2C $25,000.00 $1.00 $ 26,746,000
A-2D $25,000.00 $1.00 $ 72,135,000
A-2E $25,000.00 $1.00 $ 35,463,000
M-1 $25,000.00 $1.00 $ 35,032,000
M-2 $25,000.00 $1.00 $ 41,952,000
M-3 $25,000.00 $1.00 $ 15,570,000
M-4 $25,000.00 $1.00 $ 17,732,000
M-5 $25,000.00 $1.00 $ 17,300,000
M-6 $25,000.00 $1.00 $ 12,110,000
B-1 $25,000.00 $1.00 $ 10,812,000
B-2 $25,000.00 $1.00 $ 8,649,000
B-3 $25,000.00 $1.00 $ 12,110,000
C (1) 1% (1)
R $ 100.00 N/A $ 100.00
P (2) 1% (2)
----------
(1) The Class C Certificates shall not have minimum dollar denominations as the
Certificate Principal Balance thereof shall vary over time as described
herein and shall be issued in a minimum percentage interest of 10% and an
aggregate percentage interest of 100%.
(2) The Class P Certificates shall not have minimum dollar denominations or
Certificate Principal Balance and shall be issued in a minimum percentage
interest of 10% and an aggregate percentage interest of 100%.
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 Issuing Entity, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form set forth as attached
hereto executed by the Trustee by manual signature, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication. On
the Closing Date, the Trustee shall authenticate the Certificates to be issued
at the written direction of the Depositor, or any Affiliate thereof.
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.09 hereof, a Certificate Register for the
Issuing Entity in which, subject to the provisions of subsections (b) and (c)
below and to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of Transfers and exchanges of
Certificates as herein provided. Upon surrender for registration of Transfer of
any Certificate, the Trustee shall authenticate
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and deliver, in the name of the designated transferee or transferees, one or
more new Certificates of the same Class and of like aggregate Percentage
Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of a Trustee. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute and the Trustee shall
authenticate and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to a Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.
(b) No Transfer of a Class C or Class P Certificate shall be made unless
such Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall (except with
respect to the initial transfer of a Class C or Class P Certificate by Xxxxxxx
Xxxxx & Co. or, in connection with the transfer of a Class C or Class P
Certificate to the indenture trustee under an Indenture pursuant to which NIM
Notes are issued) each certify to the Trustee in writing the facts surrounding
the Transfer in substantially the forms set forth in Exhibit F (the "Transferor
Certificate") and (i) deliver a letter in substantially the form of either
Exhibit G (the "Investment Letter") or Exhibit H (the "Rule 144A Letter") or
(ii) there shall be delivered to the Trustee an Opinion of Counsel addressed to
the Trustee that such Transfer may be made pursuant to an exemption from the
Securities Act, which Opinion of Counsel shall not be an expense of the
Depositor or the Trustee. The Depositor shall provide to any Holder of a Class C
or Class P 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 shall cooperate with
the Depositor in providing the Rule 144A information referenced in the preceding
sentence, including providing to the Depositor such information in the
possession of the Trustee regarding the Certificates, the Mortgage Loans and
other matters regarding the Trust Fund as the Depositor shall reasonably request
to meet its obligation under the preceding sentence. Each Holder of a Class C or
Class P Certificate desiring to effect such Transfer shall, and does hereby
agree to, indemnify the Depositor and the Trustee 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 a Certificate that is neither an ERISA Restricted
Certificate nor a Class R Certificate shall be registered unless the transferee
provides the Trustee with a representation that either (i) such transferee is
not, and is not acting for, on behalf of or with any assets of, an employee
benefit plan or other arrangement subject to Title I of ERISA or plan subject to
Section 4975 of the Code, or (ii) until the termination of the Swap Agreement,
the acquisition and holding of the Certificate are eligible for exemptive relief
under any of Section 408(b)(17) of ERISA or Section 4975(d)(20) of the Code,
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Prohibited Transaction Class Exemption ("PTCE") 00-00, XXXX 00-0, XXXX 91-38,
PTCE 95-60 or PTCE 96-23.
No transfer of an ERISA Restricted Certificate or a Class R Certificate may
be made unless the Trustee has received (I) a representation that the transferee
is not an employee benefit plan or other arrangement subject to Title I of
ERISA, a plan subject to Section 4975 of the Code or a plan subject to any
state, local, federal, non-U.S. or other law substantively similar to the
foregoing provisions of ERISA or the Code ("Similar Law") (collectively,
"Plan"), or is directly or indirectly acquiring the ERISA Restricted Certificate
or Class R Certificate for, on behalf of, or with any assets of any such Plan,
or (II) solely with respect to ERISA Restricted Certificates, (A) if the
Certificate has been the subject of an ERISA-Qualifying Underwriting, a
representation that such transferee is an insurance company that is acquiring
the Certificate with assets of an "insurance company general account," as
defined in Section V(e) of Prohibited Transaction Class Exemption ("PTCE")
95-60, and the acquisition and holding of the Certificate are covered and exempt
under Section I and III of PTCE 95-60, or (B) solely in the case of any such
Certificate that is a Definitive Certificate, an Opinion of Counsel satisfactory
to the Trustee and the Depositor, and upon which the Trustee shall be entitled
to rely, to the effect that the acquisition and holding of such Certificate will
not constitute or result or result in a nonexempt prohibited transaction under
Title I of ERISA or Section 4975 of the code, or a violation of Similar Law, and
will not subject the Trustee, the Servicer or the Depositor to any obligation in
addition to those expressly undertaken in this Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the Servicer or the Depositor.
Except in the case of Definitive Certificates, the representations set
forth in the immediately two preceding paragraphs of this Subsection 5.02(b),
other than clause (II)(B) in the immediately preceding paragraph, shall be
deemed to have been made to the Trustee by the transferee's acceptance of a
Certificate (or the acceptance by a Certificate Owner of the beneficial interest
in any Class of Certificate). Notwithstanding any other provision herein to the
contrary, any purported transfer of a Certificate to or on behalf of a Plan
without the delivery to the Trustee of a representation or an Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect.
The Trustee shall not be under any liability to any Person for any registration
of transfer of any Certificate that is in fact not permitted by this Section
5.02(b) nor shall the Trustee be under any liability 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. The Trustee shall be entitled, but not obligated, to recover from
any Holder of any Certificate that was in fact a Plan and that held such
Certificate in violation of this Section 5.02(b) all payments made on such
Certificate at and after the time it commenced such holding. Any such payments
so recovered shall be paid and delivered to the last preceding Holder of such
Certificate that is not a Plan.
(c) Each Person who has or who acquires any Ownership Interest in a Class R
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 Class R Certificate are
expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
R 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 Class R Certificate may be purchased,
transferred or sold, directly or indirectly, except in accordance with the
provisions hereof. No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and no Transfer
of any Class R Certificate shall be registered unless, in addition to the
certificates
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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 E-1 and an affidavit of the proposed transferor
in the form attached hereto as Exhibit E-2. In the absence of a contrary
instruction from the transferor of a Class R Certificate, declaration (11)
in Appendix A of the Transfer Affidavit may be left blank. If the
transferor requests by written notice to the Trustee prior to the date of
the proposed transfer that one of the two other forms of declaration (11)
in Appendix A of the Transfer Affidavit be used, then the requirements of
this Section 5.02(c)(ii) shall not have been satisfied unless the Transfer
Affidavit includes such other form of declaration.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R 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 Class R 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 Class R Certificate and (C) not to
Transfer its Ownership Interest in a Class R Certificate or to cause the
Transfer of an Ownership Interest in a Class R Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee. Further, no transfer, sale or other disposition of any
Ownership Interest in a Class R Certificate may be made to a person who is
not a U.S. Person (within the meaning of section 7701 of the Code) unless
such person furnishes the transferor and the Trustee with a duly completed
and effective Internal Revenue Service Form W-8ECI (or any successor
thereto) and the Trustee consents to such transfer, sale or other
disposition in writing.
(iv) Any attempted or purported Transfer of any Ownership Interest in
a Class R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall become a Holder of
a Class R Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class R
Certificate that is in fact not permitted by Section 5.02(b) and this
Section 5.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under
the provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit. The Trustee shall be
entitled but not obligated to recover from any Holder of a Class R
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 Class R 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) At the option of the Holder of the Class R Certificate, the Class
SWR Interest, the Class LTR Interest, and the Residual Interest may be
severed and represented by separate certificates (with the separate
certificate that represents the Residual Interest also representing all
rights of the Class R Certificate to distributions attributable to an
interest rate on the Class R Certificate in excess of the REMIC
Pass-Through Rate); provided, however, that such separate certification may
not occur until the Trustee receives an Opinion of Counsel addressed to the
Trustee (at the expense of the Holder of the Class R Certificate) to the
effect that separate certification in the form and manner proposed would
not result in the imposition of federal tax upon the Issuing Entity or any
of the REMICs provided for herein or cause any of the REMICs provided for
herein to fail to qualify as a REMIC; and provided further, that the
provisions of Sections 5.02(b) and (c) will apply to each such separate
certificate as if the separate certificate
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were a Class R Certificate. If, as evidenced by an Opinion of Counsel, it
is necessary to preserve the REMIC status of any of the REMICs provided for
herein, the Class SWR Interest, the Class LTR Interest, and the Residual
Interest shall be severed and represented by separate Certificates (with
the separate certificate that represents the Residual Interest also
representing all rights of the Class R Certificate to distributions
attributable to an interest rate on the Class R Certificate in excess of
the REMIC Pass-Through Rate).
The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(c) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee of an Opinion of Counsel addressed to the Trustee,
which Opinion of Counsel shall not be an expense of the Issuing Entity, the
Trustee or the Depositor, to the effect that the elimination of such
restrictions will not cause any of the REMICs provided for herein 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 Issuing Entity, any REMIC provided for
herein, a Certificateholder or another Person. Each Person holding or acquiring
any Ownership Interest in a Class R Certificate hereby consents to any amendment
of this Agreement that, based on an Opinion of Counsel addressed to and
furnished to the Trustee, is reasonably necessary (a) to ensure that the record
ownership of, or any beneficial interest in, a Class R 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 Class R
Certificate that is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
(d) The transferor of the Class R Certificate shall notify the Trustee in
writing upon the transfer of the Class R Certificate.
(e) The preparation and delivery of all certificates, opinions and other
writings referred to above in this Section 5.02 shall not be an expense of the
Issuing Entity, the Depositor or the Trustee.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee such security or indemnity as may be required by the Trustee to save
the Trustee harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.03, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section 5.03 shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time. All Certificates
surrendered to the Trustee under the terms of this Section 5.03 shall be
canceled and destroyed by the Trustee in accordance with its standard procedures
without liability on its part.
SECTION 5.04. Persons Deemed Owners.
The Trustee and any agent of 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 Trustee nor any agent of the Trustee shall
be affected by any notice to the contrary.
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SECTION 5.05. Access to List of Certificateholders' Names and Addresses.
If three or more Certificateholders (a) request such information in writing
from the Trustee, (b) state that such Certificateholders desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates, and (c) provide a copy of the communication that such
Certificateholders propose to transmit or if the Depositor 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 or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of the Issuing Entity 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 5.06. Book-Entry Certificates.
The Regular Certificates, upon original issuance, shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Book-Entry Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of a Book-Entry Certificate will receive a definitive
certificate representing such Certificate Owner's interest in such Certificates,
except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of the Book-Entry Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor and the Trustee may deal with the Depository and the
Depository Participants for all purposes (including the making of distributions)
as the authorized representative of the respective Certificate Owners of the
Book-Entry Certificates;
(c) registration of the Book-Entry Certificates may not be transferred by
the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;
(e) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.
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For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.
SECTION 5.07. Notices to Depository.
Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners and the Trustee shall give all such
notices and communications to the Depository.
SECTION 5.08. Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depository or the Depositor advises the Trustee that the
Depository is no longer willing, qualified or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Depositor is unable to locate a qualified successor, (b)
the Depositor, at its sole option, advises the Trustee that it elects to
terminate the book-entry system with respect to such Certificates through the
Depository or (c) after the occurrence and continuation of an Event of Default,
Certificate Owners of such Book-Entry Certificates having not less than 51% of
the Voting Rights evidenced by any Class of Book-Entry Certificates advise the
Trustee and the Depository in writing through the Depository Participants that
the continuation of a book-entry system with respect to Certificates of such
Class through the Depository (or its successor) is no longer in the best
interests of the Certificate Owners of such Class, then the Trustee shall notify
all Certificate Owners of such Book-Entry Certificates, through the Depository,
of the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners of such Class requesting the same. The
Depositor shall provide the Trustee with an adequate inventory of certificates
to facilitate the issuance and transfer of Definitive Certificates. Upon
surrender to the Trustee of any such Certificates by the Depository, accompanied
by registration instructions from the Depository for registration, the Trustee
shall authenticate and deliver such Definitive Certificates. Neither the
Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and each may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of such Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.
SECTION 5.09. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange. The Trustee initially designates its
office at 00 Xxxxxxxxxx Xxxxxx, Mail Code EP-MN-WS3D, Xx. Xxxx, Xxxxxxxxx
00000-0000, Attention: Structured Finance/SURF 2006-BC5, as offices for such
purposes. The Trustee will give prompt written notice to the Certificateholders
of any change in such location of any such office or agency.
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ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the Servicer.
The Depositor and the 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 6.02. Merger or Consolidation of the Depositor or the Servicer.
Except as provided in the next paragraph, the Depositor and the Servicer
will each keep in full effect its existence, rights and franchises as a
corporation or banking association 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 Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or Servicer shall be a party, or any Person succeeding to the
business of the Depositor or Servicer, shall be the successor of the Depositor
or 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 (except for the execution of an
assumption agreement where such succession is not effected by operation of law);
provided, however, that the successor or surviving Person to a Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf of,
Xxxxxx Xxx or Xxxxxxx Mac.
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and
Others.
None of the Depositor, the Servicer or any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Issuing Entity or the Certificateholders for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such Person against any
breach of representations or warranties made by it herein or protect the
Depositor, the Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the 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 Servicer and any
director, officer, employee or agent of the Depositor or the Servicer shall be
indemnified by the Issuing Entity and held harmless against any loss, liability
or expense, incurred in connection with the performance of their duties under
this agreement or incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense (i) incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder or (ii) which does not constitute
an "unanticipated expense" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii). Neither the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided, however, that either of the
Depositor or the 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 Servicer and the
Certificateholders hereunder.
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In such event, the legal expenses and costs of such action and any liability
resulting therefrom shall be, expenses, costs and liabilities of the Issuing
Entity, and the Depositor and the Servicer shall be entitled to be reimbursed
therefor out of the Collection Account as provided by Section 3.08 hereof.
SECTION 6.04. Limitation on Resignation of Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the 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 servicer reasonably acceptable to the Trustee
is appointed and has assumed the Servicer's responsibilities, duties,
liabilities and obligations hereunder. Any such resignation shall not relieve
the Servicer of any of the obligations specified in Sections 7.01, 7.02 and 7.03
as obligations that survive the resignation or termination of the Servicer.
The Trustee and the Depositor hereby specifically (i) consent to the pledge
and assignment by the Servicer of all the Servicer's right, title and interest
in, to and under this Agreement to the Servicing Rights Pledgee, for the benefit
of certain lenders, and (ii) provided that no Event of Default exists, agree
that upon delivery to the Trustee by the Servicing Rights Pledgee of a letter
signed by the Servicer whereby the Servicer shall resign as Servicer under this
Agreement, the Trustee shall appoint the Servicing Rights Pledgee or its
designee as successor servicer but only if such successor servicer meets the
requirements of a successor servicer under this Agreement and agrees to be
subject to the terms of this Agreement. If, pursuant to any provision hereof,
the duties of the Servicer are transferred to a successor servicer, the entire
amount of the Servicing Fee and other compensation payable to the Servicer
pursuant hereto shall thereafter be payable to such successor servicer.
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.
The Servicer shall, for so long as it acts as 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 servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy and bond shall, together, meet the requirements of
Xxxxxx Xxx or Xxxxxxx Mac, unless the Servicer has obtained a waiver of such
requirements from the Sponsor. The Servicer shall provide the Trustee, upon
request with reasonable notice, with copies of such policies and fidelity bond
or a certification from the insurance provider evidencing such policies and
fidelity bond. The Servicer may be deemed to have complied with this provision
if an Affiliate of the Servicer has such errors and omissions and fidelity bond
coverage and, by the terms of such insurance policy or fidelity bond, the
coverage afforded thereunder extends to the Servicer. In the event that any such
policy or bond ceases to be in effect, the Servicer shall use its reasonable
commercial efforts to obtain a comparable replacement policy or bond from an
insurer or issuer meeting the requirements set forth above as of the date of
such replacement. The Servicer shall ensure that any such policy or fidelity
bond shall by its terms not be cancelable without thirty (30) days' prior
written notice to the Trustee.
ARTICLE VII
DEFAULT; TERMINATION OF SERVICER
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events:
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(i) any failure by the Servicer to make any Advance to deposit in the
Collection Account or the Certificate Account or remit to the Trustee any
payment (excluding a payment required to be made under Section 4.01 hereof)
required to be made under the terms of this Agreement, which failure shall
continue unremedied for three Business Days and, with respect to a payment
required to be made under Section 4.01 hereof, for one Business Day, after
the date on which written notice of such failure shall have been given to
the Servicer by the Trustee or the Depositor; or
(ii) any failure by the Servicer to observe or perform in any material
respect any other of the covenants or agreements on the part of the
Servicer contained in this Agreement or any representation or warranty
shall prove to be untrue, which failure or breach shall continue unremedied
for a period of sixty (60) days after the date on which written notice of
such failure shall have been given to the Servicer by the Trustee or the
Depositor; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Servicer and such decree or order shall
have remained in force undischarged or unstayed for a period of sixty (60)
consecutive days; or
(iv) consent by the Servicer to the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings of or relating to the Servicer or
all or substantially all of the property of the Servicer; or
(v) admission by the Servicer in writing of 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) any failure by the Servicer to duly perform, within the required
time period, its obligations under Sections 3.17, 3.18 and 3.22 of this
Agreement, which failure continues unremedied for a period of ten (10) days
after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the Trustee or any
other party to this Agreement.
If an Event of Default shall occur with respect to the Servicer, then, and
in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, or solely with respect to
clause (i) above by 5:00 p.m. on the Servicer Remittance Date, the Trustee may,
or at the direction of the Holders of Certificates evidencing not less than 50%
of the Voting Rights evidenced by the Certificates shall, by notice in writing
to the Servicer (with a copy to each Rating Agency), terminate all of the rights
and obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof, other than its rights as a Certificateholder
hereunder. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer hereunder, subject to and in accordance with
Section 6.04 hereof, whether with respect to the Mortgage Loans or otherwise,
shall pass to and be vested in the Trustee as successor servicer. To the extent
the Event of Default resulted from the failure of the Servicer to make a
required Advance, the Trustee, in its capacity as successor servicer, shall
thereupon make any Advance described in Section 4.01 hereof subject to Section
3.04 hereof. The Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the 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
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related documents, or otherwise. Unless expressly provided in such written
notice, no such termination shall affect any obligation of the Servicer to pay
amounts owed pursuant to Article VIII. The Servicer agrees to cooperate with the
Trustee in effecting the termination of the 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 Collection Account,
or thereafter be received with respect to the Mortgage Loans. The Servicer and
the Trustee shall promptly notify the Rating Agencies of the occurrence of an
Event of Default or an event that, with notice, passage of time, other action or
any combination of the foregoing would be an Event of Default, such notice to be
provided in any event within two Business Days of such occurrence.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a)(i) through (viii), and any other
amounts payable to the Servicer hereunder the entitlement to which arose prior
to the termination of its activities hereunder. Notwithstanding anything herein
to the contrary, upon termination of the Servicer hereunder, any liabilities of
the Servicer which accrued prior to such termination shall survive such
termination.
SECTION 7.02. [RESERVED]
SECTION 7.03. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, be the successor to the Servicer in its capacity as 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 Servicer by the terms and provisions hereof and applicable law
including the obligation to make advances pursuant to Section 4.01. As
compensation therefor, subject to the last paragraph of Section 7.01, as
applicable, the Trustee shall be entitled to all compensation and reimbursement
for costs and expenses that the Servicer would have been entitled to hereunder
if the Servicer had continued to act hereunder. Notwithstanding the foregoing,
if the Trustee has become the successor to the Servicer in accordance with
Section 7.01 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 4.01 hereof or if it is otherwise unable to so act, appoint, or petition
a court of competent jurisdiction to appoint, any established mortgage loan
servicing institution the appointment of which successor does not adversely
affect the then current rating of the Certificates by each Rating Agency as the
successor to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. Any successor
servicer shall be an institution that is a Xxxxxx Xxx and Xxxxxxx Mac approved
seller/servicer in good standing, that has a net worth of at least $15,000,000,
and that is willing to service the Mortgage Loans and executes and delivers to
the Depositor and the Trustee an agreement accepting such delegation and
assignment, that contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the Servicer (other
than liabilities of the Servicer under Section 6.03 hereof incurred prior to
termination of the Servicer under Section 7.01), 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. No appointment of a
successor to the Servicer hereunder shall be effective until the Trustee shall
have consented thereto, and written notice of such proposed appointment shall
have been provided by the Trustee to each Certificateholder. The Trustee shall
not resign as servicer until a successor servicer has been appointed and has
accepted such appointment. Pending appointment of a successor to the Servicer
hereunder, the Trustee, unless the Trustee is prohibited by law from so acting,
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shall, subject to Section 3.04 hereof, act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the 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 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 Servicer to deliver or provide, or any delay in
delivering or providing, any cash, information, documents or records to it.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of any Event of Default),
notwithstanding anything to the contrary above, the Trustee and the Depositor
hereby agree that within ten (10) Business Days or delivery to the Trustee by
the Servicing Rights Pledgee of a letter signed by the Servicer whereby the
Servicer shall resign as Servicer under this Agreement, the Servicing Rights
Pledgee or its designee shall be appointed as successor servicer (provided that
at the time of such appointment the Servicing Rights Pledgee or such designee
meets the requirements of a successor servicer set forth above) and the
Servicing Rights Pledgee agrees to be subject to the terms of this Agreement.
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.
SECTION 7.04. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the Servicer,
the Trustee shall give prompt written notice thereof to Certificateholders and
to each Rating Agency.
(b) Within sixty (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 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default 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 has occurred and remains uncured, the
Trustee shall exercise such 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. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee,
shall, at the direction of the majority of the Certificateholders, or may,
proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, and subject
to the
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foregoing, shall deem most effectual to protect and enforce any of the rights of
the Trustee and the Certificateholders.
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 conform on their
face, to the requirements of this Agreement. If any such instrument is found not
to conform, on its face, to the requirements of this Agreement in a material
manner, the Trustee shall notify the person providing such Agreement of such
non-conformance, and if the instrument is not corrected to conform to the
requirements of this Agreement, the Trustee will provide notice thereof to the
Certificateholders and take such further action as directed by the
Certificateholders.
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 misconduct, its negligent failure to perform its obligations in
compliance with this Agreement, or any liability that would be imposed by reason
of its willful misfeasance or bad faith; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable, individually
or as Trustee, 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 that it reasonably 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, individually or as Trustee, for
an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless the Trustee was negligent or
acted in bad faith or with willful misfeasance;
(iii) the Trustee shall not be liable, individually or as Trustee,
with respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the Holders of each Class of
Certificates evidencing not less than 50% of the Voting Rights of such
Class 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; and
(iv) except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under
any Permitted Investment, the Trustee may and, subject to Section 8.01 and
Section 8.02, upon the request of the Holders of the Certificates
representing more than 50% of the Voting Rights allocated to any Class of
Certificates, shall take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of
appropriate proceedings.
The Trustee shall have no duty hereunder with respect to any complaint,
claim, demand, notice or other document it may receive or which may be alleged
to have been delivered to or served upon it by the parties as a consequence of
the assignment of any Mortgage Loan hereunder; provided, however, that the
Trustee shall promptly remit to the Servicer upon receipt any such complaint,
claim, demand, notice or
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other document (i) which is delivered to the Trustee, (ii) of which a
Responsible Officer has actual knowledge and (iii) which contains information
sufficient to permit the Trustee to make a determination that the real property
to which such document related to is a Mortgaged Property.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's
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;
(ii) the Trustee may consult with counsel of its choice and any advice
or 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 advice or Opinion of
Counsel;
(iii) the Trustee shall not be liable, individually or as Trustee, 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;
(iv) prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default that may have occurred, 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 the Holders of
each Class of Certificates evidencing not less than 50% of the Voting
Rights of such Class;
(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;
(vi) the Trustee shall not be required to expend its own funds or
otherwise incur any financial liability in the performance of any of its
duties hereunder if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such liability is not
assured to it;
(vii) the Trustee shall not be liable, individually or as Trustee, for
any loss on any investment of funds pursuant to this Agreement (other than
as issuer of the investment security or as provided for in Section
3.05(g));
(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;
(ix) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request, order
or direction of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; and
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(x) if requested by the Servicer, the Trustee may appoint the Servicer
as the trustee's attorney-in-fact in order to carry out and perform certain
activities that are necessary or appropriate for the servicing and
administration of the Mortgage Loans pursuant to this Agreement. Such
appointment shall be evidenced by a power of attorney in such form as may
be agreed to by the Trustee and the Servicer. The Trustee shall have no
liability for any action or inaction of the Servicer in connection with
such power of attorney and the Trustee shall be indemnified by the Servicer
for all liabilities, costs and expenses incurred by the Trustee in
connection with the Servicer's use or misuse of such powers of attorney.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.
(c) [Reserved]
SECTION 8.03. Trustee Not Liable for Mortgage Loans.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any Mortgage Loan or related
document other than with respect to the Trustee's execution and authentication
of the Certificates. The Trustee shall not be accountable for the use or
application by the Depositor or the Servicer of any funds paid to the Depositor
or the Servicer in respect of the Mortgage Loans or deposited in or withdrawn
from the Collection Account or Certificate Account by the Depositor or the
Servicer.
SECTION 8.04. 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 8.05. Trustee's Fees.
The Trustee shall be entitled to earnings on or investment income with
respect to funds in or credited to the Certificate Account.
SECTION 8.06. Indemnification of Trustee; Expenses.
(a) The Trustee and its respective directors, officers, employees and
agents shall be entitled to indemnification from the Issuing Entity for any
loss, liability or expense incurred in connection with any legal proceeding or
incurred without negligence or willful misconduct on their part, arising out of,
or in connection with, the acceptance or administration of the trusts created
hereunder or in connection with the performance of their duties hereunder,
including any applicable fees and expenses payable hereunder and the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:
(i) with respect to any such claim, the Trustee shall have given the
Depositor and the Holders written notice thereof promptly after the Trustee
shall have knowledge thereof; provided that failure to so notify shall not
relieve the Issuing Entity of the obligation to indemnify the Trustee;
however, any reasonable delay by the Trustee to provide written notice to
the Depositor
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and the Holders promptly after the Trustee shall have obtained knowledge of
a claim shall not relieve the Issuing Entity of the obligation to indemnify
the Trustee under this Section 8.06;
(ii) while maintaining control over its own defense, the Trustee shall
cooperate and consult fully with the Depositor in preparing such defense;
(iii) notwithstanding anything to the contrary in this Section 8.06,
the Issuing Entity shall not be liable for settlement of any such claim by
the Trustee entered into without the prior consent of the Depositor, which
consent shall not be unreasonably withheld; and
(iv) any such loss, liability or expense to be indemnified by the
Issuing Entity must constitute an "unanticipated expense" of the Issuing
Entity within the meaning of Treasury Regulations Section
1.860G-1(b)(3)(ii).
The provisions of this Section 8.06 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.
(b) The Trustee shall be entitled to all reasonable expenses, disbursements
and advancements incurred or made by the Trustee in accordance with this
Agreement (including fees and expenses of its counsel and all persons not
regularly in its employment), except any such expenses, disbursements and
advancements that either (i) arise from its negligence, bad faith or willful
misconduct or (ii) do not constitute "unanticipated expenses" within the meaning
of Treasury Regulations Section 1.860G-1(b)(3)(ii).
(c) The Trustee's right to indemnification and reimbursement shall be
subject to a cap of $300,000, excluding any Servicing Transfer Costs and any
auction expenses incurred by the Trustee in connection with Section 9.01(a)(i),
in the aggregate in any calendar year; provided, however, that such cap shall
apply only if NIM Notes have been issued and are outstanding and shall cease to
apply after the date on which any NIM Notes are paid in full. Any amounts not in
excess of this cap may be withdrawn by the Trustee from the Certificate Account
at any time.
(d) The Trustee shall be further indemnified by the Issuing Entity for and
held harmless against, any loss, liability or expense arising out of, or in
connection with, the provisions set forth in the last paragraph of Section 2.01
hereof, including, without limitation, all costs, liabilities and expenses
(including reasonably legal fees and expenses) of investigating and defending
itself against any claim, action or proceeding, pending or threatened, relating
to the provisions of such paragraph.
SECTION 8.07. 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 that would
not cause any of the Rating Agencies to reduce their respective ratings of any
Class of Certificates below the ratings issued on the Closing Date (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 8.07
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
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this Section 8.07, the Trustee shall resign immediately in the manner and with
the effect specified in Section 8.08 hereof. The corporation or national banking
association serving as Trustee may have normal banking and trust relationships
with the Depositor and its Affiliates; provided, however, that such corporation
cannot be an Affiliate of the Servicer other than the Trustee in its role as
successor to the Servicer.
SECTION 8.08. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by (1) giving written notice of resignation to the Depositor and by
mailing notice of resignation by first class mail, postage prepaid, to the
Certificateholders at their addresses appearing on the Certificate Register and
each Rating Agency, not less than sixty (60) days before the date specified in
such notice when, subject to Section 8.09, such resignation is to take effect,
and (2) acceptance of appointment by a successor trustee in accordance with
Section 8.09 and meeting the qualifications set forth in Section 8.07. If no
successor trustee shall have been so appointed and have accepted appointment
within thirty (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 (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.07 hereof and shall fail to resign after
written request thereto by the Depositor, (ii) 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
(iii)(A) a tax is imposed with respect to the Issuing Entity by any state in
which the Trustee or the Issuing Entity is located, (B) the imposition of such
tax would be avoided by the appointment of a different trustee and (C) the
Trustee fails to indemnify the Issuing Entity against such tax, then the
Depositor may remove the Trustee and shall promptly 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 Servicer
and one copy of which shall be delivered to the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of all Classes of
Certificates upon failure of the Trustee to perform its obligations hereunder
may at any time remove the Trustee and the Depositor shall 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 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 8.08 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.09 hereof.
SECTION 8.09. Successor Trustee.
Any successor trustee appointed as provided in Section 8.08 hereof shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
and the 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.
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No successor trustee shall accept appointment as provided in this Section
8.09 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.07 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 8.09, 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 ten (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 8.10. 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 all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 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 (except for the execution of an assumption agreement where such
succession is not effected by operation of law).
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the 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 8.11, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. Any such
co-trustee or separate trustee shall be subject to the written approval of the
Servicer. The Trustee shall not be liable for the actions of any co-trustee
appointed at the request of the Trustee provided that such co-trustee has been
appointed with due care. If the Servicer shall not have joined in such
appointment within fifteen (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 8.07 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 8.09.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee, except for the obligation of the Trustee under this
Agreement to advance funds on behalf of the Servicer, shall be conferred or
imposed upon and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer hereunder),
the Trustee shall be incompetent
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or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
Fund or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article 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
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 8.12. Tax Matters.
(a) It is intended that each of the REMICs provided for herein shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such REMIC to qualify as, a "real estate mortgage investment conduit"
as defined in and in accordance with the REMIC Provisions. It is also intended
that each of the grantor trusts provided for in Section 2.07 hereof shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such grantor trust to qualify as, a grantor trust under the
provisions of Subpart E, Part I of Subchapter J of the Code. 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 each of the REMICs
provided for herein 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 each of the REMICs and grantor trusts provided for herein, 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 (30) days
of the Closing Date, furnish or cause to be furnished to the Internal Revenue
Service, on Forms 8811 or as otherwise may be required by the Code, the name,
title, address, and telephone number of the person that the holders of the
Certificates may contact for tax information relating thereto, together with
such additional information as may be required by such Form, and update such
information at the time or times in the manner required by the Code for each of
the REMICs provided for herein; (c) make or cause to be made
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elections, on behalf of each of the REMICs provided for herein to be treated as
a REMIC on the federal tax return of such REMICs for their first taxable years
(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 provided to them in
accordance with the REMIC Provisions or other applicable tax law, 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 Class R Certificate to a Person that is not a
Permitted Transferee, or an agent (including a broker, nominee or other
middleman) of a Person that is not a Permitted Transferee, or a pass-through
entity in which a Person that is not a Permitted Transferee is the record holder
of an interest (the reasonable cost of computing and furnishing such information
may be charged to the Person liable for such tax); (f) to the extent that they
are under its control conduct the affairs of each of the REMICs and grantor
trusts provided for herein at all times that any Certificates are outstanding so
as to maintain the status of each of the REMICs provided for herein as a REMIC
under the REMIC Provisions and the status of each of the grantor trusts provided
for herein as a grantor trust under Subpart E, Part I of Subchapter J of the
Code; (g) not knowingly or intentionally take any action or omit to take any
action that would cause the termination of the REMIC status of any of the REMICs
provided for herein or result in the imposition of tax upon any such REMIC; (h)
not knowingly or intentionally take any action or omit to take any action that
would cause the termination of the grantor trust status under Subpart E, Part I
of Subchapter J of the Code of any of the grantor trusts provided for herein or
result in the imposition of tax upon any such grantor trust; (i) pay, from the
sources specified in the last paragraph of this Section 8.12(a), the amount of
any federal, state and local taxes, including prohibited transaction taxes as
described below, imposed on each of the REMICs provided for herein prior to the
termination of the Trust Fund when and as the same shall be due and payable (but
such obligation shall not prevent the Trustee 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); (j) sign or cause to be signed federal, state
or local income tax or information returns; (k) maintain records relating to
each of the REMICs and grantor trusts provided for herein, including but not
limited to the income, expenses, assets and liabilities of each of the REMICs
and grantor trusts provided for herein, and the fair market value and adjusted
basis of the Trust Fund property determined at such intervals as may be required
by the Code, as may be necessary to prepare the foregoing returns, schedules,
statements or information; and (l) as and when necessary and appropriate,
represent each of the REMICs and grantor trusts provided for herein 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 of the REMICs provided for herein, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of any of the REMICs provided for herein,
and otherwise act on behalf of each of the REMICs provided for herein in
relation to any tax matter involving any of such REMICs or any controversy
involving the Trust Fund.
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, request in order to
enable the Trustee to perform its duties as set forth herein. The Depositor
hereby agrees to indemnify 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.
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In the event that any tax is imposed on "prohibited transactions" of any of
the REMICs provided for herein as defined in Section 860F(a)(2) of the Code, on
the "net income from foreclosure property" of any of such REMICs as defined in
Section 860G(c) of the Code, on any contribution to the Trust Fund 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 arises out of or results from a breach by
the Trustee of any of its obligations under this Agreement or as a result of the
location of the Trustee, (ii) any party hereto (other than the Trustee) to the
extent any such other tax arises out of or results from a breach by such other
party of any of its obligations under this Agreement or as a result of the
location of such other party or (iii) in all other cases, or in the event that
any liable party here fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid first with amounts (other than amounts
derived by the Issuing Entity from a payment on any Cap Contract or amounts
received by the Supplemental Interest Trust as payments on the Swap Agreement)
otherwise to be distributed to the Class R Certificateholders (pro rata)
pursuant to Section 4.04, and second with amounts (other than amounts derived by
the Issuing Entity from a payment on any Cap Contract or amounts received by the
Supplemental Interest Trust as payments on the Swap Agreement) otherwise to be
distributed to all other Certificateholders in the following order of priority:
first, to the Class C Certificates (pro rata), second, to the Class B-3
Certificates (pro rata), third, to the Class B-2 Certificates (pro rata),
fourth, to the Class B-1 Certificates (pro rata), fifth, to the Class M-6
Certificates (pro rata), sixth, to the Class M-5 Certificates (pro rata),
seventh, to the Class M-4 Certificates (pro rata), eighth, to the Class M-3
Certificates (pro rata), ninth, to the Class M-2 Certificates (pro rata), tenth,
to the Class M-1 Certificates (pro rata) and eleventh, to the Class A
Certificates (pro rata). Notwithstanding anything to the contrary contained
herein, to the extent that such tax is payable by the Class R Certificate, the
Trustee is hereby authorized pursuant to such instruction to retain on any
Distribution Date, from the Holders of the Class R Certificate (and, if
necessary, from the Holders of all other Certificates in the priority specified
in the preceding sentence), funds otherwise distributable to such Holders in an
amount sufficient to pay such tax. The Trustee agrees to promptly notify in
writing the party liable for any such tax of the amount thereof and the due date
for the payment thereof.
(b) Each of the Depositor, the Servicer and the Trustee agrees not to
knowingly or intentionally take any action or omit to take any action that would
cause the termination of the REMIC status of any of the REMICs provided for
herein or result in the imposition of a tax upon any of the REMICs provided for
herein.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage
Loans.
(a) Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earliest of (i) the successful completion of the
auction referred to in Section 9.01(b), (ii) the exercise by the Servicer of the
Clean Up Call on any Distribution Date on or after the Clean Up Call Date and
(iii) the later of (x) 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 (y) the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the last survivor of
the descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the United States
to the Court of St. James's, living on the date hereof and (ii) the Latest
Possible Maturity Date.
(b) (i) Any termination pursuant to Section 9.01(a)(i) shall be effected
by the auction by the Trustee of all of the Mortgage Loans and REO Properties
via a solicitation of bids in accordance with the
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auction procedures set forth in Exhibit N. The Trustee shall accept the highest
such bid, provided that such bid equals or exceeds the amount described in the
definition of "Auction Termination Price." Any sale pursuant to such auction
process must occur no earlier than the second day of the calendar month that
includes the Distribution Date on which the proceeds of such sale will be
distributed to the Certificateholders.
(ii) If no sale under Section 9.01(a)(i) occurs, the Servicer may, at
its option, terminate the Trust Fund on any Distribution Date by purchasing all
of the Mortgage Loans and REO Properties at the price equal to the Clean Up Call
Price.
Notwithstanding anything to the contrary herein, the Auction Termination
Amount received by the Trustee upon the completion of a successful auction or
the Clean Up Call Price paid by the Servicer shall be deposited by the Trustee
directly into the Certificate Account promptly upon receipt of such amount by
the Trustee. Any Clean Up Call Price to be paid by the Servicer shall be paid by
the Servicer to the Trustee for deposit into the Certificate Account.
Notwithstanding anything herein to the contrary, only an amount equal to the
Auction Termination Price or the Clean Up Call Price, reduced in each case by
the portion thereof consisting of any Swap Termination Payment (such portion,
the "Swap Optional Termination Payment"), shall be made available for
distribution to the Certificates. The Swap Optional Termination Payment shall be
withdrawn by the Trustee from the Certificate Account and remitted to the
Supplemental Interest Trust for payment to the Swap Counterparty. The Swap
Optional Termination Payment shall not be part of any REMIC and shall not be
paid into any account which is part of any REMIC.
(c) If the Trustee receives a bid meeting the conditions specified in
Section 9.01(b)(i) or there is a Clean Up Call pursuant to Section 9.01(b)(ii),
then the Trustee's written acceptance of such bid shall constitute a plan of
complete liquidation within the meaning of Section 860F of the Code, and the
Trustee shall release to the winning bidder of the auction or the Servicer
pursuant to the Clean Up Call, upon the Trustee's receipt of the Auction
Termination Price or the Clean Up Call Price and the distribution by the Trustee
of such amounts in accordance with Section 4.04 hereof, the Mortgage Files
pertaining to the Mortgage Loans being purchased and take such other actions as
the winning bidder or such purchaser may reasonably request to effect the
transfer of the Mortgage Loans to the winning bidder or such purchaser.
In connection with any such purchase pursuant to the preceding paragraph,
the Servicer shall remit to the Trustee for deposit in the Certificate Account
all amounts then on deposit in the Collection Account (less amounts permitted to
be withdrawn by the Servicer pursuant to Section 3.08), which deposit shall be
deemed to have occurred immediately preceding such purchase.
Any purchase shall be accomplished by deposit into the Certificate Account
of the Auction Termination Amount paid by the winning bidder if an Auction
Termination has occurred or the Clean Up Call Price in the event the Servicer
exercises a Clean Up Call and only following the delivery of an Opinion of
Counsel in form and substance acceptable to the Trustee that such termination is
a "Qualified Liquidation" under Section 860F of the Code.
(d) The right of the Depositor to direct the Trustee to effect an Auction
Termination or of the Servicer to effect a Clean Up Call pursuant to clause
(a)(i) or (a)(ii) above shall be conditioned upon the aggregate Stated Principal
Balance of the Mortgage Loans, at the time of any such repurchase, aggregating
ten percent (10%) or less of the Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.
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(e) In the event that the Trustee is unable to complete a sale at the
Auction Termination, the Servicer may terminate the Trust Fund by purchasing all
the Mortgage Loans, and REO Properties at a price equal to the Clean Up Call
Price on any Distribution Date on or after the Clean Up Call Date, by exercising
a Clean Up Call.
(f) Notwithstanding anything to the contrary in this Article IX, no Auction
Termination or Clean Up Call shall be effected at any time during which NIM
Notes are outstanding if the Class C Certificateholder notifies the Trustee in
writing that the Class C Certificateholder does not consent to such proposed
Auction Termination or Clean Up Call. The parties hereto intend that the portion
of any amount received upon an Auction Termination or Clean Up Call that is
attributable to clause (D) of the definition of Auction Termination Price or
clause (d) of the definition of Clean Up Call Price and required to cover what
would otherwise be a shortfall in the amounts described in clause (D) of the
definition of Auction Termination Price or clause (d) of the definition of Clean
Up Call Price shall be treated for federal income tax purposes as having been
paid by the winning bidder of the auction or the Servicer, as applicable,
directly to the Class C Certificateholder (rather than having been paid to any
REMIC) to induce the Class C Certificateholder to consent to the Auction
Termination or Clean Up Call, as applicable.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, (i) the Trustee determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Account, the Trustee shall send a final
distribution notice promptly to each Certificateholder or (ii) the Trustee
determines that a Class of Certificates shall be retired after a final
distribution on such Class, the Trustee shall notify the Certificateholders
within seven (7) Business Days after such Determination Date that the final
distribution in retirement of such Class of Certificates is scheduled to be made
on the immediately following Distribution Date. Any final distribution made
pursuant to the immediately preceding sentence will be made only upon
presentation and surrender of the Certificates at the office of the Trustee
specified in such notice. If the Trustee is able to terminate the Trust Fund
pursuant to Section 9.01(a)(i), or if the Servicer conducts a Clean Up Call and
terminates the Trust Fund pursuant to Section 9.01(a)(ii) or 9.01(e), at least
ten (10) days prior to the date notice is to be mailed to the affected
Certificateholders, the Trustee shall notify the Depositor and the Servicer of
the date such electing party 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 immediately preceding the month of such
final distribution. Any such notice shall specify (a) the Distribution Date upon
which final distribution on the Certificates will be made upon presentation and
surrender of Certificates at the office therein designated, (b) the location of
the office or agency at which such presentation and surrender must be made, and
(c) 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 Trustee 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 Servicer shall cause all funds in
the Collection Account to be deposited in the Certificate 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 Trustee the Mortgage
Files for the Mortgage Loans.
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Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the 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 that remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholder
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto. Upon payment to the Class R Certificateholder of such
funds and assets, the Trustee shall have no further duties or obligations with
respect thereto.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Trustee is able to effect an Auction Termination or
the Servicer conducts a Clean Up Call as provided in Section 9.01, the Trust
Fund shall be terminated in accordance with the following additional
requirements, unless the Trustee has been supplied with an Opinion of Counsel
addressed to the Trustee, at the expense of the Servicer to the effect that the
failure of the Issuing Entity to comply with the requirements of this Section
9.03 will not (i) result in the imposition of taxes on "prohibited transactions"
of any of the REMICs provided for herein as defined in section 860F of the Code,
or (ii) cause any of the REMICs provided for herein to fail to qualify as a
REMIC at any time that any Certificates are outstanding:
(i) The Depositor shall establish a 90-day liquidation period and
notify the Trustee thereof, which shall in turn specify the first day of
such period in a statement attached to the final tax returns of each of the
REMICs provided for herein pursuant to Treasury Regulation Section
1.860F-1. The Depositor shall satisfy all the requirements of a qualified
liquidation under Section 860F of the Code and any regulations thereunder,
as evidenced by an Opinion of Counsel obtained at the expense of the
Issuing Entity;
(ii) During such 90-day liquidation period, and at or prior to the
time of making the final payment on the Certificates, the Depositor as
agent of the Trustee shall sell all of the assets of the Trust Fund for
cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Class R Certificateholder all cash on hand
(other than cash retained to meet outstanding claims known to the Trustee),
and the Trust Fund shall terminate at that time, whereupon the Trustee
shall have no further duties or obligations with respect to sums
distributed or credited to the Class R Certificateholder.
(b) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Depositor to specify the 90-day liquidation period for the Trust
Fund, which authorization shall be binding upon all successor
Certificateholders.
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(c) The Trustee as agent for each REMIC hereby agrees to adopt and sign a
plan of complete liquidation prepared and delivered to it by the Depositor upon
the written request of the Depositor, and the receipt of Opinion of Counsel
referred to in Section 9.03(a)(i) and to take such other action in connection
therewith as may be reasonably requested by the Depositor.
(d) Notwithstanding any other terms of this Agreement, prior to termination
of the Trust Fund, the Servicer may prepare a reconciliation of all Advances and
Servicing Advances made by it for which it has not been reimbursed and a
reasonable estimate of all additional Servicing Advances and other costs for
which it would be entitled to be reimbursed if the Trust Fund were not being
terminated, including without limitation, any Servicing Advances and other costs
arising under Section 6.03, and the Servicer may recover these Advances,
Servicing Advances and estimated Servicing Advances and other costs from the
Collection Account (to the extent that such recovery of Servicing Advances,
estimated Servicing Advances and other costs constitutes "unanticipated
expenses" within the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)).
