EXECUTION COPY
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.,
Depositor
WILSHIRE CREDIT CORPORATION,
Servicer
and
XXXXX FARGO BANK, N.A.,
Trustee
----------------------------
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 2006
----------------------------
XXXXXXX XXXXX MORTGAGE INVESTORS TRUST,
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2006-HE1
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS ................................................ 1
ARTICLE II. CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES ................................................. 51
2.01. Conveyance of Mortgage Loans .................................. 51
2.02. Acceptance by the Trustee of the Mortgage Loans ............... 53
2.03. Representations, Warranties and Covenants of the Depositor .... 54
2.04. Representations and Warranties of the Servicer ................ 58
2.05. Substitutions and Repurchases of Mortgage Loans that are
not "Qualified Mortgages" ..................................... 59
2.06. Authentication and Delivery of Certificates ................... 60
2.07. REMIC Elections ............................................... 60
2.08. [RESERVED] .................................................... 64
2.09. Covenants of the Servicer ..................................... 64
2.10. [RESERVED] .................................................... 64
2.11. Permitted Activities of the Trust ............................. 64
2.12. Qualifying Special Purpose Entity ............................. 64
2.13. Depositor Notification of NIM Notes ........................... 64
ARTICLE III. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS ............. 64
3.01. Servicer to Service Mortgage Loans ............................ 64
3.02. Servicing and Subservicing; Enforcement of the Obligations
of Servicer ................................................... 66
3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer ...................................................... 67
3.04. Trustee to Act as Servicer .................................... 67
3.05. Collection of Mortgage Loan Payments; Collection Account;
Certificate Account ........................................... 68
3.06. Collection of Taxes, Assessments and Similar Items; Escrow
Accounts ...................................................... 71
3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans ............................................ 71
3.08. Permitted Withdrawals from the Collection Account and
Certificate Account ........................................... 71
3.09. [RESERVED] .................................................... 74
3.10. Maintenance of Hazard Insurance ............................... 74
3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements ..... 74
3.12. Realization Upon Defaulted Mortgage Loans; Determination of
Excess Proceeds; Special Loss Mitigation ...................... 75
3.13. Trustee to Cooperate; Release of Mortgage Files ............... 78
3.14. Documents, Records and Funds in Possession of Servicer to
be Held for the Trustee ....................................... 80
3.15. Servicing Compensation ........................................ 80
3.16. Access to Certain Documentation ............................... 80
3.17. Annual Statement as to Compliance ............................. 81
3.18. Annual Assessment of Compliance; Accountant's Attestation;
Financial Statements .......................................... 81
3.19. [RESERVED] .................................................... 83
3.20. Periodic Filings .............................................. 83
3.21. Annual Certificate by Servicer ................................ 88
3.22. Prepayment Charge Reporting Requirements ...................... 88
3.23. Information to the Trustee .................................... 88
i
PAGE
3.24. Indemnification ............................................... 89
3.25. Nonsolicitation ............................................... 89
3.26. High Cost Mortgage Loans ...................................... 89
ARTICLE IV. DISTRIBUTIONS .............................................. 90
4.01. Advances ...................................................... 90
4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls ................................ 91
4.03. Distributions on the REMIC Interests .......................... 91
4.04. Distributions ................................................. 91
4.05. Monthly Statements to Certificateholders ...................... 97
ARTICLE V. THE CERTIFICATES ........................................... 101
5.01. The Certificates .............................................. 101