(e) Notwithstanding any other terms of this Agreement, unless the Servicer
previously has notified the Trustee that it has entered into a servicing
agreement for the servicing after the termination date of the Trust Fund assets,
at least twenty (20) days prior to any termination of the Trust Fund, the
Depositor shall notify the Servicer in writing to transfer the assets of the
Trust Fund as of the termination date to the person specified in the notice, or
if such person is not then known, to continue servicing the assets until the
date that is twenty (20) days after the termination date and on the termination
date, the Depositor shall notify the Servicer of the person to whom the assets
should be transferred on that date. In the latter event the Servicer shall be
entitled to recover its servicing fee and any advances made for the interim
servicing period from the collections on the assets which have been purchased
from the Trust and the new owner of the assets, and the agreements for the new
owner to obtain ownership of the assets of the Trust Fund shall so provide.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
(i) To cure any ambiguity or correct any mistake,
(ii) To correct, modify or supplement any provision therein which may
be inconsistent with any other provision herein,
(iii) To add any other provisions with respect to matters or questions
arising under this Agreement, or
(iv) To modify, alter, amend, add to or rescind any of the terms or
provisions contained in this Agreement, provided, however, that, in the
case of clauses (iii) and (iv), such amendment will not, as evidenced by an
Opinion of Counsel addressed to the Trustee to such effect, adversely
affect in any material respect the interests of any Holder; provided,
further, however, that such amendment will be deemed to not adversely
affect in any material respect the interest of any Holder if the Person
requesting such amendment obtains a letter from each Rating Agency stating
that such amendment will not result in a reduction or withdrawal of its
rating of any Class of the Certificates, it being understood and agreed
that any such letter in and of itself
141
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. In addition, this Agreement may be amended from
time to time by the Depositor, the Servicer and the Trustee without the
consent of any of the Certificateholders and without delivery of an Opinion
of Counsel to comply with the provisions of Regulation AB.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Servicer and the Trustee may at any time
and from time to time amend this Agreement to modify, eliminate or add to any of
its provisions to such extent as shall be necessary or appropriate to maintain
the qualification of any of the REMICs provided for herein as REMICs under the
Code or to avoid or minimize the risk of the imposition of any tax on the Trust
Fund or any of the REMICs provided for herein pursuant to the Code that would be
a claim against the Trust Fund at any time prior to the final redemption of the
Certificates, provided that the Trustee has been provided an Opinion of Counsel
addressed to the Trustee, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the Trustee
or the Trust Fund, to the effect that such action is necessary or appropriate to
maintain such qualification or to avoid or minimize the risk of the imposition
of such a tax.
This Agreement may also be amended from time to time by the Depositor, the
Servicer, the Trustee and the Holders of the Certificates affected thereby
evidencing not less than 66 2/3% of the Voting Rights, 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 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 66
2/3% or more of the Voting Rights of such Class 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 addressed to the Trustee, which opinion shall be
an expense of the party requesting such amendment but in any case shall not be
an expense of the Trustee or the Trust Fund, to the effect that such amendment
is permitted hereunder and will not cause the imposition of any tax on the Trust
Fund, any of the REMICs provided for herein or the Certificateholders or cause
any of the REMICs provided for herein 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 or upon the written request of
the Trustee to the Servicer, the Servicer shall furnish written notification of
the substance of such amendment to each Certificateholder and each Rating
Agency.
It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer that (i) such
142
amendment is permitted and is not prohibited by this Agreement and that all
conditions precedent 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, the Cap Contract Counterparty or the
Swap Counterparty or (B) the conclusion set forth in the immediately preceding
clause (A) is not required to be reached pursuant to this Section 10.01.
The Trustee may, but shall not be obligated to, enter into any supplement,
modification or waiver which affects its rights, duties or obligations
hereunder.
The Trustee shall not enter into any amendment to this Agreement that would
have a materially adverse effect on the Swap Counterparty or the Cap Contract
Counterparty without first obtaining the consent of the Swap Counterparty or the
Cap Contract Counterparty, respectively.
SECTION 10.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
SECTION 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Depositor to
the Trustee be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance 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
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. 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.
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SECTION 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency with respect to each of the following of which a Responsible
Officer of the Trustee has written notice or actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
(iii) The resignation or termination of the Trustee or the Servicer
and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02 and 2.03;
(v) The final payment to Certificateholders; and
(vi) Any change in the location of the Certificate Account or the
Collection Account.
The Trustee shall promptly furnish or make available to each Rating Agency
copies of the following upon its receipt thereof:
(vii) Each report to Certificateholders described in Section 4.05;
(viii) Each annual statement as to compliance described in Section
3.17; and
(ix) Each annual independent public accountants' servicing report
described in Section 3.18.
(b) All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Depositor, Xxxxxxx Xxxxx Mortgage Investors, Inc., 000 Xxxxx Xxxxxx, 4 World
Financial Center, 10th Floor, New York, New York 10080, Attention: Asset-Backed
Finance; (b) in the case of the Trustee, U.S. Bank National Association, 00
Xxxxxxxxxx Xxxxxx, Mail Code EP-MN-WS3D, St. Xxxx, Minnesota 55107-2292,
Attention: Structured Finance/SURF Series 2006-BC5; (c) in the case of the
Rating Agencies, (i) Fitch, Inc. Xxx Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Surveillance Group, (ii) Standard and Poor's Ratings
Services, a division of the McGraw Hill Companies, Inc., 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, (iii) Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000; (d) in the case of the Servicer, Wilshire Credit
Corporation, 00000 X.X. Xxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxx, Xxxxxx 00000,
Attention: VP Client Services, and in the case of any of the foregoing persons,
such other addresses as may hereafter be furnished by any such persons to the
other parties to this Agreement. Notices to Certificateholders shall be deemed
given when mailed, first class postage prepaid, to their respective addresses
appearing in the Certificate Register.
SECTION 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
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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 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor.
SECTION 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, the Holders
of Certificates evidencing not less than 25% of the Voting Rights evidenced by
the Certificates shall also have made written request to the Trustee 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 sixty (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 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 10.09. Inspection and Audit Rights.
The Servicer agrees that, on reasonable prior notice, it will permit any
representative of the Depositor, subject to a reasonable confidentiality
agreement, or the Trustee during the Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
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,
agents, counsel and independent public accountants (and by this provision the
Servicer hereby authorizes such
145
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 10.09 shall be borne by the party
requesting such inspection; all other such expenses shall be borne by the
Servicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Issuing Entity, that the interests in
the Issuing Entity 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 10.11. [RESERVED]
SECTION 10.12. [RESERVED]
SECTION 10.13. Third Party Rights.
The Cap Contract Counterparty shall be deemed a third party beneficiary of
this Agreement regarding provisions related to payments owed to the Cap Contract
Counterparty so long as any of the Cap Contracts remains in effect. The Swap
Counterparty is an express third party beneficiary of this Agreement and shall
have the right to enforce the provisions of this Agreement so long as the Swap
Agreement remains in effect.
SECTION 10.14. Assignment; Sales; Advance Facilities.
(a) The Servicer is hereby authorized to enter into a financing or other
facility (any such arrangement, an "Advance Facility"), the documentation for
which complies with Section 10.14(e) below, under which (1) the Servicer assigns
or pledges its rights under this Agreement to be reimbursed for any or all
Advances and/or Servicing Advances to (i) a Person, which may be a
special-purpose bankruptcy-remote entity (an "SPV"), (ii) a Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (i) or (ii), may directly or through other
assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all the Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party shall be required before the
Servicer may enter into an Advance Facility nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to and as required
by this Agreement and (ii) shall not be relieved of such obligations by virtue
of such Advance Facility and (B) neither the Advance Financing Person nor any
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any Mortgagor for the purpose of collecting any
payment that may be due with respect to any related Mortgage Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan documents.
(b) If the Servicer enters into an Advance Facility, the Servicer and the
related Advance Financing Person shall deliver to the Trustee at the address set
forth in Section 10.05 hereof a written notice (an "Advance Facility Notice"),
stating (a) the identity of the Advance Financing Person and (b)
146
the identity of the Person (the "Servicer's Assignee") that will, subject to
Section 10.14(c) hereof, have the right to make withdrawals from the Collection
Account pursuant to Section 3.08(a) hereof to reimburse previously unreimbursed
Advances and/or Servicing Advances ("Advance Reimbursement Amounts"). Advance
Reimbursement Amounts (i) shall consist solely of amounts in respect of Advances
and/or Servicing Advances for which the Servicer would be permitted to reimburse
itself in accordance with Section 3.08 hereof, assuming the Servicer had made
the related Advance(s) and/or Servicing Advance(s) and (ii) shall not consist of
amounts payable to a successor servicer in accordance with Section 3.05 hereof
to the extent permitted under Section 10.14(e) below.
(c) Notwithstanding the existence of an Advance Facility, the Servicer, on
behalf of the Advance Financing Person and the Servicer's Assignee, shall be
entitled to receive reimbursements of Advances and/or Servicing Advances in
accordance with Section 4.01 hereof, which entitlement may be terminated by the
Advance Financing Person pursuant to a written notice to the Trustee in the
manner set forth in Section 10.05 hereof. Upon receipt of such written notice,
the Servicer shall no longer be entitled to receive reimbursement for any
Advance Reimbursement Amounts and the Servicer's Assignee shall immediately have
the right to receive from the Collection Account all Advance Reimbursement
Amounts. Notwithstanding the foregoing, and for the avoidance of doubt, (i) the
Servicer and/or the Servicer's Assignee shall only be entitled to reimbursement
of Advance Reimbursement Amounts hereunder from withdrawals from the Collection
Account pursuant to Section 4.01 of this Agreement and shall not otherwise be
entitled to make withdrawals or receive amounts that shall be deposited in the
Distribution Account pursuant to Section 4.01 hereof, and (ii) none of the
Trustee or the Certificateholders shall have any right to, or otherwise be
entitled to, receive any Advance Reimbursement Amounts to which the Servicer or
Servicer's Assignee, as applicable, shall be entitled pursuant to Section 4.01
hereof. An Advance Facility may be terminated by the joint written direction of
the Servicer and the related Advance Financing Person. Written notice of such
termination shall be delivered to the Trustee in the manner set forth in Section
10.05 hereof. None of the Depositor or the Trustee shall, as a result of the
existence of any Advance Facility, have any additional duty or liability with
respect to the calculation or payment of any Advance Reimbursement Amount, nor,
as a result of the existence of any Advance Facility, shall the Depositor or the
Trustee have any additional responsibility to track or monitor the
administration of the Advance Facility or the payment of Advance Reimbursement
Amounts to the Servicer's Assignee. The Servicer shall indemnify the Depositor,
the Trustee, any successor servicer and the Issuing Entity for any claim, loss,
liability or damage resulting from any claim by the related Advance Financing
Person, except to the extent that such claim, loss, liability or damage resulted
from or arose out of negligence, recklessness or willful misconduct on the part
of the Depositor, the Trustee or any successor servicer, as the case may be, or
failure by the successor servicer or the Trustee, as the case may be, to remit
funds as required by this Agreement or the commission of an act or omission to
act by the successor servicer or the Trustee, as the case may be, and the
passage of any applicable cure or grace period, such that an Event of Default
under this Agreement occurs or such entity is subject to termination for cause
under this Agreement. The Servicer shall maintain and provide to any successor
servicer and, upon request, the Trustee a detailed accounting on a loan-by-loan
basis as to amounts advanced by, pledged or assigned to, and reimbursed to any
Advance Financing Person. The successor servicer shall be entitled to rely on
any such information provided by the predecessor Servicer, and the successor
servicer shall not be liable for any errors in such information.
(d) [Reserved]
(e) As between a predecessor Servicer and its Advance Financing Person, on
the one hand, and a successor servicer and its Advance Financing Person, if any,
on the other hand, Advance Reimbursement Amounts on a loan-by-loan basis with
respect to each Mortgage Loan as to which an Advance and/or Servicing Advance
shall have been made and be outstanding shall be allocated on a "first-in, first
out" basis. In the event the Servicer's Assignee shall have received some or all
of an
147
Advance Reimbursement Amount related to Advances and/or Servicing Advances that
were made by a Person other than such predecessor Servicer or its related
Advance Financing Person in error, then such Servicer's Assignee shall be
required to remit any portion of such Advance Reimbursement Amount to each
Person entitled to such portion of such Advance Reimbursement Amount. Without
limiting the generality of the foregoing, the Servicer shall remain entitled to
be reimbursed by the Advance Financing Person for all Advances and/or Servicing
Advances funded by the Servicer to the extent the related Advance Reimbursement
Amounts have not been assigned or pledged to such Advance Financing Person or
Servicer's Assignee.
(f) For purposes of any Officer's Certificate of the Servicer made pursuant
to Section 4.01, any Non-Recoverable Advance or Non-Recoverable Servicing
Advance referred to therein may have been made by such Servicer or any
predecessor Servicer. In making its determination that any Advance or Servicing
Advance theretofore made has become a Non-Recoverable Advance or Non-Recoverable
Servicing Advance, the Servicer shall apply the same criteria in making such
determination regardless of whether such Advance or Servicing Advance shall have
been made by the Servicer or any predecessor Servicer.
(g) Any amendment to this Section 10.14 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 10.14, including amendments to
add provisions relating to a successor servicer, may be entered into by the
Trustee, the Depositor and the Servicer without the consent of any
Certificateholder, provided such amendment complies with Section 10.01 hereof.
All reasonable costs and expenses (including attorneys' fees) of each party
hereto of any such amendment shall be borne solely by the Servicer. The parties
hereto hereby acknowledge and agree that: (a) the Advances and/or Servicing
Advances financed by and/or pledged to an Advance Financing Person under any
Advance Facility are obligations owed to the Servicer payable only from the cash
flows and proceeds received under this Agreement for reimbursement of Advances
and/or Servicing Advances only to the extent provided herein, and the Trustee
and the Trust are not, as a result of the existence of any Advance Facility,
obligated or liable to repay any Advances and/or Servicing Advances financed by
the Advance Financing Person; (b) the Servicer will be responsible for remitting
to the Advance Financing Person the applicable amounts collected by it as
reimbursement for Advances and/or Servicing Advances funded by the Advance
Financing Person, subject to the provisions of this Agreement; and (c) the
Trustee shall not have any responsibility to track or monitor the administration
of the financing arrangement between the Servicer and any Advance Financing
Person.
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IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.,
as Depositor
By:
------------------------------------
Name: Xxxx Park
Title: Authorized Signatory
WILSHIRE CREDIT CORPORATION,
as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
149
EXHIBIT A
FORMS OF OFFERED CERTIFICATES
A-1
FORM OF THE CLASS A-[_] CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS (I) A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED AND (II) AN INTEREST IN NOTIONAL PRINCIPAL
CONTRACTS.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN XXXXXXX
XXXXX MORTGAGE INVESTORS, INC. ("MLMI"), THE TRUSTEE, OR ANY SERVICER REFERRED
TO BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR
INTEREST REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR
INSURED BY MLMI, THE TRUSTEE, ANY SERVICER OR BY ANY OF THEIR AFFILIATES OR BY
ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
UNTIL THE TERMINATION OF THE SWAP AGREEMENT, EACH TRANSFEREE OF THIS CERTIFICATE
SHALL BE DEEMED TO REPRESENT (OR IN THE CASE OF A DEFINITIVE CERTIFICATE, SHALL
REPRESENT) TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT, AND IS NOT ACTING
FOR, ON BEHALF OF OR WITH ANY ASSETS OF, ANY EMPLOYEE BENEFIT PLAN OR OTHER
ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR ANY PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR (B) THE TRANSFEREE'S
ACQUISITION AND HOLDING OF THIS CERTIFICATE IS COVERED BY AND EXEMPT UNDER ANY
OF SECTION 408(B)(17) OF ERISA OR SECTION 4975(D)(20) OF THE CODE, PROHIBITED
TRANSACTION CLASS EXEMPTION ("PTCE") 00-00, XXXX 00-0, XXXX 91-38, PTCE 95-60,
OR PTCE 96-23, EACH AS AMENDED.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE TRUSTEE.
CLASS A-[_] CERTIFICATE
Number: [________________] Original Denomination: [________________]
Cut-off Date: November 1, 2006 Last Scheduled Distribution Date:
November 25, 2037
First Distribution Date: Aggregate Initial Certificate Balance of all
December 26, 2006 Class A-1 Certificates: [__________]
Pass-Through Rate: Variable(1) CUSIP: [__________]
----------
(1) Subject to a cap as described in the Agreement.
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-BC5
evidencing an ownership interest in distributions allocable to the Class A-[_]
Certificates with respect to a pool of conventional, sub-prime mortgage loans
formed and sold by
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to the Trustee for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co. has an interest
herein.
This certifies that CEDE & CO. is the registered owner of the ownership
interest (the "Ownership Interest") evidenced by this Certificate (obtained by
dividing the Original Denomination of this Certificate by the aggregate Initial
Certificate Balance of all Class A Certificates) in certain distributions with
respect to a pool of conventional, sub-prime mortgage loans (the "Mortgage
Loans") formed and sold by Xxxxxxx Xxxxx Mortgage Investors, Inc. (hereinafter
called the "Depositor"), and certain other property held in trust for the
benefit of Certificateholders (collectively, the "Trust Fund"). The Mortgage
Loans are serviced by Wilshire Credit Corporation (the "Servicer") and are
secured by first or second mortgages on Mortgaged Properties. The Trust Fund was
created pursuant to a pooling and servicing agreement (the "Agreement"), dated
as of November 1, 2006, between the Depositor, the Servicer and U.S. Bank
National Association, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Specialty Underwriting and Residential Finance Trust, Mortgage
Loan Asset-Backed Certificates, Series 2006-BC5, Class A-[_] (the "Class A-[_]
Certificates") and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which Agreement such Holder is
bound.
The Class A-1 Certificates, the Class A-2A Certificates, the Class A-2B
Certificates, the Class A-2C Certificates, the Class A-2D Certificates, the
Class A-2E Certificates, the Class M-1 Certificates, the Class M-2 Certificates,
the Class M-3 Certificates, the Class M-4 Certificates, the Class M-5
Certificates, the Class M-6 Certificates, the Class B-1 Certificates, the Class
B-2
Certificates, the Class B-3 Certificates, the P Certificates, the C
Certificates, and the Class R Certificate are collectively referred to herein as
the "Certificates."
Pursuant to the terms of the Agreement, the Trustee will distribute from
funds in the Certificate Account the amounts described in the Agreement on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing in December
2006. Such distributions will be made to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month preceding the month in which such payment is made, if such last day is
not a Business Day, the Business Day immediately preceding such last day.
Distributions on this Certificate will be made either by check mailed to
the address of the person entitled to distributions as it appears on the
Certificate Register or, in the case of any Certificateholder that has so
notified the Trustee in writing in accordance with the Agreement, by wire
transfer in immediately available funds to the account of such Certificateholder
at a bank or other depository institution having appropriate wire transfer
facilities; provided, however, that the final distribution in retirement of the
certificates will be made only upon presentation and surrender of this
Certificate at the office of the Trustee or such other address designated in
writing by the Trustee. On each Distribution Date, a Holder of this Certificate
will receive such Holder's Percentage Interest of the amounts required to be
distributed with respect to the applicable Class of Certificates.
The Trustee will maintain or cause to be maintained a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the
Trustee will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Trustee, or, if an Authenticating
Agent has been appointed under the Agreement, the Authenticating Agent,
maintained for such purpose, the Trustee, will, subject to the limitations set
forth in the Agreement, authenticate and deliver, in the name of the designated
transferee or transferees, a Certificate of a like class and dated the date of
authentication by the Authenticating Agent. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee,
of the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee, for that
purpose and specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: November 28, 2006 U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates
referred to in the within-mentioned
Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Authenticating Agent
By:
---------------------------------
Authorized Signatory
REVERSE OF CERTIFICATE
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-BC5
This Certificate is one of a duly authorized issue of Certificates,
designated as Specialty Underwriting and Residential Finance Trust Mortgage Loan
Asset-Backed Certificates, Series 2006-BC5, issued in one or more Classes of
Class X-0, Xxxxx X-0X, Xxxxx X-0X, Class A-2C, Class A-2D, Class A-2E, Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class B-1, Class
B-2, Class B-3, the P Certificates, the C Certificates, and Class R Certificate,
each evidencing an interest in certain distributions with respect to a pool of
conventional, sub-prime Mortgage Loans formed and sold by the Depositor and
certain other property conveyed by the Depositor to the Trustee.
Following the initial issuance of the Certificates, the principal balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current principal
balance by inquiry of the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that the Trustee is not liable to the Holders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Trustee may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor and the Trustee may
treat the person in whose name any Certificate is registered as the owner of
such Certificate and the Percentage Interest in the Trust Fund evidenced thereby
for the purpose of receiving distributions pursuant to the Agreement and for all
other purposes whatsoever, and neither the Depositor nor the Trustee will be
affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC included in the Trust Fund as a REMIC, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such
action does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66 2/3% of the Percentage Interests 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
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in a
manner other than as described in clause (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of the Voting Rights of
such Class or (iii) change the percentage specified in clause (ii) of the third
paragraph of Section 10.01 of the Agreement, without the consent of the Holders
of all Certificates of such Class then outstanding.
For federal income tax purposes, the Trust Fund will include multiple "real
estate mortgage investment conduits" (each, a "REMIC") in a tiered REMIC
structure. The REMIC Regular Interests will represent "regular interests" in one
of the REMICs included in the Trust Fund. The Class R Certificate will represent
the sole class of "residual interest" in each of the REMICs.
The obligations and responsibilities of the Depositor, the Servicer and the
Trustee under the Agreement shall terminate upon the earlier of (a) the exercise
by the Trustee of an Optional Termination; and (b) the later of (i) the maturity
or other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event shall
the trusts created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof and (ii) the Latest Possible Maturity Date.
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
________________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
____________________________________________________________________ Attorney to
transfer the within Certificate on the books kept for the registration thereof,
with full power of substitution in the premises.
Dated:
----------------------
------------------------------------ ----------------------------------------
(Signature guaranty) NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that
the assignee will not be subject to backup withholding under Section 3406 of the
Code.)
FORM OF THE CLASS M-[_] CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS (I) A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED AND (II) AN INTEREST IN NOTIONAL PRINCIPAL
CONTRACTS.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN XXXXXXX
XXXXX MORTGAGE INVESTORS, INC. ("MLMI"), THE TRUSTEE, OR ANY SERVICER REFERRED
TO BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR
INTEREST REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR
INSURED BY MLMI, THE TRUSTEE, ANY SERVICER OR BY ANY OF THEIR AFFILIATES OR BY
ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
UNTIL THE TERMINATION OF THE SWAP AGREEMENT, EACH TRANSFEREE OF THIS CERTIFICATE
SHALL BE DEEMED TO REPRESENT (OR IN THE CASE OF A DEFINITIVE CERTIFICATE, SHALL
REPRESENT) TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT, AND IS NOT ACTING
FOR, ON BEHALF OF OR WITH ANY ASSETS OF, ANY EMPLOYEE BENEFIT PLAN OR OTHER
ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR ANY PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR (B) THE TRANSFEREE'S
ACQUISITION AND HOLDING OF THIS CERTIFICATE IS COVERED BY AND EXEMPT UNDER ANY
OF SECTION 408(B)(17) OF ERISA OR SECTION 4975(D)(20) OF THE CODE, PROHIBITED
TRANSACTION CLASS EXEMPTION ("PTCE") 00-00, XXXX 00-0, XXXX 91-38, PTCE 95-60,
OR PTCE 96-23, EACH AS AMENDED.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE TRUSTEE.
CLASS M-[_] CERTIFICATE
Number: [____________] Original Denomination: [____________]
Cut-off Date: November 1, 2006 Last Scheduled
Distribution Date: November 25, 2037
First Distribution Date: Aggregate Initial Certificate
December 26, 2006 Balance of all Class M-[_]
Certificates: [____________]
Pass-Through Rate: Variable(2) CUSIP: [____________]
----------
(2) Subject to a cap as described in the Agreement.
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-BC5
evidencing an ownership interest in distributions allocable to the Class M-[_]
Certificates with respect to a pool of conventional, sub-prime mortgage loans
formed and sold by
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to the Trustee for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co. has an interest
herein.
This certifies that CEDE & CO. is the registered owner of the ownership
interest (the "Ownership Interest") evidenced by this Certificate (obtained by
dividing the Original Denomination of this Certificate by the aggregate Initial
Certificate Balance of all Class A Certificates) in certain distributions with
respect to a pool of conventional, sub-prime mortgage loans (the "Mortgage
Loans") formed and sold by Xxxxxxx Xxxxx Mortgage Investors, Inc. (hereinafter
called the "Depositor"), and certain other property held in trust for the
benefit of Certificateholders (collectively, the "Trust Fund"). The Mortgage
Loans are serviced by Wilshire Credit Corporation (the "Servicer") and are
secured by first or second mortgages on Mortgaged Properties. The Trust Fund was
created pursuant to a pooling and servicing agreement (the "Agreement"), dated
as of November 1, 2006, between the Depositor, the Servicer and U.S. Bank
National Association, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Specialty Underwriting and Residential Finance Trust, Mortgage
Loan Asset-Backed Certificates, Series 2006-BC5, Class M-[_] (the "Class M-[_]
Certificates") and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which Agreement such Holder is
bound.
The Class A-1 Certificates, the Class A-2A Certificates, the Class A-2B
Certificates, the Class A-2C Certificates, the Class A-2D Certificates, the
Class A-2E Certificates, the Class M-1 Certificates, the Class M-2 Certificates,
the Class M-3 Certificates, the Class M-4 Certificates, the Class M-5
Certificates, the Class M-6 Certificates, the Class B-1, Class B-2, the Class
B-3,
the P Certificates, the C Certificates, and the Class R Certificate are
collectively referred to herein as the "Certificates."
Pursuant to the terms of the Agreement, the Trustee will distribute from
funds in the Certificate Account the amounts described in the Agreement on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing in December
2006. Such distributions will be made to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month preceding the month in which such payment is made, if such last day is
not a Business Day, the Business Day immediately preceding such last day.
Distributions on this Certificate will be made either by check mailed to
the address of the person entitled to distributions as it appears on the
Certificate Register or, in the case of any Certificateholder that has so
notified the Trustee in writing in accordance with the Agreement, by wire
transfer in immediately available funds to the account of such Certificateholder
at a bank or other depository institution having appropriate wire transfer
facilities; provided, however, that the final distribution in retirement of the
certificates will be made only upon presentation and surrender of this
Certificate at the office of the Trustee or such other address designated in
writing by the Trustee. On each Distribution Date, a Holder of this Certificate
will receive such Holder's Percentage Interest of the amounts required to be
distributed with respect to the applicable Class of Certificates.
The Trustee will maintain or cause to be maintained a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the
Trustee will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Trustee, or, if an Authenticating
Agent has been appointed under the Agreement, the Authenticating Agent,
maintained for such purpose, the Trustee, will, subject to the limitations set
forth in the Agreement, authenticate and deliver, in the name of the designated
transferee or transferees, a Certificate of a like class and dated the date of
authentication by the Authenticating Agent. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee,
of the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee, for that
purpose and specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: November 28, 2006 U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates
referred to in the within-mentioned
Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Authenticating Agent
By:
---------------------------------
Authorized Signatory
REVERSE OF CERTIFICATE
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-BC5
This Certificate is one of a duly authorized issue of Certificates,
designated as Specialty Underwriting and Residential Finance Trust Mortgage Loan
Asset-Backed Certificates, Series 2006-BC5, issued in one or more Classes of
Class X-0, Xxxxx X-0X, Xxxxx X-0X, Class A-2C, Class A-2D, Class A-2E, Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class B-1, Class
B-2, Class B-3, the P Certificates, the C Certificates, and Class R Certificate,
each evidencing an interest in certain distributions with respect to a pool of
conventional, sub-prime Mortgage Loans formed and sold by the Depositor and
certain other property conveyed by the Depositor to the Trustee.
Following the initial issuance of the Certificates, the principal balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current principal
balance by inquiry of the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that the Trustee is not liable to the Holders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Trustee may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor and the Trustee may
treat the person in whose name any Certificate is registered as the owner of
such Certificate and the Percentage Interest in the Trust Fund evidenced thereby
for the purpose of receiving distributions pursuant to the Agreement and for all
other purposes whatsoever, and neither the Depositor nor the Trustee will be
affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC included in the Trust Fund as a REMIC, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such
action does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66 2/3% of the Percentage Interests 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
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in a
manner other than as described in clause (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of the Voting Rights of
such Class or (iii) change the percentage specified in clause (ii) of the third
paragraph of Section 10.01 of the Agreement, without the consent of the Holders
of all Certificates of such Class then outstanding.
For federal income tax purposes, the Trust Fund will include multiple "real
estate mortgage investment conduits" (each, a "REMIC") in a tiered REMIC
structure. The REMIC Regular Interests will represent "regular interests" in one
of the REMICs included in the Trust Fund. The Class R Certificate will represent
the sole class of "residual interest" in each of the REMICs.
The obligations and responsibilities of the Depositor, the Servicer and the
Trustee under the Agreement shall terminate upon the earlier of (a) the exercise
by the Trustee of an Optional Termination; and (b) the later of (i) the maturity
or other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event shall
the trusts created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof and (ii) the Latest Possible Maturity Date.
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
_______________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
_______________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
___________________________________________________________________ Attorney to
transfer the within Certificate on the books kept for the registration thereof,
with full power of substitution in the premises.
Dated:
------------------------------
------------------------------------- ----------------------------------------
(Signature guaranty) NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that
the assignee will not be subject to backup withholding under Section 3406 of the
Code.)
FORM OF THE CLASS B-[_] CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS (I) A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED AND (II) AN INTEREST IN NOTIONAL PRINCIPAL
CONTRACTS.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN XXXXXXX
XXXXX MORTGAGE INVESTORS, INC. ("MLMI"), THE TRUSTEE, OR ANY SERVICER REFERRED
TO BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR
INTEREST REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR
INSURED BY MLMI, THE TRUSTEE, ANY SERVICER OR BY ANY OF THEIR AFFILIATES OR BY
ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
UNTIL THE TERMINATION OF THE SWAP AGREEMENT, EACH TRANSFEREE OF THIS CERTIFICATE
SHALL BE DEEMED TO REPRESENT (OR IN THE CASE OF A DEFINITIVE CERTIFICATE, SHALL
REPRESENT) TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT, AND IS NOT ACTING
FOR, ON BEHALF OF OR WITH ANY ASSETS OF, ANY EMPLOYEE BENEFIT PLAN OR OTHER
ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR ANY PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR (B) THE TRANSFEREE'S
ACQUISITION AND HOLDING OF THIS CERTIFICATE IS COVERED BY AND EXEMPT UNDER ANY
OF SECTION 408(B)(17) OF ERISA OR SECTION 4975(D)(20) OF THE CODE, PROHIBITED
TRANSACTION CLASS EXEMPTION ("PTCE") 00-00, XXXX 00-0, XXXX 91-38, PTCE 95-60,
OR PTCE 96-23, EACH AS AMENDED.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE TRUSTEE.
CLASS B-[_] CERTIFICATE
Number: [____________________] Original Denomination: [______________________]
Cut-off Date: November 1, 2006 Last Scheduled
Distribution Date: November 25, 2037
First Distribution Date: Aggregate Initial Certificate
December 26, 2006 Balance of all Class B-[_]
Certificates: $[______________________________]
Pass-Through Rate: Variable(3) CUSIP: [______________________________________]
----------
(3) Subject to a cap as described in the Agreement.
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-BC5
evidencing an ownership interest in distributions allocable to the Class B-1
Certificates with respect to a pool of conventional, sub-prime mortgage loans
formed and sold by
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to the Trustee for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co. has an interest
herein.
This certifies that CEDE & CO. is the registered owner of the ownership
interest (the "Ownership Interest") evidenced by this Certificate (obtained by
dividing the Original Denomination of this Certificate by the aggregate Initial
Certificate Balance of all Class A Certificates) in certain distributions with
respect to a pool of conventional, sub-prime mortgage loans (the "Mortgage
Loans") formed and sold by Xxxxxxx Xxxxx Mortgage Investors, Inc. (hereinafter
called the "Depositor"), and certain other property held in trust for the
benefit of Certificateholders (collectively, the "Trust Fund"). The Mortgage
Loans are serviced by Wilshire Credit Corporation (the "Servicer") and are
secured by first or second mortgages on Mortgaged Properties. The Trust Fund was
created pursuant to a pooling and servicing agreement (the "Agreement"), dated
as of November 1, 2006, between the Depositor, the Servicer and U.S. Bank
National Association, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Specialty Underwriting and Residential Finance Trust, Mortgage
Loan Asset-Backed Certificates, Series 2006-BC5, Class B-[_] (the "Class B-[_]
Certificates") and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which Agreement such Holder is
bound.
The Class A-1 Certificates, the Class A-2A Certificates, the Class A-2B
Certificates, the Class A-2C Certificates, the Class A-2D Certificates, the
Class A-2E Certificates, the Class M-1 Certificates, the Class M-2 Certificates,
the Class M-3 Certificates, the Class M-4 Certificates, the Class M-5
Certificates, the Class M-6 Certificates, the Class B-1 Certificates, the Class
B-2
Certificates, the Class B-3, the P Certificates, the C Certificates, and the
Class R Certificate are collectively referred to herein as the "Certificates."
Pursuant to the terms of the Agreement, the Trustee will distribute from
funds in the Certificate Account the amounts described in the Agreement on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing in December
2006. Such distributions will be made to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month preceding the month in which such payment is made, if such last day is
not a Business Day, the Business Day immediately preceding such last day.
Distributions on this Certificate will be made either by check mailed to
the address of the person entitled to distributions as it appears on the
Certificate Register or, in the case of any Certificateholder that has so
notified the Trustee in writing in accordance with the Agreement, by wire
transfer in immediately available funds to the account of such Certificateholder
at a bank or other depository institution having appropriate wire transfer
facilities; provided, however, that the final distribution in retirement of the
certificates will be made only upon presentation and surrender of this
Certificate at the office of the Trustee or such other address designated in
writing by the Trustee. On each Distribution Date, a Holder of this Certificate
will receive such Holder's Percentage Interest of the amounts required to be
distributed with respect to the applicable Class of Certificates.
The Trustee will maintain or cause to be maintained a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the
Trustee will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Trustee, or, if an Authenticating
Agent has been appointed under the Agreement, the Authenticating Agent,
maintained for such purpose, the Trustee, will, subject to the limitations set
forth in the Agreement, authenticate and deliver, in the name of the designated
transferee or transferees, a Certificate of a like class and dated the date of
authentication by the Authenticating Agent. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee,
of the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee, for that
purpose and specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: November 28, 2006 U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the
Certificates referred to
in the within-mentioned
Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Authenticating Agent
By:
---------------------------------
Authorized Signatory
REVERSE OF CERTIFICATE
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-BC5
This Certificate is one of a duly authorized issue of Certificates,
designated as Specialty Underwriting and Residential Finance Trust Mortgage Loan
Asset-Backed Certificates, Series 2006-BC5, issued in one or more Classes of
Class X-0, Xxxxx X-0X, Xxxxx X-0X, Class A-2C, Class A-2D, Class A-2E, Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class B-1, Class
B-2, Class B-3, the P Certificates, the C Certificates, and Class R Certificate,
each evidencing an interest in certain distributions with respect to a pool of
conventional, sub-prime Mortgage Loans formed and sold by the Depositor and
certain other property conveyed by the Depositor to the Trustee.
Following the initial issuance of the Certificates, the principal balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current principal
balance by inquiry of the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that the Trustee is not liable to the Holders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Trustee may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor and the Trustee may
treat the person in whose name any Certificate is registered as the owner of
such Certificate and the Percentage Interest in the Trust Fund evidenced thereby
for the purpose of receiving distributions pursuant to the Agreement and for all
other purposes whatsoever, and neither the Depositor nor the Trustee will be
affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC included in the Trust Fund as a REMIC, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such
action does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66 2/3% of the Percentage Interests 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
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in a
manner other than as described in clause (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of the Voting Rights of
such Class or (iii) change the percentage specified in clause (ii) of the third
paragraph of Section 10.01 of the Agreement, without the consent of the Holders
of all Certificates of such Class then outstanding.
For federal income tax purposes, the Trust Fund will include multiple "real
estate mortgage investment conduits" (each, a "REMIC") in a tiered REMIC
structure. The REMIC Regular Interests will represent "regular interests" in one
of the REMICs included in the Trust Fund. The Class R Certificate will represent
the sole class of "residual interest" in each of the REMICs.
The obligations and responsibilities of the Depositor, the Servicer and the
Trustee under the Agreement shall terminate upon the earlier of (a) the exercise
by the Trustee of an Optional Termination; and (b) the later of (i) the maturity
or other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event shall
the trusts created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof and (ii) the Latest Possible Maturity Date.
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
_______________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
_______________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
__________________________________________________________________ Attorney to
transfer the within Certificate on the books kept for the registration thereof,
with full power of substitution in the premises.
Dated:
------------------------------
------------------------------------- ----------------------------------------
(Signature guaranty) NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that
the assignee will not be subject to backup withholding under Section 3406 of the
Code.)
FORM OF THE CLASS C CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST
IN A GRANTOR TRUST THAT HOLDS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED AND IS TREATED AS
HAVING ENTERED INTO CERTAIN NOTIONAL PRINCIPAL CONTRACTS.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN XXXXXXX
XXXXX MORTGAGE INVESTORS, INC. ("MLMI"), THE TRUSTEE, OR ANY SERVICER REFERRED
TO BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR
INTEREST REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR
INSURED BY MLMI, THE TRUSTEE, THE SERVICER OR BY ANY OF THEIR AFFILIATES OR BY
ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CLASS C CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT,
DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED, OR OFFERED FOR SALE,
UNLESS SUCH TRANSFER IS NOT SUBJECT TO REGISTRATION UNDER THE ACT, THE 1940 ACT
AND ANY APPLICABLE STATE SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH
THE OTHER PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO
TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE (A) AN INVESTMENT
LETTER FROM THE PROSPECTIVE INVESTOR; AND (B) REPRESENTATIONS FROM THE
TRANSFEROR REGARDING THE OFFERING AND SALE OF THE CERTIFICATES.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED (A) A REPRESENTATION FROM THE TRANSFEREE THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN SUBJECT TO
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A
PLAN SUBJECT TO ANY STATE, LOCAL, FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW")
(COLLECTIVELY, A "PLAN"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS
CERTIFICATE FOR, ON BEHALF OF OR WITH ANY ASSETS OF ANY SUCH PLAN, (B) IF THE
CERTIFICATE HAS BEEN THE SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING, A
REPRESENTATION THAT SUCH TRANSFEREE IS AN INSURANCE COMPANY THAT IS ACQUIRING
THE
CERTIFICATE WITH ASSETS OF AN "INSURANCE COMPANY GENERAL ACCOUNT," AS DEFINED IN
SECTION V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60, AND THE
ACQUISITION AND HOLDING OF THE CERTIFICATE ARE COVERED AND EXEMPT UNDER SECTIONS
I AND III OF PTCE 95-60, OR (C) SOLELY IN THE EVENT THE CERTIFICATE IS A
DEFINITIVE CERTIFICATE, AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE, AND
UPON WHICH THE TRUSTEE SHALL BE ENTITLED TO RELY, TO THE EFFECT THAT THE
ACQUISITION AND HOLDING OF THE CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN A
NONEXEMPT PROHIBITED TRANSACTION UNDER ERISA OR THE CODE, OR A VIOLATION OF
SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE SERVICER OR THE DEPOSITOR TO
ANY OBLIGATION IN ADDITION TO THOSE EXPRESSLY UNDERTAKEN IN THE POOLING AND
SERVICING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE
TRUSTEE, THE SERVICER OR THE DEPOSITOR. IF THE CERTIFICATE IS NOT A DEFINITIVE
CERTIFICATE, THE TRANSFEREE IS DEEMED TO HAVE MADE THE REPRESENTATION IN (A) OR
(B) ABOVE.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO A PERSON THAT IS EITHER (I) NOT A
"UNITED STATES PERSON" (AS DEFINED FOR PURPOSES OF SECTION 7701 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED) OR (II) A DISQUALIFIED ORGANIZATION (AS
DEFINED IN THE POOLING AND SERVICING AGREEMENT) OR A PERSON ACQUIRING SUCH
CERTIFICATE ON BEHALF (AS A BROKER, AGENT, NOMINEE OR OTHERWISE) OF A
DISQUALIFIED ORGANIZATION. THE TRUSTEE SHALL NOT REGISTER ANY TRANSFER OF THIS
CERTIFICATE UNLESS THE TRUSTEE SHALL HAVE BEEN FURNISHED WITH A TRANSFEREE
LETTER OR A LETTER FROM THE INITIAL HOLDER OF THIS CERTIFICATE IN THE FORM
ATTACHED TO THE POOLING AND SERVICING AGREEMENT. ANY TRANSFER OF THIS
CERTIFICATE IN VIOLATION OF THESE RESTRICTIONS SHALL BE ABSOLUTELY NULL AND VOID
AND THE PURPORTED TRANSFEREE SHALL ACQUIRE NO RIGHTS WITH RESPECT TO THIS
CERTIFICATE.
CLASS C CERTIFICATE
Number: 06-BC5-C-1 Percentage Interest: 100%
Cut-off Date: November 1, 2006 Aggregate Percentage Interest of all Class C
Certificates: 100%
First Distribution Date: CUSIP: 84751N AR 5
December 26, 2006
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-BC5
evidencing an ownership interest in distributions allocable to the Class C
Certificates with respect to a pool of conventional, sub-prime mortgage loans
formed and sold by
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
This certifies that XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED is
the registered owner of the ownership interest (the "Ownership Interest")
evidenced by this Certificate in certain distributions with respect to a pool of
conventional, sub-prime mortgage loans (the "Mortgage Loans") formed and sold by
Xxxxxxx Xxxxx Mortgage Investors, Inc. (hereinafter called the "Depositor"), and
certain other property held in trust for the benefit of Certificateholders
(collectively, the "Trust Fund"). The Mortgage Loans are serviced by Wilshire
Credit Corporation (the "Servicer") and are secured by first or second mortgages
on Mortgaged Properties. The Trust Fund was created pursuant to a pooling and
servicing agreement (the "Agreement"), dated as of November 1, 2006, between the
Depositor, the Servicer and U.S. Bank National Association, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Specialty Underwriting and Residential Finance Trust, Mortgage
Loan Asset-Backed Certificates, Series 2006-BC5, Class C (the "Class C
Certificates") and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which Agreement such Holder is
bound.
The Class A-1 Certificates, the Class A-2A Certificates, the Class A-2B
Certificates, the Class A-2C Certificates, the Class A-2D Certificates, the
Class A-2E Certificates, the Class M-1 Certificates, the Class M-2 Certificates,
the Class M-3 Certificates, the Class M-4 Certificates, the Class M-5
Certificates, the Class M-6 Certificates, the Class B-1 Certificates, the Class
B-2 Certificates, the Class B-3 Certificates, the Class P Certificates, the
Class C Certificates, and the Class R Certificate are collectively referred to
herein as the "Certificates."
Pursuant to the terms of the Agreement, the Trustee will distribute from
funds in the Certificate Account the amounts described in the Agreement on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing in December
2006. Such distributions will be made to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month preceding the month in which such payment is made, if such last day is
not a Business Day, the Business Day immediately preceding such last day.
Distributions on this Certificate will be made either by check mailed to
the address of the person entitled to distributions as it appears on the
Certificate Register or, in the case of any
certificateholder that has so notified the Trustee in writing in accordance with
the Agreement, by wire transfer in immediately available funds to the account of
such certificateholder at a bank or other depository institution having
appropriate wire transfer facilities; provided, however, that the final
distribution in retirement of the certificates will be made only upon
presentation and surrender of this Certificate at the office of the Trustee or
such other address designated in writing by the Trustee. On each Distribution
Date, a holder of this Certificate will receive such holder's Percentage
Interest of the amounts required to be distributed with respect to the
applicable Class of Certificates.
The Trustee will maintain or cause to be maintained a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the
Trustee will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Trustee, or, if an Authenticating
Agent has been appointed under the Agreement, the Authenticating Agent,
maintained for such purpose, the Trustee, will, subject to the limitations set
forth in the Agreement, authenticate and deliver, in the name of the designated
transferee or transferees, a Certificate of a like class and dated the date of
authentication by the Authenticating Agent. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee,
of the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee, for that
purpose and specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: November 28, 2006 U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the
Certificates referred to
in the within-mentioned
Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Authenticating Agent
By:
---------------------------------
Authorized Signatory
REVERSE OF CERTIFICATE
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-BC5
This Certificate is one of a duly authorized issue of Certificates,
designated as Specialty Underwriting and Residential Finance Trust Mortgage Loan
Asset-Backed Certificates, Series 2006-BC5, issued in one or more Classes of
Class X-0, Xxxxx X-0X, Xxxxx X-0X, Class A-2C, Class A-2D, Class A-2E, Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class B-1, Class
B-2, Class B-3, Class P, Class C, and Class R Certificate, each evidencing an
interest in certain distributions with respect to a pool of conventional,
sub-prime Mortgage Loans formed and sold by the Depositor and certain other
property conveyed by the Depositor to the Trustee.
Following the initial issuance of the Certificates, the principal balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current principal
balance by inquiry of the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that the Trustee is not liable to the Holders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Trustee may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor and the Trustee may
treat the person in whose name any Certificate is registered as the owner of
such Certificate and the Percentage Interest in the Trust Fund evidenced thereby
for the purpose of receiving distributions pursuant to the Agreement and for all
other purposes whatsoever, and neither the Depositor nor the Trustee will be
affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC included in the Trust Fund as a REMIC, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such
action does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66 2/3% of the Percentage Interests 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
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in a
manner other than as described in clause (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of the Voting Rights of
such Class or (iii) change the percentage specified in clause (ii) of the third
paragraph of Section 10.01 of the Agreement, without the consent of the Holders
of all Certificates of such Class then outstanding.
For federal income tax purposes, the Trust Fund will include multiple "real
estate mortgage investment conduits" (each, a "REMIC") in a tiered REMIC
structure. The REMIC Regular Interests will represent "regular interests" in one
of the REMICs included in the Trust Fund. The Class R Certificate will represent
the sole class of "residual interest" in each of the REMICs.
The obligations and responsibilities of the Depositor, the Servicer and the
Trustee under the Agreement shall terminate upon the earlier of (a) the exercise
by the Trustee of an Optional Termination; and (b) the later of (i) the maturity
or other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event shall
the trusts created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof and (ii) the Latest Possible Maturity Date.
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
_______________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
_______________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
____________________________________________________________________ Attorney to
transfer the within Certificate on the books kept for the registration thereof,
with full power of substitution in the premises.
Dated:
------------------------------
------------------------------------- ----------------------------------------
(Signature guaranty) NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that
the assignee will not be subject to backup withholding under Section 3406 of the
Code.)
FORM OF THE CLASS P CERTIFICATE
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN XXXXXXX
XXXXX MORTGAGE INVESTORS, INC. ("MLMI"), THE TRUSTEE, OR ANY SERVICER REFERRED
TO BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED OR INSURED BY MLMI, THE TRUSTEE, ANY SERVICER, OR
BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CLASS P CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT,
DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED, OR OFFERED FOR SALE,
UNLESS SUCH TRANSFER IS NOT SUBJECT TO REGISTRATION UNDER THE ACT, THE 1940 ACT
AND ANY APPLICABLE STATE SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH
THE OTHER PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO
TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE (A) AN INVESTMENT
LETTER FROM THE PROSPECTIVE INVESTOR; AND (B) REPRESENTATIONS FROM THE
TRANSFEROR REGARDING THE OFFERING AND SALE OF THE CERTIFICATES.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED (A) A REPRESENTATION FROM THE TRANSFEREE THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN SUBJECT TO
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A
PLAN SUBJECT TO ANY STATE, LOCAL, FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW")
(COLLECTIVELY, A "PLAN"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS
CERTIFICATE FOR, ON BEHALF OF OR WITH ANY ASSETS OF ANY SUCH PLAN, (B) IF THE
CERTIFICATE HAS BEEN THE SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING, A
REPRESENTATION THAT SUCH TRANSFEREE IS AN INSURANCE COMPANY THAT IS ACQUIRING
THE CERTIFICATE WITH ASSETS OF AN "INSURANCE COMPANY GENERAL ACCOUNT," AS
DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE")
95-60, AND THE ACQUISITION AND HOLDING OF THE CERTIFICATE ARE COVERED AND EXEMPT
UNDER SECTIONS I AND III OF PTCE 95-60, OR (C) SOLELY IN THE EVENT THE
CERTIFICATE IS A DEFINITIVE CERTIFICATE, AN OPINION OF COUNSEL SATISFACTORY TO
THE TRUSTEE, AND UPON WHICH THE TRUSTEE SHALL BE ENTITLED TO RELY, TO THE EFFECT
THAT THE ACQUISITION AND HOLDING OF THE CERTIFICATE WILL NOT CONSTITUTE OR
RESULT IN A
NONEXEMPT PROHIBITED TRANSACTION UNDER ERISA OR THE CODE, OR A VIOLATION OF
SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE SERVICER OR THE DEPOSITOR TO
ANY OBLIGATION IN ADDITION TO THOSE EXPRESSLY UNDERTAKEN IN THE POOLING AND
SERVICING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE
TRUSTEE, THE SERVICER OR THE DEPOSITOR. IF THE CERTIFICATE IS NOT A DEFINITIVE
CERTIFICATE, THE TRANSFEREE IS DEEMED TO HAVE MADE THE REPRESENTATION IN (A) OR
(B) ABOVE.
CLASS P CERTIFICATE
Number: 06-BC5-P-1 Percentage Interest: 100%
Cut-off Date: November 1, 2006 Aggregate Percentage Interest
of all Class P Certificates: 100%
First Distribution Date: CUSIP: 84751N AS 3
December 26, 2006
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-BC5
evidencing an ownership interest in distributions allocable to the Class P
Certificates with respect to a pool of conventional, sub-prime mortgage loans
formed and sold by
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
This certifies that XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED is
the registered owner of the ownership interest (the "Ownership Interest")
evidenced by this Certificate in certain distributions with respect to a pool of
conventional, sub-prime mortgage loans (the "Mortgage Loans") formed and sold by
Xxxxxxx Xxxxx Mortgage Investors, Inc. (hereinafter called the "Depositor"), and
certain other property held in trust for the benefit of Certificateholders
(collectively, the "Trust Fund"). The Mortgage Loans are serviced by Wilshire
Credit Corporation (the "Servicer") and are secured by first or second mortgages
on Mortgaged Properties. The Trust Fund was created pursuant to a pooling and
servicing agreement (the "Agreement"), dated as of November 1, 2006, between the
Depositor, the Servicer and U.S. Bank National Association, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Specialty Underwriting and Residential Finance Trust, Mortgage
Loan Asset-Backed Certificates, Series 2006-BC5, Class P (the "Class P
Certificates") and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which Agreement such Holder is
bound.
The Class A-1 Certificates, the Class A-2A Certificates, the Class A-2B
Certificates, the Class A-2C Certificates, the Class A-2D Certificates, the
Class A-2E Certificates, the Class M-1 Certificates, the Class M-2 Certificates,
the Class M-3 Certificates, the Class M-4 Certificates, the Class M-5
Certificates, the Class M-6 Certificates, the Class B-1, the Class B-2
Certificates, the Class B-3 Certificates, the Class P Certificates, the Class C
Certificates, and the Class R Certificate are collectively referred to herein as
the "Certificates."
Pursuant to the terms of the Agreement, the Trustee will distribute from
funds in the Certificate Account the amounts described in the Agreement on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing in December
2006. Such distributions will be made to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month preceding the month in which such payment is made, if such last day is
not a Business Day, the Business Day immediately preceding such last day.
Distributions on this Certificate will be made either by check mailed to
the address of the person entitled to distributions as it appears on the
Certificate Register or, in the case of any
certificateholder that has so notified the Trustee in writing in accordance with
the Agreement, by wire transfer in immediately available funds to the account of
such certificateholder at a bank or other depository institution having
appropriate wire transfer facilities; provided, however, that the final
distribution in retirement of the certificates will be made only upon
presentation and surrender of this Certificate at the office of the Trustee or
such other address designated in writing by the Trustee. On each Distribution
Date, a holder of this Certificate will receive such holder's Percentage
Interest of the amounts required to be distributed with respect to the
applicable Class of Certificates.
The Trustee will maintain or cause to be maintained a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the
Trustee will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Trustee, or, if an Authenticating
Agent has been appointed under the Agreement, the Authenticating Agent,
maintained for such purpose, the Trustee, will, subject to the limitations set
forth in the Agreement, authenticate and deliver, in the name of the designated
transferee or transferees, a Certificate of a like class and dated the date of
authentication by the Authenticating Agent. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee,
of the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee, for that
purpose and specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: November 28, 2006 U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the
Certificates referred to
in the within-mentioned
Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Authenticating Agent
By:
---------------------------------
Authorized Signatory
REVERSE OF CERTIFICATE
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-BC5
This Certificate is one of a duly authorized issue of Certificates,
designated as Specialty Underwriting and Residential Finance Trust Mortgage Loan
Asset-Backed Certificates, Series 2006-BC5, issued in one or more Classes of
Class X-0, Xxxxx X-0X, Xxxxx X-0X, Class A-2C, Class A-2D, Class A-2E, Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class B-1, Class
B-2, Class B-3, Class P, Class C, and Class R Certificate, each evidencing an
interest in certain distributions with respect to a pool of conventional,
sub-prime Mortgage Loans formed and sold by the Depositor and certain other
property conveyed by the Depositor to the Trustee.
Following the initial issuance of the Certificates, the principal balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current principal
balance by inquiry of the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that the Trustee is not liable to the Holders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Trustee may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor and the Trustee may
treat the person in whose name any Certificate is registered as the owner of
such Certificate and the Percentage Interest in the Trust Fund evidenced thereby
for the purpose of receiving distributions pursuant to the Agreement and for all
other purposes whatsoever, and neither the Depositor nor the Trustee will be
affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC included in the Trust Fund as a REMIC, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such
action does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66 2/3% of the Percentage Interests 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
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in a
manner other than as described in clause (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of the Voting Rights of
such Class or (iii) change the percentage specified in clause (ii) of the third
paragraph of Section 10.01 of the Agreement, without the consent of the Holders
of all Certificates of such Class then outstanding.
For federal income tax purposes, the Trust Fund will include multiple "real
estate mortgage investment conduits" (each, a "REMIC") in a tiered REMIC
structure. The REMIC Regular Interests will represent "regular interests" in one
of the REMICs included in the Trust Fund. The Class R Certificate will represent
the sole class of "residual interest" in each of the REMICs.
The obligations and responsibilities of the Depositor, the Servicer and the
Trustee under the Agreement shall terminate upon the earlier of (a) the exercise
by the Trustee of an Optional Termination; and (b) the later of (i) the maturity
or other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event shall
the trusts created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof and (ii) the Latest Possible Maturity Date.
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
________________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
____________________________________________________________________ Attorney to
transfer the within Certificate on the books kept for the registration thereof,
with full power of substitution in the premises.
Dated:
------------------------------
------------------------------------- ----------------------------------------
(Signature guaranty) NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that
the assignee will not be subject to backup withholding under Section 3406 of the
Code.)
FORM OF THE CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS (I) A
"RESIDUAL INTEREST" IN EACH OF ONE OR MORE "REAL ESTATE MORTGAGE INVESTMENT
CONDUITS", AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED AND (II) AN INTEREST IN
NOTIONAL PRINCIPAL CONTRACTS.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN XXXXXXX
XXXXX MORTGAGE INVESTORS, INC. ("MLMI"), THE TRUSTEE OR THE SERVICER REFERRED TO
BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC RESIDUAL
INTERESTS REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR
INSURED BY MLMI, THE TRUSTEE, ANY SERVICER OR BY ANY OF THEIR AFFILIATES OR BY
ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CLASS R CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS SOLD OR TRANSFERRED IN TRANSACTIONS
WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT OR UNDER APPLICABLE STATE LAW
AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUSTEE WITH A REPRESENTATION IN ACCORDANCE WITH SECTION
5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN THAT SUCH
TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN SUBJECT TO
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") OR A
PLAN SUBJECT TO ANY PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR
OTHER LAWS OR REGULATIONS THAT ARE SUBSTANTIVELY SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), AND IS NOT DIRECTLY OR
INDIRECTLY ACQUIRING THIS CERTIFICATE FOR, ON BEHALF OF, OR WITH ANY ASSETS OF
ANY SUCH PLAN.
CLASS R CERTIFICATE
Number: 06-BC5-R-1 Principal Balance: $100
Cut-off Date: November 1, 2006 Pass-Through Rate: Variable(1)
First Distribution Date: CUSIP: 84751N AT 1
December 26, 2006
----------
(1) Subject to a cap as described in the Agreement.
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-BC5
evidencing an ownership interest in distributions allocable to the Class R
Certificates with respect to a pool of conventional, sub-prime mortgage loans
formed and sold by
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
This certifies that XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED is
the registered owner of the ownership interest (the "Ownership Interest")
evidenced by this Certificate (obtained by dividing the Original Denomination of
this Certificate by the aggregate Initial Certificate Balance of all Class R
Certificates) in certain distributions with respect to a pool of conventional,
sub-prime mortgage loans (the "Mortgage Loans") formed and sold by Xxxxxxx Xxxxx
Mortgage Investors, Inc. (hereinafter called the "Depositor"), and certain other
property held in trust for the benefit of Certificateholders (collectively, the
"Trust Fund"). The Mortgage Loans are serviced by Wilshire Credit Corporation
(the "Servicer") and are secured by first or second mortgages on Mortgaged
Properties. The Trust Fund was created pursuant to a pooling and servicing
agreement (the "Agreement"), dated as of November 1, 2006, between the
Depositor, the Servicer and U.S. Bank National Assocation, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Specialty Underwriting and Residential Finance Trust, Mortgage
Loan Asset-Backed Certificates, Series 2006-BC5, Class R (the "Class R
Certificates") and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which Agreement such Holder is
bound.
The Class A-1 Certificates, the Class A-2A Certificates, the Class A-2B
Certificates, the Class A-2C Certificates, the Class A-2D Certificates, the
Class A-2E Certificates, the Class M-1 Certificates, the Class M-2 Certificates,
the Class M-3 Certificates, the Class M-4 Certificates, the Class M-5
Certificates, the Class M-6 Certificates, the Class B-1, the Class B-2
Certificates, the Class B-3, and the Class R Certificate are collectively
referred to herein as the "Certificates."
Pursuant to the terms of the Agreement, the Trustee will distribute from
funds in the Certificate Account the amounts described in the Agreement on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing in December
2006. Such distributions will be made to the Person in whose name this
Certificate is registered at the close of business on (i) the last Business Day
of the month preceding the month in which such payment is made, (ii) if such
last day is not a Business Day, the Business Day immediately preceding such last
day.
Distributions on this Certificate will be made either by check mailed to
the address of the person entitled to distributions as it appears on the
Certificate Register or, in the case of any certificateholder that has so
notified the Trustee in writing in accordance with the Agreement, by wire
transfer in immediately available funds to the account of such certificateholder
at a bank or other depository institution having appropriate wire transfer
facilities; provided, however, that the final distribution in retirement of the
certificates will be made only upon presentation and surrender of this
Certificate at the office of the Trustee or such other address designated in
writing by the Trustee. On each Distribution Date, a holder of this Certificate
will receive such holder's Percentage Interest of the amounts required to be
distributed with respect to the applicable Class of Certificates.
The Trustee will maintain or cause to be maintained a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the
Trustee will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Trustee, or, if an Authenticating
Agent has been appointed under the Agreement, the Authenticating Agent,
maintained for such purpose, the Trustee, will, subject to the limitations set
forth in the Agreement, authenticate and deliver, in the name of the designated
transferee or transferees, a Certificate of a like class and dated the date of
authentication by the Authenticating Agent. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee,
of the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee, for that
purpose and specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: November 28, 2006 U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the
Certificates referred to
in the within-mentioned
Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Authenticating Agent
By:
---------------------------------
Authorized Signatory
REVERSE OF CERTIFICATE
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-BC5
This Certificate is one of a duly authorized issue of Certificates,
designated as Specialty Underwriting and Residential Finance Trust Mortgage Loan
Asset-Backed Certificates, Series 2006-BC5 issued in one or more Classes of
Class X-0, Xxxxx X-0X, Xxxxx X-0X, Class A-2C, Class A-2D, Class A-2E, Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class B-1 Class B-2,
Class B-3, the P Certificates, the C Certificates, and Class R Certificate, each
evidencing an interest in certain distributions with respect to a pool of
conventional, sub-prime Mortgage Loans formed and sold by the Depositor and
certain other property conveyed by the Depositor to the Trustee.
Following the initial issuance of the Certificates, the principal balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current principal
balance by inquiry of the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that the Trustee is not liable to the Holders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Trustee may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor and the Trustee may
treat the person in whose name any Certificate is registered as the owner of
such Certificate and the Percentage Interest in the Trust Fund evidenced thereby
for the purpose of receiving distributions pursuant to the Agreement and for all
other purposes whatsoever, and neither the Depositor nor the Trustee will be
affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC included in the Trust Fund as a REMIC, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such
action does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66 2/3% of the Percentage Interests 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
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in a
manner other than as described in clause (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of the Voting Rights of
such Class or (iii) change the percentage specified in clause (ii) of the third
paragraph of Section 10.01 of the Agreement, without the consent of the Holders
of all Certificates of such Class then outstanding.
For federal income tax purposes, the Trust Fund will include multiple "real
estate mortgage investment conduits" (each, a "REMIC") in a tiered REMIC
structure. The REMIC Regular Interests will represent "regular interests" in one
of the REMICs included in the Trust Fund. The Class R Certificate will represent
the sole class of "residual interest" in each of the REMICs.
The obligations and responsibilities of the Depositor, the Servicer and the
Trustee under the Agreement shall terminate upon the earlier of (a) the exercise
by the Trustee of an Optional Termination; and (b) the later of (i) the maturity
or other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event shall
the trusts created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof and (ii) the Latest Possible Maturity Date.
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
________________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
____________________________________________________________________ Attorney to
transfer the within Certificate on the books kept for the registration thereof,
with full power of substitution in the premises.
Dated:
------------------------------
------------------------------------- ----------------------------------------
(Signature guaranty) NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that
the assignee will not be subject to backup withholding under Section 3406 of the
Code.)
EXHIBIT B-1
MORTGAGE LOAN SCHEDULE - MORTGAGE POOL
[Intentionally Omitted]
B-1-1
EXHIBIT B-2
MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
[Intentionally Omitted]
B-2-1
EXHIBIT B-3
MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
[Intentionally Omitted]
B-3-1
EXHIBIT C-1
[RESERVED]
C-1
EXHIBIT C-2
[RESERVED]
C-1
EXHIBIT D
FORM OF TRUSTEE CERTIFICATION
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Wilshire Credit Corporation
00000 X.X. Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Re: Pooling and Servicing Agreement, dated as of November 1, 2006, among
Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Wilshire Credit
Corporation, as servicer, and U.S. Bank National Association, as trustee,
relating to Specialty Underwriting and Residential Finance Trust, Mortgage
Loan Asset-Backed Certificates, Series 2006-BC5
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:
(i) All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;
(ii) In connection with each Mortgage Loan as to which documentary evidence
of recording was not received on the Closing Date, it has received evidence of
such recording; and
(iii) Such documents have been reviewed by it and such documents do not
contain any material omissions or defects within the meaning of Section 2.01 or
2.02.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond confirming (i) that the Mortgage Loan number and
the name of the Mortgagor in each Mortgage File conform to the respective
Mortgage Loan number and name listed on the Mortgage Loan Schedule and (ii) the
existence in each Mortgage File of each of the documents listed in subparagraphs
(i)(a) through (k), inclusive, of Section 2.01 in the Agreement. The Trustee
makes no representations or warranties as to the validity, legality,
recordability, sufficiency, recordability, enforceability or genuineness of any
of the documents contained in each Mortgage Loan or the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
D-1
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
D-2
EXHIBIT E-1
FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
[DATE]
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC5
Ladies and Gentlemen:
We propose to purchase the Specialty Underwriting and Residential Finance
Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-BC5, Class R
Certificate, described in the Prospectus Supplement, dated November 22, 2006,
and Prospectus, dated September 8, 2006.
1. We certify that (a) we are not a disqualified organization and (b) we
are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.
2. We certify that (a) we have historically paid our debts as they became
due, (b) we intend, and believe that we will be able, to continue to pay our
debts as they become due in the future, (c) we understand that, as beneficial
owner of the Class R Certificate, we may incur tax liabilities in excess of any
cash flows generated by the Class R Certificate, and (d) we intend to pay any
taxes associated with holding the Class R Certificate as they become due and (e)
we will not cause income from the Class R Certificate to be attributable to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of ours or another U.S. taxpayer.
3. We acknowledge that we will be the beneficial owner of the Class R
Certificate and:(1)
___ The Class R Certificate will be registered in our name.
___ The Class R Certificate will be held in the name of our nominee
____________, which is not a disqualified organization.
----------
(1) Check appropriate box and if necessary fill in the name of the Transferee's
nominee.
E-1-1
4. We certify that we are not an employee benefit plan or other arrangement
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), a plan subject to Section 4975 of the Code or a plan subject
to state, local, federal, non-U.S. or other law substantively similar to the
foregoing provisions of ERISA or the Code (each, a "Plan"), and are not directly
or indirectly acquiring the Class R Certificate for, on behalf of or with any
assets of a Plan.
5. We certify that (i) we are a U.S. person or (ii) we will hold the Class
R Certificate in connection with the conduct of a trade or business within the
United States and have furnished the transferor and the Trustee with a duly
completed and effective Internal Revenue Service Form W-8ECI or successor form
at the time and in the manner required by the Code; for this purpose the term
"U.S. person" means a citizen or resident of the United States, a corporation,
or partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any State thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to United States federal income tax regardless
of the source of its income, or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more such U.S. persons have the authority to control all substantial
decisions of the trust (or, to the extent provided in applicable Treasury
regulations, certain trusts in existence on August 20, 1996 which are eligible
to elect to be treated as U.S. Persons). We agree that any breach by us of this
certification shall render the transfer of any interest in the Class R
Certificate to us absolutely null and void and shall cause no rights in the
Class R Certificate to vest in us.
6. We agree that in the event that at some future time we wish to transfer
any interest in the Class R Certificate, we will transfer such interest in the
Class R Certificate only (a) to a transferee that (i) is not a disqualified
organization and is not purchasing such interest in the Class R Certificate on
behalf of a disqualified organization, (ii) is a U.S. person or will hold the
Class R Certificate in connection with the conduct of a trade or business within
the United States and will furnish us and the Trustee with a duly completed and
effective Internal Revenue Service Form W-8ECI or successor form at the time and
in the manner required by the Code and (iii) has delivered to the Trustee a
letter in the form of this letter (including the affidavit appended hereto) and,
we will provide the Trustee a written statement substantially in the form of
Exhibit E-2 to the Agreement.
E-1-2
7. We hereby designate ___________________ as our fiduciary to act as the
tax matters person for each of the REMICs provided for in the Agreement.
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted as of _________ __, 200_.
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
E-1-3
APPENDIX A
Affidavit pursuant to (i) Section
860E(e)(4) of the Internal Revenue Code
of 1986, as amended, and (ii) certain
provisions of the Pooling and Servicing
Agreement
Under penalties of perjury, the undersigned declares that the following is true:
(1) He or she is an officer of _________________________ (the "Transferee"),
(2) the Transferee's Employer Identification number is _______________________,
(3) the Transferee is not a "disqualified organization" (as defined below), has
no plan or intention of becoming a disqualified organization, and is not
acquiring any of its interest in the Specialty Underwriting and Residential
Finance Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-BC5,
Class R Certificate on behalf of a disqualified organization or any other
entity,
(4) unless Xxxxxxx Xxxxx Mortgage Investors, Inc.("MLMI") has consented to the
transfer to the Transferee by executing the form of Consent affixed as
Appendix B to the Transferee's Letter to which this Certificate is affixed
as Appendix A, the Transferee is a "U.S. person" (as defined below),
(5) that no purpose of the transfer is to avoid or impede the assessment or
collection of tax,
(6) the Transferee has historically paid its debts as they became due,
(7) the Transferee intends, and believes that it will be able, to continue to
pay its debts as they become due in the future,
(8) the Transferee understands that, as beneficial owner of the Class R
Certificate, it may incur tax liabilities in excess of any cash flows
generated by the Class R Certificate,
(9) the Transferee intends to pay any taxes associated with holding the Class R
Certificate as they become due,
(10) the Transferee consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by Xxxxxxx Xxxxx Mortgage
Investors, Inc. (upon advice of counsel) to constitute a reasonable
arrangement to ensure that the Class R Certificate will not be owned
directly or indirectly by a disqualified organization, and
(11) IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the transfer
is not a direct or indirect transfer of the Class R Certificate to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of the Transferee, and as to each of the
residual interests represented by the Class R Certificate, the present
value of the anticipated tax liabilities associated with holding such
residual interest does not exceed the sum of:
(A) the present value of any consideration given to the Transferee to
acquire such residual interest;
(B) the present value of the expected future distributions on such
residual interest; and
E-1-4
(C) the present value of the anticipated tax savings associated with
holding such residual interest as the related REMIC generates losses.
For purposes of this declaration, (i) the Transferee is assumed to pay tax
at a rate equal to the highest rate of tax specified in Section 11(b)(1) of
the Code, but the tax rate specified in Section 55(b)(1)(B) of the Code may
be used in lieu of the highest rate specified in Section 11(b)(1) of the
Code if the Transferee has been subject to the alternative minimum tax
under Section 55 of the Code in the preceding two years and will compute
its taxable income in the current taxable year using the alternative
minimum tax rate, and (ii) present values are computed using a discount
rate equal to the Federal short-term rate prescribed by Section 1274(d) of
the Code for the month of the transfer and the compounding period used by
the Transferee;]
[(11)(A) at the time of the transfer, and at the close of each of the
Transferee's two fiscal years preceding the Transferee's fiscal year
of transfer, the Transferee's gross assets for financial reporting
purposes exceed $100 million and its net assets for financial
reporting purposes exceed $10 million; and
(B) the Transferee is an eligible corporation as defined in Treasury
regulations Section 1.860E-1(c)(6)(i) and has agreed in writing that
any subsequent transfer of the Class R Certificate will be to another
eligible corporation in a transaction that satisfies Treasury
regulation Sections 1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii),
1.860E-1(c)(4)(iii) and 1.860E1(c)(5) and such transfer will not be a
direct or indirect transfer to a foreign permanent establishment
(within the meaning of an applicable income tax treaty) of a domestic
corporation.
For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]
(12) The Transferee will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of the Transferee or another
U.S. taxpayer.
E-1-5
For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust, and one or
more such U.S. Persons have the authority to control all substantial decisions
of such trust, (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to be
treated as U.S. Persons).
-------------------------------------
By:
---------------------------------
-------------------------------------
-------------------------------------
Address of Investor for receipt of
distribution:
-------------------------------------
Address of Investor for receipt of tax
information:
-------------------------------------
(Corporate Seal)
Attest:
-------------------------------------
, Secretary
--------------------------
E-1-6
Personally appeared before me the above-named ____________, known or proved to
me to be the same person who executed the foregoing instrument and to be the
____________ of the Investor, and acknowledged to me that he executed the same
as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this ____ day of _______, 200_.
-------------------------------------
Notary Public
County of
------------------------------
State of
-------------------------------
My commission expires the _________________ day of ____________________
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Dated:
------------------------------
E-1-7
EXHIBIT E-2
FORM OF TRANSFEROR'S AFFIDAVIT
[DATE]
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC5
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-BC5
___________________________________ (the "Transferor") has reviewed the
attached affidavit of __________________________ (the "Transferee"), and has no
actual knowledge that such affidavit is not true, and has no reason to believe
that the Transferee has the intention to impede the assessment or collection of
any federal, state or local taxes legally required to be paid with respect to
the Class R Certificate referred to in the attached affidavit. In addition, the
Transferor has conducted a reasonable investigation at the time of the transfer
and found that the Transferee had historically paid its debts as they came due
and found no significant evidence to indicate that the Transferee will not
continue to pay its debts as they become due.
Very truly yours,
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
E-2-1
EXHIBIT F
FORM OF TRANSFEROR CERTIFICATE FOR CLASS P AND CLASS C CERTIFICATES
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC5
Re: Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-BC5
Ladies and Gentlemen:
In connection with our disposition of the Class [__] Certificate, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act and (b) we have not offered or sold any Certificates to, or solicited offers
to buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement, dated as of November 1,
2006, among Xxxxxxx Xxxxx Mortgage, Inc., as depositor, Wilshire Credit
Corporation, as servicer, and U.S. Bank National Association, as trustee.
Very truly yours,
----------------------------------------
Name of Transferor
By:
------------------------------------
Name:
----------------------------------
Title
----------------------------------
F-1
EXHIBIT G
FORM OF INVESTMENT LETTER
(ACCREDITED INVESTOR)
[DATE]
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC5
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-BC5
Ladies and Gentlemen:
____________________ (the "Purchaser") intends to purchase from __________
(the "Transferor") $ ________ by original principal balance (the "Transferred
Certificates") of Mortgage Loan Asset-Backed Certificates, Series 2006-BC5 (the
"Certificates"), issued pursuant to a Pooling and Servicing Agreement, dated as
of November 1, 2006 (the "Pooling and Servicing Agreement"), among Xxxxxxx Xxxxx
Mortgage Investors, Inc., as depositor (the "Depositor"), Wilshire Credit
Corporation, as servicer (the "Servicer"), and U.S. Bank National Association,
as trustee (the "Trustee"). [THE PURCHASER INTENDS TO REGISTER THE TRANSFERRED
CERTIFICATE IN THE NAME OF ____________, AS NOMINEE FOR _____________.] All
terms used and not otherwise defined herein shall have the meanings set forth in
the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (1) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.
2. The Certificates will bear a legend to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE
"1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT, DIRECTLY OR
INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED, OR OFFERED FOR SALE, UNLESS SUCH
TRANSFER IS NOT SUBJECT TO REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY
APPLICABLE STATE SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO TRANSFER
OF THIS CERTIFICATE SHALL BE MADE UNLESS
G-1
THE TRUSTEE SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE
TRUSTEE (A) AN INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND (B)
REPRESENTATIONS FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE OF THE
CERTIFICATES.
3. All Certificates other than ERISA Restricted Certificates and Class R
Certificates will bear a legend to the following effect:
UNTIL THE TERMINATION OF THE SWAP AGREEMENT, EACH TRANSFEREE OF THIS
CERTIFICATE SHALL BE DEEMED TO REPRESENT (OR IN THE CASE OF A DEFINITIVE
CERTIFICATE, SHALL REPRESENT) TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT,
AND IS NOT ACTING FOR, ON BEHALF OF OR WITH ANY ASSETS OF, ANY EMPLOYEE BENEFIT
PLAN OR OTHER ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR ANY PLAN SUBJECT TO SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR (B) THE
TRANSFEREE'S ACQUISITION AND HOLDING OF THIS CERTIFICATE IS COVERED BY AND
EXEMPT UNDER ANY OF SECTION 408(B)(17) OF ERISA OR SECTION 4975(D)(20) OF THE
CODE, PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 00-00, XXXX 00-0, XXXX
00-00, XXXX 00-00, XXXX 96-23, EACH AS AMENDED.
4. All ERISA Restricted Certificates will bear a legend to the following
effect:
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED (A) A REPRESENTATION FROM THE TRANSFEREE THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN SUBJECT TO
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A
PLAN SUBJECT TO ANY STATE, LOCAL, FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW")
(COLLECTIVELY, A "PLAN"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS
CERTIFICATE FOR, ON BEHALF OF OR WITH ANY ASSETS OF ANY SUCH PLAN, (B) IF THE
CERTIFICATE HAS BEEN THE SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING, A
REPRESENTATION THAT SUCH TRANSFEREE IS AN INSURANCE COMPANY THAT IS ACQUIRING
THE CERTIFICATE WITH ASSETS OF AN "INSURANCE COMPANY GENERAL ACCOUNT," AS
DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE")
95-60, AND THE ACQUISITION AND HOLDING OF THE CERTIFICATE ARE COVERED AND EXEMPT
UNDER SECTIONS I AND III OF PTCE 95-60, OR (C) SOLELY IN THE EVENT THE
CERTIFICATE IS A DEFINITIVE CERTIFICATE, AN OPINION OF COUNSEL SATISFACTORY TO
THE TRUSTEE, AND UPON WHICH THE TRUSTEE SHALL BE ENTITLED TO RELY, TO THE EFFECT
THAT THE ACQUISITION AND HOLDING OF THE CERTIFICATE WILL NOT CONSTITUTE OR
RESULT IN A NONEXEMPT PROHIBITED TRANSACTION UNDER TITLE I OF ERISA OR SECTION
4975 OF THE CODE, OR A VIOLATION OF SIMILAR LAW, AND WILL NOT SUBJECT THE
TRUSTEE, THE SERVICER OR THE DEPOSITOR TO ANY OBLIGATION IN ADDITION TO THOSE
EXPRESSLY UNDERTAKEN IN THE POOLING AND SERVICING AGREEMENT, WHICH OPINION OF
COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE SERVICER OR THE DEPOSITOR.
IF THE CERTIFICATE IS NOT A DEFINITIVE CERTIFICATE, THE TRANSFEREE IS DEEMED TO
HAVE MADE THE REPRESENTATION IN (A) OR (B) ABOVE.
G-2
5. The Purchaser is acquiring the Transferred Certificates for its own
account [FOR INVESTMENT ONLY]**/ and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.
6. The Purchaser (a) is a substantial, sophisticated institutional investor
having such knowledge and experience in financial and business matters, and in
particular in such matters related to securities similar to the Certificates,
such that it is capable of evaluating the merits and risks of investment in the
Certificates, (b) is able to bear the economic risks of such an investment and
(c) is an "accredited investor" within the meaning of Rule 501 (a) promulgated
pursuant to the Securities Act.
7. The Purchaser will not nor has it authorized nor will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification pursuant
thereto. Neither the Purchaser nor anyone acting on its behalf has offered the
Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
8. Either (i) the Purchaser of a Certificate that is neither an ERISA
Restricted Certificate nor a Class R Certificate is not, and is not acting for,
on behalf of or with any assets of, an employee benefit plan or other
arrangement subject to Title I of ERISA or plan subject to Section 4975 of the
Code, or (ii) until the termination of the Swap Agreement, such Purchaser's
acquisition and holding of such Certificates are eligible for exemptive relief
under any of Section 408(b)(17) of ERISA or Section 4975(d)(20) of the Code,
Prohibited Transaction Class Exemption ("PTCE") 00-00, XXXX 00-0, XXXX 91-38,
PTCE 95-60 or XXXX 00-00
0. Xxx Xxxxxxxxx (X) is not an employee benefit plan or other arrangement
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), a plan subject to Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"), or a plan subject to any state, local,
federal, non-U.S. or other law substantively similar to the foregoing provisions
of ERISA or the Code ("Similar Law") (collectively, "Plan"), and is not directly
or indirectly acquiring the Certificate for, on behalf of, or with any assets of
any such Plan, (B) if the Certificate has been the subject of an
ERISA-Qualifying Underwriting, is an insurance company that is acquiring the
Certificate with assets of an "insurance company general account," as defined in
Section V(e) of Prohibited Transaction Class Exemption ("PTCE") 95-60, and the
acquisition and holding of the Certificate are covered and exempt under Sections
I and III of PTCE 95-60, or (C) solely in the case of any such Certificate that
is a Definitive Certificate, will deliver herewith an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee shall be entitled to
rely, to the effect that the acquisition and holding of the Certificate will not
constitute or result in a nonexempt prohibited transaction under Title I of
ERISA or Section 4975
----------
**/ Not required of a broker/dealer purchaser.
G-3
of the Code, or a violation of Similar Law, and will not subject the Trustee,
the Servicer or the Depositor to any obligation in addition to those expressly
undertaken in the Pooling and Servicing Agreement, which Opinion of Counsel
shall not be an expense of the Trustee, the Servicer or the Depositor.
10. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit G to the Pooling and Servicing Agreement.
11. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
G-4
EXHIBIT H
FORM OF RULE 144A INVESTMENT LETTER
(QUALIFIED INSTITUTIONAL BUYER)
[DATE]
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC5
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-BC5
Ladies and Gentlemen:
______________________ (the "Purchaser") intends to purchase from
______________ (the "Transferor") $_______ by original principal balance (the
"Transferred Certificates") of Mortgage Loan Asset-Backed Certificates, Series
2006-BC5 (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement, dated as of November 1, 2006 (the "Pooling and Servicing Agreement'),
among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor (the "Depositor"),
Wilshire Credit Corporation, as servicer (the "Servicer"), and U.S. Bank
National Association, as trustee (the "Trustee"). [THE PURCHASER INTENDS TO
REGISTER THE TRANSFERRED CERTIFICATE IN THE NAME OF ____________ AS NOMINEE FOR
____________.] All terms used and not otherwise defined herein shall have the
meanings set forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
In connection with our acquisition of the above Transferred Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act'), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Transferred Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Transferred Certificates, (d) solely in the case of a
Certificate other than an ERISA Restricted Certificate or Class R Certificate,
either (i) we are not, and are not acquiring the Certificate for, on behalf of
or with any assets of, any employee benefit plan or other arrangement subject to
Title I of ERISA or any plan subject to Section 4975 of the Code, or (ii) until
the termination of the Swap Agreement, our acquisition and holding of the
Certificate is covered by and exempt under any of Section 408(b)(17) of ERISA or
Section 4975(d)(20) of the Code, Prohibited Transaction Class Exemption ("PTCE")
00-00, XXXX 00-0, XXXX 91-38, PTCE 95-60, or PTCE 96-23, (e) we (A) are not an
employee benefit plan or other arrangement subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or a
plan subject to any state, local, federal,
H-1
non-U.S. or other law substantively similar to the foregoing provisions of ERISA
or the Code ("Similar Law") (collectively, "Plan"), and are not directly or
indirectly acquiring the Certificate for, on behalf of, or with any assets of
any such Plan, (B) if the Certificate has been the subject of an
ERISA-Qualifying Underwriting, are an insurance company that is acquiring the
Certificate with assets of an "insurance company general account," as defined in
Section V(e) of Prohibited Transaction Class Exemption ("PTCE") 95-60, and the
acquisition and holding of the Certificate are covered and exempt under Sections
I and III of PTCE 95-60, or (C) solely in the event the Certificate is a
Definitive Certificate, shall herewith deliver an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee shall be entitled to
rely, to the effect that the acquisition and holding of the Certificate will not
constitute or result in a nonexempt prohibited transaction under Title I of
ERISA or Section 4975 of the Code, or a violation of Similar Law, and will not
subject the Trustee, the Servicer or the Depositor to any obligation in addition
to those expressly undertaken in the Pooling and Servicing Agreement, which
Opinion of Counsel shall not be an expense of the Trustee, the Servicer or the
Depositor, (f) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Certificates, and (g) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act and have completed one of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale of the Transferred Certificates to us is being made in
reliance on Rule 144A. We are acquiring the Transferred Certificates for our own
account or for resale pursuant to Rule 144A and further understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed by us, based upon certifications of such purchaser or
information we have in our possession, to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Securities Act.
We agree to indemnify the Trustee, the Servicer and the Depositor against
any liability that may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
X-0
XXXXX 0
XXXXXXXXX XXXXXXXXXXXXX BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with the purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $____________* in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District
of Columbia, the business of which is substantially confined to
banking and is supervised by Federal, State or territorial
banking commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision
over such institution or is a foreign savings and loan
association or equivalent institution and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is
----------
* Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
H-3
subject to supervision by the insurance commissioner or a similar
official or agency of the State, territory or the District of
Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency
or instrumentality of the State or its political subdivisions,
for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974,
as amended.
___ Investment Advisor. The Buyer is an investment advisor registered
under the Investment Advisors Act of 1940, as amended.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301 (c) or (d) of the Small Business
Investment Act of 1958, as amended.
___ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
H-4
6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
X-0
XXXXX 0
XXXXXXXXX XXXXXXXXXXXXX BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A"), because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (1) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $_________ securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which owned
in the aggregate $_______ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.
H-6
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
IF AN ADVISER:
----------------------------------------
Print Name of Buyer
Date:
----------------------------------
H-7
EXHIBIT I
REQUEST FOR RELEASE OF DOCUMENTS
To: U.S. Bank National Association
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Document Custody Services/SURF 2006-BC5
With a Copy to:
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC5
Re: Pooling and Servicing Agreement, dated as of November 1, 2006, among
Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Wilshire Credit
Corporation, as servicer, and U.S. Bank National Association, as trustee,
relating to Specialty Underwriting and Residential Finance Trust, Mortgage
Loan Asset-Backed Certificates, Series 2006-BC5
In connection with the administration of the Mortgage Loans held by you, as
Trustee, pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt, of the Mortgage File for
the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number: _____________________________
Mortgagor Name, Address & Zip Code: _______________
Reason for Requesting Documents (check one):
_______1. Mortgage Paid in Full
_______2. Foreclosure
_______3. Substitution
_______4. Other Liquidation (Repurchases, etc.)
_______5. Nonliquidation
_______6. Other Reason: _________________
Address to which the Trustee should deliver the Mortgage File:
I-1
By:
------------------------------------
(authorized signer)
Address:
-------------------------------
Date:
----------------------------------
If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
Trustee
U.S. Bank National Association
Please acknowledge the execution of the above request by your signature and date
below:
------------------------------------- ----------------------------------------
Signature Date
Documents returned to Trustee:
------------------------------------- ----------------------------------------
Trustee Date
I-2
EXHIBIT J
FORM OF POWER OF ATTORNEY
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
WILSHIRE CREDIT CORPORATION
00000 X.X. Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Attn: _________________________________
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that U.S. Bank National Association, having
its principal place of business at 00 Xxxxxxxxxx Xxxxxx, Mail Code EP-MN-WS3D,
Xx. Xxxx, Xxxxxxxxx 00000-0000, as Trustee (the "Trustee") pursuant to that
Pooling and Servicing Agreement among Xxxxxxx Xxxxx Mortgage Investors, Inc.
(the "Depositor"), Wilshire Credit Corporation (the "Servicer"), and the
Trustee, dated as of November 1, 2006 (the "Pooling and Servicing Agreement"),
hereby constitutes and appoints the Servicer, by and through the Servicer's
officers, the Trustee's true and lawful Attorney-in-Fact, in the Trustee's name,
place and stead and for the Trustee's benefit, in connection with all mortgage
loans serviced by the Servicer pursuant to the Pooling and Servicing Agreement
for the purpose of performing all acts and executing all documents in the name
of the Trustee as may be customarily and reasonably necessary and appropriate to
effectuate the following enumerated transactions in respect of any of the
mortgages or deeds of trust (the "Mortgages" and the "Deeds of Trust",
respectively) and promissory notes secured thereby (the "Mortgage Notes") for
which the undersigned is acting as Trustee for various certificateholders
(whether the undersigned is named therein as mortgagee or beneficiary or has
become mortgagee by virtue of endorsement of the Mortgage Note secured by any
such Mortgage or Deed of Trust) and for which the Servicer is acting as
servicer, all subject to the terms of the Pooling and Servicing Agreement.
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recordings is for the purpose of correcting the Mortgage
or Deed of Trust to conform same to the original intent of the parties
thereto or to correct title errors discovered after such title insurance
was issued and said modification or re-recording, in either instance, does
not adversely affect the lien of the Mortgage or Deed of Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to a lien that
is replacing a lien existing as of the date of the Mortgage or Deed of
Trust or an easement in favor of a public utility company of a government
agency or unit with powers of eminent domain; this section shall include,
without limitation, the execution of partial satisfactions/releases,
partial reconveyances or the execution or requests to trustees to
accomplish same.
3. The conveyance of the properties to the mortgage insurer, or the closing of
the title to the property to be acquired as real estate owned, or
conveyance of title to real estate owned.
4. The completion of loan assumption agreements.
J-1
5. The full satisfaction/release of a Mortgage or Deed of Trust or full
conveyance upon payment and discharge of all sums secured thereby,
including, without limitation, cancellation of the related Mortgage Note.
6. The assignment of any Mortgage or Deed of Trust and the related Mortgage
Note, in connection with the repurchase of the mortgage loan secured and
evidenced thereby.
7. The full assignment of a Mortgage or Deed of Trust upon payment and
discharge of all sums secured thereby in conjunction with the refinancing
thereof, including, without limitation, the assignment of the related
Mortgage Note.
8. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of
a deed in lieu of foreclosure, or the completion of judicial or
non-judicial foreclosure or termination, cancellation or rescission of any
such foreclosure, including, without limitation, any and all of the
following acts:
(a) the substitution of trustee(s) serving under a Deed of Trust, in
accordance with state law and the Deed of Trust;
(b) the preparation and issuance of statements of breach or
non-performance;
(c) the preparation and filing of notices of default and/or notices of
sale;
(d) the cancellation/rescission of notices of default and/or notices
of sale;
(e) the taking of a deed in lieu of foreclosure; and
(f) the preparation and execution of such other documents and
performance of such other actions as may be necessary under the terms
of the Mortgage, Deed of Trust or state law to expeditiously complete
said transactions in paragraphs 8(a) through 8(e), above.
The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect and has not
been revoked unless an instrument of revocation has been made in writing by the
undersigned.
J-2
IN WITNESS WHEREOF, U.S. Bank National Association, as Trustee pursuant to
that Pooling and Servicing Agreement among the Depositor, the Servicer, and the
Trustee, dated as of November 1, 2006 (Specialty Underwriting and Residential
Finance Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-BC5), has
caused its corporate seal to be hereto affixed and these presents to be signed
and acknowledged in its name and behalf by ________________ its duly elected and
authorized ____________ this day of ___, 200__.
U.S. BANK NATIONAL ASSOCIATION
as Trustee for Specialty Underwriting
and Residential Finance Trust, Mortgage
Loan Asset-Backed Certificates, Series
2006-BC5
By
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
STATE OF
----------------------------
COUNTY OF
---------------------------
On ____________ __________, 200__, before me, the undersigned, a Notary
Public in and for said state, personally appeared ____________, _______________
of U.S. Bank National Association as Trustee for Specialty Underwriting and
Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series
2006-BC5, personally known to me to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed that same in
his/her authorized capacity, and that by his/her signature on the instrument the
entity upon behalf of which the person acted and executed the instrument.
WITNESS my hand and official seal.
(SEAL)
-------------------------------------
Notary Public
My Commission Expires ______________
J-3
EXHIBIT K
FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Wilshire Credit Corporation
00000 XX Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Re: Pooling and Servicing Agreement (the "Agreement") dated as of November 1,
2006 among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Wilshire
Credit Corporation, as servicer and U.S. Bank National Association, as
trustee, relating to Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-BC5
The Trustee hereby certifies to the Depositor, the Servicer and their
officers, directors and Affiliates, and with the knowledge and intent that they
will rely upon this certification, that:
(1) I have reviewed the annual report on Form 10-K for the fiscal year
[2006] (the "Annual Report"), and all reports on Form 8-K (if any) and on Form
10-D required to be filed in respect of the period covered by the Annual Report
(collectively with the Annual Report, the "Reports"), of the Issuing Entity;
(2) To the best of my knowledge, and assuming the accuracy of the
statements required to be made or data required to be delivered by the Servicer
and Depositor (to the extent that such statements or data were received by the
Trustee and are relevant to the statements made by the Trustee in this Back-Up
Certification), the information in the Reports, taken as a whole, does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
the Annual Report;
(3) To the best of my knowledge, and assuming the accuracy of the
statements required to be made or data required to be delivered by the Servicer
and Depositor (to the extent that such statements or data were received by the
Trustee and are relevant to the statements made by the Trustee in this Back-Up
Certification), the distribution and any other information required to be
provided by the Trustee to the Depositor and each Servicer under the Pooling and
Servicing Agreement for inclusion in the Reports is included in the Reports;
(4) The report on assessment of compliance (the "Assessment of
Compliance') with servicing criteria for asset-backed securities of the Trustee
and its related attestation report (the "Attestation Report") on assessment of
compliance with servicing criteria required to be included in the Annual Report
in accordance with Item 1122 of Regulation AB and Exchange Act Rules 13a-18 and
15d-18 has been included as an exhibit to the Annual Report. Any material
instances of non-compliance of the Trustee are described in such report and have
been disclosed in the Annual Report;
K-1
(5) A review of the Trustee's activities during the preceding calendar
year or portion thereof and of such Trustee's performance of its distribution
and calculation activities under the Agreement has been made under my
supervision. Based on my knowledge, based on such review, the Trustee has
fulfilled all its obligations with respect to such distribution and calculation
activities under the Agreement, in all material respects throughout the year or
applicable portion thereof, or, if there has been a failure to fulfill any such
obligation in any material respect, the Trustee has specified each such failure
known to such officer and the nature and status thereof; and
(6) Based on my knowledge, and assuming the accuracy of the statements
required to be made or data required to be delivered by the Servicer and
Depositor (to the extent that such statements or data were received by the
Trustee and are relevant to the statements made by the Trustee in this Back-Up
Certification), the Assessment of Compliance and the related Attestation Report,
taken as a whole, do not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in the light of
the circumstances under which such statements were made, not misleading with
respect to the period of time covered by the Assessment of Compliance and the
related Attestation Report.