5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates ............................................... 102
5.03. Mutilated, Destroyed, Lost or Stolen Certificates ............. 106
5.04. Persons Deemed Owners ......................................... 107
5.05. Access to List of Certificateholders' Names and Addresses ..... 107
5.06. Book-Entry Certificates ....................................... 107
5.07. Notices to Depository ......................................... 108
5.08. Definitive Certificates ....................................... 108
5.09. Maintenance of Office or Agency ............................... 109
5.10. [Reserved] .................................................... 109
ARTICLE VI. THE DEPOSITOR AND THE SERVICER ............................. 109
6.01. Respective Liabilities of the Depositor and the Servicer ...... 109
6.02. Merger or Consolidation of the Depositor or the Servicer ...... 109
6.03. Limitation on Liability of the Depositor, the Servicer and
Others ........................................................ 109
6.04. Limitation on Resignation of Servicer ......................... 110
6.05. Errors and Omissions Insurance; Fidelity Bonds ................ 110
6.06. Special Servicing Agreements .................................. 110
ARTICLE VII. DEFAULT; TERMINATION OF SERVICER ........................... 111
7.01. Events of Default ............................................. 111
7.02. Trustee to Act; Appointment of Successor ...................... 112
7.03. Notification to Certificateholders ............................ 113
ARTICLE VIII. CONCERNING THE TRUSTEE ..................................... 113
8.01. Duties of the Trustee ......................................... 113
8.02. Certain Matters Affecting the Trustee ......................... 114
8.03. Trustee Not Liable for Certificates or Mortgage Loans ......... 116
8.04. Trustee May Own Certificates .................................. 116
8.05. Trustee's Fees and Expenses ................................... 116
8.06. Indemnification and Expenses of Trustee ....................... 116
8.07. Eligibility Requirements for Trustee .......................... 117
ii
PAGE
8.08. Resignation and Removal of Trustee ............................ 118
8.09. Successor Trustee ............................................. 118
8.10. Merger or Consolidation of Trustee ............................ 119
8.11. Appointment of Co-Trustee or Separate Trustee ................. 119
8.12. Tax Matters ................................................... 120
ARTICLE IX. TERMINATION ................................................ 122
9.01. Termination upon Liquidation or Repurchase of all Mortgage
Loans ......................................................... 122
9.02. Final Distribution on the Certificates ........................ 123
9.03. Additional Termination Requirements ........................... 124
ARTICLE X. MISCELLANEOUS PROVISIONS ................................... 125
10.01. Amendment ..................................................... 125
10.02. Counterparts .................................................. 127
10.03. Governing Law ................................................. 127
10.04. Intention of Parties .......................................... 127
10.05. Notices ....................................................... 128
10.06. Severability of Provisions .................................... 129
10.07. Assignment .................................................... 129
10.08. Limitation on Rights of Certificateholders .................... 130
10.09. Inspection and Audit Rights ................................... 131
10.10. Certificates Nonassessable and Fully Paid ..................... 131
10.11. Compliance with Regulation AB ................................. 131
iii
EXHIBIT A FORMS OF CERTIFICATES
EXHIBIT B MORTGAGE LOAN SCHEDULE
EXHIBIT C [RESERVED]
EXHIBIT D FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1 FORM OF CLASS R TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2 FORM OF CLASS R TRANSFEROR'S AFFIDAVIT
EXHIBIT F FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G FORM OF INVESTMENT LETTER (ACCREDITED INVESTOR)
EXHIBIT H FORM OF RULE 144A LETTER (QUALIFIED INSTITUTIONAL BUYER)
EXHIBIT I FORM OF REQUEST FOR RELEASE
EXHIBIT J MLML LIST OF TRANSFER AGREEMENTS AND BRING DOWN LETTERS
EXHIBIT K FORM OF BACK-UP CERTIFICATION OF TRUSTEE
EXHIBIT L FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M-1 [RESERVED]
EXHIBIT M-2 FORM OF MONTHLY REMITTANCE ADVICE
EXHIBIT N-1 FORM OF CLASS A-1 CAP CONTRACT
EXHIBIT N-2 FORM OF CLASS A-2 CAP CONTRACT
EXHIBIT N-3 FORM OF SUBORDINATED CERTIFICATE CAP CONTRACT
EXHIBIT O-1 ONE-MONTH LIBOR CAP TABLE - CLASS A-1 CAP CONTRACT