Date:
-------------------------------
U.S. Bank National Association, as
Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
K-2
EXHIBIT L
FORM OF OFFICER'S CERTIFICATE OF SERVICER
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-BC5
Wilshire Credit Corporation (the "Servicer") certifies to the
Depositor and the Trustee, and their officers, directors and Affiliates, and
with the knowledge and intent that they will rely upon this certification, that:
(1) I am responsible for reviewing the activities performed by the
Servicer under the Pooling and Servicing Agreement and I have reviewed, or
persons under my supervision have reviewed, the servicer compliance statement of
the Servicer and the compliance statements of each Subservicer, if any, engaged
by the Servicer provided to the Depositor and the Trustee for the Issuing
Entity's fiscal year [___] in accordance with Item 1123 of Regulation AB (each a
"Compliance Statement"), the report on assessment of the Servicer's compliance
with the servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria") and reports on Assessment of Compliance with servicing
criteria for asset-backed securities of the Servicer and of each Subservicer [or
Subcontractor], if any, engaged or utilized by the Servicer provided to the
Depositor and the Trustee for the Issuing Entity's fiscal year [___] in
accordance with Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934,
as amended (the "Exchange Act") and Item 1122 of Regulation AB (each a
"Servicing Assessment"), the registered public accounting firm's attestation
report provided in accordance with Rules 13a-18 and 15d-18 under the Exchange
Act and Section 1122(b) of Regulation AB related to each Servicing Assessment
(each a "Attestation Report"), and all servicing reports, officer's certificates
and other information relating to the servicing of the Mortgage Loans by the
Servicer during 200[_] that were delivered or caused to be delivered by the
Servicer pursuant to the Agreement (collectively, the "Servicing Information");
(2) Based on my knowledge, and assuming the accuracy of the
information provided to the Servicer in connection with the performance of the
Servicer's duties under the Pooling and Servicing Agreement and the accuracy of
the information provided to the Servicer in connection with the transfer of
servicing of the Mortgage Loans to the Servicer, the Servicing Information,
taken as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in the
light of the circumstances under which such statements were made, not misleading
with respect to the period of time covered by the Servicing Information;
(3) Based on my knowledge, the servicing information required to be
provided to the Trustee by the Servicer pursuant to the Pooling and Servicing
Agreement has been provided to the Trustee;
(4) Based on my knowledge and the compliance review conducted in
preparing Compliance Statement of the Servicer and, if applicable, reviewing
each Compliance Statement of each Subservicer, if any, engaged by the Servicer,
and except as disclosed in such Compliance Statement[(s)], the Servicer
[(directly and through its Subservicers, if any)] has fulfilled its obligations
under the Pooling and Servicing Agreement in all material respects;
L-1
(5) Each Servicing Assessment of the Servicer and of each Subservicer
[or Subcontractor], if any, engaged or utilized by the Servicer and its related
Attestation Report required to be included in the Annual Report in accordance
with Item 1122 of Regulation AB and Exchange Act Rules 13a-18 and 15d-18 has
been provided to the Depositor and the Trustee. Any material instances of
non-compliance are described in any such Servicing Assessment or Attestation
Report.
Date:
-------------------------------
Wilshire Credit Corporation,
as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
L-2
EXHIBIT M
[RESERVED]
M-1
EXHIBIT N
FORM OF AUCTION PROCEDURES
The following sets forth the auction procedures to be followed in
connection with Pooling and Servicing Agreement (the "Agreement") among Xxxxxxx
Xxxxx Mortgage Investors, Inc., U.S. Bank National Association as trustee and
Wilshire Credit Corporation, dated November 1, 2006. Capitalized terms used
herein that are not otherwise defined shall have the meanings described thereto
in the Agreement.
1. Upon notice that the aggregate Stated Principal Balance of the Mortgage
Loans is equal to ten percent (10%) or less of the Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date (which notice will also be
sent to the Servicer), the Trustee will initiate the general auction
procedures consisting of the following: (i) prepare a general solicitation
package along with a confidentiality agreement; (ii) derive a list of
bidders which shall include (x) the Holders of the Class C and Class P
Certificates (other than the Sponsor or any Affiliate of the Sponsor) and
(y) a minimum of three (3) bidders including the Holders of the Class C
Certificates but not including the holders of the Class P Certificates,
each of whom shall be a nationally recognized participant in mortgage
finance; (iii) initiate contact with all bidders, (iv) send a
confidentiality agreement to all bidders; and (v) upon receipt of a signed
confidentiality agreement, send the general bid solicitation package to all
bidders.
2. The general solicitation package will include (i) the Agreement; (ii) a
copy of all monthly trustee reports or electronic access thereto; (iii) a
form of a Mortgage Loan Purchase Agreement acceptable to the Trustee, the
Servicer and Depositor (the Mortgage Loans and other property included in
the Trust Fund will be offered and sold on an "as is, where is" basis,
without any representation or warranty, expressed or implied, of any kind
and without recourse to, or guaranty by, the Trustee); (iv) a description
of the minimum price as set forth in the Agreement; (v) a formal bid sheet
as determined by the Depositor and accepted by the Trustee; (vi) a detailed
timetable (which shall include, but not be limited to, the provisions and
dates preliminary bids, due diligence and final bids); and (vii) a data
tape of the Mortgage Loans as of the related Remittance Period reflecting
substantially the same data attributes used in the Prospectus Supplement
dated November 22, 2006.
3. A detailed timetable will be determined approximately ten (10) days prior
to each auction sale and shall be determined by the Depositor with the
consent of the Trustee, which consent shall not be unreasonably withheld,
within reasonable market conditions at the time of the auction sale.
4. All bids will be submitted directly to the Trustee. Upon acceptance of a
bid which meets or exceeds the conditions set forth in Section 9.01, the
Trustee will complete the auction by selling the Mortgage Loans and the
other property included in the Trust Fund and distribute the proceeds from
the auction to the holders of the Certificates on the next succeeding
Distribution Date as set forth in the Agreement. In the event the Trustee
receives two (2) or more bids from bidders above the Auction Termination
Price and at equal bids (a "Tie Event"), the Trustee shall notify such
bidders to resubmit a bid to break the Tie Event.
5. Upon determination that the minimum price was not met, the Trustee shall
cancel such auction sale and notify the Servicer and Depositor immediately.
6. The Trustee, the Servicer and the Depositor may mutually agree to revise or
supplement these provisions as necessary, provided that the purchase price
is at all times required to be at least the Auction Termination Price.
N-1
EXHIBIT O-1
FORM OF CLASS A-1 CAP CONTRACT
O-1-1
Page 1 of 21
(THE BANK OF NEW YORK. LOGO)
Dated: November 28, 2006
RATE CAP TRANSACTION
RE: BNY REFERENCE NO. 38513
Ladies and Gentlemen:
The purpose of this letter agreement ("AGREEMENT") is to confirm the terms
and conditions of the rate Swap Transaction entered into on the Trade Date
specified below (the "TRANSACTION") between The Bank of New York ("BNY"), a
trust company duly organized and existing under the laws of the State of New
York, and Specialty Underwriting & Residential Finance Trust, Series 2006-BC5
(the "COUNTERPARTY"), as represented by U.S Bank National Association, not in
its individual capacity, but solely as Trustee under the Pooling and Servicing
Agreement, dated and effective November 1, 2006, among Xxxxxxx Xxxxx Mortgage
Investors, Inc., as Depositor, Wilshire Credit Corporation, as Servicer, and
U.S. Bank National Association, as Trustee (the "POOLING AND SERVICING
AGREEMENT"). This Agreement, which evidences a complete and binding agreement
between you and us to enter into the Transaction on the terms set forth below,
constitutes a "CONFIRMATION" as referred to in the "ISDA FORM MASTER AGREEMENT"
(as defined below), as well as a "Schedule" as referred to in the ISDA Form
Master Agreement.
1. FORM OF AGREEMENT. This Agreement is subject to the 2000 ISDA
Definitions (the "DEFINITIONS"), as published by the International Swaps and
Derivatives Association, Inc. ("ISDA"). Any reference to a "Swap Transaction" in
the Definitions is deemed to be a reference to a "Transaction" for purposes of
this Agreement, and any reference to a "Transaction" in this Agreement is deemed
to be a reference to a "Swap Transaction" for purposes of the Definitions. You
and we have agreed to enter into this Agreement in lieu of negotiating a
Schedule to the 1992 ISDA Master Agreement (Multicurrency--Cross Border) form
(the "ISDA FORM MASTER AGREEMENT"). An ISDA Form Master Agreement, as modified
by the Schedule terms in Paragraph 4 of this Confirmation (the "MASTER
AGREEMENT"), shall be deemed to have been executed by you and us on the date we
entered into the Transaction. For the avoidance of doubt, the Transaction
described herein shall be the sole Transaction governed by such ISDA Form Master
Agreement. Except as otherwise specified, references herein to Sections shall be
to Sections of the Master Agreement, and references to Paragraphs shall be to
paragraphs of this Agreement. Each party hereto agrees that the Master Agreement
deemed to have been executed by the parties hereto shall be the same Master
Agreement referred to in the agreement setting forth the terms of transaction
reference numbers 38514 and 38515. In the event of any inconsistency between the
provisions of this Agreement and the Definitions or the Master Agreement, this
Agreement shall prevail for purposes of the Transaction. Capitalized terms not
otherwise defined herein or in the Definitions or the Master Agreement shall
have the meaning defined for such term in the Pooling and Servicing Agreement.
2. CERTAIN TERMS. The terms of the particular Transaction to which this
Confirmation relates are as follows:
Page 2 of 21
Type of Transaction: Rate Cap
Notional Amount: With respect to any Calculation Period, the
lesser of: (i) the amount set forth on Schedule
I attached hereto for such Calculation Period
and (ii) the Class Certificate Principal Balance
of the Class A-1 Certificates (as defined in the
Pooling and Servicing Agreement) for such
Floating Rate Payer Payment Date.
The Trustee under the Pooling and Servicing
Agreement shall provide at least five (5)
business days notice prior to each Floating Rate
Payer Payment Date for each Calculation Period
to The Bank of New York if the Class Certificate
Principal Balance of the Class A-1 Certificates
is less than the Schedule I attached hereto.
Trade Date: November 3, 2006
Effective Date: November 28, 2006
Termination Date: May 25, 2007, subject to adjustment in
accordance with the Modified Following Business
Day Convention
FLOATING AMOUNTS
Floating Rate Payer: BNY
Cap Rate: For each Calculation Period, as set forth for
such period on Schedule I attached hereto.
Floating Rate for initial
Calculation Period: To be determined
Floating Rate Day Count
Fraction: Actual/360
Floating Rate Option: USD-LIBOR-BBA, provided, however, if the
Floating Rate Option for a Calculation Period is
greater than 10.86% then the Floating Rate
Option for such Calculation Period shall be
deemed equal to 10.86%.
Designated Maturity: One month
Spread: Inapplicable
Floating Rate Payer
Period End Dates: The 25th day of each month, beginning on
December 25, 2006 and ending on the Termination
Date, subject to adjustment in accordance with
the Following Business Day Convention.
Floating Rate Payer
Payment Dates: Early Payment shall be applicable. The Floating
Rate Payer Payment Date shall be two (2)
Business Days preceding each Floating Rate Payer
Period End Date.
Reset Dates: The first day of each Calculation Period
Page 3 of 21
Compounding: Inapplicable
Business Days for Payments
By both parties: New York
Calculation Agent: BNY
3. ADDITIONAL PROVISIONS:
1) RELIANCE. Each party hereto is hereby advised and acknowledges that the
other party has engaged in (or refrained from engaging in) substantial financial
transactions and has taken (or refrained from taking) other material actions in
reliance upon the entry by the parties into the Transaction being entered into
on the terms and conditions set forth herein.
2) TRANSFER, AMENDMENT AND ASSIGNMENT. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of Standard & Poor's Ratings Service, a
division of The XxXxxx-Xxxx Companies, Inc ("S&P") and Xxxxx'x Investors
Service, Inc. ("MOODY'S"), has been provided notice of the same and confirms in
writing (including by facsimile transmission) that it will not downgrade,
qualify, withdraw or otherwise modify its then-current ratings on the Class A-1
Certificates issued under the Pooling and Servicing Agreement (the
"CERTIFICATES").
4. PROVISIONS DEEMED INCORPORATED IN A SCHEDULE TO THE MASTER AGREEMENT:
1) NO PAYMENT NETTING AMONG TRANSACTIONS. The parties agree that
subparagraph (ii) of Section 2(c) of the ISDA Form Master Agreement will apply
to this Transaction.
2) TERMINATION PROVISIONS. Subject to the provisions of Paragraph 4(12),
for purposes of the Master Agreement:
(a) "SPECIFIED ENTITY" in relation to BNY or the Counterparty shall mean:
none.
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14.
(c) APPLICABILITY. The following provisions apply or do not apply to the
parties as specified below:
(i) Section 5(a)(i) (FAILURE TO PAY OR DELIVER):
(A) will apply to BNY; and
(B) will apply to the Counterparty.
(ii) Section 5(a)(ii) (BREACH OF AGREEMENT):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
(iii) Section 5(a)(iii) (CREDIT SUPPORT DEFAULT):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
(iv) Section 5(a)(iv) (MISREPRESENTATION):
Page 4 of 21
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
(v) Section 5(a)(v) (DEFAULT UNDER SPECIFIED TRANSACTION):
(A) will not apply to BNY; and
(B) will not apply to the Counterparty.
(vi) Section 5(a)(vi) (CROSS DEFAULT):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
For the purposes of Section 5(a)(vi):
"SPECIFIED INDEBTEDNESS" will have the meaning specified in
Section 14 of this Agreement, except that it shall not include
indebtedness in respect of deposits received.
"THRESHOLD AMOUNT" means, 3% of consolidated shareholders equity
of BNY and its subsidiaries determined in accordance with
generally accepted accounting principles of the United States
consistently applied as of the last day of the fiscal quarter
ended immediately prior to the occurrence or existence of an
event for which a Threshold Amount is applicable under Section
5(a)(vi) of this Agreement.
(vii) Section 5(a)(vii) (BANKRUPTCY):
(A) will apply to BNY; and
(B) (1) subclauses (2), (4) (but only if the proceeding or
petition is instituted or presented by the Counterparty or its
affiliates), (7) and (8) (but only with respect to clauses (2),
(4) and (7) to the extent of disapplication herein) of Section
5(a)(vii) will not apply to the Counterparty, and the remaining
provisions of Section 5(a)(vii) will apply to the Counterparty;
and (2) the words "trustee" and "custodian" in subclause (6) will
not include the Trustee; and (3) events described in Section
5(a)(vii) occurring with respect to the Trust or the Supplemental
Interest Trust are deemed to occur to the Counterparty.
(viii) Section 5(a)(viii) (MERGER WITHOUT ASSUMPTION):
(A) will apply to BNY; and
(B) will apply to the Counterparty.
(ix) Section 5(b)(i) (ILLEGALITY):
(A) will apply to BNY; and
(B) will apply to the Counterparty.
(x) Section 5(b)(ii) (TAX EVENT):
Page 5 of 21
(A) will apply to BNY; provided that the words "(x) any action
taken by a taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is
entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (y)" shall
be deleted; and
(B) will not apply to the Counterparty.
(xi) Section 5(b)(iii) (TAX EVENT UPON MERGER):
(A) will apply to BNY, provided, that BNY shall not be entitled
to designate an Early Termination Date by reason of a Tax Event
upon Merger in respect of which it is the Affected Party; and
(B) will apply to the Counterparty.
(xii) Section 5(b)(iv) (CREDIT EVENT UPON MERGER):
(A) will not apply to BNY; and
(B) will not apply to the Counterparty.
(xiii) Section 5(b)(v) (ADDITIONAL TERMINATION EVENT):
(A) will apply to BNY with respect to Paragraph 4(2)(g)(iii) and
(iv); and
(B) will apply to the Counterparty with respect to Paragraph
(2)(g)(i), and (ii).
(d) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a):
(A) will not apply to BNY; and
(B) will not apply to the Counterparty.
(e) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e), the
Second Method and Market Quotation will apply. For such purpose, for so
long as the Certificates are rated by Moody's, if BNY is the Affected Party
in respect of an Additional Termination Event or a Tax Event Upon Merger or
the Defaulting Party in respect of any Event of Default (but not, in any
case, in respect of a Termination Event arising from an Illegality or Tax
Event), the following provisions shall apply:
(i) The definitions of "Market Quotation" and "Settlement Amount" are
amended in their entirety to read as follows:
"MARKET QUOTATION" means, with respect to one or more Terminated
Transactions, an offer capable of becoming legally binding upon
acceptance made by a Reference Market-maker with ratings that
meet the Collateralization Requirement or the Ratings
Requirement, as the case may be, for an amount that would be paid
to the Counterparty (expressed as a negative number) or by the
Counterparty (expressed as a positive number) in consideration of
an agreement between the Counterparty and such Reference
Market-maker to enter into a transaction (the "REPLACEMENT
Page 6 of 21
TRANSACTION"), with commercial terms substantially the same as
those of this Agreement (save for the exclusion of provisions
relating to Transactions that are not Terminated Transactions)
(which shall be determined by the Counterparty, acting in a
commercially reasonable manner), that would have the effect of
preserving the economic equivalent for the Counterparty of any
payment or delivery (whether the underlying obligation was
absolute or contingent and assuming the satisfaction of each
applicable condition precedent) by the parties under Section
2(a)(i) in respect of such Terminated Transactions or group of
Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that
Date. For this purpose, Unpaid Amounts in respect of the
Terminated Transaction or group of Transactions are to be
excluded but, without limitation, any payment or delivery that
would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition
precedent) after that Early Termination Date is to be included.
"SETTLEMENT AMOUNT" means, with respect to any Early Termination
Date: --
(a) the Termination Currency Equivalent of the Market Quotation
(whether positive or negative) for each Terminated Transaction or
group of Terminated Transactions for which a Market Quotation is
accepted by the Counterparty so as to become legally binding on
or before the day falling ten (10) Local Business Days after the
day on which the Early Termination Date is designated (or such
later day not be later than the Early Termination Date as the
Counterparty may specify in writing to BNY); or (if there is no
such accepted Market Quotation)
(b) the Counterparty's Loss (whether positive or negative and
without reference to any Unpaid amounts) for the relevant
Terminated Transaction or group of Terminated Transactions.
(ii) the Counterparty and, if request is made in writing within two
Local Business Days after the day on which the Early Termination Date
is designated, BNY, shall use reasonable efforts to obtain one or more
Market Quotations before the date determined pursuant to clause (a) of
the definition of "Settlement Amount".
(iii) Notwithstanding anything to the contrary in Section 6(e)(i)(3)
or Part 5(g), if the Settlement Amount is a negative number, the
Unpaid Amounts of BNY and the Counterparty shall be subject to netting
in accordance with Section 2(c).
(f) "TERMINATION CURRENCY" means United States Dollars.
(g) "ADDITIONAL TERMINATION EVENT" will apply. The following shall
constitute Additional Termination Events, and the party specified shall be
the Affected Party with respect thereto:--
(i) TERMINATION OF TRUST FUND. The Trust, Supplemental Interest Trust
or Trust Fund shall be terminated pursuant to any provision of the
Pooling and
Page 7 of 21
Servicing Agreement (including, without limitation, by exercise of the
option to purchase and giving of notice under Sections 10.01 of the
Pooling and Servicing Agreement). The Early Termination Date with
respect to such Additional Termination Event shall be the Distribution
Date upon which the Trust and the Supplemental Interest Trust or Trust
Fund is terminated and final payment is made in respect of the
Certificates. Each of BNY and the Counterparty may designate an Early
Termination Date in respect of this Additional Termination Event. The
Counterparty shall be the sole Affected Party.
(ii) AMENDMENT OF POOLING AND SERVICING AGREEMENT. The amendment of
the Pooling and Servicing Agreement in a manner which could have a
material adverse affect on BNY without first obtaining the prior
written consent of BNY (such consent not to be unreasonably withheld),
where such consent is required under the Pooling and Servicing
Agreement. The Counterparty shall be the sole Affected Party.
(iii) COLLATERALIZATION OR RATINGS EVENT. A Collateralization Event or
Ratings Event (as defined in Paragraph 4(8)(a) has occurred and is
continuing and BNY fails to comply with the provisions of Paragraph
4(8)(b) within the time periods set out therein, and, with respect to
a Ratings Event, at least one substitute counterparty has made an
offer which remains capable of becoming legally binding upon
acceptance to be the Transferee of an assignment, transfer or
replacement in accordance with Paragraph 4(8)(b)(2)(A) hereof). BNY
shall be the sole Affected Party.
(iv) REGULATION AB. BNY shall fail to comply with the provisions of
Paragraph 4(9) hereof within the time provided for therein. BNY shall
be the sole Affected Party.
(h) "GROSS UP". Section 2(d)(i)(4) shall not apply to Counterparty as X,
and Section 2(d)(ii) shall not apply to Counterparty as Y, such that
Counterparty shall not be required to pay any additional amounts referred
to therein.
3) TAX REPRESENTATIONS.
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e), BNY and the
Counterparty make the following representations:
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e)) to be made by it to the other party under this
Agreement. In making this representation, it may rely on:
(i) the accuracy of any representations made by the other party
pursuant to Section 3(f);
(ii) the satisfaction of the agreement contained in Section 4 (a)(i)
or 4(a)(iii) and the accuracy and effectiveness of any document
provided by the other party pursuant to Section 4 (a)(i) or 4(a)(iii);
and
Page 8 of 21
(iii) the satisfaction of the agreement of the other party contained
in Section 4(d), provided that it shall not be a breach of this
representation where reliance is placed on clause (ii) and the other
party does not deliver a form or document under Section 4(a)(iii) by
reason of material prejudice of its legal or commercial position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f), BNY and the
Counterparty make the following representations.
(i) The following representation will apply to BNY:
(x) It is a "U.S. person" (as that term is used in section
1.1441-4(a)(3)(ii) of the United States Treasury Regulations) for
United States federal income tax purposes, (y) it is a trust
company duly organized and existing under the laws of the State
of New York, and (y) its U.S. taxpayer identification number is
000000000.
(ii) The following representation will apply to the Counterparty:
It is a "U.S. person" (as that term is used in section
1.1441-4(a)(3)(ii) of United States Treasury Regulations) for
United States federal income tax purposes.
4) DOCUMENTS TO BE DELIVERED. FOR THE PURPOSE OF SECTION 4(a):
(a) Tax forms, documents or certificates to be delivered are:
PARTY REQUIRED TO DATE BY WHICH TO BE COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE DELIVERED 3(d) REPRESENTATION
----------------- ------------------------------------- --------------------- -------------------
BNY and Counterparty Any document required or Promptly after the Yes
reasonably requested to allow the earlier of (i)
other party to make payments under reasonable demand
this Agreement without any by either party or
deduction or withholding for or on (ii) learning that
the account of any tax. such form or
document is required
(b) Other documents to be delivered are:
PARTY REQUIRED TO DATE BY WHICH TO BE COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE DELIVERED 3(d) REPRESENTATION
----------------- ------------------------------------- --------------------- -------------------
BNY A certificate of an authorized Upon the execution Yes
officer of the party, as to the and delivery of
incumbency and authority of the this Agreement
respective officers of the party
signing this Agreement, any
relevant Credit Support Document,
or any Confirmation,
Page 9 of 21
PARTY REQUIRED TO DATE BY WHICH TO BE COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE DELIVERED 3(d) REPRESENTATION
----------------- ------------------------------------- --------------------- -------------------
as the case may be.
Counterparty (i) a copy of the executed Pooling Upon the later of, Yes
and Servicing Agreement, and (ii) receipt by such
an incumbency certificate party, or within 30
verifying the true signatures and days after the date
authority of the person or persons of this Agreement
signing this letter agreement on
behalf of the Counterparty.
BNY A copy of the annual balance sheet Promptly after Yes
from the most recent publicly request by the
available regulatory call report. Counterparty (if
available on
xxxx://xxx.xxxx.xxx,
such delivery is
not required)
BNY Legal Opinion as to enforceability Upon the execution Yes
of this Agreement. and delivery of
this Agreement.
Counterparty Certified copy of the Board of Upon the execution Yes
Directors resolution (or equivalent and delivery of
authorizing documentation) which sets this Agreement.
forth the authority of each signatory
to the Confirmation signing on its
behalf and the authority of such
party to enter into Transactions
contemplated and performance of its
obligations hereunder.
5) MISCELLANEOUS.
(a) ADDRESS FOR NOTICES: For the purposes of Section 12(a):
ADDRESS FOR NOTICES OR COMMUNICATIONS TO BNY:
The Bank of New York
Swaps and Derivative Products Group
Global Market Division
00 Xxx Xxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
with a copy to:
The Bank of New York
Swaps and Derivative Products Group
00 Xxx Xxxx 00xx Xxxxx
Page 10 of 21
New York, New York 10286
Attention: Xxxxxx Xxxxxxxx
Tele: 000-000-0000
Fax: 000-000-0000/5837
(For all purposes)
A copy of any notice or other communication with respect to Sections 5
or 6 should also be sent to the addresses set out below:
The Bank of New York
Legal Department
Xxx Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
ADDRESS FOR NOTICES OR COMMUNICATIONS TO THE COUNTERPARTY:
U.S. Bank National Association
Mail Code: Ep-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Structured Finance - SURF 2006-BC5
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx Xxxxx SURF
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) PROCESS AGENT. For the purpose of Section 13(c):
BNY appoints as its Process Agent: Not Applicable
The Counterparty appoints as its Process Agent: Not Applicable
(c) OFFICES. The provisions of Section 10(a) will not apply to this
Agreement; neither BNY nor the Counterparty have any Offices other than as
set forth in the Notices Section and BNY agrees that, for purposes of
Section 6(b), it shall not in future have any Office other than one in the
United States.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c):
Page 11 of 21
BNY is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is BNY.
(f) "CREDIT SUPPORT DOCUMENT" means in relation to:--
BNY: the Credit Support Annex attached as Exhibit A hereto.
The Counterparty: Not applicable.
(g) "CREDIT SUPPORT PROVIDER" means in relation to:--
BNY: Not Applicable (except with respect to credit support furnished
pursuant to Paragraph 4(8) or 4(9).
Counterparty: Not Applicable
(h) GOVERNING LAW. The parties to this Agreement hereby agree that the law
of the State of New York shall govern their rights and duties in whole,
without regard to conflict of law provisions thereof other than New York
General Obligations Law Sections 5-1401 and 5-1402.
(i) SEVERABILITY. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall
be held to be invalid or unenforceable (in whole or in part) for any
reason, the remaining terms, provisions, covenants, and conditions hereof
shall continue in full force and effect as if this Agreement had been
executed with the invalid or unenforceable portion eliminated, so long as
this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter of
this Agreement and the deletion of such portion of this Agreement will not
substantially impair the respective benefits or expectations of the
parties. The parties shall endeavor to engage in good faith negotiations to
replace any invalid or unenforceable term, provision, covenant or condition
with a valid or enforceable term, provision, covenant or condition, the
economic effect of which comes as close as possible to that of the invalid
or unenforceable term, provision, covenant or condition.
(j) RECORDING OF CONVERSATIONS. Each party (i) consents to the recording of
telephone conversations between the trading, marketing and other relevant
personnel of the parties in connection with this Agreement or any potential
Transaction, (ii) agrees to obtain any necessary consent of, and give any
necessary notice of such recording to, its relevant personnel and (iii)
agrees, to the extent permitted by applicable law, that recordings may be
submitted in evidence in any Proceedings.
(k) WAIVER OF JURY TRIAL. Each party waives any right it may have to a
trial by jury in respect of any Proceedings relating to this Agreement or
any Credit Support Document.
(l) NON-RECOURSE. Notwithstanding any provision herein or in the Master
Agreement to the contrary, the obligations of the Counterparty hereunder
are limited recourse obligations of the Counterparty, payable solely from
the Swap Account and the proceeds thereof to satisfy the Counterparty's
obligations hereunder. In the event that the Swap
Page 12 of 21
Account and proceeds thereof should be insufficient to satisfy all claims
outstanding and following the realization of the Swap Account and the
distribution of the proceeds thereof in accordance with the Pooling and
Servicing Agreement, any claims against or obligations of the Counterparty
under the Master Agreement or any other confirmation thereunder, still
outstanding shall be extinguished and thereafter not revive. This provision
shall survive the expiration of this Agreement.
(m) LIMITATION ON INSTITUTION OF BANKRUPTCY PROCEEDINGS. BNY shall not
institute against or cause any other person to institute against, or join
any other person in instituting against the Counterparty, the supplemental
interest trust or the trust created pursuant to the Pooling and Servicing
Agreement any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, under any federal or state bankruptcy or similar
law or bankruptcy or similar laws of any other jurisdiction, for a period
of one year and one day (or, if longer, the applicable preference period)
following indefeasible payment in full of the Certificates. This provision
shall survive the expiration of this Agreement.
(n) REMEDY OF FAILURE TO PAY OR DELIVER. The ISDA Form Master Agreement is
hereby amended by replacing the word "third" in the third line of Section
5(a)(i) by the word "second".
(o) "AFFILIATE" will have the meaning specified in Section 14 of the ISDA
Form Master Agreement, provided that the Counterparty shall be deemed not
to have any Affiliates for purposes of this Agreement, including for
purposes of Section 6(b)(ii).
(p) TRUSTEE'S CAPACITY. It is expressly understood and agreed by the
parties hereto that insofar as this Confirmation is executed by the Trustee
(i) this Confirmation is executed and delivered by U.S Bank National
Association, not in its individual capacity but solely as Trustee pursuant
to the Pooling and Servicing Agreement in the exercise of the powers and
authority conferred and vested in it thereunder and pursuant to instruction
set forth therein, (ii) each of the representations, undertakings and
agreements herein made on behalf of the trust is made and intended not as a
personal representation, undertaking or agreement of the Trustee but is
made and intended for the purpose of binding only the trust, (iii) nothing
contained herein shall be construed as creating any liability of U.S. Bank
National Association, individually or personally, to perform any covenants
either express or implied contained herein, all such liability, if any,
being expressly waived by the parties hereto and by any person claiming by,
through or under the parties hereto and (iv) under no circumstances will
U.S Bank National Association, in its individual capacity be personally
liable for the payment of any indebtedness or expenses or be personally
liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken under this Confirmation. Nothing
herein contained shall be construed as creating any liability on U.S Bank
National Association, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any,
being expressly waived by the parties who are signatories to this letter
agreement and by any person claiming by, through or under such parties.
Page 13 of 21
(q) TRUSTEE'S REPRESENTATION. U.S Bank National Association, as Trustee,
represents and warrants that:
It has been directed under the Pooling and Servicing Agreement to
enter into this letter agreement as Trustee on behalf of the
Counterparty.
6) ADDITIONAL REPRESENTATIONS. Section 3 is hereby amended by adding, at
the end thereof, the following Sections 3(g),3(h) and 3(i):
"(g) RELATIONSHIP BETWEEN PARTIES.
(1) NONRELIANCE. It is not relying on any statement or representation
of the other party regarding the Transaction (whether written or
oral), other than the representations expressly made in this Agreement
or the Confirmation in respect of that Transaction.
(2) EVALUATION AND UNDERSTANDING.
(i) Each Party acknowledges that U.S. Bank National Association,
has been directed under the Pooling and Servicing Agreement to
enter into this Transaction as Trustee on behalf of the
Counterparty.
(ii) It is acting for its own account and has the capacity to
evaluate (internally or through independent professional advice)
the Transaction and has made its own decision to enter into the
Transaction; it is not relying on any communication (written or
oral) of the other party as investment advice or as a
recommendation to enter into such transaction; it being
understood that information and explanations related to the terms
and conditions of such transaction shall not be considered
investment advice or a recommendation to enter into such
transaction. No communication (written or oral) received from the
other party shall be deemed to be an assurance or guarantee as to
the expected results of the transaction; and(iii) It understands
the terms, conditions and risks of the Transaction and is willing
and able to accept those terms and conditions and to assume (and
does, in fact assume) those risks, financially and otherwise.
(3) PRINCIPAL. The other party is not acting as a fiduciary or an
advisor for it in respect of this Transaction.
(h) EXCLUSION FROM COMMODITIES EXCHANGE ACT. (A) It is an "eligible
contract participant" within the meaning of Section 1a(12) of the Commodity
Exchange Act, as amended; (B) this Agreement and each Transaction is
subject to individual negotiation by such party; and (C) neither this
Agreement nor any Transaction will be executed or traded on a "trading
facility" within the meaning of Section 1a(33) of the Commodity Exchange
Act, as amended.
(i) SWAP AGREEMENT. Each Transaction is a "swap agreement" as defined in 12
U.S.C. Section 1821(e)(8)(D)(vi) and a "covered swap agreement" as defined
in the Commodity Exchange Act (7 U.S.C. Section 27(d)(1))."
Page 14 of 21
7) SET-OFF. Notwithstanding any provision of this Agreement or any other
existing or future agreement (but without limiting the provisions of
Section 2(c) and Section 6, except as provided in the next sentence), each
party irrevocably waives any and all rights it may have to set off, net,
recoup or otherwise withhold or suspend or condition payment or performance
of any obligation between it and the other party hereunder against any
obligation between it and the other party under any other agreements. The
last sentence of the first paragraph of Section 6(e) shall not apply for
purposes of this Transaction.
8) RATINGS DOWNGRADE. For purposes of each Transaction:
(a) DEFINITIONS. (1) "RATING AGENCY CONDITION" means, with respect to any
action taken or to be taken hereunder, a condition that is satisfied when
each of Xxxxx'x Investors Service, Inc. ("MOODY'S") and Standard & Poor's
Ratings Services, a division of The McGraw Hill Companies, Inc. ("S&P")
(each a "RATING AGENCY", and the rating condition with respect to it, the
"XXXXX'X RATING CONDITION" and "S&P RATING CONDITION", respectively) has
confirmed in writing to the Trustee that such action will not result in
withdrawal, reduction or other adverse action with respect to any
then-current rating by such Rating Agency of the Certificates; (2)
"QUALIFYING RATINGS" means, with respect to the debt of any assignee or
guarantor hereunder, (A) a short-term unsecured and unsubordinated debt
rating of "P-1" (not on watch for downgrade), and a long-term unsecured and
unsubordinated debt of "A1" (not on watch for downgrade) (or, if it has no
short-term unsecured and unsubordinated debt rating, a long term rating of
"Aa3" (not on watch for downgrade) by Moody's, and (B) a short-term
unsecured and unsubordinated debt rating of "A-1", or if it does not have a
short-term rating, a long-term unsecured and unsubordinated debt rating of
"A+" by S & P; (3) a "COLLATERALIZATION EVENT" shall occur with respect to
BNY (or any applicable credit support provider) if: (A) its short-term
unsecured and unsubordinated debt rating is reduced to "P-2" or below, and
its long-term unsecured and unsubordinated debt is reduced to "A3" or
below, or, if it has no short-term unsecured and unsubordinated debt
rating, its long term rating is reduced to "A2" or below, by Moody's (a
"MOODY'S COLLATERALIZATION EVENT"), or (B) its short-term unsecured and
unsubordinated debt rating is reduced to "A-2" or below, or, if it does not
have a short-term rating, its long-term unsecured and unsubordinated debt
rating is reduced to "A" or below by S&P (an "S&P COLLATERALIZATION
EVENT"); and (4) a "RATINGS EVENT" shall occur with respect to BNY (or any
applicable credit support provider) if: (A) its short-term unsecured and
unsubordinated debt rating is withdrawn or reduced to "P-3" or below and
its long-term unsecured and unsubordinated debt is reduced to "Baa1" or
below, or, if it has no short-term unsecured and unsubordinated debt
rating, its long term rating is reduced to "Baa1" or below, by Moody's (a
"MOODY'S RATINGS EVENT"), or (B) its long-term unsecured and unsubordinated
debt rating is withdrawn or reduced to "BB+" or below by S&P (an "S&P
RATINGS EVENT").
(b) ACTIONS TO BE TAKEN. Subject, in each case to satisfaction of the
Rating Agency Condition: (1) if a Collateralization Event occurs with
respect to BNY (or any applicable credit support provider), then BNY shall,
at its own expense, within thirty (30) days of such Collateralization
Ratings Event: (A) post collateral in accordance with the Credit Support
Annex; or (B) on terms substantially similar to this Agreement assign or
transfer the Transactions to or replace the Transactions with transactions
with a third party approved by
Page 15 of 21
the Counterparty (such approval not to be unreasonably withheld) the
ratings of which (or of the guarantor of which) meet or exceed the
Qualifying Ratings; or (C) obtain a guaranty of or a contingent agreement
to honor BNY's obligations under this Agreement by a third party approved
by the Counterparty (such approval not to be unreasonably withheld) the
ratings of which (or of the guarantor of which) meet or exceed the
Qualifying Ratings; or (D) establish any other arrangement approved by the
Counterparty (such approval not to be unreasonably withheld) that satisfies
the Rating Condition; and (2) if a Ratings Event occurs with respect to BNY
(or any applicable Credit Support Provider), then BNY shall, at its own
expense, within ten (10) Business Days of such Ratings Event: (A) on terms
substantially similar to this Agreement assign or transfer the Transactions
to or replace the Transactions with transactions with a third party
approved by the Counterparty (such approval not to be unreasonably
withheld) the ratings of which (or of the guarantor of which) meet or
exceed the Qualifying Ratings, or (B) obtain a guaranty of or a contingent
agreement to honor BNY's obligations under this Agreement by a third party
approved by the Counterparty (such approval not to be unreasonably
withheld) the ratings of which (or of the guarantor of which) meet or
exceed the Qualifying Ratings; or (C) establish any other arrangement
approved by the Counterparty (such approval not to be unreasonably
withheld) that satisfies the Rating Condition.
9) COMPLIANCE WITH REGULATION AB.
If the Depositor under the Pooling and Servicing Agreement still has a
reporting obligation with respect to this Transaction pursuant to
Regulation AB under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended ("REGULATION AB") and BNY has
not, within 30 days after receipt of a Swap Disclosure Request complied
with the provisions set forth below in this Paragraph 4(9) (provided that
if the significance percentage reaches 10% after a Swap Disclosure Request
has been made to BNY, BNY must comply with the provisions set forth below
in this Section 4(9) within 10 calendar days of BNY being informed of the
significance percentage reaching 10%), then an Additional Termination Event
shall have occurred with respect to BNY and BNY shall be the sole Affected
Party with respect to such Additional Termination Event.
BNY acknowledges that for so long as there are reporting obligations with
respect to this Transaction under Regulation AB, the Depositor is required
under Regulation AB to disclose certain information set forth in Regulation
AB regarding BNY or its group of affiliated entities, if applicable,
depending on the aggregate "significance percentage" of this Agreement and
any other derivative contracts between BNY or its group of affiliated
entities, if applicable, and the Counterparty, as calculated from time to
time in accordance with Item 1115 of Regulation AB.
If the Depositor determines, reasonably and in good faith, that the
significance percentage of this Agreement has increased to nine (9)
percent, then the Depositor may request on a Business Day after the date of
such determination from BNY the same information set forth in Item 1115(b)
of Regulation AB that would have been required if the significance
percentage had in fact increased to ten (10) percent (such request, a "SWAP
DISCLOSURE REQUEST" and such requested information, subject to the last
sentence of this paragraph, is the "SWAP FINANCIAL DISCLOSURE"). The
Counterparty or the Depositor shall provide BNY with the calculations and
any other information reasonably requested by BNY with respect to the
Depositor's
Page 16 of 21
determination that led to the Swap Disclosure Request. The parties hereto
further agree that the Swap Financial Disclosure provided to meet the Swap
Disclosure Request may be, solely at BNY's option, either the information
set forth in Item 1115(b)(1) or Item 1115(b)(2) of Regulation AB.
Upon the occurrence of a Swap Disclosure Request, BNY, at its own expense,
shall (x) provide the Depositor with the Swap Financial Disclosure, or (y)
subject to Rating Agency Confirmation, secure another entity to replace BNY
as party to this Agreement on terms substantially similar to this Agreement
which entity is able to provide the Swap Financial Disclosure. If permitted
by Regulation AB, any required Swap Financial Disclosure may be provided by
incorporation by reference from reports filed pursuant to the Securities
Exchange Act.
10) BNY PAYMENTS TO BE MADE TO TRUSTEE. BNY will, unless otherwise directed
by the Trustee, make all payments hereunder to the Trustee. Payment made to
the Trustee at the account specified herein or to another account specified
in writing by the Trustee shall satisfy the payment obligations of BNY
hereunder to the extent of such payment.
11) RETURN OF AMOUNTS RECEIVED BY MLML OR ITS AFFILIATES. Xxxxxxx Xxxxx
Mortgage Lending, Inc. ("MLML") agrees and acknowledges that amounts paid
hereunder are not intended to benefit the holder of any class of
Certificates rated by any Rating Agency if such holder is MLML or any of
its affiliates. If MLML or any of its affiliates receives any such amounts,
it will promptly remit (or, if such amounts are received by an affiliate of
MLML, MLML hereby agrees that it will cause such affiliate to promptly
remit) such amounts to the Trustee, whereupon such Trustee will promptly
remit such amounts to BNY. MLML further agrees to provide notice to BNY
upon any remittance to the Trustee.
12) ADDITIONAL PROVISIONS. Notwithstanding the terms of Sections 5 and 6 of
the ISDA Form Master Agreement, if the Counterparty has satisfied its
payment obligations under Section 2(a)(i) of the ISDA Form Master
Agreement, and shall, at the time, have no future payment or delivery
obligation, whether absolute or contingent, then unless BNY is required
pursuant to appropriate proceedings to return to the Counterparty or
otherwise returns to the Counterparty upon demand of the Counterparty any
portion of such payment, (a) the occurrence of an event described in
Section 5(a) of the ISDA Form Master Agreement with respect to the
Counterparty shall not constitute an Event of Default or Potential Event of
Default with respect to the Counterparty as the Defaulting Party and (b)
BNY shall be entitled to designate an Early Termination Date pursuant to
Section 6 of the ISDA Form Master Agreement only as a result of a
Termination Event set forth in either Section 5(b)(i) or Section 5(b)(ii)
of the ISDA Form Master Agreement with respect to BNY as the Affected Party
or Section 5(b)(iii) of the ISDA Form Master Agreement with respect to BNY
as the Burdened Party.
Page 17 of 21
5. ACCOUNT DETAILS AND SETTLEMENT INFORMATION:
PAYMENTS TO BNY:
The Bank of New York
Derivative Products Support Department
00 Xxx Xxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
ABA #000000000
Account #000-0000-000
Reference: Interest Rate Cap
PAYMENTS TO COUNTERPARTY:
U.S. Bank National Association
ABA#: 000000000
DDA#: 1731 0332 2058
DDA Name: Structured Finance Wire Clearing
FFC: 107730000/SURF BC5 Cap Contract Account
6. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this agreement and returning it via facsimile to
Derivative Products Support Dept., Attn: Xxxxx Au-Xxxxx at 000-000-0000/5837.
Once we receive this we will send you two original confirmations for execution.
Page 18 of 21
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
THE BANK OF NEW YORK
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Page 19 of 21
The Counterparty, acting through its duly authorized signatory, hereby agrees
to, accepts and confirms the terms of the foregoing as of the Trade Date.
U.S. BANK NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE FOR THE SPECIALTY UNDERWRITING & RESIDENTIAL FINANCE TRUST SERIES
2006-BC5
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Page 20 of 21
SCHEDULE I
All dates subject to adjustment in accordance with the Modified Following
Business Day Convention.
Accrual Start Date Accrual End Date Notional Amount (in USD) Cap Rate (%)
------------------ ---------------- ------------------------ ------------
11/28/2006 12/25/2006 258,105,000 8.683
12/25/2006 1/25/2007 255,657,902 7.544
1/25/2007 2/25/2007 252,484,707 7.544
2/25/2007 3/25/2007 248,588,091 8.368
3/25/2007 4/25/2007 243,972,961 7.545
4/25/2007 5/25/2007 238,649,832 7.801
Page 21 of 21
Exhibit A to Confirmation No. 38513
See Exhibit 0-4 of Form 8-K filing.
EXHIBIT O-2
FORM OF CLASS A-2 CAP CONTRACT
O-2-1
Page 1 of 21
(THE BANK OF NEW YORK. LOGO)
Dated: November 28, 2006
RATE CAP TRANSACTION
RE: BNY REFERENCE NO. 38514
Ladies and Gentlemen:
The purpose of this letter agreement ("AGREEMENT") is to confirm the terms
and conditions of the rate Swap Transaction entered into on the Trade Date
specified below (the "TRANSACTION") between The Bank of New York ("BNY"), a
trust company duly organized and existing under the laws of the State of New
York, and Specialty Underwriting & Residential Finance Trust, Series 2006-BC5
(the "COUNTERPARTY"), as represented by U.S Bank National Association, not in
its individual capacity, but solely as Trustee under the Pooling and Servicing
Agreement, dated and effective November 1, 2006, among Xxxxxxx Xxxxx Mortgage
Investors, Inc., as Depositor, Wilshire Credit Corporation, as Servicer, and
U.S. Bank National Association, as Trustee (the "POOLING AND SERVICING
AGREEMENT"). This Agreement, which evidences a complete and binding agreement
between you and us to enter into the Transaction on the terms set forth below,
constitutes a "CONFIRMATION" as referred to in the "ISDA FORM MASTER AGREEMENT"
(as defined below), as well as a "Schedule" as referred to in the ISDA Form
Master Agreement.
1. FORM OF AGREEMENT. This Agreement is subject to the 2000 ISDA
Definitions (the "DEFINITIONS"), as published by the International Swaps and
Derivatives Association, Inc. ("ISDA"). Any reference to a "Swap Transaction" in
the Definitions is deemed to be a reference to a "Transaction" for purposes of
this Agreement, and any reference to a "Transaction" in this Agreement is deemed
to be a reference to a "Swap Transaction" for purposes of the Definitions. You
and we have agreed to enter into this Agreement in lieu of negotiating a
Schedule to the 1992 ISDA Master Agreement (Multicurrency--Cross Border) form
(the "ISDA FORM MASTER AGREEMENT"). An ISDA Form Master Agreement, as modified
by the Schedule terms in Paragraph 4 of this Confirmation (the "MASTER
AGREEMENT"), shall be deemed to have been executed by you and us on the date we
entered into the Transaction. For the avoidance of doubt, the Transaction
described herein shall be the sole Transaction governed by such ISDA Form Master
Agreement. Except as otherwise specified, references herein to Sections shall be
to Sections of the Master Agreement, and references to Paragraphs shall be to
paragraphs of this Agreement. Each party hereto agrees that the Master Agreement
deemed to have been executed by the parties hereto shall be the same Master
Agreement referred to in the agreement setting forth the terms of transaction
reference numbers 38513 and 38515. In the event of any inconsistency between the
provisions of this Agreement and the Definitions or the Master Agreement, this
Agreement shall prevail for purposes of the Transaction. Capitalized terms not
otherwise defined herein or in the Definitions or the Master Agreement shall
have the meaning defined for such term in the Pooling and Servicing Agreement.
2. CERTAIN TERMS. The terms of the particular Transaction to which this
Confirmation relates are as follows:
Page 2 of 21
Type of Transaction: Rate Cap
Notional Amount: With respect to any Calculation Period, the lesser
of: (i) the amount set forth on Schedule I attached
hereto for such Calculation Period and (ii) the
Class Certificate Principal Balance of the Class
A-2A, Class A-2B, Class A-2C, Class A-2D and Class
A-2E Certificates (as defined in the Pooling and
Servicing Agreement) for such Floating Rate Payer
Payment Date.
The Trustee under the Pooling and Servicing
Agreement shall provide at least five (5) business
days notice prior to each Floating Rate Payer
Payment Date for each Calculation Period to The
Bank of New York if the Class Certificate Principal
Balance of the Class A-2A, Class A-2B, Class A-2C,
Class A-2D and Class A-2E Certificates is less than
the Schedule I attached hereto.
Trade Date: November 3, 2006
Effective Date: November 28, 2006
Termination Date: May 25, 2007, subject to adjustment in accordance
with the Modified Following Business Day Convention
FLOATING AMOUNTS
Floating Rate Payer: BNY
Cap Rate: For each Calculation Period, as set forth for such
period on Schedule I attached hereto.
Floating Rate for initial
Calculation Period: To be determined
Floating Rate Day Count
Fraction: Actual/360
Floating Rate Option: USD-LIBOR-BBA, provided, however, if the Floating
Rate Option for a Calculation Period is greater
than 10.37% then the Floating Rate Option for such
Calculation Period shall be deemed equal to 10.37%.
Designated Maturity: One month
Spread: Inapplicable
Floating Rate Payer
Period End Dates: The 25th day of each month, beginning on December
25, 2006 and ending on the Termination Date,
subject to adjustment in accordance with the
Following Business Day Convention.
Floating Rate Payer
Payment Dates: Early Payment shall be applicable. The Floating
Rate Payer Payment Date shall be two (2) Business
Days preceding each Floating Rate Payer Period End
Date.
Page 3 of 21
Reset Dates: The first day of each Calculation Period
Compounding: Inapplicable
Business Days for Payments
By both parties: New York
Calculation Agent: BNY
3. ADDITIONAL PROVISIONS:
1) RELIANCE. Each party hereto is hereby advised and acknowledges that the
other party has engaged in (or refrained from engaging in) substantial financial
transactions and has taken (or refrained from taking) other material actions in
reliance upon the entry by the parties into the Transaction being entered into
on the terms and conditions set forth herein.
2) TRANSFER, AMENDMENT AND ASSIGNMENT. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of Standard & Poor's Ratings Service, a
division of The XxXxxx-Xxxx Companies, Inc ("S&P") and Xxxxx'x Investors
Service, Inc. ("MOODY'S"), has been provided notice of the same and confirms in
writing (including by facsimile transmission) that it will not downgrade,
qualify, withdraw or otherwise modify its then-current ratings on the Class
A-2A, Class A-2B, Class A-2C, Class A-2D and Class A-2E Certificates issued
under the Pooling and Servicing Agreement (the "CERTIFICATES").
4. PROVISIONS DEEMED INCORPORATED IN A SCHEDULE TO THE MASTER AGREEMENT:
1) NO PAYMENT NETTING AMONG TRANSACTIONS. The parties agree that
subparagraph (ii) of Section 2(c) of the ISDA Form Master Agreement will apply
to this Transaction.
2) TERMINATION PROVISIONS. Subject to the provisions of Paragraph 4(12),
for purposes of the Master Agreement:
(a) "SPECIFIED ENTITY" in relation to BNY or the Counterparty shall mean:
none.
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14.
(c) APPLICABILITY. The following provisions apply or do not apply to the
parties as specified below:
(i) Section 5(a)(i) (FAILURE TO PAY OR DELIVER):
(A) will apply to BNY; and
(B) will apply to the Counterparty.
(ii) Section 5(a)(ii) (BREACH OF AGREEMENT):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
(iii) Section 5(a)(iii) (CREDIT SUPPORT DEFAULT):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
Page 4 of 21
(iv) Section 5(a)(iv) (MISREPRESENTATION):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
(v) Section 5(a)(v) (DEFAULT UNDER SPECIFIED TRANSACTION):
(A) will not apply to BNY; and
(B) will not apply to the Counterparty.
(vi) Section 5(a)(vi) (CROSS DEFAULT):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
For the purposes of Section 5(a)(vi):
"SPECIFIED INDEBTEDNESS" will have the meaning specified in
Section 14 of this Agreement, except that it shall not include
indebtedness in respect of deposits received.
"THRESHOLD AMOUNT" means, 3% of consolidated shareholders equity
of BNY and its subsidiaries determined in accordance with
generally accepted accounting principles of the United States
consistently applied as of the last day of the fiscal quarter
ended immediately prior to the occurrence or existence of an
event for which a Threshold Amount is applicable under Section
5(a)(vi) of this Agreement.
(vii) Section 5(a)(vii) (BANKRUPTCY):
(A) will apply to BNY; and
(B) (1) subclauses (2), (4) (but only if the proceeding or
petition is instituted or presented by the Counterparty or its
affiliates), (7) and (8) (but only with respect to clauses (2),
(4) and (7) to the extent of disapplication herein) of Section
5(a)(vii) will not apply to the Counterparty, and the remaining
provisions of Section 5(a)(vii) will apply to the Counterparty;
and (2) the words "trustee" and "custodian" in subclause (6) will
not include the Trustee; and (3) events described in Section
5(a)(vii) occurring with respect to the Trust or the Supplemental
Interest Trust are deemed to occur to the Counterparty.
(viii) Section 5(a)(viii) (MERGER WITHOUT ASSUMPTION):
(A) will apply to BNY; and
(B) will apply to the Counterparty.
(ix) Section 5(b)(i) (ILLEGALITY):
(A) will apply to BNY; and
(B) will apply to the Counterparty.
Page 5 of 21
(x) Section 5(b)(ii) (TAX EVENT):
(A) will apply to BNY; provided that the words "(x) any action
taken by a taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is
entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (y)" shall
be deleted; and
(B) will not apply to the Counterparty.
(xi) Section 5(b)(iii) (TAX EVENT UPON MERGER):
(A) will apply to BNY, provided, that BNY shall not be entitled
to designate an Early Termination Date by reason of a Tax Event
upon Merger in respect of which it is the Affected Party; and
(B) will apply to the Counterparty.
(xii) Section 5(b)(iv) (CREDIT EVENT UPON MERGER):
(A) will not apply to BNY; and
(B) will not apply to the Counterparty.
(xiii) Section 5(b)(v) (ADDITIONAL TERMINATION EVENT):
(A) will apply to BNY with respect to Paragraph 4(2)(g)(iii) and
(iv); and
(B) will apply to the Counterparty with respect to Paragraph
(2)(g)(i) and (ii).
(d) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a):
(A) will not apply to BNY; and
(B) will not apply to the Counterparty.
(e) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e), the
Second Method and Market Quotation will apply. For such purpose, for so
long as the Certificates are rated by Moody's, if BNY is the Affected Party
in respect of an Additional Termination Event or a Tax Event Upon Merger or
the Defaulting Party in respect of any Event of Default (but not, in any
case, in respect of a Termination Event arising from an Illegality or Tax
Event), the following provisions shall apply:
(i) The definitions of "Market Quotation" and "Settlement Amount" are
amended in their entirety to read as follows:
"MARKET QUOTATION" means, with respect to one or more Terminated
Transactions, an offer capable of becoming legally binding upon
acceptance made by a Reference Market-maker with ratings that
meet the Collateralization Requirement or the Ratings
Requirement, as the case may be, for an amount that would be paid
to the Counterparty (expressed as a negative number) or by the
Counterparty (expressed as a positive number) in consideration of
an agreement between the Counterparty and such
Page 6 of 21
Reference Market-maker to enter into a transaction (the
"REPLACEMENT TRANSACTION"), with commercial terms substantially
the same as those of this Agreement (save for the exclusion of
provisions relating to Transactions that are not Terminated
Transactions) (which shall be determined by the Counterparty,
acting in a commercially reasonable manner), that would have the
effect of preserving the economic equivalent for the Counterparty
of any payment or delivery (whether the underlying obligation was
absolute or contingent and assuming the satisfaction of each
applicable condition precedent) by the parties under Section
2(a)(i) in respect of such Terminated Transactions or group of
Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that
Date. For this purpose, Unpaid Amounts in respect of the
Terminated Transaction or group of Transactions are to be
excluded but, without limitation, any payment or delivery that
would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition
precedent) after that Early Termination Date is to be included.
"SETTLEMENT AMOUNT" means, with respect to any Early Termination
Date: --
(a) the Termination Currency Equivalent of the Market Quotation
(whether positive or negative) for each Terminated Transaction or
group of Terminated Transactions for which a Market Quotation is
accepted by the Counterparty so as to become legally binding on
or before the day falling ten (10) Local Business Days after the
day on which the Early Termination Date is designated (or such
later day not be later than the Early Termination Date as the
Counterparty may specify in writing to BNY); or (if there is no
such accepted Market Quotation)
(b) the Counterparty's Loss (whether positive or negative and
without reference to any Unpaid amounts) for the relevant
Terminated Transaction or group of Terminated Transactions.
(ii) the Counterparty and, if request is made in writing within two
Local Business Days after the day on which the Early Termination Date
is designated, BNY, shall use reasonable efforts to obtain one or more
Market Quotations before the date determined pursuant to clause (a) of
the definition of "Settlement Amount".
(iii) Notwithstanding anything to the contrary in Section 6(e)(i)(3)
or Part 5(g), if the Settlement Amount is a negative number, the
Unpaid Amounts of BNY and the Counterparty shall be subject to netting
in accordance with Section 2(c).
(f) "TERMINATION CURRENCY" means United States Dollars.
(g) "ADDITIONAL TERMINATION EVENT" will apply. The following shall
constitute Additional Termination Events, and the party specified shall be
the Affected Party with respect thereto:--
Page 7 of 21
(i) TERMINATION OF TRUST FUND. The Trust, Supplemental Interest Trust
or Trust Fund shall be terminated pursuant to any provision of the
Pooling and Servicing Agreement (including, without limitation, by
exercise of the option to purchase and giving of notice under Sections
10.01 of the Pooling and Servicing Agreement). The Early Termination
Date with respect to such Additional Termination Event shall be the
Distribution Date upon which the Trust and the Supplemental Interest
Trust or Trust Fund is terminated and final payment is made in respect
of the Certificates. Each of BNY and the Counterparty may designate an
Early Termination Date in respect of this Additional Termination
Event. The Counterparty shall be the sole Affected Party.
(ii) AMENDMENT OF POOLING AND SERVICING AGREEMENT. The amendment of
the Pooling and Servicing Agreement in a manner which could have a
material adverse affect on BNY without first obtaining the prior
written consent of BNY (such consent not to be unreasonably withheld),
where such consent is required under the Pooling and Servicing
Agreement. The Counterparty shall be the sole Affected Party.
(iii) COLLATERALIZATION OR RATINGS EVENT. A Collateralization Event or
Ratings Event (as defined in Paragraph 4(8)(a) has occurred and is
continuing and BNY fails to comply with the provisions of Paragraph
4(8)(b) within the time periods set out therein, and, with respect to
a Ratings Event, at least one substitute counterparty has made an
offer which remains capable of becoming legally binding upon
acceptance to be the Transferee of an assignment, transfer or
replacement in accordance with Paragraph 4(8)(b)(2)(A) hereof). BNY
shall be the sole Affected Party.
(iv) REGULATION AB. BNY shall fail to comply with the provisions of
Paragraph 4(9) hereof within the time provided for therein. BNY shall
be the sole Affected Party.
(h) "GROSS UP". Section 2(d)(i)(4) shall not apply to Counterparty as X,
and Section 2(d)(ii) shall not apply to Counterparty as Y, such that
Counterparty shall not be required to pay any additional amounts referred
to therein.
3) TAX REPRESENTATIONS.
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e), BNY and the
Counterparty make the following representations:
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e)) to be made by it to the other party under this
Agreement. In making this representation, it may rely on:
(i) the accuracy of any representations made by the other party
pursuant to Section 3(f);
Page 8 of 21
(ii) the satisfaction of the agreement contained in Section 4
(a)(i) or 4(a)(iii) and the accuracy and effectiveness of any
document provided by the other party pursuant to Section 4 (a)(i)
or 4(a)(iii); and
(iii) the satisfaction of the agreement of the other party
contained in Section 4(d), provided that it shall not be a breach
of this representation where reliance is placed on clause (ii)
and the other party does not deliver a form or document under
Section 4(a)(iii) by reason of material prejudice of its legal or
commercial position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f), BNY and
the Counterparty make the following representations.
(i) The following representation will apply to BNY:
(x) It is a "U.S. person" (as that term is used in section
1.1441-4(a)(3)(ii) of the United States Treasury
Regulations) for United States federal income tax purposes,
(y) it is a trust company duly organized and existing under
the laws of the State of New York, and (y) its U.S. taxpayer
identification number is 000000000.
(ii) The following representation will apply to the Counterparty:
It is a "U.S. person" (as that term is used in section
1.1441-4(a)(3)(ii) of United States Treasury Regulations)
for United States federal income tax purposes.
4) DOCUMENTS TO BE DELIVERED. FOR THE PURPOSE OF SECTION 4(a):
(a) Tax forms, documents or certificates to be delivered are:
PARTY REQUIRED TO COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED 3(d) REPRESENTATION
------------------- ------------------------------------------ ----------------------------- -------------------
BNY and Counterparty Any document required or reasonably Promptly after the earlier of Yes
requested to allow the other party to make (i) reasonable demand by
payments under this Agreement without any either party or (ii) learning
deduction or withholding for or on the that such form or document is
account of any tax. required
(b) Other documents to be delivered are:
PARTY REQUIRED TO COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED 3(d) REPRESENTATION
------------------- ------------------------------------------ ----------------------------- -------------------
BNY A certificate of an authorized officer of Upon the execution and Yes
the party, as to the incumbency and delivery of this Agreement
authority of the
Page 9 of 21
PARTY REQUIRED TO COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED 3(d) REPRESENTATION
------------------- ------------------------------------------ ----------------------------- -------------------
respective officers of the party signing
this Agreement, any relevant Credit
Support Document, or any Confirmation,
as the case may be.
Counterparty (i) a copy of the executed Pooling and Upon the later of, receipt Yes
Servicing Agreement, and (ii) an by such party, or within 30
incumbency certificate verifying the true days after the date of this
signatures and authority of the person or Agreement
persons signing this letter agreement on
behalf of the Counterparty.
BNY A copy of the annual balance sheet from Promptly after request by Yes
the most recent publicly available the Counterparty (if
regulatory call report. available on
xxxx://xxx.xxxx.xxx, such
delivery is not required)
BNY Legal Opinion as to enforceability of Upon the execution and Yes
this Agreement. delivery of this Agreement.
Counterparty Certified copy of the Board of Directors Upon the execution and Yes
resolution (or equivalent authorizing delivery of this Agreement.
documentation) which sets forth the
authority of each signatory to the
Confirmation signing on its behalf and
the authority of such party to enter into
Transactions contemplated and performance
of its obligations hereunder.
5) MISCELLANEOUS.
(a) ADDRESS FOR NOTICES: For the purposes of Section 12(a):
ADDRESS FOR NOTICES OR COMMUNICATIONS TO BNY:
The Bank of New York
Swaps and Derivative Products Group
Global Market Division
00 Xxx Xxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
with a copy to:
Page 10 of 21
The Bank of New York
Swaps and Derivative Products Group
00 Xxx Xxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Tele: 000-000-0000
Fax: 000-000-0000/5837
(For all purposes)
A copy of any notice or other communication with respect to
Sections 5 or 6 should also be sent to the addresses set out
below:
The Bank of New York
Legal Department
Xxx Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
ADDRESS FOR NOTICES OR COMMUNICATIONS TO THE COUNTERPARTY:
U.S. Bank National Association
Mail Code: Ep-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Structured Finance - SURF 2006-BC5
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx Xxxxx SURF
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) PROCESS AGENT. For the purpose of Section 13(c):
BNY appoints as its Process Agent: Not Applicable
The Counterparty appoints as its Process Agent: Not Applicable
(c) OFFICES. The provisions of Section 10(a) will not apply to this
Agreement; neither BNY nor the Counterparty have any Offices other than as
set forth in the Notices Section
Page 11 of 21
and BNY agrees that, for purposes of Section 6(b), it shall not in future
have any Office other than one in the United States.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c):
BNY is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is BNY.
(f) "CREDIT SUPPORT DOCUMENT" means in relation to:--
BNY: the Credit Support Annex attached as Exhibit A hereto.
The Counterparty: Not applicable.
(g) "CREDIT SUPPORT PROVIDER" means in relation to:--
BNY: Not Applicable (except with respect to credit support furnished
pursuant to Paragraph 4(8) or 4(9).
Counterparty: Not Applicable
(h) GOVERNING LAW. The parties to this Agreement hereby agree that the law
of the State of New York shall govern their rights and duties in whole,
without regard to conflict of law provisions thereof other than New York
General Obligations Law Sections 5-1401 and 5-1402.
(i) SEVERABILITY. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall
be held to be invalid or unenforceable (in whole or in part) for any
reason, the remaining terms, provisions, covenants, and conditions hereof
shall continue in full force and effect as if this Agreement had been
executed with the invalid or unenforceable portion eliminated, so long as
this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter of
this Agreement and the deletion of such portion of this Agreement will not
substantially impair the respective benefits or expectations of the
parties. The parties shall endeavor to engage in good faith negotiations to
replace any invalid or unenforceable term, provision, covenant or condition
with a valid or enforceable term, provision, covenant or condition, the
economic effect of which comes as close as possible to that of the invalid
or unenforceable term, provision, covenant or condition.
(j) RECORDING OF CONVERSATIONS. Each party (i) consents to the recording of
telephone conversations between the trading, marketing and other relevant
personnel of the parties in connection with this Agreement or any potential
Transaction, (ii) agrees to obtain any necessary consent of, and give any
necessary notice of such recording to, its relevant personnel and (iii)
agrees, to the extent permitted by applicable law, that recordings may be
submitted in evidence in any Proceedings.
(k) WAIVER OF JURY TRIAL. Each party waives any right it may have to a
trial by jury in respect of any Proceedings relating to this Agreement or
any Credit Support Document.
Page 12 of 21
(l) NON-RECOURSE. Notwithstanding any provision herein or in the Master
Agreement to the contrary, the obligations of the Counterparty hereunder
are limited recourse obligations of the Counterparty, payable solely from
the Swap Account and the proceeds thereof to satisfy the Counterparty's
obligations hereunder. In the event that the Swap Account and proceeds
thereof should be insufficient to satisfy all claims outstanding and
following the realization of the Swap Account and the distribution of the
proceeds thereof in accordance with the Pooling and Servicing Agreement,
any claims against or obligations of the Counterparty under the Master
Agreement or any other confirmation thereunder, still outstanding shall be
extinguished and thereafter not revive. This provision shall survive the
expiration of this Agreement.
(m) LIMITATION ON INSTITUTION OF BANKRUPTCY PROCEEDINGS. BNY shall not
institute against or cause any other person to institute against, or join
any other person in instituting against the Counterparty, the supplemental
interest trust or the trust created pursuant to the Pooling and Servicing
Agreement any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, under any federal or state bankruptcy or similar
law or bankruptcy or similar laws of any other jurisdiction, for a period
of one year and one day (or, if longer, the applicable preference period)
following indefeasible payment in full of the Certificates. This provision
shall survive the expiration of this Agreement.
(n) REMEDY OF FAILURE TO PAY OR DELIVER. The ISDA Form Master Agreement is
hereby amended by replacing the word "third" in the third line of Section
5(a)(i) by the word "second".
(o) "AFFILIATE" will have the meaning specified in Section 14 of the ISDA
Form Master Agreement, provided that the Counterparty shall be deemed not
to have any Affiliates for purposes of this Agreement, including for
purposes of Section 6(b)(ii).
(p) TRUSTEE'S CAPACITY. It is expressly understood and agreed by the
parties hereto that insofar as this Confirmation is executed by the Trustee
(i) this Confirmation is executed and delivered by U.S Bank National
Association, not in its individual capacity but solely as Trustee pursuant
to the Pooling and Servicing Agreement in the exercise of the powers and
authority conferred and vested in it thereunder and pursuant to instruction
set forth therein, (ii) each of the representations, undertakings and
agreements herein made on behalf of the trust is made and intended not as a
personal representation, undertaking or agreement of the Trustee but is
made and intended for the purpose of binding only the trust, (iii) nothing
contained herein shall be construed as creating any liability of U.S. Bank
National Association, individually or personally, to perform any covenants
either express or implied contained herein, all such liability, if any,
being expressly waived by the parties hereto and by any person claiming by,
through or under the parties hereto and (iv) under no circumstances will
U.S Bank National Association, in its individual capacity be personally
liable for the payment of any indebtedness or expenses or be personally
liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken under this Confirmation. Nothing
herein contained shall be construed as creating any liability on U.S Bank
National Association, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if
Page 13 of 21
any, being expressly waived by the parties who are signatories to this
letter agreement and by any person claiming by, through or under such
parties.
(q) TRUSTEE'S REPRESENTATION. U.S Bank National Association, as Trustee,
represents and warrants that:
It has been directed under the Pooling and Servicing Agreement to
enter into this letter agreement as Trustee on behalf of the
Counterparty.
6) ADDITIONAL REPRESENTATIONS. Section 3 is hereby amended by adding, at
the end thereof, the following Sections 3(g),3(h) and 3(i):
"(g) RELATIONSHIP BETWEEN PARTIES.
(1) NONRELIANCE. It is not relying on any statement or representation
of the other party regarding the Transaction (whether written or
oral), other than the representations expressly made in this Agreement
or the Confirmation in respect of that Transaction.
(2) EVALUATION AND UNDERSTANDING.
(i) Each Party acknowledges that U.S. Bank National Association,
has been directed under the Pooling and Servicing Agreement to
enter into this Transaction as Trustee on behalf of the
Counterparty.
(ii) It is acting for its own account and has the capacity to
evaluate(internally or through independent professional advice)
the Transaction and has made its own decision to enter into the
Transaction; it is not relying on any communication (written or
oral) of the other party as investment advice or as a
recommendation to enter into such transaction; it being
understood that information and explanations related to the terms
and conditions of such transaction shall not be considered
investment advice or a recommendation to enter into such
transaction. No communication (written or oral) received from the
other party shall be deemed to be an assurance or guarantee as to
the expected results of the transaction; and
(iii) It understands the terms, conditions and risks of the
Transaction and is willing and able to accept those terms and
conditions and to assume (and does, in fact assume) those risks,
financially and otherwise.
(3) PRINCIPAL. The other party is not acting as a fiduciary or an
advisor for it in respect of this Transaction.
(h) EXCLUSION FROM COMMODITIES EXCHANGE ACT. (A) It is an "eligible
contract participant" within the meaning of Section 1a(12) of the Commodity
Exchange Act, as amended; (B) this Agreement and each Transaction is
subject to individual negotiation by such party; and (C) neither this
Agreement nor any Transaction will be executed or traded on a "trading
facility" within the meaning of Section 1a(33) of the Commodity Exchange
Act, as amended.
Page 14 of 21
(i) SWAP AGREEMENT. Each Transaction is a "swap agreement" as
defined in 12 U.S.C. Section 1821(e)(8)(D)(vi) and a "covered
swap agreement" as defined in the Commodity Exchange Act (7
U.S.C. Section 27(d)(1))."
7) SET-OFF. Notwithstanding any provision of this Agreement or any other
existing or future agreement (but without limiting the provisions of Section
2(c) and Section 6, except as provided in the next sentence), each party
irrevocably waives any and all rights it may have to set off, net, recoup or
otherwise withhold or suspend or condition payment or performance of any
obligation between it and the other party hereunder against any obligation
between it and the other party under any other agreements. The last sentence of
the first paragraph of Section 6(e) shall not apply for purposes of this
Transaction.
8) RATINGS DOWNGRADE. For purposes of each Transaction:
(a) DEFINITIONS. (1) "RATING AGENCY CONDITION" means, with respect to any
action taken or to be taken hereunder, a condition that is satisfied when
each of Xxxxx'x Investors Service, Inc. ("MOODY'S") and Standard & Poor's
Ratings Services, a division of The McGraw Hill Companies, Inc. ("S&P")
(each a "RATING AGENCY", and the rating condition with respect to it, the
"XXXXX'X RATING CONDITION" and "S&P RATING CONDITION", respectively) has
confirmed in writing to the Trustee that such action will not result in
withdrawal, reduction or other adverse action with respect to any
then-current rating by such Rating Agency of the Certificates; (2)
"QUALIFYING RATINGS" means, with respect to the debt of any assignee or
guarantor hereunder, (A) a short-term unsecured and unsubordinated debt
rating of "P-1" (not on watch for downgrade), and a long-term unsecured and
unsubordinated debt of "A1" (not on watch for downgrade) (or, if it has no
short-term unsecured and unsubordinated debt rating, a long term rating of
"Aa3" (not on watch for downgrade) by Moody's, and (B) a short-term
unsecured and unsubordinated debt rating of "A-1", or if it does not have a
short-term rating, a long-term unsecured and unsubordinated debt rating of
"A+" by S & P; (3) a "COLLATERALIZATION EVENT" shall occur with respect to
BNY (or any applicable credit support provider) if: (A) its short-term
unsecured and unsubordinated debt rating is reduced to "P-2" or below, and
its long-term unsecured and unsubordinated debt is reduced to "A3" or
below, or, if it has no short-term unsecured and unsubordinated debt
rating, its long term rating is reduced to "A2" or below, by Moody's (a
"MOODY'S COLLATERALIZATION EVENT"), or (B) its short-term unsecured and
unsubordinated debt rating is reduced to "A-2" or below, or, if it does not
have a short-term rating, its long-term unsecured and unsubordinated debt
rating is reduced to "A" or below by S&P (an "S&P COLLATERALIZATION
EVENT"); and (4) a "RATINGS EVENT" shall occur with respect to BNY (or any
applicable credit support provider) if: (A) its short-term unsecured and
unsubordinated debt rating is withdrawn or reduced to "P-3" or below and
its long-term unsecured and unsubordinated debt is reduced to "Baa1" or
below, or, if it has no short-term unsecured and unsubordinated debt
rating, its long term rating is reduced to "Baa1" or below, by Moody's (a
"MOODY'S RATINGS EVENT"), or (B) its long-term unsecured and unsubordinated
debt rating is withdrawn or reduced to "BB+" or below by S&P (an "S&P
RATINGS EVENT").
(b) ACTIONS TO BE TAKEN. Subject, in each case to satisfaction of the
Rating Agency Condition: (1) if a Collateralization Event occurs with
respect to BNY (or any applicable
Page 15 of 21
credit support provider), then BNY shall, at its own expense, within thirty
(30) days of such Collateralization Ratings Event: (A) post collateral in
accordance with the Credit Support Annex; or (B) on terms substantially
similar to this Agreement assign or transfer the Transactions to or replace
the Transactions with transactions with a third party approved by the
Counterparty (such approval not to be unreasonably withheld) the ratings of
which (or of the guarantor of which) meet or exceed the Qualifying Ratings;
or (C) obtain a guaranty of or a contingent agreement to honor BNY's
obligations under this Agreement by a third party approved by the
Counterparty (such approval not to be unreasonably withheld) the ratings of
which (or of the guarantor of which) meet or exceed the Qualifying Ratings;
or (4) establish any other arrangement approved by the Counterparty (such
approval not to be unreasonably withheld) that satisfies the Rating
Condition; and (2) if a Ratings Event occurs with respect to BNY (or any
applicable Credit Support Provider), then BNY shall, at its own expense,
within ten (10) Business Days of such Ratings Event: (A) on terms
substantially similar to this Agreement assign or transfer the Transactions
to or replace the Transactions with transactions with a third party
approved by the Counterparty (such approval not to be unreasonably
withheld) the ratings of which (or of the guarantor of which) meet or
exceed the Qualifying Ratings, or (B) obtain a guaranty of or a contingent
agreement to honor BNY's obligations under this Agreement by a third party
approved by the Counterparty (such approval not to be unreasonably
withheld) the ratings of which (or of the guarantor of which) meet or
exceed the Qualifying Ratings; or (C) establish any other arrangement
approved by the Counterparty (such approval not to be unreasonably
withheld) that satisfies the Rating Condition.
9) COMPLIANCE WITH REGULATION AB.
If the Depositor under the Pooling and Servicing Agreement still has a
reporting obligation with respect to this Transaction pursuant to
Regulation AB under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended ("REGULATION AB") and BNY has
not, within 30 days after receipt of a Swap Disclosure Request complied
with the provisions set forth below in this Paragraph 4(9) (provided that
if the significance percentage reaches 10% after a Swap Disclosure Request
has been made to BNY, BNY must comply with the provisions set forth below
in this Section 4(9) within 10 calendar days of BNY being informed of the
significance percentage reaching 10%), then an Additional Termination Event
shall have occurred with respect to BNY and BNY shall be the sole Affected
Party with respect to such Additional Termination Event.
BNY acknowledges that for so long as there are reporting obligations with
respect to this Transaction under Regulation AB, the Depositor is required
under Regulation AB to disclose certain information set forth in Regulation
AB regarding BNY or its group of affiliated entities, if applicable,
depending on the aggregate "significance percentage" of this Agreement and
any other derivative contracts between BNY or its group of affiliated
entities, if applicable, and the Counterparty, as calculated from time to
time in accordance with Item 1115 of Regulation AB.
If the Depositor determines, reasonably and in good faith, that the
significance percentage of this Agreement has increased to nine (9)
percent, then the Depositor may request on a Business Day after the date of
such determination from BNY the same information set forth in Item 1115(b)
of Regulation AB that would have been required if the significance
percentage had in
Page 16 of 21
fact increased to ten (10) percent (such request, a "SWAP DISCLOSURE
REQUEST" and such requested information, subject to the last sentence of
this paragraph, is the "SWAP FINANCIAL DISCLOSURE"). The Counterparty or
the Depositor shall provide BNY with the calculations and any other
information reasonably requested by BNY with respect to the Depositor's
determination that led to the Swap Disclosure Request. The parties hereto
further agree that the Swap Financial Disclosure provided to meet the Swap
Disclosure Request may be, solely at BNY's option, either the information
set forth in Item 1115(b)(1) or Item 1115(b)(2) of Regulation AB.
Upon the occurrence of a Swap Disclosure Request, BNY, at its own expense,
shall (x) provide the Depositor with the Swap Financial Disclosure, or (y)
subject to Rating Agency Confirmation, secure another entity to replace BNY
as party to this Agreement on terms substantially similar to this Agreement
which entity is able to provide the Swap Financial Disclosure. If permitted
by Regulation AB, any required Swap Financial Disclosure may be provided by
incorporation by reference from reports filed pursuant to the Securities
Exchange Act.
10) BNY PAYMENTS TO BE MADE TO TRUSTEE. BNY will, unless otherwise directed
by the Trustee, make all payments hereunder to the Trustee. Payment made to the
Trustee at the account specified herein or to another account specified in
writing by the Trustee shall satisfy the payment obligations of BNY hereunder to
the extent of such payment.
11) RETURN OF AMOUNTS RECEIVED BY MLML OR ITS AFFILIATES. Xxxxxxx Xxxxx
Mortgage Lending, Inc. ("MLML") agrees and acknowledges that amounts paid
hereunder are not intended to benefit the holder of any class of Certificates
rated by any Rating Agency if such holder is MLML or any of its affiliates. If
MLML or any of its affiliates receives any such amounts, it will promptly remit
(or, if such amounts are received by an affiliate of MLML, MLML hereby agrees
that it will cause such affiliate to promptly remit) such amounts to the
Trustee, whereupon such Trustee will promptly remit such amounts to BNY. MLML
further agrees to provide notice to BNY upon any remittance to the Trustee.
12) ADDITIONAL PROVISIONS. Notwithstanding the terms of Sections 5 and 6 of
the ISDA Form Master Agreement, if the Counterparty has satisfied its payment
obligations under Section 2(a)(i) of the ISDA Form Master Agreement, and shall,
at the time, have no future payment or delivery obligation, whether absolute or
contingent, then unless BNY is required pursuant to appropriate proceedings to
return to the Counterparty or otherwise returns to the Counterparty upon demand
of the Counterparty any portion of such payment, (a) the occurrence of an event
described in Section 5(a) of the ISDA Form Master Agreement with respect to the
Counterparty shall not constitute an Event of Default or Potential Event of
Default with respect to the Counterparty as the Defaulting Party and (b) BNY
shall be entitled to designate an Early Termination Date pursuant to Section 6
of the ISDA Form Master Agreement only as a result of a Termination Event set
forth in either Section 5(b)(i) or Section 5(b)(ii) of the ISDA Form Master
Agreement with respect to BNY as the Affected Party or Section 5(b)(iii) of the
ISDA Form Master Agreement with respect to BNY as the Burdened Party.
Page 17 of 21
5. ACCOUNT DETAILS AND SETTLEMENT INFORMATION:
PAYMENTS TO BNY:
The Bank of New York
Derivative Products Support Department
00 Xxx Xxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
ABA #000000000
Account #000-0000-000
Reference: Interest Rate Cap
PAYMENTS TO COUNTERPARTY:
U.S. Bank National Association
ABA#: 000000000
DDA#: 1731 0332 2058
DDA Name: Structured Finance Wire Clearing
FFC: 107730000/SURF BC5 Cap Contract Account
6. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this agreement and returning it via facsimile to
Derivative Products Support Dept., Attn: Xxxxx Au-Xxxxx at 000-000-0000/5837.
Once we receive this we will send you two original confirmations for execution.
Page 18 of 21
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
THE BANK OF NEW YORK
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Page 19 of 21
The Counterparty, acting through its duly authorized signatory, hereby agrees
to, accepts and confirms the terms of the foregoing as of the Trade Date.
U.S. BANK NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE FOR THE SPECIALTY UNDERWRITING & RESIDENTIAL FINANCE TRUST SERIES
2006-BC5
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Page 20 of 21
SCHEDULE I
All dates subject to adjustment in accordance with the Modified Following
Business Day Convention.
Accrual Start Date Accrual End Date Notional Amount (in USD) Cap Rate (%)
------------------ ---------------- ------------------------ ------------
11/28/2006 12/25/2006 399,727,000 8.640
12/25/2006 1/25/2007 396,044,653 7.509
1/25/2007 2/25/2007 391,233,475 7.510
2/25/2007 3/25/2007 385,296,352 8.329
3/25/2007 4/25/2007 378,240,568 7.511
4/25/2007 5/25/2007 370,080,953 7.767
Page 21 of 21
Exhibit A to Confirmation No. 38514
See Exhibit 0-4 of Form 8-K filing.
EXHIBIT O-3
FORM OF SUBORDINATE CERTIFICATE CAP CONTRACT
O-3-1
Page 1 of 21
(THE BANK OF NEW YORK. LOGO)
Dated: November 3, 2006
RATE CAP TRANSACTION
RE: BNY REFERENCE NO. 38515
Ladies and Gentlemen:
The purpose of this letter agreement ("AGREEMENT") is to confirm the terms
and conditions of the rate Swap Transaction entered into on the Trade Date
specified below (the "TRANSACTION") between The Bank of New York ("BNY"), a
trust company duly organized and existing under the laws of the State of New
York, and Specialty Underwriting & Residential Finance Trust, Series 2006-BC5
(the "COUNTERPARTY"), as represented by U.S Bank National Association, not in
its individual capacity, but solely as Trustee under the Pooling and Servicing
Agreement, dated and effective November 1, 2006, among Xxxxxxx Xxxxx Mortgage
Investors, Inc., as Depositor, Wilshire Credit Corporation, as Servicer, and
U.S. Bank National Association, as Trustee (the "POOLING AND SERVICING
AGREEMENT"). This Agreement, which evidences a complete and binding agreement
between you and us to enter into the Transaction on the terms set forth below,
constitutes a "CONFIRMATION" as referred to in the "ISDA FORM MASTER AGREEMENT"
(as defined below), as well as a "Schedule" as referred to in the ISDA Form
Master Agreement.
1. FORM OF AGREEMENT. This Agreement is subject to the 2000 ISDA
Definitions (the "DEFINITIONS"), as published by the International Swaps and
Derivatives Association, Inc. ("ISDA"). Any reference to a "Swap Transaction" in
the Definitions is deemed to be a reference to a "Transaction" for purposes of
this Agreement, and any reference to a "Transaction" in this Agreement is deemed
to be a reference to a "Swap Transaction" for purposes of the Definitions. You
and we have agreed to enter into this Agreement in lieu of negotiating a
Schedule to the 1992 ISDA Master Agreement (Multicurrency--Cross Border) form
(the "ISDA FORM MASTER AGREEMENT"). An ISDA Form Master Agreement, as modified
by the Schedule terms in Paragraph 4 of this Confirmation (the "MASTER
AGREEMENT"), shall be deemed to have been executed by you and us on the date we
entered into the Transaction. For the avoidance of doubt, the Transaction
described herein shall be the sole Transaction governed by such ISDA Form Master
Agreement. Except as otherwise specified, references herein to Sections shall be
to Sections of the Master Agreement, and references to Paragraphs shall be to
paragraphs of this Agreement. Each party hereto agrees that the Master Agreement
deemed to have been executed by the parties hereto shall be the same Master
Agreement referred to in the agreement setting forth the terms of transaction
reference numbers 38513 and 38514. In the event of any inconsistency between the
provisions of this Agreement and the Definitions or the Master Agreement, this
Agreement shall prevail for purposes of the Transaction. Capitalized terms not
otherwise defined herein or in the Definitions or the Master Agreement shall
have the meaning defined for such term in the Pooling and Servicing Agreement.
2. CERTAIN TERMS. The terms of the particular Transaction to which this
Confirmation relates are as follows:
Page 2 of 21
Type of Transaction: Rate Cap
Notional Amount: With respect to any Calculation Period, the
lesser of: (i) USD 171,267,000.00 and (ii) the
Class Certificate Principal Balance of the
Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class B-1, Class B-2 and
Class B-3 Certificates (as defined in the
Pooling and Servicing Agreement) for such
Floating Rate Payer Payment Date.
The Trustee under the Pooling and Servicing
Agreement shall provide at least five (5)
business days notice prior to each Floating
Rate Payer Payment Date for each Calculation
Period to The Bank of New York if the Class
Certificate Principal Balance of the Class
M-1, Class M-2, Class M-3, Class M-4, Class
M-5, Class M-6, Class B-1, Class B-2 and Class
B-3 Certificates is less than the Schedule I
attached hereto.
Trade Date: November 3, 2006
Effective Date: November 28, 2006
Termination Date: May 25, 2007, subject to adjustment in
accordance with the Modified Following
Business Day Convention
FLOATING AMOUNTS
Floating Rate Payer: BNY
Cap Rate: For each Calculation Period, as set forth for
such period on Schedule I attached hereto.
Floating Rate for initial
Calculation Period: To be determined
Floating Rate Day Count
Fraction: Actual/360
Floating Rate Option: USD-LIBOR-BBA, provided, however, if the
Floating Rate Option for a Calculation Period
is greater than 8.990% then the Floating Rate
Option for such Calculation Period shall be
deemed equal to 8.990%.
Designated Maturity: One month
Spread: Inapplicable
Floating Rate Payer
Period End Dates: The 25th day of each month, beginning on
December 25, 2006 and ending on the
Termination Date, subject to adjustment in
accordance with the Following Business Day
Convention.
Page 3 of 21
Floating Rate Payer
Payment Dates: Early Payment shall be applicable. The
Floating Rate Payer Payment Date shall be two
(2) Business Days preceding each Floating Rate
Payer Period End Date.
Reset Dates: The first day of each Calculation Period
Compounding: Inapplicable
Business Days for Payments
By both parties: New York
Calculation Agent: BNY
3. ADDITIONAL PROVISIONS:
1) RELIANCE. Each party hereto is hereby advised and acknowledges that the
other party has engaged in (or refrained from engaging in) substantial financial
transactions and has taken (or refrained from taking) other material actions in
reliance upon the entry by the parties into the Transaction being entered into
on the terms and conditions set forth herein.
2) TRANSFER, AMENDMENT AND ASSIGNMENT. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of Standard & Poor's Ratings Service, a
division of The XxXxxx-Xxxx Companies, Inc ("S&P") and Xxxxx'x Investors
Service, Inc. ("MOODY'S"), has been provided notice of the same and confirms in
writing (including by facsimile transmission) that it will not downgrade,
qualify, withdraw or otherwise modify its then-current ratings on the Class X-0,
Xxxxx X-0, Class M-3, Class M-4, Class M-5, Class M-6, Class B-1, Class B-2 and
Class B-3 Certificates issued under the Pooling and Servicing Agreement (the
"CERTIFICATES").
4. PROVISIONS DEEMED INCORPORATED IN A SCHEDULE TO THE MASTER AGREEMENT:
1) NO PAYMENT NETTING AMONG TRANSACTIONS. The parties agree that
subparagraph (ii) of Section 2(c) of the ISDA Form Master Agreement will apply
to this Transaction.
2) TERMINATION PROVISIONS. Subject to the provisions of Paragraph 4(12),
for purposes of the Master Agreement:
(a) "SPECIFIED ENTITY" in relation to BNY or the Counterparty shall mean:
none.
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14.
(c) APPLICABILITY. The following provisions apply or do not apply to the
parties as specified below:
(i) Section 5(a)(i) (FAILURE TO PAY OR DELIVER):
(A) will apply to BNY; and
(B) will apply to the Counterparty.
(ii) Section 5(a)(ii) (BREACH OF AGREEMENT):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
Page 4 of 21
(iii) Section 5(a)(iii) (CREDIT SUPPORT DEFAULT):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
(iv) Section 5(a)(iv) (MISREPRESENTATION):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
(v) Section 5(a)(v) (DEFAULT UNDER SPECIFIED TRANSACTION):
(A) will not apply to BNY; and
(B) will not apply to the Counterparty.
(vi) Section 5(a)(vi) (CROSS DEFAULT):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
For the purposes of Section 5(a)(vi):
"SPECIFIED INDEBTEDNESS" will have the meaning specified in
Section 14 of this Agreement, except that it shall not include
indebtedness in respect of deposits received.
"THRESHOLD AMOUNT" means, 3% of consolidated shareholders equity
of BNY and its subsidiaries determined in accordance with
generally accepted accounting principles of the United States
consistently applied as of the last day of the fiscal quarter
ended immediately prior to the occurrence or existence of an
event for which a Threshold Amount is applicable under Section
5(a)(vi) of this Agreement.
(vii) Section 5(a)(vii) (BANKRUPTCY):
(A) will apply to BNY; and
(B) (1) subclauses (2), (4) (but only if the proceeding or
petition is instituted or presented by the Counterparty or its
affiliates), (7) and (8) (but only with respect to clauses (2),
(4) and (7) to the extent of disapplication herein) of Section
5(a)(vii) will not apply to the Counterparty, and the remaining
provisions of Section 5(a)(vii) will apply to the Counterparty;
and (2) the words "trustee" and "custodian" in subclause (6) will
not include the Trustee; and (3) events described in Section
5(a)(vii) occurring with respect to the Trust or the Supplemental
Interest Trust are deemed to occur to the Counterparty.
(viii) Section 5(a)(viii) (MERGER WITHOUT ASSUMPTION):
(A) will apply to BNY; and
(B) will apply to the Counterparty.
Page 5 of 21
(ix) Section 5(b)(i) (ILLEGALITY):
(A) will apply to BNY; and
(B) will apply to the Counterparty.
(x) Section 5(b)(ii) (TAX EVENT):
(A) will apply to BNY; provided that the words "(x) any action
taken by a taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is
entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (y)" shall
be deleted; and
(B) will not apply to the Counterparty.
(xi) Section 5(b)(iii) (TAX EVENT UPON MERGER):
(A) will apply to BNY, provided, that BNY shall not be entitled
to designate an Early Termination Date by reason of a Tax Event
upon Merger in respect of which it is the Affected Party; and
(B) will apply to the Counterparty.
(xii) Section 5(b)(iv) (CREDIT EVENT UPON MERGER):
(A) will not apply to BNY; and
(B) will not apply to the Counterparty.
(xiii) Section 5(b)(v) (ADDITIONAL TERMINATION EVENT):
(A) will apply to BNY with respect to Paragraph 4(2)(g)(iii) and
(iv); and
(B) will apply to the Counterparty with respect to Paragraph
(2)(g)(i) and (ii).
(d) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a):
(A) will not apply to BNY; and
(B) will not apply to the Counterparty.
(e) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e), the
Second Method and Market Quotation will apply. For such purpose, for so
long as the Certificates are rated by Moody's, if BNY is the Affected Party
in respect of an Additional Termination Event or a Tax Event Upon Merger or
the Defaulting Party in respect of any Event of Default (but not, in any
case, in respect of a Termination Event arising from an Illegality or Tax
Event), the following provisions shall apply:
(i) The definitions of "Market Quotation" and "Settlement Amount" are
amended in their entirety to read as follows:
"MARKET QUOTATION" means, with respect to one or more Terminated
Transactions, an offer capable of becoming legally binding upon
acceptance
Page 6 of 21
made by a Reference Market-maker with ratings that meet the
Collateralization Requirement or the Ratings Requirement, as the
case may be, for an amount that would be paid to the Counterparty
(expressed as a negative number) or by the Counterparty
(expressed as a positive number) in consideration of an agreement
between the Counterparty and such Reference Market-maker to enter
into a transaction (the "REPLACEMENT TRANSACTION"), with
commercial terms substantially the same as those of this
Agreement (save for the exclusion of provisions relating to
Transactions that are not Terminated Transactions) (which shall
be determined by the Counterparty, acting in a commercially
reasonable manner), that would have the effect of preserving the
economic equivalent for the Counterparty of any payment or
delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable
condition precedent) by the parties under Section 2(a)(i) in
respect of such Terminated Transactions or group of Terminated
Transactions that would, but for the occurrence of the relevant
Early Termination Date, have been required after that Date. For
this purpose, Unpaid Amounts in respect of the Terminated
Transaction or group of Transactions are to be excluded but,
without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming
satisfaction of each applicable condition precedent) after that
Early Termination Date is to be included.