EXHIBIT O-2 ONE-MONTH LIBOR CAP TABLE - CLASS A-2 CAP CONTRACT
EXHIBIT O-3 ONE-MONTH LIBOR CAP TABLE - SUBORDINATED CERTIFICATE CAP
CONTRACT
EXHIBIT P FORM OF ASSESSMENT OF COMPLIANCE
EXHIBIT Q FORM OF ASSESSMENT OF COMPLIANCE (CUSTODIAN)
EXHIBIT R FORM OF XXXXXXXX-XXXXX CERTIFICATION
EXHIBIT S FORM OF ITEM 1123 CERTIFICATION OF SERVICER
EXHIBIT T FORM OF ADDITIONAL DISCLOSURE NOTIFICATION
SCHEDULE X ITEMS FOR FORM 8-K
SCHEDULE Y ITEMS FOR FORM 10-D
SCHEDULE Z ITEMS FOR FORM 10-K
iv
POOLING AND SERVICING AGREEMENT, dated as of January 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 XXXXX FARGO BANK, N.A., 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) two real estate mortgage investment conduits,
(ii) the right to receive payments distributable to the Class P Certificates
pursuant to Section 4.04(b)(i) hereof, (iii) the Cap Contracts and the Cap
Contract Account, and (iv) the grantor trusts described in Section 2.07 hereof.
The Lower Tier REMIC will consist of all of the assets constituting the Trust
Fund (other than the assets described in clauses (ii), (iii) and (iv) above and
other than the Lower Tier 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 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 Transferors in the Transfer
Agreements, 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.
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 which service for their own 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.
Accrual Period: With respect to each Class of Class A, Class M and Class B
Certificates (other than the Class B-1B, Class B-2B and Class B-3B Certificates)
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 Class B-1B, Class B-2B
and Class B-3B Certificates 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 Class A, Class M and Class B
Certificates (other than the Class B-1B, Class B-2B and Class B-3B Certificates)
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 Class B-1B,
Class B-2B and Class B-3B Certificates will be made on a the basis of a 360 day
year consisting of twelve 30-day months.
Additional Form 10-D Disclosure: Has the meaning set forth in Section
3.20.
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 of payments of
principal and interest (net of the Servicing Fee Rate) 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, 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 any Mortgage Loan that is 150 days
delinquent or more (whether or not the Mortgage Loan has been converted to an
REO Property), 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 be limited to payments of interest.
Advance Facility: A financing or other facility as described in Section
10.07.
Advancing Person: A Person to whom the Servicer's rights under this
Agreement to be reimbursed for any Advances or Servicing Advances have been
assigned pursuant to Section 10.07.
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
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 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.
2
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.
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: The one-time auction conducted by the Trustee, as described in
Section 9.01(b) hereof.
Auction Date: The date on which the Auction occurs.
Available Funds Cap: Any of the Class A-1 Available Funds Cap, the Class
A-2 Available Funds Cap, the Floating Rate Subordinate Available Funds Cap or
the Fixed Rate Subordinate Available Funds Cap.
Balloon Loan: A Mortgage Loan having an original term to stated maturity
of approximately 15 years and that provides for level monthly payments of
principal and interest generally based on a 30-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 constitutes a Class of Book-Entry
Certificates.
Bring Down Letters: Those certain letter agreements, each dated as of
February 7, 2006, between MLML and the Transferors.
Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a day
on which banking institutions in the State of California, State of Maryland,
State of Minnesota, State of Oregon and 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 Subordinated Certificate Cap Contract.
Cap Contract Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.04(k) in the name of the Trustee for the
benefit of the Issuing Entity and designated "Xxxxx Fargo Bank, N.A., as
Trustee, in trust for registered holders of Xxxxxxx Xxxxx Mortgage Investors
3
Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-HE1." 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: Bear Xxxxxxx Financial Products, Inc., 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 Subordinated
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
Subordinated Certificate Cap Contract Termination Date.
Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee, as authenticating agent, 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(e) in the name of the Trustee for the
benefit of the Certificateholders and designated "Xxxxx Fargo Bank, N.A., as
Trustee, in trust for registered holders of Xxxxxxx Xxxxx Mortgage Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-HE1." 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-2A, Class A-2B, Class A-2C and Class
A-2D 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(i). 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 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); this
sentence shall be applied by, first, computing any amounts under
4
this sentence by treating each of the Class B-1 Certificates as a single Class
of Certificates, each of the Class B-2 Certificates as a single Class of
Certificates, and each of the Class B-3 Certificates as a single Class of
Certificates, and second, allocating any such amounts computed with respect to
the Class B-1 Certificates pro rata between the Class B-1A and Class B-1B
Certificates based on their respective Certificate Principal Balances,
allocating any such amounts computed with respect to the Class B-2 Certificates
pro rata between the Class B-2A and Class B-2B Certificates based on their
respective Certificate Principal Balances, and allocating any such amounts
computed with respect to the Class B-3 Certificates pro rata between the Class
B-3A and Class B-3B Certificates based on their respective Certificate Principal
Balances.
Certificate Register: The register maintained pursuant to Section 5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any 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 R Certificate Principal Balance.
Class A Certificates: Any of 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 and the Class R 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 Class A Certificate Principal
Balance immediately prior to such Distribution Date over (B) the lesser of (i)
48.00% of the Stated Principal Balance of the Mortgage Loans as of such
Distribution Date and (ii) the excess of the Stated Principal Balance 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 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 Group One Mortgage Loans based on the Net
Mortgage Rates in effect on the related Due Date divided by (y) the aggregate
Stated Principal Balance of the Group One Mortgage Loans as of the first day of
the related Accrual Period (or,
5
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.
Class A-1 Cap Contract: The confirmation and agreement, between the
Trustee on behalf of the Issuing Entity and the Cap Contract Counterparty (in
the form of Exhibit N-1 hereto).
Class A-1 Cap Contract Notional Balance: With respect to any Distribution
Date, the lesser of (x) 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 O-1 and (y) the outstanding Certificate Principal Balance of
the Class A-1 Certificates.
Class A-1 Cap Contract Termination Date: The Distribution Date in August
2012.
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 Certificates: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
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 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 interest 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
Initial Optional Termination Date, 0.220% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.440% per annum.
Class A-1 Maximum Rate Cap: With respect to any Distribution Date, the per
annum rate equal to 12 times the quotient of (x) the total scheduled interest
that would have been due on the Mortgage Loans in Group One during the related
Due Period had the Adjustable Rate Mortgage Loans in Group One provided for
interest at their maximum lifetime Net Mortgage Rates and the Fixed Rate
Mortgage Loans in Group One provided for interest at their Net Mortgage Rates
divided by (y) the aggregate Stated Principal Balance of the Group One Mortgage
Loans as of the preceding Distribution Date (or in the case of the first
Distribution Date, as of the Cut-off Date), multiplied by 30 and divided by the
actual number of days in the related Accrual Period. The Class A-1 Maximum Rate
Cap shall relate to the Class A-1 and Class R Certificates.
Class A-1 Pass-Through Rate: For the first Distribution Date, 4.790% 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.
6
Class A-1 Upper Collar: With respect to a 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 LIBOR and 9.78% per annum.
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 Group Two Mortgage Loans based on the Net
Mortgage Rates in effect on the related Due Date divided by (y) the aggregate
Stated Principal Balance of the Group Two Mortgage Loans 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.
Class A-2 Cap Contract: The confirmation and agreement, between Trustee on
behalf of the Issuing Entity and the Cap Contract Counterparty (in the form of
Exhibit N-2 hereto).