"SETTLEMENT AMOUNT" means, with respect to any Early Termination
Date: --
(a) the Termination Currency Equivalent of the Market Quotation
(whether positive or negative) for each Terminated Transaction or
group of Terminated Transactions for which a Market Quotation is
accepted by the Counterparty so as to become legally binding on
or before the day falling ten (10) Local Business Days after the
day on which the Early Termination Date is designated (or such
later day not be later than the Early Termination Date as the
Counterparty may specify in writing to BNY); or (if there is no
such accepted Market Quotation)
(b) the Counterparty's Loss (whether positive or negative and
without reference to any Unpaid amounts) for the relevant
Terminated Transaction or group of Terminated Transactions.
(ii) the Counterparty and, if request is made in writing within two
Local Business Days after the day on which the Early Termination Date
is designated, BNY, shall use reasonable efforts to obtain one or more
Market Quotations before the date determined pursuant to clause (a) of
the definition of "Settlement Amount".
(iii) Notwithstanding anything to the contrary in Section 6(e)(i)(3)
or Part 5(g), if the Settlement Amount is a negative number, the
Unpaid Amounts of BNY and the Counterparty shall be subject to netting
in accordance with Section 2(c).
Page 7 of 21
(f) "TERMINATION CURRENCY" means United States Dollars.
(g) "ADDITIONAL TERMINATION EVENT" will apply. The following shall
constitute Additional Termination Events, and the party specified shall be
the Affected Party with respect thereto:--
(i) TERMINATION OF TRUST FUND. The Trust, Supplemental Interest Trust
or Trust Fund shall be terminated pursuant to any provision of the
Pooling and Servicing Agreement (including, without limitation, by
exercise of the option to purchase and giving of notice under Sections
10.01 of the Pooling and Servicing Agreement). The Early Termination
Date with respect to such Additional Termination Event shall be the
Distribution Date upon which the Trust and the Supplemental Interest
Trust or Trust Fund is terminated and final payment is made in respect
of the Certificates. Each of BNY and the Counterparty may designate an
Early Termination Date in respect of this Additional Termination
Event. The Counterparty shall be the sole Affected Party.
(ii) AMENDMENT OF POOLING AND SERVICING AGREEMENT. The amendment of
the Pooling and Servicing Agreement in a manner which could have a
material adverse affect on BNY without first obtaining the prior
written consent of BNY (such consent not to be unreasonably withheld),
where such consent is required under the Pooling and Servicing
Agreement. The Counterparty shall be the sole Affected Party.
(iii) COLLATERALIZATION OR RATINGS EVENT. A Collateralization Event or
Ratings Event (as defined in Paragraph 4(8)(a) has occurred and is
continuing and BNY fails to comply with the provisions of Paragraph
4(8)(b) within the time periods set out therein, and, with respect to
a Ratings Event, at least one substitute counterparty has made an
offer which remains capable of becoming legally binding upon
acceptance to be the Transferee of an assignment, transfer or
replacement in accordance with Paragraph 4(8)(b)(2)(A) hereof). BNY
shall be the sole Affected Party.
(iv) REGULATION AB. BNY shall fail to comply with the provisions of
Paragraph 4(9) hereof within the time provided for therein. BNY shall
be the sole Affected Party.
(h) "GROSS UP". Section 2(d)(i)(4) shall not apply to Counterparty as X,
and Section 2(d)(ii) shall not apply to Counterparty as Y, such that
Counterparty shall not be required to pay any additional amounts referred
to therein.
3) TAX REPRESENTATIONS.
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e), BNY and the
Counterparty make the following representations:
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other
Page 8 of 21
than interest under Section 2(e), 6(d)(ii) or 6(e)) to be made by it
to the other party under this Agreement. In making this
representation, it may rely on:
(i) the accuracy of any representations made by the other party
pursuant to Section 3(f);
(ii) the satisfaction of the agreement contained in Section 4 (a)(i)
or 4(a)(iii) and the accuracy and effectiveness of any document
provided by the other party pursuant to Section 4 (a)(i) or 4(a)(iii);
and
(iii) the satisfaction of the agreement of the other party contained
in Section 4(d), provided that it shall not be a breach of this
representation where reliance is placed on clause (ii) and the other
party does not deliver a form or document under Section 4(a)(iii) by
reason of material prejudice of its legal or commercial position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f), BNY and the
Counterparty make the following representations.
(i) The following representation will apply to BNY:
(x) It is a "U.S. person" (as that term is used in section
1.1441-4(a)(3)(ii) of the United States Treasury Regulations) for
United States federal income tax purposes, (y) it is a trust
company duly organized and existing under the laws of the State
of New York, and (y) its U.S. taxpayer identification number is
000000000.
(ii) The following representation will apply to the Counterparty:
It is a "U.S. person" (as that term is used in section
1.1441-4(a)(3)(ii) of United States Treasury Regulations) for
United States federal income tax purposes.
4) DOCUMENTS TO BE DELIVERED. FOR THE PURPOSE OF SECTION 4(a):
(a) Tax forms, documents or certificates to be delivered are:
PARTY REQUIRED COVERED BY SECTION
TO DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED 3(d) REPRESENTATION
------------------- ---------------------------------------- ----------------------------- -------------------
BNY and Counterparty Any document required or reasonably Promptly after the earlier Yes
requested to allow the other party to of (i) reasonable demand by
make payments under this Agreement either party or (ii)
without any deduction or withholding for learning that such form or
or on the account of any tax. document is required
Page 9 of 21
(b) Other documents to be delivered are:
PARTY REQUIRED COVERED BY SECTION
TO DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED 3(d) REPRESENTATION
------------------- ----------------------------------------- ----------------------------- -------------------
BNY A certificate of an authorized officer of Upon the execution and Yes
the party, as to the incumbency and delivery of this Agreement
authority of the respective officers of
the party signing this Agreement, any
relevant Credit Support Document, or any
Confirmation, as the case may be.
Counterparty (i) a copy of the executed Pooling and Upon the later of, receipt Yes
Servicing Agreement, and (ii) an by such party, or within 30
incumbency certificate verifying the true days after the date of this
signatures and authority of the person or Agreement
persons signing this letter agreement on
behalf of the Counterparty.
BNY A copy of the annual balance sheet from Promptly after request by Yes
the most recent publicly available the Counterparty (if
regulatory call report. available on
xxxx://xxx.xxxx.xxx, such
delivery is not required)
BNY Legal Opinion as to enforceability of Upon the execution and Yes
this Agreement. delivery of this Agreement.
Counterparty Certified copy of the Board of Directors Upon the execution and Yes
resolution (or equivalent authorizing delivery of this Agreement.
documentation) which sets forth the
authority of each signatory to the
Confirmation signing on its behalf and
the authority of such party to enter into
Transactions contemplated and performance
of its obligations hereunder.
Page 10 of 21
5) MISCELLANEOUS.
(a) ADDRESS FOR NOTICES: For the purposes of Section 12(a):
ADDRESS FOR NOTICES OR COMMUNICATIONS TO BNY:
The Bank of New York
Swaps and Derivative Products Group
Global Market Division
00 Xxx Xxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
with a copy to:
The Bank of New York
Swaps and Derivative Products Group
00 Xxx Xxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Tele: 000-000-0000
Fax: 000-000-0000/5837
(For all purposes)
A copy of any notice or other communication with respect to Sections 5
or 6 should also be sent to the addresses set out below:
The Bank of New York
Legal Department
Xxx Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
ADDRESS FOR NOTICES OR COMMUNICATIONS TO THE COUNTERPARTY:
U.S. Bank National Association
Mail Code: Ep-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Structured Finance - SURF 2006-BC5
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx Xxxxx SURF
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Page 11 of 21
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) PROCESS AGENT. For the purpose of Section 13(c):
BNY appoints as its Process Agent: Not Applicable
The Counterparty appoints as its Process Agent: Not Applicable
(c) OFFICES. The provisions of Section 10(a) will not apply to this
Agreement; neither BNY nor the Counterparty have any Offices other than as
set forth in the Notices Section and BNY agrees that, for purposes of
Section 6(b), it shall not in future have any Office other than one in the
United States.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c):
BNY is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is BNY.
(f) "CREDIT SUPPORT DOCUMENT" means in relation to:--
BNY: the Credit Support Annex attached as Exhibit A hereto.
The Counterparty: Not applicable.
(g) "CREDIT SUPPORT PROVIDER" means in relation to:--
BNY: Not Applicable (except with respect to credit support furnished
pursuant to Paragraph 4(8) or 4(9).
Counterparty: Not Applicable
(h) GOVERNING LAW. The parties to this Agreement hereby agree that the law
of the State of New York shall govern their rights and duties in whole,
without regard to conflict of law provisions thereof other than New York
General Obligations Law Sections 5-1401 and 5-1402.
(i) SEVERABILITY. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall
be held to be invalid or unenforceable (in whole or in part) for any
reason, the remaining terms, provisions, covenants, and conditions hereof
shall continue in full force and effect as if this Agreement had been
executed with the invalid or unenforceable portion eliminated, so long as
this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter of
this Agreement and the deletion of such portion of this Agreement will not
substantially impair the respective benefits or expectations of the
parties. The parties shall endeavor to engage in good faith negotiations to
replace any invalid or unenforceable term, provision, covenant or condition
with a valid or enforceable term, provision, covenant or condition, the
economic effect of which comes
Page 12 of 21
as close as possible to that of the invalid or unenforceable term,
provision, covenant or condition.
(j) RECORDING OF CONVERSATIONS. Each party (i) consents to the recording of
telephone conversations between the trading, marketing and other relevant
personnel of the parties in connection with this Agreement or any potential
Transaction, (ii) agrees to obtain any necessary consent of, and give any
necessary notice of such recording to, its relevant personnel and (iii)
agrees, to the extent permitted by applicable law, that recordings may be
submitted in evidence in any Proceedings.
(k) WAIVER OF JURY TRIAL. Each party waives any right it may have to a
trial by jury in respect of any Proceedings relating to this Agreement or
any Credit Support Document.
(l) NON-RECOURSE. Notwithstanding any provision herein or in the Master
Agreement to the contrary, the obligations of the Counterparty hereunder
are limited recourse obligations of the Counterparty, payable solely from
the Swap Account and the proceeds thereof to satisfy the Counterparty's
obligations hereunder. In the event that the Swap Account and proceeds
thereof should be insufficient to satisfy all claims outstanding and
following the realization of the Swap Account and the distribution of the
proceeds thereof in accordance with the Pooling and Servicing Agreement,
any claims against or obligations of the Counterparty under the Master
Agreement or any other confirmation thereunder, still outstanding shall be
extinguished and thereafter not revive. This provision shall survive the
expiration of this Agreement.
(m) LIMITATION ON INSTITUTION OF BANKRUPTCY PROCEEDINGS. BNY shall not
institute against or cause any other person to institute against, or join
any other person in instituting against the Counterparty, the supplemental
interest trust or the trust created pursuant to the Pooling and Servicing
Agreement any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, under any federal or state bankruptcy or similar
law or bankruptcy or similar laws of any other jurisdiction, for a period
of one year and one day (or, if longer, the applicable preference period)
following indefeasible payment in full of the Certificates. This provision
shall survive the expiration of this Agreement.
(n) REMEDY OF FAILURE TO PAY OR DELIVER. The ISDA Form Master Agreement is
hereby amended by replacing the word "third" in the third line of Section
5(a)(i) by the word "second".
(o) "AFFILIATE" will have the meaning specified in Section 14 of the ISDA
Form Master Agreement, provided that the Counterparty shall be deemed not
to have any Affiliates for purposes of this Agreement, including for
purposes of Section 6(b)(ii).
(p) TRUSTEE'S CAPACITY. It is expressly understood and agreed by the
parties hereto that insofar as this Confirmation is executed by the Trustee
(i) this Confirmation is executed and delivered by U.S Bank National
Association, not in its individual capacity but solely as Trustee pursuant
to the Pooling and Servicing Agreement in the exercise of the powers and
authority conferred and vested in it thereunder and pursuant to instruction
set forth therein, (ii) each of the representations, undertakings and
agreements herein made on behalf of the trust is made and intended not as a
personal representation, undertaking or agreement of the Trustee but is
made and intended for the purpose of binding only the trust,
Page 13 of 21
(iii) nothing contained herein shall be construed as creating any liability
of U.S. Bank National Association, individually or personally, to perform
any covenants either express or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
person claiming by, through or under the parties hereto and (iv) under no
circumstances will U.S Bank National Association, in its individual
capacity be personally liable for the payment of any indebtedness or
expenses or be personally liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken under
this Confirmation. Nothing herein contained shall be construed as creating
any liability on U.S Bank National Association, individually or personally,
to perform any covenant either expressed or implied contained herein, all
such liability, if any, being expressly waived by the parties who are
signatories to this letter agreement and by any person claiming by, through
or under such parties.
(q) TRUSTEE'S REPRESENTATION. U.S Bank National Association, as Trustee,
represents and warrants that:
It has been directed under the Pooling and Servicing Agreement to
enter into this letter agreement as Trustee on behalf of the
Counterparty.
6) ADDITIONAL REPRESENTATIONS. Section 3 is hereby amended by adding, at
the end thereof, the following Sections 3(g),3(h) and 3(i):
"(g) RELATIONSHIP BETWEEN PARTIES.
(1) NONRELIANCE. It is not relying on any statement or representation
of the other party regarding the Transaction (whether written or
oral), other than the representations expressly made in this Agreement
or the Confirmation in respect of that Transaction.
(2) EVALUATION AND UNDERSTANDING.
(i) Each Party acknowledges that U.S. Bank National Association,
has been directed under the Pooling and Servicing Agreement to
enter into this Transaction as Trustee on behalf of the
Counterparty.
(ii) It is acting for its own account and has the capacity to
evaluate (internally or through independent professional advice)
the Transaction and has made its own decision to enter into the
Transaction; it is not relying on any communication (written or
oral) of the other party as investment advice or as a
recommendation to enter into such transaction; it being
understood that information and explanations related to the terms
and conditions of such transaction shall not be considered
investment advice or a recommendation to enter into such
transaction. No communication (written or oral) received from the
other party shall be deemed to be an assurance or guarantee as to
the expected results of the transaction; and
(iii) It understands the terms, conditions and risks of the
Transaction and is willing and able to accept those terms and
conditions and to assume (and does, in fact assume) those risks,
financially and otherwise.
Page 14 of 21
(3) PRINCIPAL. The other party is not acting as a fiduciary or an
advisor for it in respect of this Transaction.
(h) EXCLUSION FROM COMMODITIES EXCHANGE ACT. (A) It is an "eligible
contract participant" within the meaning of Section 1a(12) of the Commodity
Exchange Act, as amended; (B) this Agreement and each Transaction is
subject to individual negotiation by such party; and (C) neither this
Agreement nor any Transaction will be executed or traded on a "trading
facility" within the meaning of Section 1a(33) of the Commodity Exchange
Act, as amended.
(i) SWAP AGREEMENT. Each Transaction is a "swap agreement" as defined in 12
U.S.C. Section 1821(e)(8)(D)(vi) and a "covered swap agreement" as defined
in the Commodity Exchange Act (7 U.S.C. Section 27(d)(1))."
7) SET-OFF. Notwithstanding any provision of this Agreement or any other
existing or future agreement (but without limiting the provisions of
Section 2(c) and Section 6, except as provided in the next sentence), each
party irrevocably waives any and all rights it may have to set off, net,
recoup or otherwise withhold or suspend or condition payment or performance
of any obligation between it and the other party hereunder against any
obligation between it and the other party under any other agreements. The
last sentence of the first paragraph of Section 6(e) shall not apply for
purposes of this Transaction.
8) RATINGS DOWNGRADE. For purposes of each Transaction:
(a) DEFINITIONS. (1) "RATING AGENCY CONDITION" means, with respect to any
action taken or to be taken hereunder, a condition that is satisfied when
each of Xxxxx'x Investors Service, Inc. ("MOODY'S") and Standard & Poor's
Ratings Services, a division of The McGraw Hill Companies, Inc. ("S&P")
(each a "RATING AGENCY", and the rating condition with respect to it, the
"XXXXX'X RATING CONDITION" and "S&P RATING CONDITION", respectively) has
confirmed in writing to the Trustee that such action will not result in
withdrawal, reduction or other adverse action with respect to any
then-current rating by such Rating Agency of the Certificates; (2)
"QUALIFYING RATINGS" means, with respect to the debt of any assignee or
guarantor hereunder, (A) a short-term unsecured and unsubordinated debt
rating of "P-1" (not on watch for downgrade), and a long-term unsecured and
unsubordinated debt of "A1" (not on watch for downgrade) (or, if it has no
short-term unsecured and unsubordinated debt rating, a long term rating of
"Aa3" (not on watch for downgrade) by Moody's, and (B) a short-term
unsecured and unsubordinated debt rating of "A-1", or if it does not have a
short-term rating, a long-term unsecured and unsubordinated debt rating of
"A+" by S& P; (3) a "COLLATERALIZATION EVENT" shall occur with respect to
BNY (or any applicable credit support provider) if: (A) its short-term
unsecured and unsubordinated debt rating is reduced to "P-2" or below, and
its long-term unsecured and unsubordinated debt is reduced to "A3" or
below, or, if it has no short-term unsecured and unsubordinated debt
rating, its long term rating is reduced to "A2" or below, by Moody's (a
"MOODY'S COLLATERALIZATION EVENT"), or (B) its short-term unsecured and
unsubordinated debt rating is reduced to "A-2" or below, or, if it does not
have a short-term rating, its long-term unsecured and unsubordinated debt
rating is reduced to "A" or below by S&P (an "S&P COLLATERALIZATION
EVENT"); and (4) a "RATINGS EVENT" shall occur with respect to BNY (or any
applicable credit support provider) if: (A) its short-term unsecured
Page 15 of 21
and unsubordinated debt rating is withdrawn or reduced to "P-3" or below
and its long-term unsecured and unsubordinated debt is reduced to "Baa1" or
below, or, if it has no short-term unsecured and unsubordinated debt
rating, its long term rating is reduced to "Baa1" or below, by Moody's (a
"MOODY'S RATINGS EVENT"), or (B) its long-term unsecured and unsubordinated
debt rating is withdrawn or reduced to "BB+" or below by S&P (an "S&P
RATINGS EVENT").
(b) ACTIONS TO BE TAKEN. Subject, in each case to satisfaction of the
Rating Agency Condition: (1) if a Collateralization Event occurs with
respect to BNY (or any applicable credit support provider), then BNY shall,
at its own expense, within thirty (30) days of such Collateralization
Ratings Event: (A) post collateral in accordance with the Credit Support
Annex; or (B) on terms substantially similar to this Agreement assign or
transfer the Transactions to or replace the Transactions with transactions
with a third party approved by the Counterparty (such approval not to be
unreasonably withheld) the ratings of which (or of the guarantor of which)
meet or exceed the Qualifying Ratings; or (C) obtain a guaranty of or a
contingent agreement to honor BNY's obligations under this Agreement by a
third party approved by the Counterparty (such approval not to be
unreasonably withheld) the ratings of which (or of the guarantor of which)
meet or exceed the Qualifying Ratings; or (D) establish any other
arrangement approved by the Counterparty (such approval not to be
unreasonably withheld) that satisfies the Rating Condition; and (2) if a
Ratings Event occurs with respect to BNY (or any applicable Credit Support
Provider), then BNY shall, at its own expense, within ten (10) Business
Days of such Ratings Event: (A) on terms substantially similar to this
Agreement assign or transfer the Transactions to or replace the
Transactions with transactions with a third party approved by the
Counterparty (such approval not to be unreasonably withheld) the ratings of
which (or of the guarantor of which) meet or exceed the Qualifying Ratings,
or (B) obtain a guaranty of or a contingent agreement to honor BNY's
obligations under this Agreement by a third party approved by the
Counterparty (such approval not to be unreasonably withheld) the ratings of
which (or of the guarantor of which) meet or exceed the Qualifying Ratings;
or (C) establish any other arrangement approved by the Counterparty (such
approval not to be unreasonably withheld) that satisfies the Rating
Condition.
9) COMPLIANCE WITH REGULATION AB.
If the Depositor under the Pooling and Servicing Agreement still has a
reporting obligation with respect to this Transaction pursuant to
Regulation AB under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended ("REGULATION AB") and BNY has
not, within 30 days after receipt of a Swap Disclosure Request complied
with the provisions set forth below in this Paragraph 4(9) (provided that
if the significance percentage reaches 10% after a Swap Disclosure Request
has been made to BNY, BNY must comply with the provisions set forth below
in this Section 4(9) within 10 calendar days of BNY being informed of the
significance percentage reaching 10%), then an Additional Termination Event
shall have occurred with respect to BNY and BNY shall be the sole Affected
Party with respect to such Additional Termination Event.
BNY acknowledges that for so long as there are reporting obligations with
respect to this Transaction under Regulation AB, the Depositor is required
under Regulation AB to disclose
Page 16 of 21
certain information set forth in Regulation AB regarding BNY or its group
of affiliated entities, if applicable, depending on the aggregate
"significance percentage" of this Agreement and any other derivative
contracts between BNY or its group of affiliated entities, if applicable,
and the Counterparty, as calculated from time to time in accordance with
Item 1115 of Regulation AB.
If the Depositor determines, reasonably and in good faith, that the
significance percentage of this Agreement has increased to nine (9)
percent, then the Depositor may request on a Business Day after the date of
such determination from BNY the same information set forth in Item 1115(b)
of Regulation AB that would have been required if the significance
percentage had in fact increased to ten (10) percent (such request, a "SWAP
DISCLOSURE REQUEST" and such requested information, subject to the last
sentence of this paragraph, is the "SWAP FINANCIAL DISCLOSURE"). The
Counterparty or the Depositor shall provide BNY with the calculations and
any other information reasonably requested by BNY with respect to the
Depositor's determination that led to the Swap Disclosure Request. The
parties hereto further agree that the Swap Financial Disclosure provided to
meet the Swap Disclosure Request may be, solely at BNY's option, either the
information set forth in Item 1115(b)(1) or Item 1115(b)(2) of Regulation
AB.
Upon the occurrence of a Swap Disclosure Request, BNY, at its own expense,
shall (x) provide the Depositor with the Swap Financial Disclosure, or (y)
subject to Rating Agency Confirmation, secure another entity to replace BNY
as party to this Agreement on terms substantially similar to this Agreement
which entity is able to provide the Swap Financial Disclosure. If permitted
by Regulation AB, any required Swap Financial Disclosure may be provided by
incorporation by reference from reports filed pursuant to the Securities
Exchange Act.
10) BNY PAYMENTS TO BE MADE TO TRUSTEE. BNY will, unless otherwise directed
by the Trustee, make all payments hereunder to the Trustee. Payment made to
the Trustee at the account specified herein or to another account specified
in writing by the Trustee shall satisfy the payment obligations of BNY
hereunder to the extent of such payment.
11) RETURN OF AMOUNTS RECEIVED BY MLML OR ITS AFFILIATES. Xxxxxxx Xxxxx
Mortgage Lending, Inc. ("MLML") agrees and acknowledges that amounts paid
hereunder are not intended to benefit the holder of any class of
Certificates rated by any Rating Agency if such holder is MLML or any of
its affiliates. If MLML or any of its affiliates receives any such amounts,
it will promptly remit (or, if such amounts are received by an affiliate of
MLML, MLML hereby agrees that it will cause such affiliate to promptly
remit) such amounts to the Trustee, whereupon such Trustee will promptly
remit such amounts to BNY. MLML further agrees to provide notice to BNY
upon any remittance to the Trustee.
12) ADDITIONAL PROVISIONS. Notwithstanding the terms of Sections 5 and 6 of
the ISDA Form Master Agreement, if the Counterparty has satisfied its
payment obligations under Section 2(a)(i) of the ISDA Form Master
Agreement, and shall, at the time, have no future payment or delivery
obligation, whether absolute or contingent, then unless BNY is required
pursuant to appropriate proceedings to return to the Counterparty or
otherwise returns to the Counterparty upon demand of the Counterparty any
portion of such payment, (a) the occurrence of an event described in
Section 5(a) of the ISDA Form Master
Page 17 of 21
Agreement with respect to the Counterparty shall not constitute an Event of
Default or Potential Event of Default with respect to the Counterparty as
the Defaulting Party and (b) BNY shall be entitled to designate an Early
Termination Date pursuant to Section 6 of the ISDA Form Master Agreement
only as a result of a Termination Event set forth in either Section 5(b)(i)
or Section 5(b)(ii) of the ISDA Form Master Agreement with respect to BNY
as the Affected Party or Section 5(b)(iii) of the ISDA Form Master
Agreement with respect to BNY as the Burdened Party.
5. ACCOUNT DETAILS AND SETTLEMENT INFORMATION:
PAYMENTS TO BNY:
The Bank of New York
Derivative Products Support Department
00 Xxx Xxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
ABA #000000000
Account #000-0000-000
Reference: Interest Rate Cap
PAYMENTS TO COUNTERPARTY:
U.S. Bank National Association
ABA#: 000000000
DDA#: 1731 0332 2058
DDA Name: Structured Finance Wire Clearing
FFC: 107730000/SURF BC5 Cap Contract Account
6. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this agreement and returning it via facsimile to
Derivative Products Support Dept., Attn: Xxxxx Au-Xxxxx at 000-000-0000/5837.
Once we receive this we will send you two original confirmations for execution.
Page 18 of 21
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
THE BANK OF NEW YORK
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Page 19 of 21
The Counterparty, acting through its duly authorized signatory, hereby agrees
to, accepts and confirms the terms of the foregoing as of the Trade Date.
U.S. BANK NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE FOR THE SPECIALTY UNDERWRITING & RESIDENTIAL FINANCE TRUST SERIES
2006-BC5
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Page 20 of 21
SCHEDULE I
All dates subject to adjustment in accordance with the Modified
Following Business Day Convention.
Accrual Start Date Accrual End Date Cap Rate(%)
------------------ ---------------- -----------
11/28/2006 12/25/2006 8.281
12/25/2006 1/25/2007 7.147
1/25/2007 2/25/2007 7.147
2/25/2007 3/25/2007 7.968
3/25/2007 4/25/2007 7.148
4/25/2007 5/25/2007 7.404
Page 21 of 21
Exhibit A to Confirmation No. 38515
See Exhibit 0-4 of Form 8-K filing.
EXHIBIT O-4
FORM OF CREDIT SUPPORT ANNEX FOR CAP CONTRACTS
O-4-1
(BILATERAL FORM) (ISDA AGREEMENTS SUBJECT TO NEW YORK LAW ONLY)
(ISDA(R) LOGO)
International Swaps and Derivatives Association, Inc.
CREDIT SUPPORT ANNEX
to the Schedule to the
ISDA MASTER AGREEMENT
Dated as of November 28, 2006
between
THE BANK OF NEW YORK and U.S. BANK NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY,
BUT SOLELY AS TRUSTEE ON BEHALF
OF THE SPECIALTY UNDERWRITING &
RESIDENTIAL FINANCE TRUST SERIES
2006-BC5
established as a banking organization The Trust is a common law trust
under the laws of the State of New established under the laws of
York the State of New York.
("PARTY A") ("PARTY B")
This Annex supplements, forms part of, and is subject to, the Master Agreement
specified in the Confirmation between Party A and Party B (BNY Ref. No. 38513,
38514 and 38515), dated even date herewith, is part of the Schedule deemed
incorporated therein, and is a Credit Support Document under the Master
Agreement with respect to Party A.
Accordingly, the parties agree as follows:--
PARAGRAPHS 1 - 12. INCORPORATION. Paragraphs 1 through 12 inclusive of the ISDA
Credit Support Annex (Bilateral Form) (ISDA Agreements Subject to New York Law
Only) published in 1994 by the International Swaps and Derivatives Association,
Inc. are incorporated herein by reference and made a part hereof (all references
to Paragraphs herein being references to the Paragraphs thereof), except that
Paragraph 1(b) is hereby amended in its entirety to read as follows:
"(b) SECURED PARTY AND PLEDGOR. Notwithstanding anything contained in this Annex
to the contrary, (a) the term "Secured Party" as used in this Annex means only
Party B, (b) the term "Pledgor" as used in this Annex means only Party A, (c)
only Party A makes the pledge and grant in Paragraph 2, the acknowledgment in
the final sentence of Paragraph 8(a) and the representations in Paragraph 9, and
(d) only Party A will be required to make Transfers of Eligible Credit Support
hereunder."
A-1
PARAGRAPH 13.
CERTAIN DEFINITIONS. As used herein, "MOODY'S", "S&P", "RATING AGENCY",
"COLLATERALIZATION EVENT", "MOODY'S COLLATERALIZATION EVENT", "S&P
COLLATERALIZATION EVENT"; "RATINGS EVENT", "MOODY'S RATINGS EVENT", and "S&P
RATINGS EVENT" have the meanings assigned in the Schedule.
(a) SECURITY INTEREST FOR "OBLIGATIONS." The term "OBLIGATIONS" as used in this
Annex includes the following additional obligations: Not applicable.
(b) CREDIT SUPPORT OBLIGATIONS.
(i) DELIVERY AMOUNT, RETURN AMOUNT AND CREDIT SUPPORT AMOUNT.
(A) "DELIVERY AMOUNT" has the meaning specified in Paragraph 3(a)
except that the words "upon a demand made by the Transferee on or
promptly following a Valuation Date" shall be deleted and replaced by
the words "on each Valuation Date commencing no later than the
Valuation Date falling on the 30th Business Day after publication by
the applicable Rating Agency of the change in rating constituting a
Collateralization Event".
(B) "RETURN AMOUNT" has the meaning specified in Paragraph 3(b).
(C) "CREDIT SUPPORT AMOUNT" in Paragraph 3(b), shall be amended in its
entirety to read as follows:
"'CREDIT SUPPORT AMOUNT' means, unless otherwise specified in
Paragraph 13, for any Valuation Date after and during the
continuance of a Collateralization Event or Ratings Event, (i)
the Secured Party's Exposure for that Valuation Date, plus (ii)
the aggregate of all Independent Amounts applicable to the
Pledgor, if any, minus (iii) all Independent Amounts applicable
to the Secured Party, if any, minus (iv) the Pledgor's Threshold;
provided, however, that the Credit Support Amount will be deemed
to be zero whenever the calculation of the Credit Support Amount
yields a number less than zero; and, provided further, that, in
respect of a Xxxxx'x Rating Event, the Credit Support Amount will
not be less than the amount of, the next scheduled Payment in
respect of the Affected Transactions to be made by the Pledgor.
(ii) ELIGIBLE COLLATERAL. The items set forth in Schedule 1 will qualify as
"ELIGIBLE COLLATERAL" for Party A.
(iii) OTHER ELIGIBLE SUPPORT. The following items will qualify as "OTHER
ELIGIBLE SUPPORT" for the party specified: Not Applicable.
(iv) THRESHOLDS.
(A) "INDEPENDENT AMOUNT" means with respect to Party B: Zero; and,
with respect to Party A: an amount, as of the date of determination,
equal to the product of the aggregate Notional Amount outstanding at
the beginning of the related Calculation Period under the applicable
Affected Transactions, and:
(1) in respect of a Moody's Collateralization Event, the lesser
of (x) 2% (for daily valuation) or 4% (for weekly valuation)
or (y) the Moody's Increase Factor at First Trigger, and, in
respect of a Moody's Ratings Event, the lesser of (x) 8%
(for daily valuation) or 9% (for weekly valuation) or (y)
the Moody's Increase Factor at Second Trigger; or
(2) in respect of an S&P Collateralization Event or an S&P
Ratings Event, (x) with respect to basis risk swaps, the
product of the S&P Volatility Buffer and .01, and (y) with
respect to all other Transactions the S&P Volatility Buffer.
A-2
As used herein, the "MOODY'S INCREASE FACTOR" will be determined using
the table set forth in Schedule 2; and the "S&P VOLATILITY BUFFER"
will be determined using the tables set forth in Schedule 3.
(B) "THRESHOLD" means for each party: An infinite number; provided,
that the Threshold for Party A shall be zero upon the occurrence and
during the continuance of an Event of Default, Termination Event,
Additional Termination Event Rating Event (provided that, with respect
to a Collateralization Event, such event shall have continued for at
least 30 days) or Specified Condition with respect to such party.
(C) "MINIMUM TRANSFER AMOUNT" means with respect to Party A and Party
B: $100,000; provided, that the Minimum Transfer Amount for such party
shall be $50,000 in respect of an S&P Collateralization Event if the
aggregated principal balance of the rated Certificates is less than
$50,000,000 on the applicable Valuation Date, and shall be zero upon
the occurrence and during the continuance of an Event of Default,
Termination Event, Additional Termination Event, or Specified
Condition with respect to such party.
(D) ROUNDING. The Delivery Amount will be rounded up and the Return
Amount will be rounded down respectively to the nearest integral
multiple of $1,000.
(v) CONFLICTING RATING CONDITIONS. If any outstanding Certificates are
rated by more than one Rating Agency and a Collateralization Event or
Ratings Event with respect to each such Rating Agency has occurred and is
continuing, the Credit Support Amount and Independent Amount of Party A
shall equal the highest, and the Return Amount and Valuation Percentage
shall equal the lowest, of the applicable amounts determined as set forth
above; provided, that the Credit Support Amount and Independent Amount may
equal the lowest, and the Return Amount and Valuation Percentage may equal
the highest, of the applicable amounts determined as set forth above if the
Rating Condition of each Rating Agency is satisfied with respect with
respect thereto.
(c) VALUATION AND TIMING.
(i) "VALUATION AGENT" means, Party A, provided, that if any Event of
Default with respect to Party A has occurred and is continuing, then any
designated third party mutually agreed to by the parties shall be the
Valuation Agent until such time as Party A is no longer a Defaulting Party.
(ii) "VALUATION DATE" means:
[X] each Local Business Day, or
[ ] any Local Business Day in each calendar week, which shall be the
same calendar day each week to the extent practicable, on a
reasonably consistent basis.
(iii) "VALUATION TIME" means:
[ ] the close of business in the city of the Valuation Agent on the
Valuation Date or date of calculation, as applicable;
[X] the close of business on the Local Business Day before the
Valuation Date or date of calculation, as applicable;
provided, that the calculations of Value and Exposure will be made as of
approximately the same time on the same date.
(iv) "NOTIFICATION TIME" means 1:00 p.m., New York time, on a Local
Business Day.
(d) CONDITIONS PRECEDENT AND SECURED PARTY'S RIGHTS AND REMEDIES. (i)
Illegality, (ii) Credit Event Upon Merger, and (ii) Additional Termination
Events will be a "SPECIFIED CONDITION" for Party A (as the Affected Party) (but
not for purposes of Paragraph 8(d)), and (iv) Tax Event and (v) Tax Event Upon
Merger will not be a "SPECIFIED CONDITION for Party A.
(e) SUBSTITUTION.
A-3
(i) "SUBSTITUTION DATE" has the meaning specified in Paragraph 4(d)(ii).
(ii) CONSENT. If specified here as applicable, then the Pledgor must obtain
the Secured Party's consent for any substitution pursuant to Paragraph
4(d): Applicable.
(f) DISPUTE RESOLUTION.
(i) "RESOLUTION TIME" means 1:00 p.m., New York time, on the Local Business
Day following the date on which the notice is given that gives rise to a
dispute under Paragraph 5.
(ii) VALUE. For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value of
Posted Credit Support will be calculated as follows: as set forth for other
purposes in Paragraph 12.
(iii) ALTERNATIVE. The provisions of Paragraph 5 will apply, except to the
following extent: (A) pending the resolution of a dispute, Transfer of the
undisputed Value of Eligible Credit Support or Posted Credit Support
involved in the relevant demand will be due as provided in Paragraph 5 if
the demand is given by the Notification Time, but will be due on the second
Local Business Day after the demand if the demand is given after the
Notification Time; and (B) the Disputing Party need not comply with the
provisions of Paragraph 5(II)(2) if the amount to be Transferred does not
exceed the Disputing Party's Minimum Transfer Amount.
(g) HOLDING AND USING POSTED COLLATERAL.
(i) ELIGIBILITY TO HOLD POSTED COLLATERAL; CUSTODIANS. The Secured Party
will not be entitled to hold Posted Collateral itself. The Secured Party
will hold Posted Collateral through a Custodian (which may be the Trustee
and which shall at all times be a financial institution as specified under
the Pooling and Servicing Agreement or, if not so specified, which shall be
a commercial bank or trust company which is unaffiliated with Party B
organized under the laws of the United States or any state thereof, having
assets of at least $10 billion and a long term debt or a deposit rating of
at least (i) Baa2 from Moody's and (ii) "A-1" or "A" from S&P in the Swap
Collateral Account (defined below). Initially, the Custodian for Party B
is: Xxxxx Fargo Bank, N.A.
(ii) USE OF POSTED COLLATERAL. The provisions of Paragraph 6(c) will apply
to the Secured Party; therefore, Party B will not have any of the rights
specified in Paragraph 6(c)(i) or 6 (c)(ii).
(h) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) INTEREST RATE. The "INTEREST RATE" with respect to Eligible Collateral
in the form of Cash will be the rate actually earned on the Cash Posted
Collateral or, if the Pledgor instructs that the Cash Posted Collateral not
be invested, an amount equal to the contractual rate of interest entitled
to be received on such amounts from the Swap Collateral Account, provided
that, if the Swap Collateral Account does not pay interest and the
custodian or trustee is not obligated to invest Cash Posted Collateral
under the Pooling and Servicing Agreement, the "Interest Rate" will be, for
any day, the rate opposite the caption "Federal Funds (Effective)" for such
day as published for such day in Federal Reserve Publication H.15(519) or
any successor publication as published by the Board of Governors of the
Federal Reserve System or such other rate as agreed by Party A and Party
B..
(ii) TRANSFER OF INTEREST AMOUNT. The Transfer of the Interest Amount will
be made on the first Local Business Day of each calendar month and on any
Local Business Day that Posted Collateral in the form of Cash is
Transferred to the Pledgor pursuant to Paragraph 3(b).
(iii) ALTERNATIVE TO INTEREST AMOUNT. The provisions of Paragraph 6(d)(ii)
will apply.
(i) OTHER ELIGIBLE SUPPORT AND OTHER POSTED SUPPORT.
(i) "VALUE" with respect to Other Eligible Support and Other Posted Support
means: Inapplicable.
A-4
(ii) "TRANSFER" with respect to Other Eligible Support and Other Posted
Support means: Inapplicable.
(j) DEMANDS AND NOTICES. All demands, specifications and notices under this
Annex will be made pursuant to the Notices Section of this Agreement, unless
otherwise specified here:
(i) Party A: to be specified in each notice.
(ii) Party B:
Address: U.S. Bank National Association,
not in its individual capacity, but solely as trustee
of the Supplemental Interest Trust on behalf of the
Specialty Underwriting & Residential Finance Trust
Series 2006-BC5Mail Code: EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/SURF 2006-BC5
Telephone: 000-000-0000
Facsimile: 000-000-0000
(k) ADDRESSES FOR TRANSFERS.
Party A: For Cash: To be provided
For Eligible Collateral: To be provided
Party B: To be provided
(l) OTHER PROVISIONS.
(i) ADDITIONAL DEFINITIONS. As used in this Annex:--
"EQUIVALENT COLLATERAL" means, with respect to any security
constituting Posted Collateral, a security of the same issuer and, as
applicable, representing or having the same class, series, maturity,
interest rate, principal amount or liquidation value and such other
provisions as are necessary for that security and the security
constituting Posted Collateral to be treated as equivalent in the
market for such securities;
"LOCAL BUSINESS DAY" means: (i) any day on which commercial banks are
open for business (including dealings in foreign exchange and foreign
currency deposits) in New York, and (ii) in relation to a Transfer of
Eligible Collateral, a day on which the clearance system agreed
between the parties for the delivery of Eligible Collateral is open
for acceptance and execution of settlement instructions (or in the
case of a Transfer of Cash or other Eligible Collateral for which
delivery is contemplated by other means, a day on which commercial
banks are open for business (including dealings for foreign exchange
and foreign currency deposits) in New York and such other places as
the parties shall agree);
(ii) TRANSFER TIMING.
(A) Paragraph 4(b) shall be deleted and replaced in its entirety by
the following paragraph: "Subject to Paragraphs 4(a) and 5 and unless
otherwise specified, if a demand for the Transfer of Eligible Credit
Support or Posted Credit Support is made by the Notification Time,
then the relevant Transfer will be made not later than the close of
business on the second Local Business Day thereafter; if a demand is
made after the Notification Time then the relevant Transfer will be
made not later than the close of business on the third Local Business
Day thereafter."
A-5
(B) Paragraph 6(d)(1) shall be amended so that the reference therein
to "the following Local Business Day" shall be replaced by reference
to "the second Local Business Day thereafter".
(iii) EVENTS OF DEFAULT. Paragraph 7 shall be deleted and replaced in its
entirety by the following paragraph:
"For the purposes of Section 5(a)(i) of this Agreement, an Event of
Default will exist with respect to a party if that party fails (or
fails to cause its Custodian) to make, when due, any Transfer of
Eligible Credit Support, Posted Credit Support or the Interest Amount,
as applicable, required to be made by it and that failure continues
for two Local Business Day after the notice of that failure is given
to that party; provided, that, with respect to a failure to Transfer
Eligible Credit Support, at least 30 Local Business Days have elapsed
after a Ratings Event has occurred and such failure is not remedied on
or before the third Local Business Day after notice of such failure is
given to Party A".
(iv) RETURN OF FUNGIBLE SECURITIES. In lieu of returning to the Pledgor
pursuant to Paragraphs 3(b), 4(d), 5 and 8(d) any Posted Collateral
comprising securities the Secured Party may return Equivalent Collateral.
(v) NO COUNTERCLAIM. A party's rights to demand and receive the Transfer of
Eligible Collateral as provided hereunder and its rights as Secured Party
against the Posted Collateral or otherwise shall be absolute and subject to
no counterclaim, set-off, deduction or defense in favor of the Pledgor
except as contemplated in Sections 2 and 6 of the Agreement and Paragraph 8
of this Annex.
(vi) HOLDING COLLATERAL. The Secured Party shall cause any Custodian
appointed hereunder to open and maintain a segregated account and to hold,
record and identify all the Posted Collateral in such segregated account
and, subject to Paragraphs 6(c) and 8(a), such Posted Collateral shall at
all times be and remain the property of the Pledgor and shall at no time
constitute the property of, or be commingled with the property of, the
Secured Party or the Custodian (the "SWAP COLLATERAL ACCOUNT").
(vii) INVESTMENT OF CASH POSTED COLLATERAL. Cash Posted Collateral shall be
invested in Eligible Investments as directed by Party A. Such instructions
may be delivered as standing instructions.
(viii) RETURN OF POSTED COLLATERAL. At any time a Collateralization Event
or Ratings Event has occurred and is continuing with respect to Party A,
Party A shall be obligated to transfer Eligible Collateral in accordance
with the terms of this Annex. If a Collateralization Event or Rating Event
occurs and thereafter ceases to be continuing (and provided that no Event
of Default or Potential Event of Default exists with respect to Party A) or
Party A has made a Permitted Transfer under this Agreement, then Party A's
obligations to transfer Eligible Collateral under this Annex will
immediately cease with respect to that Collateralization Event, and Party B
will, upon demand by Party A, return to Party A, or cause its Custodian to
return, all Posted Collateral held under this Annex. The Secured Party is
authorized to liquidate any Posted Collateral pursuant to written
instructions from Party A.
(ix) EXTERNAL VERIFICATION OF XXXX-TO-MARKET VALUATIONS. If the long term
senior unsecured debt of Party A is rated BBB or lower by S&P, once every
month, Party A will, at it's own expense, verify its determination of
Exposure of the Transaction on the next Valuation Date by seeking
quotations from two (2) Reference Market-makers (provided that any
Reference Market-maker may not be used more than four times within each 12
month period) for their determination of Exposure of the Transaction on
such Valuation Date and the Valuation Agent will use the greater of either
(a) its own determination or (b) the high quotation for a Reference
Market-maker, if applicable for the next Valuation Date. Party A shall
provide the Quotations of such Reference Market-makers to S&P.
A-6
(x) EXPENSES. Notwithstanding Paragraph 10, the Pledgor will be responsible
for, and will reimburse the Secured Party for, all transfer and other taxes
and other costs involved in the transfer of Eligible Collateral.
(xi) LIMIT ON SECURED PARTY'S LIABILITY. The Secured Party will not be
liable for any losses or damages that the Pledgor may suffer as a result of
any failure by the Secured Party to perform, or any delay by it in
performing, any of its obligations under this Annex if the failure or delay
results from circumstances beyond the reasonable control of the Secured
Party or its Custodian, such as interruption or loss of computer or
communication services, labor disturbance, natural disaster or local or
national emergency.
[Signature page immediately follows]
A-7
IN WITNESS WHEREOF the parties have executed this Credit Support Annex on
the respective dates specified below with effect from the date on the first
page.
THE BANK OF NEW YORK U.S. BANK NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY, BUT
SOLELY AS TRUSTEE ON BEHALF OF THE
SPECIALTY UNDERWRITING & RESIDENTIAL
FINANCE TRUST SERIES 2006-BC5
By: By:
--------------------------------- ------------------------------------
Name: Name:
-------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
Date: Date:
------------------------------- ----------------------------------
A-8
SCHEDULE 1
ELIGIBLE COLLATERAL
Certificates: Specialty Underwriting & Residential Finance Trust Series 2006-BC5
Highest Rating of Certificates: Class A-1A rated "Aaa" by Moody's and "AAA" by
S&P S&P Scheduled Date Certificates will fall below USD 50,000,000: none
Valuation Date and Valuation Percentage for BNY: Daily
ELIGIBLE COLLATERAL & VALUATION PERCENTAGES MOODY'S AND S&P
VALUATION PERCENTAGE VALUATION PERCENTAGE
MOODY'S S&P
---------------------------- --------------------
COLLATERAL-
IZATION EVENT RATING EVENT DAILY WEEKLY
------------- ------------ ----- ------------
(A) Cash: U.S. Dollars in depositary account 100 100 100 100
form
(B) U.S. Treasury Securities: negotiable debt 100 100 98.9 98.6
obligations issued by the U.S. Treasury
Department after July 18, 1984
("TREASURIES") having a remaining maturity
of up to and not more than 1 year.
(C) Treasuries having a remaining maturity of 100 99 98 97.3
greater than 1 year but not more than 2
years.
(C) Treasuries having a remaining maturity of 100 98 97.4 95.8
greater than 2 years but not more than 3
years.
(C) Treasuries having a remaining maturity of 100 97 95.5 93.8
greater than 3 years but not more than 5
years.
(D) Treasuries having a remaining maturity of 100 95 93.7 91.4
greater than 5 years but not more than 7
years.
(D) Treasuries having a remaining maturity of 100 94 92.5 90.3
greater than 7 years but not more than 10
years.
(E) Treasuries having a remaining maturity of 100 89 91.1 87.9
greater than 10 years but not more than 20
years.
(F) Treasuries having a remaining maturity of 100 87 88.6 84.6
greater than 20 years but not more than 30
years.
(G) Agency Securities: negotiable debt 100 99 98.5 98
obligations of the Federal National Mortgage
Association (FNMA), Federal Home Loan
Mortgage Corporation (FHLMC), Federal Home
Loan Banks (FHLB), Federal Farm Credit Banks
(FFCB), Tennessee Valley Authority (TVA)
(collectively, "AGENCY SECURITIES") issued
after July 18, 1984 and having a remaining
maturity of not more than 1 year.
A-1-1
(H) Agency Securities having a remaining 100 98 97.7 96.8
maturity of greater than 1 year but not more
than 2 years.
(H) Agency Securities having a remaining 100 97 97.3 96.3
maturity of greater than 2 years but not
more than 3 years.
(H) Agency Securities having a remaining 100 96 94.5 94.5
maturity of greater than 3 years but not
more than 5 years.
(I) Agency Securities having a remaining 100 94 93.1 90.3
maturity of greater than 5 years but not
more than 7 years.
(I) Agency Securities having a remaining 100 93 90.7 86.9
maturity of greater than 7 years but not
more than 10 years.
(J) Agency Securities having a remaining 100 88 87.7 82.6
maturity of greater than 10 years but not
more than 20 years.
(K) Agency Securities having a remaining 100 86 84.4 77.9
maturity of greater than 20 years but not
more than 30 years.
(L) FHLMC Certificates. Mortgage participation 100 86 86.40
certificates issued by FHLMC evidencing (weekly
undivided interests or participations in valuation)
pools of first lien conventional or FHA/VA
residential mortgages or deeds of trust,
guaranteed by FHLMC, issued after July 18,
1984 and having a remaining maturity of not
more than 30 years.
(M) FNMA Certificates. Mortgage-backed 100 86 86.40
pass-through certificates issued by FNMA (weekly
evidencing undivided interests in pools of valuation)
first lien mortgages or deeds of trust on
residential properties, guaranteed by FNMA,
issued after July 18, 1984 and having a
remaining maturity of not more than 30
years.
(N) GNMA Certificates. Mortgage-backed 100 86 86.40
pass-through certificates issued by private (weekly
entities, evidencing undivided interests in valuation)
pools of first lien mortgages or deeds of
trust on single family residences,
guaranteed by the Government National
Mortgage Association (GNMA) with the full
faith and credit of the United States,
issued after July 18, 1984 and having a
remaining maturity of not more than 30
years.
(O) Commercial Mortgage-Backed Securities.
Commercial mortgage-backed securities rated
AAA by two major rating agencies with a
minimum par or face amount of $250 million
(excluding securities issued under Rule
144A) ("Commercial Mortgage-Backed
Securities") having a remaining maturity of
not more than 5 years.
A-1-2
(O) Commercial Mortgage-Backed Securities having
a remaining maturity of more than 5 years
and not more than 10 years.
(O) Commercial Mortgage-Backed Securities having
a remaining maturity of more than 10 years.
(P) Commercial Paper. Commercial Paper with a 100 99 99
rating of at least P-1 by Moody's and at
least A-1+ by S&P and having a remaining
maturity of not more than 30 days.
(Q) Other Items of Credit Support approved by * * *
the Rating Agencies to the extent any
[Notes][Certificates] are rated.
* percentage to be determined.
A-1-3
SCHEDULE 2
MOODY'S INCREASE FACTOR
The Moody's Increase Factor will be determined using the following table:
MOODY'S INCREASE FACTOR
-----------------------------------
POSTING FREQUENCY
REMAINING YEARS -----------------
TO MATURITY DAILY WEEKLY
--------------- ----- --------
MOODY'S INCREASE FACTOR AT FIRST
TRIGGER SWAPS, CAPS AND FLOORS
1 0.15% 0.25%
2 0.30% 0.50%
3 0.40% 0.70%
4 0.60% 1.00%
5 0.70% 1.20%
6 0.80% 1.40%
7 1.00% 1.60%
8 1.10% 1.80%
9 1.20% 2.00%
10 1.30% 2.20%
11 1.40% 2.30%
12 1.50% 2.50%
13 1.60% 2.70%
14 1.70% 2.80%
15 1.80% 3.00%
16 1.90% 3.20%
17 2.00% 3.30%
18 2.00% 3.50%
19 2.00% 3.60%
20 2.00% 3.70%
21 2.00% 3.90%
22 to 30 2.00% 4.00%
MOODY'S INCREASE FACTOR AT SECOND
TRIGGER SWAPS
1 0.50% 0.60%
2 1.00% 1.20%
3 1.50% 1.70%
4 1.90% 2.30%
5 2.40% 2.80%
6 2.80% 3.30%
7 3.20% 3.80%
8 3.60% 4.30%
9 4.00% 4.80%
10 4.40% 5.30%
11 4.70% 5.60%
12 5.00% 6.00%
13 5.40% 6.40%
14 5.70% 6.80%
15 6.00% 7.20%
16 6.30% 7.60%
17 6.60% 7.90%
18 6.90% 8.30%
19 7.20% 8.60%
20 7.50% 9.00%
21 7.80% 9.00%
A-2-1
22 to 30 8.00% 9.00%
MOODY'S INCREASE FACTOR AT SECOND
TRIGGER CAPS, FLOORS, TRANSACTION
SPECIFIC XXXXXX
1 0.65% 0.75%
2 1.30% 1.50%
3 1.90% 2.20%
4 2.50% 2.90%
5 3.10% 3.60%
6 3.60% 4.20%
7 4.20% 4.80%
8 4.70% 5.40%
9 5.20% 6.00%
10 5.70% 6.60%
11 6.10% 7.00%
12 6.50% 7.50%
13 7.00% 8.00%
14 7.40% 8.50%
15 7.80% 9.00%
16 8.20% 9.50%
17 8.60% 9.90%
18 9.00% 10.40%
19 9.40% 10.80%
20 9.70% 11.00%
21 to 30 10.00% 11.00%
A-2-2
SCHEDULE 3
S&P VOLATILITY BUFFER
Certificates: Specialty Underwriting & Residential Finance Trust Series 2006-BC5
Highest Rating of Certificates: Class A-1A rated "Aaa" by Moody's, and "AAA" by
S&P Weighted Average Life of Highest Rated Certificates: 5.15 years
The S&P Volatility Buffer will be determined using the following table:
S&P VOLATILITY BUFFER
------------------------------------------------------------
(Weighted Average Life of Highest Rated Floating Rate Notes)
Party A Rating* (Up to 5 years) (Up to 10 years) (Up to 30 years)
--------------- --------------- ---------------- ----------------
If, on the related Valuation Date, the highest rated Notes are rated "AA-" or
higher by S&P, the S&P Volatility Buffer is:
A-2 3.25% 4.00% 4.75%
A-3 4.00% 5.00% 6.25%
BB+ or lower 4.50% 6.75% 7.50%
If, on the related Valuation Date, the highest rated Notes are rated "A" or "A+"
by S&P, the S&P Volatility Buffer is:
BBB+/BBB 3.25% 4.00% 4.50%
A-2 3.25% 4.00% 4.50%
A-3/BBB- 3.50% 4.50% 6.00%
BB+ or lower 4.00% 5.25% 7.00%
* This rating shall be the higher of the rating by S&P on the related
Valuation Date of the long-term debt and short-term debt of Party A or its
guarantor or other Credit Support Provider.
A-4-1
EXHIBIT P-1
ONE-MONTH LIBOR CAP TABLE - A-1 CAP CONTRACT(1)
BEGINNING ENDING NOTIONAL LOWER UPPER
PERIOD ACCRUAL ACCRUAL BALANCE ($) COLLAR (%) COLLAR (%)
------ --------- -------- ----------- ---------- ----------
1 11/28/06 12/25/06 258,105,000 8.683 10.860
2 12/25/06 01/25/07 255,657,902 7.544 10.860
3 01/25/07 02/25/07 252,484,707 7.544 10.860
4 02/25/07 03/25/07 248,588,091 8.368 10.860
5 03/25/07 04/25/07 243,972,961 7.545 10.860
6 04/25/07 05/25/07 238,649,832 7.801 10.860
(1) With respect to any Distribution Date, if One-Month LIBOR (as determined by
the Cap Contract Counterparty and subject to a cap equal to 10.860%)
exceeds the Lower Collar, the Issuing Entity will receive payments pursuant
to the Cap Contract.
P-1-1
EXHIBIT P-2
ONE-MONTH LIBOR CAP TABLE - A-2 CAP CONTRACT(1)
BEGINNING ENDING NOTIONAL LOWER UPPER
PERIOD ACCRUAL ACCRUAL BALANCE ($) COLLAR (%) COLLAR (%)
------ --------- -------- ----------- ---------- ----------
1 11/28/06 12/25/06 399,727,000 8.640 10.370
2 12/25/06 01/25/07 396,044,653 7.509 10.370
3 01/25/07 02/25/07 391,233,475 7.510 10.370
4 02/25/07 03/25/07 385,296,352 8.329 10.370
5 03/25/07 04/25/07 378,240,568 7.511 10.370
6 04/25/07 05/25/07 370,080,953 7.767 10.370
(1) With respect to any Distribution Date, if One-Month LIBOR (as determined by
the Cap Contract Counterparty and subject to a cap equal to 10.370%)
exceeds the Lower Collar, the Issuing Entity will receive payments pursuant
to the Class A-2 Cap Contract.
P-2-1
EXHIBIT P-3
ONE-MONTH LIBOR CAP TABLE - SUBORDINATE CERTIFICATE CAP CONTRACT(1)
BEGINNING ENDING NOTIONAL LOWER UPPER
PERIOD ACCRUAL ACCRUAL BALANCE ($) COLLAR (%) COLLAR (%)
------ --------- -------- ----------- ---------- ----------
1 11/28/06 12/25/06 171,267,000 8.281 8.990
2 12/25/06 01/25/07 171,267,000 7.147 8.990
3 01/25/07 02/25/07 171,267,000 7.147 8.990
4 02/25/07 03/25/07 171,267,000 7.968 8.990
5 03/25/07 04/25/07 171,267,000 7.148 8.990
6 04/25/07 05/25/07 171,267,000 7.404 8.990
(1) With respect to any Distribution Date, if One-Month LIBOR (as determined by
the Cap Contract Counterparty and subject to a cap equal to 8.990%) exceeds
the Lower Collar, the Issuing Entity will receive payments pursuant to the
Subordinate Certificate Cap Contract.
P-3-1
EXHIBIT Q
FORM OF ASSESSMENT OF COMPLIANCE
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Center, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code XX-XX-XX0X
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC5
Wilshire Credit Corporation
00000 XX Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc.
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of
November 1, 2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as
depositor, Wilshire Credit Corporation, as servicer, and U.S. Bank
National Association, as trustee, relating to Specialty Underwriting
and Residential Finance Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-BC5 (the "Trust")
For the calendar year ending December 31, [2006] or portion thereof,
[U.S. Bank National Association, as Trustee] [Wilshire Credit Corporation, as
Servicer], for the Trust has complied in all material respects with the relevant
Servicing Criteria in Exhibit R of the Agreement.
Q-1
All capitalized terms used herein but not defined herein shall have
the meanings assigned to them in the Agreement.
Date:
--------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Q-2
EXHIBIT R
SERVICING CRITERIA TO BE ADDRESSED
IN ASSESSMENT OF COMPLIANCE
(RMBS unless otherwise noted)
DEFINITIONS KEY:
PRIMARY SERVICER - transaction party having borrower contact X - obligation
CUSTODIAN - safe keeper of certain pool assets
TRUSTEE - fiduciary of the transaction and safe keeper of certain pool assets
WHERE THERE ARE MULTIPLE CHECKS FOR CRITERIA THE ATTESTING PARTY WILL IDENTIFY
IN THEIR MANAGEMENT ASSERTION THAT THEY ARE ATTESTING ONLY TO THE PORTION OF THE
DISTRIBUTION CHAIN THEY ARE RESPONSIBLE FOR IN THE RELATED TRANSACTION
AGREEMENTS.
WILSHIRE CREDIT
REGULATION AB CORPORATION U.S. BANK ADDITIONAL
REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) INFORMATION
------------- ------------------------------------------------ ----------------- ----------------- ----------------------
GENERAL SERVICING CONSIDERATIONS
1122(d)(1)(i) Policies and procedures are instituted to X X Servicer and Trustee
monitor any performance or other triggers and each responsible only
events of default in accordance with the to the extent that
transaction agreements. each party, as
applicable, has actual
knowledge or written
notice with respect to
parties other than
itself.
1122(d)(1)(ii) If any material servicing activities are IF APPLICABLE FOR IF APPLICABLE FOR
outsourced to third parties, policies and A TRANSACTION A TRANSACTION
procedures are instituted to monitor the third PARTICIPANT PARTICIPANT
party's performance and compliance with such
servicing activities.
1122(d)(1)(iii) Any requirements in the transaction agreements N/A N/A
to maintain a back-up servicer for the Pool
Assets are maintained.
1122(d)(1)(iv) A fidelity bond and errors and omissions policy X
is in effect on the party participating in the
servicing function throughout the reporting
period in the amount of coverage required by and
otherwise in accordance with the terms of the
transaction agreements.
CASH COLLECTION AND ADMINISTRATION
1122(d)(2)(i) Payments on pool assets are deposited into the X X Servicer and Trustee
appropriate custodial bank each responsible only
R-1
WILSHIRE CREDIT
REGULATION AB CORPORATION U.S. BANK ADDITIONAL
REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) INFORMATION
------------- ------------------------------------------------ ----------------- ----------------- ----------------------
accounts and related bank clearing accounts no for deposits into the
more than two (2) business days following accounts held by it.
receipt, or such other number of days specified
in the transaction agreements.
1122(d)(2)(ii) Disbursements made via wire transfer on behalf X X Servicer disburses
of an obligor or to an investor are made only by funds to trustee.
authorized personnel. Trustee disburses
funds to
Certificateholders.
1122(d)(2)(iii) Advances of funds or guarantees regarding X
collections, cash flows or distributions, and
any interest or other fees charged for such
advances, are made, reviewed and approved as
specified in the transaction agreements.
1122(d)(2)(iv) The related accounts for the transaction, such X
as cash reserve accounts or accounts established
as a form of over collateralization, are
separately maintained (e.g., with respect to
commingling of cash) as set forth in the
transaction agreements.
1122(d)(2)(v) Each custodial account is maintained at a X
federally insured depository institution as set
forth in the transaction agreements. For
purposes of this criterion, "federally insured
depository institution" with respect to a
foreign financial institution means a foreign
financial institution that meets the
requirements of Rule 13k-1(b)(1) of the
Securities Exchange Act.
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent X
unauthorized access.
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis X X
for all asset-backed securities related bank
accounts, including custodial accounts and
related bank clearing accounts. These
reconciliations are (A) mathematically accurate;
(B) prepared within thirty (30) calendar days
after the bank statement cutoff date, or such
other number of days specified in the
transaction agreements; (C) reviewed and
approved by someone other than the person who
prepared the reconciliation; and (D) contain
explanations for reconciling items. These
reconciling items are resolved within ninety
(90) calendar days of their original
identification, or such other number of days
specified in the
R-2
WILSHIRE CREDIT
REGULATION AB CORPORATION U.S. BANK ADDITIONAL
REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) INFORMATION
------------- ------------------------------------------------ ----------------- ----------------- ----------------------
transaction agreements.
INVESTOR REMITTANCES AND REPORTING
1122(d)(3)(i) Reports to investors, including those to be X X
filed with the Commission, are maintained in
accordance with the transaction agreements and
applicable Commission requirements.
Specifically, such reports (A) are prepared in
accordance with timeframes and other terms set
forth in the transaction agreements; (B) provide
information calculated in accordance with the
terms specified in the transaction agreements;
(C) are filed with the Commission as required by
its rules and regulations; and (D) agree with
investors' or the trustee's records as to the
total unpaid principal balance and number of
Pool Assets serviced by the Servicer.
1122(d)(3)(ii) Amounts due to investors are allocated and X X Wilshire remits cash
remitted in accordance with timeframes, and loan level data to
distribution priority and other terms set forth trustee based on
in the transaction agreements. timelines established
in the Pooling and
Servicing Agreement.
The trustee is
responsible for the
allocation of funds
to Certificateholders
using the appropriate
distribution priority
as established by the
Pooling and Servicing
Agreement.
1122(d)(3)(iii) Disbursements made to an investor are posted X Trustee disburses
within two (2) business days to the Servicer's funds to
investor records, or such other number of days Certificateholders.
specified in the transaction agreements.
1122(d)(3)(iv) Amounts remitted to investors per the investor X X Servicer remits funds
reports agree with cancelled checks, or other and provides certain
form of payment, or custodial bank statements. investor reports to
trustees within
guidelines and
timeframes established
in Pooling and
Servicing Agreement.
Trustee disburses
funds to
Certificateholders.
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on pool assets is X
R-3
WILSHIRE CREDIT
REGULATION AB CORPORATION U.S. BANK ADDITIONAL
REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) INFORMATION
------------- ------------------------------------------------ ----------------- ----------------- ----------------------
maintained as required by the transaction
agreements or related pool asset documents.
1122(d)(4)(ii) Pool assets and related documents are X X
safeguarded as required by the transaction
agreements
1122(d)(4)(iii) Any additions, removals or substitutions to the X X Trustee shall only
asset pool are made, reviewed and approved in review, not approve,
accordance with any conditions or requirements such additions,
in the transaction agreements. removals or
substitutions in
accordance with the
transaction
agreements.
1122(d)(4)(iv) Payments on pool assets, including any payoffs, X
made in accordance with the related pool asset
documents are posted to the Servicer's obligor
records maintained no more than two (2) business
days after receipt, or such other number of days
specified in the transaction agreements, and
allocated to principal, interest or other items
(e.g., escrow) in accordance with the related
pool asset documents.
1122(d)(4)(v) The Servicer's records regarding the pool assets X
agree with the Servicer's records with respect
to an obligor's unpaid principal balance.
1122(d)(4)(vi) Changes with respect to the terms or status of X
an obligor's pool assets (e.g., loan
modifications or re-agings) are made, reviewed
and approved by authorized personnel in
accordance with the transaction agreements and
related pool asset documents.
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., X
forbearance plans, modifications and deeds in
lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated,
conducted and concluded in accordance with the
timeframes or other requirements established by
the transaction agreements.
1122(d)(4)(viii) Records documenting collection efforts are X
maintained during the period a pool asset is
delinquent in accordance with the transaction
agreements. Such records are maintained on at
least a monthly basis, or such other period
specified in the transaction agreements, and
describe the entity's activities in monitoring
R-4
WILSHIRE CREDIT
REGULATION AB CORPORATION U.S. BANK ADDITIONAL
REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) INFORMATION
------------- ------------------------------------------------ ----------------- ----------------- ----------------------
delinquent pool assets including, for example,
phone calls, letters and payment rescheduling
plans in cases where delinquency is deemed
temporary (e.g., illness or unemployment).
1122(d)(4)(ix) Adjustments to interest rates or rates of return X
for pool assets with variable rates are computed
based on the related pool asset documents.
1122(d)(4)(x) Regarding any funds held in trust for an obligor X
(such as escrow accounts): (A) such funds are
analyzed, in accordance with the obligor's pool
asset documents, on at least an annual basis, or
such other period specified in the transaction
agreements; (B) interest on such funds is paid,
or credited, to obligors in accordance with
applicable pool asset documents and state laws;
and (C) such funds are returned to the obligor
within thirty (30) calendar days of full
repayment of the related pool assets, or such
other number of days specified in the
transaction agreements.
1122(d)(4)(xi) Payments made on behalf of an obligor (such as X
tax or insurance payments) are made on or before
the related penalty or expiration dates, as
indicated on the appropriate bills or notices
for such payments, provided that such support
has been received by the servicer at least
thirty (30) calendar days prior to these dates,
or such other number of days specified in the
transaction agreements.
1122(d)(4)(xii) Any late payment penalties in connection with X
any payment to be made on behalf of an obligor
are paid from the Servicer's funds and not
charged to the obligor, unless the late payment
was due to the obligor's error or omission.
1122(d)(4)(xiii) Disbursements made on behalf of an obligor are X
posted within two (2) business days to the
obligor's records maintained by the servicer, or
such other number of days specified in the
transaction agreements.
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible X
accounts are recognized and recorded in
accordance with the transaction agreements.
1122(d)(4)(xv) Any external enhancement or other X
R-5
WILSHIRE CREDIT
REGULATION AB CORPORATION U.S. BANK ADDITIONAL
REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) INFORMATION
------------- ------------------------------------------------ ----------------- ----------------- ----------------------
support, identified in Item 1114(a)(1) through
(3) or Item 1115 of Regulation AB, is maintained
as set forth in the transaction agreements.
R-6
EXHIBIT S
XXXXXXXX-XXXXX CERTIFICATIONS
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Center, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC5
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-BC5
I, [identify the certifying individual], certify that:
1. I, or persons under my supervision, have reviewed the report on Form
10-K and all reports on Form 10-D required to be filed in respect of the period
covered by this report on Form 10-K of [identify the issuing entity] (the
"Exchange Act periodic reports");
2. Based on my knowledge, the Exchange Act periodic reports does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, all of the distribution, servicing and other
information required to be provided under Form 10-D for the period covered by
this report is included in the Exchange Act periodic reports;
4. [I am responsible for reviewing the activities performed by the
servicer(s) and based on my knowledge and the compliance review(s) conducted in
preparing the servicer compliance statement(s) required in this report under
Item 1123 of Regulation AB, and except as disclosed in the Exchange Act periodic
reports, the servicer(s) [has/have] fulfilled [its/their] obligations under the
servicing agreement(s); and]
5. All of the reports on assessment of compliance with servicing criteria
for ABS and their related attestation reports on assessment of compliance with
servicing criteria for asset-backed securities required to be included in this
report in accordance with Item 1122 of Regulation AB and Exchange Act Rules
13a-18 and 15d-18 have been included as an exhibit to this report, except as
otherwise disclosed in this report. Any material instances of noncompliance
described in such reports have been disclosed in this report on Form 10-K.
S-1
[In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties [name of
servicer, subservicer, co-servicer, depositor or trustee].]
Date:
-------------------------------
----------------------------------------
[Signature]
[Title]
--------------------------------
S-2
EXHIBIT T
FORM OF ITEM 1123 CERTIFICATION OF SERVICER
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Center, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC5
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of November 1,
2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Wilshire
Credit Corporation, as servicer, and U.S. Bank National Association, as
trustee, relating to Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-BC5
I, [identify name of certifying individual], [title of certifying individual] of
Wilshire Credit Corporation (the "Servicer"), hereby certify that:
(1) A review of the activities of the Servicer during the preceding
calendar year and of the performance of the Servicer under the Agreement has
been made under my supervision; and
(2) To the best of my knowledge, based on such review, the Servicer
has fulfilled all its obligations under the Agreement in all material respects
throughout such year or a portion thereof[, or, if there has been a failure to
fulfill any such obligation in any material respect, I have specified below each
such failure known to me and the nature and status thereof].
Date:
-------------------------------
Wilshire Credit Corporation,
as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
T-1
EXHIBIT U-1
FORM OF SWAP AGREEMENT
U-1
Page 1 of 22
(THE BANK OF NEW YORK. LOGO)
Dated: November 28, 2006
RATE SWAP TRANSACTION
RE: BNY REFERENCE NO. 38512
Ladies and Gentlemen:
The purpose of this letter agreement ("AGREEMENT") is to confirm the terms
and conditions of the rate Swap Transaction entered into on the Trade Date
specified below (the "TRANSACTION") between The Bank of New York ("BNY"), a
trust company duly organized and existing under the laws of the State of New
York, and the Supplemental Interest Trust relating to Specialty Underwriting &
Residential Finance Series 2006-BC5 (the "COUNTERPARTY"), as represented by U.S
Bank National Association, not in its individual capacity, but solely as trustee
of the Supplemental Interest Trust under the Pooling and Servicing Agreement,
dated and effective November 1, 2006, among Xxxxxxx Xxxxx Mortgage Investors,
Inc., as Depositor, Wilshire Credit Corporation, as Servicer and U.S. Bank
National Association, as Trustee (the "POOLING AND SERVICING AGREEMENT"). This
Agreement, which evidences a complete and binding agreement between you and us
to enter into the Transaction on the terms set forth below, constitutes a
"CONFIRMATION" as referred to in the "ISDA FORM MASTER AGREEMENT" (as defined
below), as well as a "Schedule" as referred to in the ISDA Form Master
Agreement.
1. FORM OF AGREEMENT. This Agreement is subject to the 2000 ISDA
Definitions (the "DEFINITIONS"), as published by the International Swaps and
Derivatives Association, Inc. ("ISDA"). Any reference to a "Swap Transaction" in
the Definitions is deemed to be a reference to a "Transaction" for purposes of
this Agreement, and any reference to a "Transaction" in this Agreement is deemed
to be a reference to a "Swap Transaction" for purposes of the Definitions. You
and we have agreed to enter into this Agreement in lieu of negotiating a
Schedule to the 1992 ISDA Master Agreement (Multicurrency--Cross Border) form
(the "ISDA FORM MASTER AGREEMENT"). An ISDA Form Master Agreement, as modified
by the Schedule terms in Paragraph 4 of this Confirmation (the "MASTER
AGREEMENT"), shall be deemed to have been executed by you and us on the date we
entered into the Transaction. For the avoidance of doubt, the Transaction
described herein shall be the sole Transaction governed by such ISDA Form Master
Agreement. Except as otherwise specified, references herein to Sections shall be
to Sections of the Master Agreement, and references to Paragraphs shall be to
paragraphs of this Agreement. In the event of any inconsistency between the
provisions of this Agreement and the Definitions or the Master Agreement, this
Agreement shall prevail for purposes of the Transaction. Capitalized terms not
otherwise defined herein or in the Definitions or the Master Agreement shall
have the meaning defined for such term in the Pooling and Servicing Agreement.
2. CERTAIN TERMS. The terms of the particular Transaction to which this
Confirmation relates are as follows:
Page 2 of 22
Type of Transaction: Rate Swap
Notional Amount: With respect to any Calculation Period the
amount set forth for such period on Schedule I
attached hereto.
Trade Date: November 3, 2006
Effective Date: May 25, 2007
Termination Date: November 25, 2010, subject to adjustment in
accordance with the Following Business Day
Convention
FIXED AMOUNTS
Fixed Rate Payer: Counterparty
Fixed Rate: 5.20%
Fixed Rate Day Count
Fraction: 30/360
Fixed Rate Payer
Period End Dates: The 25th day of each month, beginning on June
25, 2007 and ending on the Termination Date,
with No Adjustment.
Fixed Rate Payer
Payment Dates: Early Payment shall be applicable. The Fixed
Rate Payer Payment Date shall be two (2)
Business Days preceding each Fixed Rate Payer
Period End Date.
FLOATING AMOUNTS
Floating Rate Payer: BNY
Floating Rate for initial
Calculation Period: To be determined
Floating Rate Day Count
Fraction: Actual/360
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: One month
Spread: Inapplicable
Floating Rate Payer
Period End Dates: The 25th day of each month, beginning on June
25, 2007 and ending on the Termination Date,
subject to adjustment in accordance with the
Following Business Day Convention.
Floating Rate Payer
Payment Dates: Early Payment shall be applicable. The Floating
Rate Payer Payment Date shall be two (2)
Business Days preceding each Floating Rate Payer
Period End Date.
Reset Dates: The first day of each Calculation Period
Compounding: Inapplicable
Business Days for Payments
By both parties: New York
Page 3 of 22
Calculation Agent: BNY
Additional Payment: Counterparty represents and warrants that it has
directed BNY to make a payment on its behalf for
the amount of USD 1,271,000.00 to Xxxxxxx Xxxxx
Mortgage Lending, Inc. for value November 28,
2006.
3. ADDITIONAL PROVISIONS:
1) RELIANCE. Each party hereto is hereby advised and acknowledges that the
other party has engaged in (or refrained from engaging in) substantial financial
transactions and has taken (or refrained from taking) other material actions in
reliance upon the entry by the parties into the Transaction being entered into
on the terms and conditions set forth herein.
2) TRANSFER, AMENDMENT AND ASSIGNMENT. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of Standard & Poor's Ratings Service, a
division of The XxXxxx-Xxxx Companies, Inc ("S&P") and Xxxxx'x Investors
Service, Inc. ("MOODY'S"), has been provided notice of the same and confirms in
writing (including by facsimile transmission) that it will not downgrade,
qualify, withdraw or otherwise modify its then-current ratings on the Class A,
Class M and Class B Certificates issued under the Pooling and Servicing
Agreement (the "CERTIFICATES").
4. PROVISIONS DEEMED INCORPORATED IN A SCHEDULE TO THE MASTER AGREEMENT:
1) NO PAYMENT NETTING AMONG TRANSACTIONS. The parties agree that
subparagraph (ii) of Section 2(c) of the ISDA Form Master Agreement will apply
to this Transaction.
2) TERMINATION PROVISIONS. For purposes of the Master Agreement:
(a) "SPECIFIED ENTITY" in relation to BNY or the Counterparty shall mean:
none.
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14.
(c) APPLICABILITY. The following provisions apply or do not apply to the
parties as specified below:
(i) Section 5(a)(i) (FAILURE TO PAY OR DELIVER):
(A) will apply to BNY; and
(B) will apply to the Counterparty.
(ii) Section 5(a)(ii) (BREACH OF AGREEMENT):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
(iii) Section 5(a)(iii) (CREDIT SUPPORT DEFAULT):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
(iv) Section 5(a)(iv) (MISREPRESENTATION):
(A) will apply to BNY; and
Page 4 of 22
(B) will not apply to the Counterparty.
(v) Section 5(a)(v) (DEFAULT UNDER SPECIFIED TRANSACTION):
(A) will not apply to BNY; and
(B) will not apply to the Counterparty.
(vi) Section 5(a)(vi) (CROSS DEFAULT):
(A) will apply to BNY; and
(B) will not apply to the Counterparty.
For the purposes of Section 5(a)(vi):
"SPECIFIED INDEBTEDNESS" will have the meaning specified in
Section 14 of this Agreement, except that it shall not include
indebtedness in respect of deposits received.
"THRESHOLD AMOUNT" means, 3% of consolidated shareholders equity
of BNY and its subsidiaries determined in accordance with
generally accepted accounting principles of the United States
consistently applied as of the last day of the fiscal quarter
ended immediately prior to the occurrence or existence of an
event for which a Threshold Amount is applicable under Section
5(a)(vi) of this Agreement.
(vii) Section 5(a)(vii) (BANKRUPTCY):
(A) will apply to BNY; and
(B) (1) subclauses (2), (4) (but only if the proceeding or
petition is instituted or presented by the Counterparty or its
affiliates), (7) and (8) (but only with respect to clauses (2),
(4) and (7) to the extent of disapplication herein) of Section
5(a)(vii) will not apply to the Counterparty, and the remaining
provisions of Section 5(a)(vii) will apply to the Counterparty;
and (2) the words "trustee" and "custodian" in subclause (6) will
not include the Trustee; and (3) events described in Section
5(a)(vii) occurring with respect to the Trust or the Supplemental
Interest Trust are deemed to occur to the Counterparty.
(viii) Section 5(a)(viii) (MERGER WITHOUT ASSUMPTION):
(A) will apply to BNY; and
(B) will apply to the Counterparty.
(ix) Section 5(b)(i) (ILLEGALITY):
(A) will apply to BNY; and
(B) will apply to the Counterparty.
(x) Section 5(b)(ii) (TAX EVENT):
Page 5 of 22
(A) will apply to BNY; provided that the words "(x) any action
taken by a taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is
entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (y)" shall
be deleted; and
(B) will not apply to the Counterparty.
(xi) Section 5(b)(iii) (TAX EVENT UPON MERGER):
(A) will apply to BNY, provided, that BNY shall not be entitled
to designate an Early Termination Date by reason of a Tax Event
upon Merger in respect of which it is the Affected Party; and
(B) will apply to the Counterparty.
(xii) Section 5(b)(iv) (CREDIT EVENT UPON MERGER):
(A) will not apply to BNY; and
(B) will not apply to the Counterparty.
(xiii) Section 5(b)(v) (ADDITIONAL TERMINATION EVENT):
(A) will apply to BNY with respect to Paragraph 4(2)(g)(iii) and
(iv); and
(B) will apply to the Counterparty with respect to Paragraph
(2)(g)(i) and(ii).
(d) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a):
(A) will not apply to BNY; and
(B) will not apply to the Counterparty.
(e) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e), the
Second Method and Market Quotation will apply. For such purpose, for so
long as the Certificates are rated by Moody's, if BNY is the Affected Party
in respect of an Additional Termination Event or a Tax Event Upon Merger or
the Defaulting Party in respect of any Event of Default (but not, in any
case, in respect of a Termination Event arising from an Illegality or Tax
Event), the following provisions shall apply:
(i) The definitions of "Market Quotation" and "Settlement Amount" are
amended in their entirety to read as follows:
"MARKET QUOTATION" means, with respect to one or more Terminated
Transactions, an offer capable of becoming legally binding upon
acceptance made by a Reference Market-maker with ratings that
meet the Collateralization Requirement or the Ratings
Requirement, as the case may be, for an amount that would be paid
to the Counterparty (expressed as a negative number) or by the
Counterparty (expressed as a positive number) in consideration of
an agreement between the Counterparty and such Reference
Market-maker to enter into a transaction (the "REPLACEMENT
Page 6 of 22
TRANSACTION"), with commercial terms substantially the same as
those of this Agreement (save for the exclusion of provisions
relating to Transactions that are not Terminated Transactions)
(which shall be determined by the Counterparty, acting in a
commercially reasonable manner), that would have the effect of
preserving the economic equivalent for the Counterparty of any
payment or delivery (whether the underlying obligation was
absolute or contingent and assuming the satisfaction of each
applicable condition precedent) by the parties under Section
2(a)(i) in respect of such Terminated Transactions or group of
Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that
Date. For this purpose, Unpaid Amounts in respect of the
Terminated Transaction or group of Transactions are to be
excluded but, without limitation, any payment or delivery that
would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition
precedent) after that Early Termination Date is to be included.
"SETTLEMENT AMOUNT" means, with respect to any Early Termination
Date: --
(a) the Termination Currency Equivalent of the Market Quotation
(whether positive or negative) for each Terminated Transaction or
group of Terminated Transactions for which a Market Quotation is
accepted by the Counterparty so as to become legally binding on
or before the day falling ten (10) Local Business Days after the
day on which the Early Termination Date is designated (or such
later day not be later than the Early Termination Date as the
Counterparty may specify in writing to BNY); or (if there is no
such accepted Market Quotation)
(b) the Counterparty's Loss (whether positive or negative and
without reference to any Unpaid amounts) for the relevant
Terminated Transaction or group of Terminated Transactions.
(ii) the Counterparty and, if request is made in writing within two
Local Business Days after the day on which the Early Termination Date
is designated, BNY, shall use reasonable efforts to obtain one or more
Market Quotations before the date determined pursuant to clause (a) of
the definition of "Settlement Amount".
(iii) Notwithstanding anything to the contrary in Section 6(e)(i)(3)
or Part 5(g), if the Settlement Amount is a negative number, the
Unpaid Amounts of BNY and the Counterparty shall be subject to netting
in accordance with Section 2(c).
(f) "TERMINATION CURRENCY" means United States Dollars.
(g) "ADDITIONAL TERMINATION EVENT" will apply. The following shall
constitute Additional Termination Events, and the party specified shall be
the Affected Party with respect thereto:--
(i) TERMINATION OF TRUST FUND. The Trust, Supplemental Interest Trust
or Trust Fund shall be terminated pursuant to any provision of the
Pooling and
Page 7 of 22
Servicing Agreement (including, without limitation, by completion of a
successful auction termination or by exercise of the option to
purchase and giving of notice under Sections 10.01 of the Pooling and
Servicing Agreement). The Early Termination Date with respect to such
Additional Termination Event shall be the Distribution Date upon which
the Trust and the Supplemental Interest Trust or Trust Fund is
terminated and final payment is made in respect of the Certificates.
Each of BNY and the Counterparty may designate an Early Termination
Date in respect of this Additional Termination Event. The Counterparty
shall be the sole Affected Party.
(ii) AMENDMENT OF POOLING AND SERVICING AGREEMENT. The amendment of
the Pooling and Servicing Agreement in a manner which could have a
material adverse affect on BNY without first obtaining the prior
written consent of BNY (such consent not to be unreasonably withheld),
where such consent is required under the Pooling and Servicing
Agreement. The Counterparty shall be the sole Affected Party.
(iii) COLLATERALIZATION OR RATINGS EVENT. A Collateralization Event or
Ratings Event (as defined in Paragraph 4(8)(a) has occurred and is
continuing and BNY fails to comply with the provisions of Paragraph
4(8)(b) within the time periods set out therein, and, with respect to
a Ratings Event, at least one substitute counterparty has made an
offer which remains capable of becoming legally binding upon
acceptance to be the Transferee of an assignment, transfer or
replacement in accordance with Paragraph 4(8)(b)(2)(A) hereof). BNY
shall be the sole Affected Party.
(iv) REGULATION AB. BNY shall fail to comply with the provisions of
Paragraph 4(9) hereof within the time provided for therein. BNY shall
be the sole Affected Party.
(h) "GROSS UP". Section 2(d)(i)(4) shall not apply to Counterparty as X,
and Section 2(d)(ii) shall not apply to Counterparty as Y, such that
Counterparty shall not be required to pay any additional amounts referred
to therein.
3) TAX REPRESENTATIONS.
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e), BNY and the
Counterparty make the following representations:
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e)) to be made by it to the other party under this
Agreement. In making this representation, it may rely on:
(i) the accuracy of any representations made by the other party
pursuant to Section 3(f);
Page 8 of 22
(ii) the satisfaction of the agreement contained in Section 4 (a)(i) or
4(a)(iii) and the accuracy and effectiveness of any document provided by
the other party pursuant to Section 4 (a)(i) or 4(a)(iii); and
(iii) the satisfaction of the agreement of the other party contained in
Section 4(d), provided that it shall not be a breach of this representation
where reliance is placed on clause (ii) and the other party does not
deliver a form or document under Section 4(a)(iii) by reason of material
prejudice of its legal or commercial position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f), BNY and the
Counterparty make the following representations.
(i) The following representation will apply to BNY:
(x) It is a "U.S. person" (as that term is used in section
1.1441-4(a)(3)(ii) of the United States Treasury Regulations) for
United States federal income tax purposes, (y) it is a trust company
duly organized and existing under the laws of the State of New York,
and (y) its U.S. taxpayer identification number is 000000000.
(ii) The following representation will apply to the Counterparty:
It is a "U.S. person" (as that term is used in section
1.1441-4(a)(3)(ii) of United States Treasury Regulations) for United
States federal income tax purposes.
4) DOCUMENTS TO BE DELIVERED. FOR THE PURPOSE OF SECTION 4(a):
(a) Tax forms, documents or certificates to be delivered are:
PARTY REQUIRED TO COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED 3(d) REPRESENTATION
------------------- ---------------------------------------- ------------------------------ -------------------
BNY and Counterparty Any document required or reasonably Promptly after the earlier of Yes
requested to allow the other party to (i) reasonable demand by
make payments under this Agreement either party or (ii) learning
without any deduction or withholding for that such form or document is
or on the account of any tax. required
(b) Other documents to be delivered are:
PARTY REQUIRED TO COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED 3(d) REPRESENTATION
------------------- ---------------------------------------- ------------------------------ -------------------
BNY A certificate of an authorized officer Upon the execution and Yes
of the party, as to the incumbency and delivery of this Agreement
authority of the
Page 9 of 22
PARTY REQUIRED TO COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED 3(d) REPRESENTATION
------------------- ---------------------------------------- ------------------------------ -------------------
respective officers of the party signing
this Agreement, any relevant Credit
Support Document, or any Confirmation,
as the case may be.
Counterparty (i) a copy of the executed Pooling and Upon the later of, receipt by Yes
Servicing Agreement, and (ii) an such party, or within 30 days
incumbency certificate verifying the after the date of this
true signatures and authority of the Agreement
person or persons signing this letter
agreement on behalf of the Counterparty.
BNY A copy of the annual balance sheet from Promptly after request by the Yes
the most recent publicly available Counterparty (if available on
regulatory call report. xxxx://xxx.xxxx.xxx, such
delivery is not required)
BNY Legal Opinion as to enforceability of Upon the execution and Yes
this Agreement. delivery of this Agreement.
Counterparty Certified copy of the Board of Directors Upon the execution and Yes
resolution (or equivalent authorizing delivery of this Agreement.
documentation) which sets forth the
authority of each signatory to the
Confirmation signing on its behalf and
the authority of such party to enter
into Transactions contemplated and
performance of its obligations
hereunder.
5) MISCELLANEOUS.
(a) ADDRESS FOR NOTICES: For the purposes of Section 12(a):
ADDRESS FOR NOTICES OR COMMUNICATIONS TO BNY:
The Bank of New York
Swaps and Derivative Products Group
Global Market Division
00 Xxx Xxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
with a copy to:
Page 10 of 22
The Bank of New York
Swaps and Derivative Products Group
00 Xxx Xxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Tele: 000-000-0000
Fax: 000-000-0000/5837
(For all purposes)
A copy of any notice or other communication with respect to Sections 5
or 6 should also be sent to the addresses set out below:
The Bank of New York
Legal Department
Xxx Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
ADDRESS FOR NOTICES OR COMMUNICATIONS TO THE COUNTERPARTY:
U.S. Bank National Association
Mail Code: Ep-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Structured Finance - SURF 2006-BC5
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx Xxxxx SURF
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) PROCESS AGENT. For the purpose of Section 13(c):
BNY appoints as its Process Agent: Not Applicable
The Counterparty appoints as its Process Agent: Not Applicable
(c) OFFICES. The provisions of Section 10(a) will not apply to this
Agreement; neither BNY nor the Counterparty have any Offices other than as
set forth in the Notices Section and BNY agrees that, for purposes of
Section 6(b), it shall not in future have any Office other than one in the
United States.
Page 11 of 22
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c):
BNY is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is BNY.
(f) "CREDIT SUPPORT DOCUMENT" means in relation to:--
BNY: the Credit Support Annex attached as Exhibit A hereto.
The Counterparty: Not applicable.
(g) "CREDIT SUPPORT PROVIDER" means in relation to:--
BNY: Not Applicable (except with respect to credit support furnished
pursuant to Paragraph 4(8) or 4(9).
Counterparty: Not Applicable
(h) GOVERNING LAW. The parties to this Agreement hereby agree that the law
of the State of New York shall govern their rights and duties in whole,
without regard to conflict of law provisions thereof other than New York
General Obligations Law Sections 5-1401 and 5-1402.
(i) SEVERABILITY. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall
be held to be invalid or unenforceable (in whole or in part) for any
reason, the remaining terms, provisions, covenants, and conditions hereof
shall continue in full force and effect as if this Agreement had been
executed with the invalid or unenforceable portion eliminated, so long as
this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter of
this Agreement and the deletion of such portion of this Agreement will not
substantially impair the respective benefits or expectations of the
parties. The parties shall endeavor to engage in good faith negotiations to
replace any invalid or unenforceable term, provision, covenant or condition
with a valid or enforceable term, provision, covenant or condition, the
economic effect of which comes as close as possible to that of the invalid
or unenforceable term, provision, covenant or condition.
(j) RECORDING OF CONVERSATIONS. Each party (i) consents to the recording of
telephone conversations between the trading, marketing and other relevant
personnel of the parties in connection with this Agreement or any potential
Transaction, (ii) agrees to obtain any necessary consent of, and give any
necessary notice of such recording to, its relevant personnel and (iii)
agrees, to the extent permitted by applicable law, that recordings may be
submitted in evidence in any Proceedings.
(k) WAIVER OF JURY TRIAL. Each party waives any right it may have to a
trial by jury in respect of any Proceedings relating to this Agreement or
any Credit Support Document.
(l) NON-RECOURSE. Notwithstanding any provision herein or in the Master
Agreement to the contrary, the obligations of the Counterparty hereunder
are limited recourse obligations of the Counterparty, payable solely from
amounts on deposit in the Swap
Page 12 of 22
Account created by the Supplemental Interest Trust and the proceeds thereof
to satisfy the Counterparty's obligations hereunder. In the event that the
Swap Account and proceeds thereof should be insufficient to satisfy all
claims outstanding and following the realization of the Swap Account and
the distribution of the proceeds thereof in accordance with the Pooling and
Servicing Agreement, any claims against or obligations of the Counterparty
under the Master Agreement or any other confirmation thereunder, still
outstanding shall be extinguished and thereafter not revive. This provision
shall survive the expiration of this Agreement.
(m) LIMITATION ON INSTITUTION OF BANKRUPTCY PROCEEDINGS. BNY shall not
institute against or cause any other person to institute against, or join
any other person in instituting against the Counterparty, the Supplemental
Interest Trust or the trust created pursuant to the Pooling and Servicing
Agreement any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, under any federal or state bankruptcy or similar
law or bankruptcy or similar laws of any other jurisdiction, for a period
of one year and one day (or, if longer, the applicable preference period)
following indefeasible payment in full of the Certificates. This provision
shall survive the expiration of this Agreement.
(n) REMEDY OF FAILURE TO PAY OR DELIVER. The ISDA Form Master Agreement is
hereby amended by replacing the word "third" in the third line of Section
5(a)(i) by the word "second".
(o) "AFFILIATE" will have the meaning specified in Section 14 of the ISDA
Form Master Agreement, provided that the Counterparty shall be deemed not
to have any Affiliates for purposes of this Agreement, including for
purposes of Section 6(b)(ii).
(p) TRUSTEE'S CAPACITY. It is expressly understood and agreed by the
parties hereto that insofar as this Confirmation is executed by the Trustee
(i) this Confirmation is executed and delivered by U.S Bank National
Association, not in its individual capacity but solely as trustee of the
Supplemental Interest Trust pursuant to the Pooling and Servicing Agreement
in the exercise of the powers and authority conferred and vested in it
thereunder and pursuant to instruction set forth therein, (ii) each of the
representations, undertakings and agreements herein made on behalf of the
trust is made and intended not as a personal representation, undertaking or
agreement of the Trustee but is made and intended for the purpose of
binding only the Counterparty, (iii) nothing contained herein shall be
construed as creating any liability of U.S. Bank National Association,
individually or personally, to perform any covenants either express or
implied contained herein, all such liability, if any, being expressly
waived by the parties hereto and by any person claiming by, through or
under the parties hereto and (iv) under no circumstances will U.S Bank
National Association, in its individual capacity be personally liable for
the payment of any indebtedness or expenses or be personally liable for the
breach or failure of any obligation, representation, warranty or covenant
made or undertaken under this Confirmation. Nothing herein contained shall
be construed as creating any liability on U.S Bank National Association,
individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly
waived by the parties who are signatories to this letter agreement and by
any person claiming by, through or under such parties.