Class A-2 Cap Contract Notional Balance: With respect to any Distribution
Date, the lesser of (x) 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 O-2 and (y) the outstanding Certificate Principal balance of
the Class A-2 Certificates.
Class A-2 Cap Contract Termination Date: The Distribution Date in
September 2008.
Class A-2 Certificates: Each of the Class A-2A Certificates, the Class
A-2B Certificates, the Class A-2C Certificates and the Class A-2D Certificates.
Class A-2 Maximum Rate Cap: With respect to any Distribution Date, the per
annum rate equal to 12 times the quotient of (x) the total scheduled interest
that would have been due on the Group Two Mortgage Loans during the related Due
Period had the Adjustable Rate Mortgage Loans in Group Two provided for interest
at their maximum lifetime Net Mortgage Rates and the Fixed Rate Mortgage Loans
in Group Two provided for interest at their Net Mortgage Rates over divided by
(y) the aggregate Stated Principal Balance of the Group Two Mortgage Loans in as
of the preceding Distribution Date (or in the case of the first Distribution
Date, as of the Cut-off Date), multiplied by 30 and divided by the actual number
of days in the related Accrual Period. The Class A-2 Maximum Rate Cap shall
relate 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 LIBOR and 9.31% per annum.
Class A-2A Certificate: Any Certificate designated as a "Class A-2A
Certificate" on the face thereof, in the form of Exhibit A hereto, 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.
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 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.
7
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 interest 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
Initial Optional Termination Date for the Certificates, 0.080% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.160% per
annum.
Class A-2A Pass-Through Rate: For the first Distribution Date, 4.650% 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, in the form of Exhibit A hereto, 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 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 interest 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
Initial Optional Termination Date for the Certificates, 0.150% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.300% per
annum.
Class A-2B Pass-Through Rate: For the first Distribution Date, 4.720% 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.
Class A-2C Certificate: Any Certificate designated as a "Class A-2C
Certificate" on the face thereof, in the form of Exhibit A hereto, 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 Current
Interest or a Class A-2C Interest Carry Forward Amount that is recovered as a
voidable
8
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 interest 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
Initial Optional Termination Date for the Certificates, 0.200% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.400% per
annum.
Class A-2C Pass-Through Rate: For the first Distribution Date, 4.770% 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, in the form of Exhibit A hereto, 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 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 interest 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
Initial Optional Termination Date for the Certificates, 0.310% per annum and, as
of any Distribution Date after the Initial Optional Termination Date, 0.620% per
annum.
Class A-2D Pass-Through Rate: For the first Distribution Date, 4.880% 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 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.
9
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: Each of the Class B-1A Certificates and the Class
B-1B Certificates.
Class B-1 Current Interest: As of any Distribution Date, the sum of the
Class B-1A Current Interest and the Class B-1B Current Interest.
Class B-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of the Class B-1A Interest Carry Forward Amount and the Class B-1B Interest
Carry Forward Amount.
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 Class A 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 and the Class M-6
Certificate Principal Balance 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 Class A Certificate Principal Balance (after taking
into account distributions of the Class A Principal Distribution Amount on such
Distribution Date), (B) the Class M-1 Certificate Principal Balance (after
taking into account distributions of the Class M-1 Principal Distribution Amount
on such Distribution Date), (C) the Class M-2 Certificate Principal Balance
(after taking into account distributions of the Class M-2 Principal Distribution
Amount on such Distribution Date), (D) the Class M-3 Certificate Principal
Balance (after taking into account distributions of the Class M-3 Principal
Distribution Amount on such Distribution Date), (E) the Class M-4 Certificate
Principal Balance (after taking into account distributions of the Class M-4
Principal Distribution Amount on such Distribution Date), (F) the Class M-5
Certificate Principal Balance (after taking into account distributions of the
Class M-5 Principal Distribution Amount on such Distribution Date), (G) 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
(H) the Class B-1 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 83.30% of the Stated Principal
Balance of the Mortgage Loans as of such Distribution Date and (B) the excess of
the Stated Principal Balance 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 Class A Certificates 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 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-1A Certificate: Any Certificate designated as a "Class B-1A
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-1A Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-1A Certificates.