Page 13 of 22
(q) TRUSTEE'S REPRESENTATION. U.S Bank National Association, as Trustee of
the Supplemental Interest Trust, represents and warrants that:
It has been directed under the Pooling and Servicing Agreement to
enter into this letter agreement as Trustee on behalf of the
Counterparty.
6) ADDITIONAL REPRESENTATIONS. Section 3 is hereby amended by adding, at
the end thereof, the following Sections 3(g),3(h) and 3(i):
"(g) RELATIONSHIP BETWEEN PARTIES.
(1) NONRELIANCE. It is not relying on any statement or representation
of the other party regarding the Transaction (whether written or
oral), other than the representations expressly made in this Agreement
or the Confirmation in respect of that Transaction.
(2) EVALUATION AND UNDERSTANDING.
(i) Each Party acknowledges that U.S. Bank National Association,
has been directed under the Pooling and Servicing Agreement to
enter into this Transaction as Trustee on behalf of the
Counterparty.
(ii) It is acting for its own account and has the capacity to
evaluate (internally or through independent professional advice)
the Transaction and has made its own decision to enter into the
Transaction; it is not relying on any communication (written or
oral) of the other party as investment advice or as a
recommendation to enter into such transaction; it being
understood that information and explanations related to the terms
and conditions of such transaction shall not be considered
investment advice or a recommendation to enter into such
transaction. No communication (written or oral) received from the
other party shall be deemed to be an assurance or guarantee as to
the expected results of the transaction; and
(iii) It understands the terms, conditions and risks of the
Transaction and is willing and able to accept those terms and
conditions and to assume (and does, in fact assume) those risks,
financially and otherwise.
(3) PRINCIPAL. The other party is not acting as a fiduciary or an
advisor for it in respect of this Transaction.
(h) EXCLUSION FROM COMMODITIES EXCHANGE ACT. (A) It is an "eligible
contract participant" within the meaning of Section 1a(12) of the
Commodity Exchange Act, as amended; (B) this Agreement and each
Transaction is subject to individual negotiation by such party; and
(C) neither this Agreement nor any Transaction will be executed or
traded on a "trading facility" within the meaning of Section 1a(33) of
the Commodity Exchange Act, as amended.
(i) SWAP AGREEMENT. Each Transaction is a "swap agreement" as defined
in 12 U.S.C. Section 1821(e)(8)(D)(vi) and a "covered swap agreement"
as defined in the Commodity Exchange Act (7 U.S.C. Section 27(d)(1))."
Page 14 of 22
7) SET-OFF. Notwithstanding any provision of this Agreement or any other
existing or future agreement (but without limiting the provisions of Section
2(c) and Section 6, except as provided in the next sentence), each party
irrevocably waives any and all rights it may have to set off, net, recoup or
otherwise withhold or suspend or condition payment or performance of any
obligation between it and the other party hereunder against any obligation
between it and the other party under any other agreements. The last sentence of
the first paragraph of Section 6(e) shall not apply for purposes of this
Transaction.
8) RATINGS DOWNGRADE. For purposes of each Transaction:
(a) DEFINITIONS. (1) "RATING AGENCY CONDITION" means, with respect to any
action taken or to be taken hereunder, a condition that is satisfied when
each of Moody's and S&P (each a "RATING AGENCY", and the rating condition
with respect to it, the "XXXXX'X RATING CONDITION" and "S&P RATING
CONDITION", respectively) has confirmed in writing to the trustee of the
Supplemental Interest Trust that such action will not result in withdrawal,
reduction or other adverse action with respect to any then-current rating
by such Rating Agency of the Certificates; (2) "QUALIFYING RATINGS" means,
with respect to the debt of any assignee or guarantor hereunder, (A) a
short-term unsecured and unsubordinated debt rating of "P-1" (not on watch
for downgrade), and a long-term unsecured and unsubordinated debt of "A1"
(not on watch for downgrade) (or, if it has no short-term unsecured and
unsubordinated debt rating, a long term rating of "Aa3" (not on watch for
downgrade) by Moody's, and (B) a short-term unsecured and unsubordinated
debt rating of "A-1", or if it does not have a short-term rating, a
long-term unsecured and unsubordinated debt rating of "A+" by S&P; (3) a
"COLLATERALIZATION EVENT" shall occur with respect to BNY (or any
applicable credit support provider) if: (A) its short-term unsecured and
unsubordinated debt rating is reduced to "P-2" or below, and its long-term
unsecured and unsubordinated debt is reduced to "A3" or below, or, if it
has no short-term unsecured and unsubordinated debt rating, its long term
rating is reduced to "A2" or below, by Moody's (a "MOODY'S
COLLATERALIZATION EVENT"), or (B) its short-term unsecured and
unsubordinated debt rating is reduced to "A-2" or below, or, if it does not
have a short-term rating, its long-term unsecured and unsubordinated debt
rating is reduced to "A" or below by S&P (an "S&P COLLATERALIZATION
EVENT"); and (4) a "RATINGS EVENT" shall occur with respect to BNY (or any
applicable credit support provider) if: (A) its short-term unsecured and
unsubordinated debt rating is withdrawn or reduced to "P-3" or below and
its long-term unsecured and unsubordinated debt is reduced to "Baa1" or
below, or, if it has no short-term unsecured and unsubordinated debt
rating, its long term rating is reduced to "Baa1" or below, by Moody's (a
"MOODY'S RATINGS EVENT"), or (B) its long-term unsecured and unsubordinated
debt rating is withdrawn or reduced to "BB+" or below by S&P (an "S&P
RATINGS EVENT").
(b) ACTIONS TO BE TAKEN. Subject, in each case to satisfaction of the
Rating Agency Condition: (1) if a Collateralization Event occurs with
respect to BNY (or any applicable credit support provider), then BNY shall,
at its own expense, within thirty (30) days of such Collateralization
Ratings Event: (A) post collateral in accordance with the Credit Support
Annex; or (B) on terms substantially similar to this Agreement assign or
transfer the Transactions to or replace the Transactions with transactions
with a third party approved by the Counterparty (such approval not to be
unreasonably withheld) the ratings of which (or of the guarantor of which)
meet or exceed the Qualifying Ratings; or (C) obtain a guaranty
Page 15 of 22
of or a contingent agreement to honor BNY's obligations under this
Agreement by a third party approved by the Counterparty (such approval not
to be unreasonably withheld) the ratings of which (or of the guarantor of
which) meet or exceed the Qualifying Ratings; or (D) establish any other
arrangement approved by the Counterparty (such approval not to be
unreasonably withheld) that satisfies the Rating Condition; and (2) if a
Ratings Event occurs with respect to BNY (or any applicable Credit Support
Provider), then BNY shall, at its own expense, within ten (10) Business
Days of such Ratings Event: (A) on terms substantially similar to this
Agreement assign or transfer the Transactions to or replace the
Transactions with transactions with a third party approved by the
Counterparty (such approval not to be unreasonably withheld) the ratings of
which (or of the guarantor of which) meet or exceed the Qualifying Ratings,
or (B) obtain a guaranty of or a contingent agreement to honor BNY's
obligations under this Agreement by a third party approved by the
Counterparty (such approval not to be unreasonably withheld) the ratings of
which (or of the guarantor of which) meet or exceed the Qualifying Ratings;
or (C) establish any other arrangement approved by the Counterparty (such
approval not to be unreasonably withheld) that satisfies the Rating
Condition.
9) COMPLIANCE WITH REGULATION AB.
If the Depositor under the Pooling and Servicing Agreement still has a
reporting obligation with respect to this Transaction pursuant to
Regulation AB under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended ("REGULATION AB") and BNY has
not, within 30 days after receipt of a Swap Disclosure Request complied
with the provisions set forth below in this Paragraph 4(9) (provided that
if the significance percentage reaches 10% after a Swap Disclosure Request
has been made to BNY, BNY must comply with the provisions set forth below
in this Section 4(9) within 10 calendar days of BNY being informed of the
significance percentage reaching 10%), then an Additional Termination Event
shall have occurred with respect to BNY and BNY shall be the sole Affected
Party with respect to such Additional Termination Event.
BNY acknowledges that for so long as there are reporting obligations with
respect to this Transaction under Regulation AB, the Depositor is required
under Regulation AB to disclose certain information set forth in Regulation
AB regarding BNY or its group of affiliated entities, if applicable,
depending on the aggregate "significance percentage" of this Agreement and
any other derivative contracts between BNY or its group of affiliated
entities, if applicable, and the Counterparty, as calculated from time to
time in accordance with Item 1115 of Regulation AB.
If the Depositor determines, reasonably and in good faith, that the
significance percentage of this Agreement has increased to nine (9)
percent, then the Depositor may request on a Business Day after the date of
such determination from BNY the same information set forth in Item 1115(b)
of Regulation AB that would have been required if the significance
percentage had in fact increased to ten (10) percent (such request, a "SWAP
DISCLOSURE REQUEST" and such requested information, subject to the last
sentence of this paragraph, is the "SWAP FINANCIAL DISCLOSURE"). The
Counterparty or the Depositor shall provide BNY with the calculations and
any other information reasonably requested by BNY with respect to the
Depositor's determination that led to the Swap Disclosure Request. The
parties hereto further agree that the Swap Financial Disclosure provided to
meet the Swap Disclosure Request may be, solely at
Page 16 of 22
BNY's option, either the information set forth in Item 1115(b)(1) or Item
1115(b)(2) of Regulation AB.
Upon the occurrence of a Swap Disclosure Request, BNY, at its own expense,
shall (x) provide the Depositor with the Swap Financial Disclosure, or (y)
subject to Rating Agency Confirmation, secure another entity to replace BNY
as party to this Agreement on terms substantially similar to this Agreement
which entity is able to provide the Swap Financial Disclosure. If permitted
by Regulation AB, any required Swap Financial Disclosure may be provided by
incorporation by reference from reports filed pursuant to the Securities
Exchange Act.
10) BNY PAYMENTS TO BE MADE TO TRUSTEE. BNY will, unless otherwise directed
by the Trustee, make all payments hereunder to the Trustee. Payment made to the
Trustee at the account specified herein or to another account specified in
writing by the Trustee shall satisfy the payment obligations of BNY hereunder to
the extent of such payment.
11) RETURN OF AMOUNTS RECEIVED BY MLML OR ITS AFFILIATES. Xxxxxxx Xxxxx
Mortgage Lending, Inc. ("MLML") agrees and acknowledges that amounts paid
hereunder are not intended to benefit the holder of any class of Certificates
rated by any Rating Agency if such holder is MLML or any of its affiliates. If
MLML or any of its affiliates receives any such amounts, it will promptly remit
(or, if such amounts are received by an affiliate of MLML, MLML hereby agrees
that it will cause such affiliate to promptly remit) such amounts to the
Trustee, whereupon such Trustee will promptly remit such amounts to BNY. MLML
further agrees to provide notice to BNY upon any remittance to the Trustee.
5. ACCOUNT DETAILS AND SETTLEMENT INFORMATION:
PAYMENTS TO BNY:
The Bank of New York
Derivative Products Support Department
00 Xxx Xxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
ABA #000000000
Account #000-0000-000
Reference: Interest Rate Swap
PAYMENTS TO COUNTERPARTY:
U.S. Bank National Association
ABA#: 000000000
DDA#: 1731 0332 2058
DDA Name: Structured Finance Wire Clearing
FFC: 107730000/SURF BC5 Swap Contract Account
Page 17 of 22
Additional Fee Payments to MLML:
Deutsche Bank NY, NY
ABA No. 000000000
Account No. 00000000
Attention: MLML Finance
Reference: Swap Additional Fee/ SURF 2006-BC5
6. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this agreement and returning it via facsimile to
Derivative Products Support Dept., Attn: Xxxxx Au-Xxxxx at 000-000-0000/5837.
Once we receive this we will send you two original confirmations for execution.
Page 18 of 22
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
THE BANK OF NEW YORK
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Page 19 of 22
The Counterparty, acting through its duly authorized signatory, hereby agrees
to, accepts and confirms the terms of the foregoing as of the Trade Date.
U.S. BANK NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE OF THE SUPPLEMENTAL INTEREST TRUST RELATING TO THE SPECIALTY
UNDERWRITING & RESIDENTIAL FINANCE SERIES 2006-BC5
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Solely with respect to Paragraph 4(11)
XXXXXXX XXXXX MORTGAGE LENDING, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Page 20 of 22
SCHEDULE I
(With respect to each Fixed Rate Payer Period End Date, all such dates are with
No Adjustment, and with respect to each Floating Rate Payer Period End Date, all
such dates are subject to adjustment in accordance with the Following Business
Day Convention)
Accrual Start Date Accrual End Date Notional Amount (in USD)
------------------ ---------------- ------------------------
5/25/2007 6/25/2007 724,468,278
6/25/2007 7/25/2007 704,760,866
7/25/2007 8/25/2007 682,838,673
8/25/2007 9/25/2007 657,223,284
9/25/2007 10/25/2007 630,048,972
10/25/2007 11/25/2007 604,435,131
11/25/2007 12/25/2007 581,199,356
12/25/2007 1/25/2008 560,090,293
1/25/2008 2/25/2008 540,625,517
2/25/2008 3/25/2008 522,337,069
3/25/2008 4/25/2008 505,159,643
4/25/2008 5/25/2008 488,978,024
5/25/2008 6/25/2008 473,714,300
6/25/2008 7/25/2008 459,042,834
7/25/2008 8/25/2008 438,940,758
8/25/2008 9/25/2008 404,354,617
9/25/2008 10/25/2008 365,129,161
10/25/2008 11/25/2008 333,660,271
11/25/2008 12/25/2008 309,685,478
12/25/2008 1/25/2009 290,553,564
1/25/2009 2/25/2009 274,681,605
2/25/2009 3/25/2009 260,815,227
3/25/2009 4/25/2009 247,765,203
4/25/2009 5/25/2009 235,596,009
5/25/2009 6/25/2009 224,372,968
6/25/2009 7/25/2009 213,733,248
7/25/2009 8/25/2009 203,080,840
8/25/2009 9/25/2009 189,819,634
9/25/2009 10/25/2009 173,470,798
10/25/2009 11/25/2009 169,575,000
11/25/2009 12/25/2009 166,574,129
Page 21 of 22
12/25/2009 1/25/2010 157,346,083
1/25/2010 2/25/2010 149,265,502
2/25/2010 3/25/2010 141,887,473
3/25/2010 4/25/2010 135,045,221
4/25/2010 5/25/2010 128,769,354
5/25/2010 6/25/2010 123,029,566
6/25/2010 7/25/2010 117,724,711
7/25/2010 8/25/2010 112,741,452
8/25/2010 9/25/2010 107,964,296
9/25/2010 10/25/2010 103,391,716
10/25/2010 11/25/2010 99,047,370
Page 22 of 22
Exhibit A to Confirmation No. 38512
See Exhibit U-2 of Form 8-K filing.
EXHIBIT U-2
FORM OF CREDIT SUPPORT ANNEX FOR SWAP AGREEMENT
U-2
(BILATERAL FORM) (ISDA AGREEMENTS SUBJECT TO NEW YORK LAW ONLY)
(ISDA(R) LOGO)
International Swaps and Derivatives Association, Inc.
CREDIT SUPPORT ANNEX
to the Schedule to the
ISDA MASTER AGREEMENT
Dated as of November 28, 2006
between
THE BANK OF NEW YORK and U.S. BANK NATIONAL ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY, BUT SOLELY AS TRUSTEE OF
THE SUPPLEMENTAL INTEREST TRUST ON BEHALF OF
THE SPECIALTY UNDERWRITING & RESIDENTIAL
FINANCE TRUST SERIES 2006-BC5
established as a banking The Supplemental Interest Trust is a common
organization under the laws law trust established under the laws of the
of the State of New York State of New York.
("PARTY A") ("PARTY B")
This Annex supplements, forms part of, and is subject to, the Master Agreement
specified in the Confirmation between Party A and Party B (BNY Ref. No. 38512),
dated even date herewith, is part of the Schedule deemed incorporated therein,
and is a Credit Support Document under the Master Agreement with respect to
Party A.
Accordingly, the parties agree as follows:--
PARAGRAPHS 1 - 12. INCORPORATION. Paragraphs 1 through 12 inclusive of the ISDA
Credit Support Annex (Bilateral Form) (ISDA Agreements Subject to New York Law
Only) published in 1994 by the International Swaps and Derivatives Association,
Inc. are incorporated herein by reference and made a part hereof (all references
to Paragraphs herein being references to the Paragraphs thereof), except that
Paragraph 1(b) is hereby amended in its entirety to read as follows:
"(b) SECURED PARTY AND PLEDGOR. Notwithstanding anything contained in this Annex
to the contrary, (a) the term "Secured Party" as used in this Annex means only
Party B, (b) the term "Pledgor" as used in this Annex means only Party A, (c)
only Party A makes the pledge and grant in Paragraph 2, the acknowledgment in
the final sentence of Paragraph 8(a) and the representations in Paragraph 9, and
(d) only Party A will be required to make Transfers of Eligible Credit Support
hereunder."
A-1
PARAGRAPH 13.
CERTAIN DEFINITIONS. As used herein, "MOODY'S", "S&P", "RATING AGENCY",
"COLLATERALIZATION EVENT", "MOODY'S COLLATERALIZATION EVENT", "S&P
COLLATERALIZATION EVENT"; "RATINGS EVENT", "MOODY'S RATINGS EVENT", and "S&P
RATINGS EVENT" have the meanings assigned in the Schedule.
(a) SECURITY INTEREST FOR "OBLIGATIONS." The term "OBLIGATIONS" as used in this
Annex includes the following additional obligations: Not applicable.
(b) CREDIT SUPPORT OBLIGATIONS.
(i) DELIVERY AMOUNT, RETURN AMOUNT AND CREDIT SUPPORT AMOUNT.
(A) "DELIVERY AMOUNT" has the meaning specified in Paragraph 3(a)
except that the words "upon a demand made by the Transferee on or
promptly following a Valuation Date" shall be deleted and replaced by
the words "on each Valuation Date commencing no later than the
Valuation Date falling on the 30th Business Day after publication by
the applicable Rating Agency of the change in rating constituting a
Collateralization Event".
(B) "RETURN AMOUNT" has the meaning specified in Paragraph 3(b).
(C) "CREDIT SUPPORT AMOUNT" in Paragraph 3(b), shall be amended in its
entirety to read as follows:
"'CREDIT SUPPORT AMOUNT' means, unless otherwise specified in
Paragraph 13, for any Valuation Date after and during the
continuance of a Collateralization Event or Ratings Event, (i)
the Secured Party's Exposure for that Valuation Date, plus (ii)
the aggregate of all Independent Amounts applicable to the
Pledgor, if any, minus (iii) all Independent Amounts applicable
to the Secured Party, if any, minus (iv) the Pledgor's Threshold;
provided, however, that the Credit Support Amount will be deemed
to be zero whenever the calculation of the Credit Support Amount
yields a number less than zero; and, provided further, that, in
respect of a Xxxxx'x Rating Event, the Credit Support Amount will
not be less than the amount of, the next scheduled Payment in
respect of the Affected Transactions to be made by the Pledgor.
(ii) ELIGIBLE COLLATERAL. The items set forth in Schedule 1 will qualify as
"ELIGIBLE COLLATERAL" for Party A.
(iii) OTHER ELIGIBLE SUPPORT. The following items will qualify as "OTHER
ELIGIBLE SUPPORT" for the party specified: Not Applicable.
(iv) THRESHOLDS.
(A) "INDEPENDENT AMOUNT" means with respect to Party B: Zero; and,
with respect to Party A: an amount, as of the date of determination,
equal to the product of the aggregate Notional Amount outstanding at
the beginning of the related Calculation Period under the applicable
Affected Transactions, and:
(1) in respect of a Moody's Collateralization Event, the lesser
of (x) 2% (for daily valuation) or 4% (for weekly valuation)
or (y) the Moody's Increase Factor at First Trigger, and, in
respect of a Moody's Ratings Event, the lesser of (x) 8%
(for daily valuation) or 9% (for weekly valuation) or (y)
the Moody's Increase Factor at Second Trigger; or
(2) in respect of an S&P Collateralization Event or an S&P
Ratings Event, (x) with respect to basis risk swaps, the
product of the S&P Volatility Buffer and .01, and (y) with
respect to all other Transactions the S&P Volatility Buffer.
A-2
As used herein, the "MOODY'S INCREASE FACTOR" will be determined using
the table set forth in Schedule 2; and the "S&P VOLATILITY BUFFER"
will be determined using the tables set forth in Schedule 3.
(B) "THRESHOLD" means for each party: An infinite number; provided,
that the Threshold for Party A shall be zero upon the occurrence and
during the continuance of an Event of Default, Termination Event,
Additional Termination Event Rating Event (provided that, with respect
to a Collateralization Event, such event shall have continued for at
least 30 days) or Specified Condition with respect to such party.
(C) "MINIMUM TRANSFER AMOUNT" means with respect to Party A and Party
B: $100,000; provided, that the Minimum Transfer Amount for such party
shall be $50,000 in respect of an S&P Collateralization Event if the
aggregated principal balance of the rated Certificates is less than
$50,000,000 on the applicable Valuation Date, and shall be zero upon
the occurrence and during the continuance of an Event of Default,
Termination Event, Additional Termination Event, or Specified
Condition with respect to such party.
(D) ROUNDING. The Delivery Amount will be rounded up and the Return
Amount will be rounded down respectively to the nearest integral
multiple of $1,000.
(v) CONFLICTING RATING CONDITIONS. If any outstanding Certificates are
rated by more than one Rating Agency and a Collateralization Event or
Ratings Event with respect to each such Rating Agency has occurred and is
continuing, the Credit Support Amount and Independent Amount of Party A
shall equal the highest, and the Return Amount and Valuation Percentage
shall equal the lowest, of the applicable amounts determined as set forth
above; provided, that the Credit Support Amount and Independent Amount may
equal the lowest, and the Return Amount and Valuation Percentage may equal
the highest, of the applicable amounts determined as set forth above if the
Rating Condition of each Rating Agency is satisfied with respect with
respect thereto.
(c) VALUATION AND TIMING.
(i) "VALUATION AGENT" means, Party A, provided, that if any Event of
Default with respect to Party A has occurred and is continuing, then any
designated third party mutually agreed to by the parties shall be the
Valuation Agent until such time as Party A is no longer a Defaulting Party.
(ii) "VALUATION DATE" means:
[X] each Local Business Day, or
[ ] any Local Business Day in each calendar week, which shall be the
same calendar day each week to the extent practicable, on a reasonably
consistent basis.
(iii) "VALUATION TIME" means:
[ ] the close of business in the city of the Valuation Agent on the
Valuation Date or date of calculation, as applicable;
[X] the close of business on the Local Business Day before the
Valuation Date or date of calculation, as applicable;
provided, that the calculations of Value and Exposure will be made as of
approximately the same time on the same date.
(iv) "NOTIFICATION TIME" means 1:00 p.m., New York time, on a Local
Business Day.
(d) CONDITIONS PRECEDENT AND SECURED PARTY'S RIGHTS AND REMEDIES. (i)
Illegality, (ii) Credit Event Upon Merger, and (ii) Additional Termination
Events will be a "SPECIFIED CONDITION" for Party A (as the Affected Party) (but
not for purposes of Paragraph 8(d)), and (iv) Tax Event and (v) Tax Event Upon
Merger will not be a "SPECIFIED CONDITION for Party A.
(e) SUBSTITUTION.
A-3
(i) "SUBSTITUTION DATE" has the meaning specified in Paragraph 4(d)(ii).
(ii) CONSENT. If specified here as applicable, then the Pledgor must obtain
the Secured Party's consent for any substitution pursuant to Paragraph
4(d): Applicable.
(f) DISPUTE RESOLUTION.
(i) "RESOLUTION TIME" means 1:00 p.m., New York time, on the Local Business
Day following the date on which the notice is given that gives rise to a
dispute under Paragraph 5.
(ii) VALUE. For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value of
Posted Credit Support will be calculated as follows: as set forth for other
purposes in Paragraph 12.
(iii) ALTERNATIVE. The provisions of Paragraph 5 will apply, except to the
following extent: (A) pending the resolution of a dispute, Transfer of the
undisputed Value of Eligible Credit Support or Posted Credit Support
involved in the relevant demand will be due as provided in Paragraph 5 if
the demand is given by the Notification Time, but will be due on the second
Local Business Day after the demand if the demand is given after the
Notification Time; and (B) the Disputing Party need not comply with the
provisions of Paragraph 5(II)(2) if the amount to be Transferred does not
exceed the Disputing Party's Minimum Transfer Amount.
(g) HOLDING AND USING POSTED COLLATERAL.
(i) ELIGIBILITY TO HOLD POSTED COLLATERAL; CUSTODIANS. The Secured Party
will not be entitled to hold Posted Collateral itself. The Secured Party
will hold Posted Collateral through a Custodian (which may be the
Supplemental Interest Trust Trustee and which shall at all times be a
financial institution as specified under the Pooling and Servicing
Agreement or, if not so specified, which shall be a commercial bank or
trust company which is unaffiliated with Party B organized under the laws
of the United States or any state thereof, having assets of at least $10
billion and a long term debt or a deposit rating of at least (i) Baa2 from
Moody's and (ii) "A-1" or "A" from S&P in the Swap Collateral Account
(defined below). Initially, the Custodian for Party B is: Xxxxx Fargo Bank,
N.A.
(ii) USE OF POSTED COLLATERAL. The provisions of Paragraph 6(c) will apply
to the Secured Party; therefore, Party B will not have any of the rights
specified in Paragraph 6(c)(i) or 6 (c)(ii).
(h) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) INTEREST RATE. The "INTEREST RATE" with respect to Eligible Collateral
in the form of Cash will be the rate actually earned on the Cash Posted
Collateral or, if the Pledgor instructs that the Cash Posted Collateral not
be invested, an amount equal to the contractual rate of interest entitled
to be received on such amounts from the Swap Collateral Account, provided
that, if the Swap Collateral Account does not pay interest and the
custodian or trustee is not obligated to invest Cash Posted Collateral
under the Pooling and Servicing Agreement, the "Interest Rate" will be, for
any day, the rate opposite the caption "Federal Funds (Effective)" for such
day as published for such day in Federal Reserve Publication H.15(519) or
any successor publication as published by the Board of Governors of the
Federal Reserve System or such other rate as agreed by Party A and Party
B..
(ii) TRANSFER OF INTEREST AMOUNT. The Transfer of the Interest Amount will
be made on the first Local Business Day of each calendar month and on any
Local Business Day that Posted Collateral in the form of Cash is
Transferred to the Pledgor pursuant to Paragraph 3(b).
(iii) ALTERNATIVE TO INTEREST AMOUNT. The provisions of Paragraph 6(d)(ii)
will apply.
(i) OTHER ELIGIBLE SUPPORT AND OTHER POSTED SUPPORT.
A-4
(i) "VALUE" with respect to Other Eligible Support and Other Posted Support
means: Inapplicable.
(ii) "TRANSFER" with respect to Other Eligible Support and Other Posted
Support means: Inapplicable.
(j) DEMANDS AND NOTICES. All demands, specifications and notices under this
Annex will be made pursuant to the Notices Section of this Agreement, unless
otherwise specified here:
(i) Party A: to be specified in each notice.
(ii) Party B:
Address: U.S. Bank National Association,
not in its individual capacity, but solely as trustee of
the Supplemental Interest Trust on behalf of the
Specialty Underwriting & Residential Finance Trust Series
2006-BC5Mail Code: EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/SURF 2006-BC5
Telephone: 000-000-0000
Facsimile: 000-000-0000
(k) ADDRESSES FOR TRANSFERS.
Party A: For Cash: To be provided
For Eligible Collateral: To be provided
Party B: To be provided
(l) OTHER PROVISIONS.
(i) ADDITIONAL DEFINITIONS. As used in this Annex:--
"EQUIVALENT COLLATERAL" means, with respect to any security
constituting Posted Collateral, a security of the same issuer and, as
applicable, representing or having the same class, series, maturity,
interest rate, principal amount or liquidation value and such other
provisions as are necessary for that security and the security
constituting Posted Collateral to be treated as equivalent in the
market for such securities;
"LOCAL BUSINESS DAY" means: (i) any day on which commercial banks are
open for business (including dealings in foreign exchange and foreign
currency deposits) in New York, and (ii) in relation to a Transfer of
Eligible Collateral, a day on which the clearance system agreed
between the parties for the delivery of Eligible Collateral is open
for acceptance and execution of settlement instructions (or in the
case of a Transfer of Cash or other Eligible Collateral for which
delivery is contemplated by other means, a day on which commercial
banks are open for business (including dealings for foreign exchange
and foreign currency deposits) in New York and such other places as
the parties shall agree);
(ii) TRANSFER TIMING.
(A) Paragraph 4(b) shall be deleted and replaced in its entirety by
the following paragraph: "Subject to Paragraphs 4(a) and 5 and unless
otherwise specified, if a demand for the Transfer of Eligible Credit
Support or Posted Credit Support is made by the Notification Time,
then the relevant Transfer will be made not later than the close of
business on the second Local Business Day thereafter; if a demand is
made after the Notification Time then the relevant Transfer will be
A-5
made not later than the close of business on the third Local Business
Day thereafter."
(B) Paragraph 6(d)(1) shall be amended so that the reference therein
to "the following Local Business Day" shall be replaced by reference
to "the second Local Business Day thereafter".
(iii) EVENTS OF DEFAULT. Paragraph 7 shall be deleted and replaced in its
entirety by the following paragraph:
"For the purposes of Section 5(a)(i) of this Agreement, an Event of
Default will exist with respect to a party if that party fails (or
fails to cause its Custodian) to make, when due, any Transfer of
Eligible Credit Support, Posted Credit Support or the Interest Amount,
as applicable, required to be made by it and that failure continues
for two Local Business Day after the notice of that failure is given
to that party; provided, that, with respect to a failure to Transfer
Eligible Credit Support, at least 30 Local Business Days have elapsed
after a Ratings Event has occurred and such failure is not remedied on
or before the third Local Business Day after notice of such failure is
given to Party A".
(iv) RETURN OF FUNGIBLE SECURITIES. In lieu of returning to the Pledgor
pursuant to Paragraphs 3(b), 4(d), 5 and 8(d) any Posted Collateral
comprising securities the Secured Party may return Equivalent Collateral.
(v) NO COUNTERCLAIM. A party's rights to demand and receive the Transfer of
Eligible Collateral as provided hereunder and its rights as Secured Party
against the Posted Collateral or otherwise shall be absolute and subject to
no counterclaim, set-off, deduction or defense in favor of the Pledgor
except as contemplated in Sections 2 and 6 of the Agreement and Paragraph 8
of this Annex.
(vi) HOLDING COLLATERAL. The Secured Party shall cause any Custodian
appointed hereunder to open and maintain a segregated account and to hold,
record and identify all the Posted Collateral in such segregated account
and, subject to Paragraphs 6(c) and 8(a), such Posted Collateral shall at
all times be and remain the property of the Pledgor and shall at no time
constitute the property of, or be commingled with the property of, the
Secured Party or the Custodian (the "SWAP COLLATERAL ACCOUNT").
(vii) INVESTMENT OF CASH POSTED COLLATERAL. Cash Posted Collateral shall be
invested in Eligible Investments as directed by Party A. Such instructions
may be delivered as standing instructions.
(viii) RETURN OF POSTED COLLATERAL. At any time a Collateralization Event
or Ratings Event has occurred and is continuing with respect to Party A,
Party A shall be obligated to transfer Eligible Collateral in accordance
with the terms of this Annex. If a Collateralization Event or Rating Event
occurs and thereafter ceases to be continuing (and provided that no Event
of Default or Potential Event of Default exists with respect to Party A) or
Party A has made a Permitted Transfer under this Agreement, then Party A's
obligations to transfer Eligible Collateral under this Annex will
immediately cease with respect to that Collateralization Event, and Party B
will, upon demand by Party A, return to Party A, or cause its Custodian to
return, all Posted Collateral held under this Annex. The Secured Party is
authorized to liquidate any Posted Collateral pursuant to written
instructions from Party A.
(ix) EXTERNAL VERIFICATION OF XXXX-TO-MARKET VALUATIONS. If the long term
senior unsecured debt of Party A is rated BBB or lower by S&P, once every
month, Party A will, at it's own expense, verify its determination of
Exposure of the Transaction on the next Valuation Date by seeking
quotations from two (2) Reference Market-makers (provided that any
Reference Market-maker may not be used more than four times within each 12
month period) for their determination of Exposure of the Transaction on
such Valuation Date and the Valuation Agent will use the greater of either
(a) its own determination or
A-6
(b) the high quotation for a Reference Market-maker, if applicable for the
next Valuation Date. Party A shall provide the Quotations of such Reference
Market-makers to S&P.
(x) EXPENSES. Notwithstanding Paragraph 10, the Pledgor will be responsible
for, and will reimburse the Secured Party for, all transfer and other taxes
and other costs involved in the transfer of Eligible Collateral.
(xi) LIMIT ON SECURED PARTY'S LIABILITY. The Secured Party will not be
liable for any losses or damages that the Pledgor may suffer as a result of
any failure by the Secured Party to perform, or any delay by it in
performing, any of its obligations under this Annex if the failure or delay
results from circumstances beyond the reasonable control of the Secured
Party or its Custodian, such as interruption or loss of computer or
communication services, labor disturbance, natural disaster or local or
national emergency.
[Signature page immediately follows]
A-7
IN WITNESS WHEREOF the parties have executed this Credit Support Annex on
the respective dates specified below with effect from the date on the first
page.
THE BANK OF NEW YORK U.S. BANK NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY, BUT
SOLELY AS TRUSTEE OF THE SUPPLEMENTAL
INTEREST TRUST ON BEHALF OF THE
SPECIALTY UNDERWRITING & RESIDENTIAL
FINANCE TRUST SERIES 2006-BC5
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
Date: Date:
------------------------------- ----------------------------------
A-8
SCHEDULE 1
ELIGIBLE COLLATERAL
Certificates: Specialty Underwriting & Residential Finance Trust Series 2006-BC5
Highest Rating of Certificates: Class A-1A rated "Aaa" by Xxxxx'x and "AAA" by
S&P S&P Scheduled Date Certificates will fall below USD 50,000,000: none
Valuation Date and Valuation Percentage for BNY: Daily
ELIGIBLE COLLATERAL & VALUATION PERCENTAGES
XXXXX'X AND S&P
VALUATION PERCENTAGE
MOODY'S VALUATION PERCENTAGE
------------------------------ S&P
COLLATERALIZATION RATING --------------------
EVENT EVENT DAILY WEEKLY
----------------- ---------- ----- ------
(A) Cash: U.S. Dollars in depositary account form 100 100 100 100
(B) U.S. Treasury Securities: negotiable debt obligations issued 100 100 98.9 98.6
by the U.S. Treasury Department after July 18, 1984
("TREASURIES") having a remaining maturity of up to and not
more than 1 year.
(C) Treasuries having a remaining maturity of greater than 1 year 100 99 98 97.3
but not more than 2 years.
(C) Treasuries having a remaining maturity of greater than 2 100 98 97.4 95.8
years but not more than 3 years.
(C) Treasuries having a remaining maturity of greater than 3 100 97 95.5 93.8
years but not more than 5 years.
(D) Treasuries having a remaining maturity of greater than 5 100 95 93.7 91.4
years but not more than 7 years.
(D) Treasuries having a remaining maturity of greater than 7 100 94 92.5 90.3
years but not more than 10 years.
(E) Treasuries having a remaining maturity of greater than 10 100 89 91.1 87.9
years but not more than 20 years.
(F) Treasuries having a remaining maturity of greater than 20 100 87 88.6 84.6
years but not more than 30 years.
(G) Agency Securities: negotiable debt obligations of the Federal 100 99 98.5 98
National Mortgage Association (FNMA), Federal Home Loan
Mortgage Corporation (FHLMC), Federal Home Loan Banks (FHLB),
Federal Farm Credit Banks (FFCB), Tennessee Valley Authority
(TVA) (collectively, "AGENCY SECURITIES") issued after July
18, 1984 and having a remaining maturity of not more than 1
year.
A-1-1
(H) Agency Securities having a remaining maturity of greater than 100 98 97.7 96.8
1 year but not more than 2 years.
(H) Agency Securities having a remaining maturity of greater than 100 97 97.3 96.3
2 years but not more than 3 years.
(H) Agency Securities having a remaining maturity of greater than 100 96 94.5 94.5
3 years but not more than 5 years.
(I) Agency Securities having a remaining maturity of greater than 100 94 93.1 90.3
5 years but not more than 7 years.
(I) Agency Securities having a remaining maturity of greater than 100 93 90.7 86.9
7 years but not more than 10 years.
(J) Agency Securities having a remaining maturity of greater than 100 88 87.7 82.6
10 years but not more than 20 years.
(K) Agency Securities having a remaining maturity of greater than 100 86 84.4 77.9
20 years but not more than 30 years.
(L) FHLMC Certificates. Mortgage participation certificates 100 86 86.40
issued by FHLMC evidencing undivided interests or (weekly
participations in pools of first lien conventional or FHA/VA valuation)
residential mortgages or deeds of trust, guaranteed by FHLMC,
issued after July 18, 1984 and having a remaining maturity of
not more than 30 years.
(M) FNMA Certificates. Mortgage-backed pass-through certificates 100 86 86.40
issued by FNMA evidencing undivided interests in pools of (weekly
first lien mortgages or deeds of trust on residential valuation)
properties, guaranteed by FNMA, issued after July 18, 1984
and having a remaining maturity of not more than 30 years.
(N) GNMA Certificates. Mortgage-backed pass-through certificates 100 86 86.40
issued by private entities, evidencing undivided interests in (weekly
pools of first lien mortgages or deeds of trust on single valuation)
family residences, guaranteed by the Government National
Mortgage Association (GNMA) with the full faith and credit of
the United States, issued after July 18, 1984 and having a
remaining maturity of not more than 30 years.
(O) Commercial Mortgage-Backed Securities. Commercial
mortgage-backed securities rated AAA by two major rating
agencies with a minimum par or face amount of $250 million
(excluding securities issued under Rule 144A) ("Commercial
Mortgage-Backed Securities") having a remaining maturity of
not more than 5 years.
A-1-2
(O) Commercial Mortgage-Backed Securities having a remaining
maturity of more than 5 years and not more than 10 years.
(O) Commercial Mortgage-Backed Securities having a remaining
maturity of more than 10 years.
(P) Commercial Paper. Commercial Paper with a rating of at least 100 99 99
P-1 by Moody's and at least A-1+ by S&P and having a
remaining maturity of not more than 30 days.
(Q) Other Items of Credit Support approved by the Rating Agencies * * *
to the extent any [Notes][Certificates] are rated.
* percentage to be determined.
A-1-3
SCHEDULE 2
MOODY'S INCREASE FACTOR
The Xxxxx'x Increase Factor will be determined using the following table:
XXXXX'X INCREASE FACTOR
-----------------------------------
POSTING FREQUENCY
REMAINING YEARS -----------------
TO MATURITY DAILY WEEKLY
--------------- ----- ------
MOODY'S INCREASE FACTOR AT FIRST
TRIGGER SWAPS, CAPS AND FLOORS
1 0.15% 0.25%
2 0.30% 0.50%
3 0.40% 0.70%
4 0.60% 1.00%
5 0.70% 1.20%
6 0.80% 1.40%
7 1.00% 1.60%
8 1.10% 1.80%
9 1.20% 2.00%
10 1.30% 2.20%
11 1.40% 2.30%
12 1.50% 2.50%
13 1.60% 2.70%
14 1.70% 2.80%
15 1.80% 3.00%
16 1.90% 3.20%
17 2.00% 3.30%
18 2.00% 3.50%
19 2.00% 3.60%
20 2.00% 3.70%
21 2.00% 3.90%
22 to 30 2.00% 4.00%
MOODY'S INCREASE FACTOR AT SECOND
TRIGGER SWAPS
1 0.50% 0.60%
2 1.00% 1.20%
3 1.50% 1.70%
4 1.90% 2.30%
5 2.40% 2.80%
6 2.80% 3.30%
7 3.20% 3.80%
8 3.60% 4.30%
9 4.00% 4.80%
10 4.40% 5.30%
11 4.70% 5.60%
12 5.00% 6.00%
13 5.40% 6.40%
14 5.70% 6.80%
15 6.00% 7.20%
16 6.30% 7.60%
17 6.60% 7.90%
18 6.90% 8.30%
19 7.20% 8.60%
20 7.50% 9.00%
21 7.80% 9.00%
A-2-1
22 to 30 8.00% 9.00%
MOODY'S INCREASE FACTOR AT SECOND
TRIGGER CAPS, FLOORS, TRANSACTION
SPECIFIC XXXXXX
1 0.65% 0.75%
2 1.30% 1.50%
3 1.90% 2.20%
4 2.50% 2.90%
5 3.10% 3.60%
6 3.60% 4.20%
7 4.20% 4.80%
8 4.70% 5.40%
9 5.20% 6.00%
10 5.70% 6.60%
11 6.10% 7.00%
12 6.50% 7.50%
13 7.00% 8.00%
14 7.40% 8.50%
15 7.80% 9.00%
16 8.20% 9.50%
17 8.60% 9.90%
18 9.00% 10.40%
19 9.40% 10.80%
20 9.70% 11.00%
21 to 30 10.00% 11.00%
A-2-2
SCHEDULE 3
S&P VOLATILITY BUFFER
Certificates: Specialty Underwriting & Residential Finance Trust Series 2006-BC5
Highest Rating of Certificates: Class A-1A rated "Aaa" by Moody's, and "AAA" by
S&P Weighted Average Life of Highest Rated Certificates: 5.15 years
The S&P Volatility Buffer will be determined using the following table:
S&P VOLATILITY BUFFER
------------------------------------------------------------
(Weighted Average Life of Highest Rated Floating Rate Notes)
Party A Rating* (Up to 5 years) (Up to 10 years) (Up to 30 years)
--------------- --------------- ---------------- ----------------
If, on the related Valuation Date, the highest rated Notes are rated "AA-" or
higher by S&P, the S&P Volatility Buffer is:
A-2 3.25% 4.00% 4.75%
A-3 4.00% 5.00% 6.25%
BB+ or lower 4.50% 6.75% 7.50%
If, on the related Valuation Date, the highest rated Notes are rated "A" or "A+"
by S&P, the S&P Volatility Buffer is:
BBB+/BBB 3.25% 4.00% 4.50%
A-2 3.25% 4.00% 4.50%
A-3/BBB- 3.50% 4.50% 6.00%
BB+ or lower 4.00% 5.25% 7.00%
* This rating shall be the higher of the rating by S&P on the related
Valuation Date of the long-term debt and short-term debt of Party A or its
guarantor or other Credit Support Provider.
A-4-1
SCHEDULE V
Item on Form 8-K Party Responsible
---------------- -----------------
*Item 1.01- Entry into a Material Each party to such agreement
Definitive Agreement
*Item 1.02- Termination of a Material Each party to such agreement
Definitive Agreement
Item 1.03- Bankruptcy or Receivership Depositor
Item 2.04- Triggering Events that Depositor
Accelerate or Increase a Direct
Financial Obligation or an Obligation
under an Off-Balance Sheet
Arrangement
*Item 3.03- Material Modification to Depositor
Rights of Security Holders
Item 5.03- Amendments of Articles of Depositor
Incorporation or Bylaws; Change of
Fiscal Year
Item 6.01- ABS Informational and Depositor
Computational Material
*Item 6.02- Change of Servicer or Servicer (as to Trustee)/Trustee
Trustee (as to Servicer)
*Item 6.03- Change in Credit Depositor/Trustee
Enhancement or External Support
*Item 6.04- Failure to Make a Trustee
Required Distribution
Item 6.05- Securities Act Updating Depositor
Disclosure
Item 7.01- Regulation FD Disclosure Depositor
Item 8.01 Depositor
Item 9.01 Depositor
V-1
SCHEDULE W
Item on Form 10-D Party Responsible
----------------- -----------------
Item 1: Distribution and Pool Trustee, Depositor
Performance Information
Plus any information required by 1121 Servicer and Trustee (to the extent
which is NOT included on the known and required by Regulation AB)
monthly statement to
Certificateholders
Item 2: Legal Proceedings per Item All parties to the Pooling and Servicing
1117 of Regulation AB Agreement (as to themselves), the
Depositor/Servicer/Trustee (to the
extent known) as to the issuing entity,
the Sponsor, 1106(b) originator, any
1100(d)(1) party
Item 3: Sale of Securities and Use of Depositor
Proceeds
Item 4: Defaults Upon Senior Trustee
Securities
Item 5: Submission of Matters to a Trustee
Vote of Security Holders
Item 6: Significant Obligors of Pool Depositor/Sponsor/Mortgage Loan Sponsor/
Assets Servicer
Item 7: Significant Enhancement Depositor/Sponsor
Provider Information
Item 8: Other Information Trustee/Servicer/Depositor (to the
extent known) and any other party
responsible for disclosure items on Form
8-K
Item 9: Exhibits Trustee/Depositor/Servicer to the extent
applicable to each
W-1
SCHEDULE X
Item on Form 10-K Party Responsible
----------------- -----------------
Item 1B: Unresolved Staff Comments Depositor
*Item 9B: Other Information Depositor and any other party
responsible for disclosure items on Form
8-K
*Item 15: Exhibits, Financial Depositor/Servicer.
Statement Schedules
*Additional Item: All parties to the Pooling and Servicing
Agreement (as to themselves), the
Disclosure per Item 1117 of Depositor/Servicer/Trustee (to the
Regulation AB extent known) as to the issuing entity,
the Sponsor, 1106(b) originator, any
1100(d)(1) party
*Additional Item: All parties to the Pooling and Servicing
Disclosure per Item 1119 of Agreement, the Sponsor, originator,
Regulation AB significant obligor, enhancement or
support provider
Additional Item: Depositor/Sponsor/Mortgage Loan
Disclosure per Item 1112(b) of Sponsor/Servicer
Regulation AB
Additional Item: Depositor/Sponsor
Disclosure per Items 1114(b) and
1115(b) of Regulation AB
X-1