10
Class B-1A Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1A Pass-Through Rate on
the Class B-1A Certificate Principal Balance as of such Distribution Date plus
the Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are 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-1A Certificates.
Class B-1A Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1A Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-1A Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-1A Pass-Through Rate for the related Accrual Period.
Class B-1A Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 1.250% per annum and as of any Distribution
Date after the Initial Optional Termination Date, 1.875% per annum.
Class B-1A Pass-Through Rate: For the first Distribution Date, 5.820% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-1A Margin, (2) the Floating Rate Subordinate Available Funds
Cap and (3) the Floating Rate Subordinate Maximum Rate Cap for such Distribution
Date.
Class B-1B Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-1B Certificates.
Class B-1B Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1B Pass-Through Rate on
the Class B-1B Certificate Principal Balance as of such Distribution Date plus
the Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are 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-1B Certificates.
Class B-1B Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1B Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-1B Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-1B Pass-Through Rate for the related Accrual Period.
Class B-1B Pass-Through Rate: As of any Distribution Date up to and
including the Initial Optional Termination Date, the least of (1) 6.000%, (2)
the Fixed Rate Subordinate Available Funds Cap and (3) the Fixed Rate
Subordinate Maximum Rate Cap for such Distribution Date; and as of any
Distribution Date after the Initial Optional Termination Date, the least of (1)
6.500%, (2) the Fixed Rate Subordinate Available Funds Cap and (3) the Fixed
Rate Subordinate Maximum Rate Cap for such Distribution Date.
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.
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: Each of the Class B-2A Certificates and the Class
B-2B Certificates.
11
Class B-2 Current Interest: As of any Distribution Date, the sum of the
Class B-2A Current Interest and the Class B-2B Current Interest.
Class B-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of the Class B-2A Interest Carry Forward Amount and the Class B-2B Interest
Carry Forward Amount.
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 Class A 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 and the Class B-1 Certificate Principal Balance
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
Class A Certificate Principal Balance (after taking into account distributions
of the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions
of the Class M-1 Principal Distribution Amount on such Distribution Date), (C)
the Class M-2 Certificate Principal Balance (after taking into account
distributions of the Class M-2 Principal Distribution Amount on such
Distribution Date), (D) the Class M-3 Certificate Principal Balance (after
taking into account distributions of the Class M-3 Principal Distribution Amount
on such Distribution Date), (E) the Class M-4 Certificate Principal Balance
(after taking into account distributions of the Class M-4 Principal Distribution
Amount on such Distribution Date), (F) the Class M-5 Certificate Principal
Balance (after taking into account distributions of the Class M-5 Principal
Distribution Amount on such Distribution Date), (G) the Class M-6 Certificate
Principal Balance (after taking into account distributions of the Class M-6
Principal Distribution Amount on such Distribution Date), (H) 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 (I) the
Class B-2 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 86.50% of the Stated Principal Balance of the
Mortgage Loans as of such Distribution Date and (B) the excess of the Stated
Principal Balance 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 Class A Certificates, 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 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 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-2A Certificate: Any Certificate designated as a "Class B-2A
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-2A Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-2A Certificates.
Class B-2A Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2A Pass-Through Rate on
the Class B-2A Certificate Principal Balance as
12
of such Distribution Date plus the Current Interest and Interest Carry Forward
Amount portions of any previous distributions on such Class that are 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-2A
Certificates.
Class B-2A Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2A Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-2A Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-2A Pass-Through Rate for the related Accrual Period.
Class B-2A Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 1.450% per annum and as of any Distribution
Date after the Initial Optional Termination Date, 2.175% per annum.
Class B-2A Pass-Through Rate: For the first Distribution Date, 6.020% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-2A Margin, (2) the Floating Rate Subordinate Available Funds
Cap and (3) the Floating Rate Subordinate Maximum Rate Cap for such Distribution
Date.
Class B-2B Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-2B Certificates.
Class B-2B Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2B Pass-Through Rate on
the Class B-2B Certificate Principal Balance as of such Distribution Date plus
the Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are 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-2B Certificates.
Class B-2B Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2B Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-2B Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-2B Pass-Through Rate for the related Accrual Period.
Class B-2B Pass-Through Rate: As of any Distribution Date up to and
including the Initial Optional Termination Date, the least of (1) 6.260%,
(2) the Fixed Rate Subordinate Available Funds Cap and (3) the Fixed Rate
Subordinate Maximum Rate Cap for such Distribution Date; and as of any
Distribution Date after the Initial Optional Termination Date, the least of
(1) 6.760%, (2) the Fixed Rate Subordinate Available Funds Cap and (3) the Fixed
Rate Subordinate Maximum Rate Cap for such Distribution Date.
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: Each of the Class B-3A Certificates and the Class
B-3B Certificates.
Class B-3 Current Interest: As of any Distribution Date, the sum of the
Class B-3A Current Interest and the Class B-3B Current Interest.
13
Class B-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of the Class B-3A Interest Carry Forward Amount and the Class B-3B Interest
Carry Forward Amount.
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 Class A 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 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 Class A Certificate Principal Balance (after
taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after taking into account distributions of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Class M-2 Certificate Principal
Balance (after taking into account distributions of the Class M-2 Principal
Distribution Amount on such Distribution Date), (D) the Class M-3 Certificate
Principal Balance (after taking into account distributions of the Class M-3
Principal Distribution Amount on such Distribution Date), (E) the Class M-4
Certificate Principal Balance (after taking into account distributions of the
Class M-4 Principal Distribution Amount on such Distribution Date), (F) the
Class M-5 Certificate Principal Balance (after taking into account distributions
of the Class M-5 Principal Distribution Amount on such Distribution Date), (G)
the Class M-6 Certificate Principal Balance (after taking into account
distributions of the Class M-6 Principal Distribution Amount on such
Distribution Date), (H) the Class B-1 Certificate Principal Balance (after
taking into account distributions of the Class B-1 Principal Distribution Amount
on such Distribution Date), (I) 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 (J) the Class B-3 Certificate Principal
Balance immediately prior to such Distribution Date over (2) the lesser of (A)
89.10% of the Stated Principal Balance of the Mortgage Loans as of such
Distribution Date and (B) the excess of the Stated Principal Balance 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 Class A Certificates, Class M Certificates, Class B-1
Certificates 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 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 B-3A Certificate: Any Certificate designated as a "Class B-3A
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-3A Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-3A Certificates.
Class B-3A Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-3A Pass-Through Rate on
the Class B-3A Certificate Principal Balance as
14
of such Distribution Date plus the Current Interest and Interest Carry Forward
Amount portions of any previous distributions on such Class that are 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-3A
Certificates.
Class B-3A Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-3A Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-3A Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-3A Pass-Through Rate for the related Accrual Period.
Class B-3A Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 2.250% per annum and as of any Distribution
Date after the Initial Optional Termination Date, 3.375% per annum.
Class B-3A Pass-Through Rate: For the first Distribution Date, 6.820% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-3A Margin, (2) the Floating Rate Subordinate Available Funds
Cap and (3) the Floating Rate Subordinate Maximum Rate Cap for such Distribution
Date.
Class B-3B Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-3B Certificates.
Class B-3B Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-3B Pass-Through Rate on
the Class B-3B Certificate Principal Balance as of such Distribution Date plus
the Current Interest and Interest Carry Forward Amount portions of any previous
distributions on such Class that are 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-3B Certificates.
Class B-3B Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-3B Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-3B Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-3B Pass-Through Rate for the related Accrual Period.
Class B-3B Pass-Through Rate: As of any Distribution Date up to and
including the Initial Optional Termination Date, the least of (1) 6.900%, (2)
the Fixed Rate Subordinate Available Funds Cap and (3) the Fixed Rate
Subordinate Maximum Rate Cap for such Distribution Date; and as of any
Distribution Date after the Initial Optional Termination Date, the least of
(1) 7.400%, (2) the Fixed Rate Subordinate Available Funds Cap and (3) the
Fixed Rate Subordinate Maximum Rate Cap for such Distribution Date.
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, in the form of Exhibit A hereto, 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.
15
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
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 Certificates (as adjusted for the length of the Accrual
Period) 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.
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 Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class C Certificates pursuant to the last sentence of
the definition of "Certificate Principal Balance."
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 LTB-1A 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.
16
Class LTB-1B 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-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 LTB-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 LTB-3A 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-3B 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 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 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 Class A-1 Available Funds Cap.
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 Class A-2 Available Funds Cap.
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.
17
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.
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 Certificate Principal Balance: As of any date of determination,
the sum of 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, and the Class M-6 Certificate Principal Balance.
Class M 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 and the 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 that
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, in the form of Exhibit A hereto, 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 Current
Interest or 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 interest on such prior Distribution Dates
18
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
Initial Optional Termination Date, 0.390% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.585% per annum.
Class M-1 Pass-Through Rate: For the first Distribution Date, 4.960% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin, (2) the Floating Rate Subordinate Available Funds Cap
and (3) the Floating Rate Subordinate Maximum Rate Cap for such Distribution
Date.
Class M-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 Class A Certificate Principal Balance has 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 Class A
Certificate Principal Balance (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 immediately prior to such Distribution
Date over (2) the lesser of (A) 55.90% 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 Class A Certificates has been reduced to
zero, the Class M-1 Principal Distribution Amount will equal the lesser of (x)
the outstanding Certificate Principal Balance of the Class M-1 Certificates and
(y) 100% of the Principal Distribution Amount remaining after any distributions
on such Class A Certificates and (II) in no event will the Class M-1 Principal
Distribution Amount with respect to any Distribution Date exceed the Class M-1
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 that
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, in the form of Exhibit A hereto, 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 Current
Interest or 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.
19
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 interest 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.
Class M-2 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.400% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.600% per annum.
Class M-2 Pass-Through Rate: For the first Distribution Date, 4.970% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the Floating Rate Subordinate Available Funds Cap
and (3) the Floating Rate Subordinate Maximum Rate Cap for such Distribution
Date.
Class M-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 Class A Certificate Principal Balance and the
Class M-1 Certificate Principal Balance 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 Class A Certificate Principal Balance (after
taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after taking into account distributions of the Class M-1 Principal Distribution
Amount on such Distribution Date) and (C) the Class M-2 Certificate Principal
Balance immediately prior to such Distribution Date over (2) the lesser of (A)
63.30% 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 Class A Certificates and the Class M-1 Certificates has
been reduced to zero, the Class M-2 Principal Distribution Amount will equal the
lesser of (x) the outstanding Certificate Principal Balance of the Class M-2
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A and Class M-1 Certificates and (II) in no
event will the Class M-2 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-2 Certificate Principal Balance.
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 that
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, in the form of Exhibit A hereto, 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.
20
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 Current
Interest or 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 interest 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
Initial Optional Termination Date, 0.440% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.660% per annum.
Class M-3 Pass-Through Rate: For the first Distribution Date, 5.010% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-3 Margin, (2) the Floating Rate Subordinate Available Funds Cap
and (3) the Floating Rate Subordinate Maximum Rate Cap for such Distribution
Date.
Class 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 Class A Certificate Principal Balance, Class
M-1 Certificate Principal Balance and Class M-2 Certificate Principal Balance
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
Class A Certificate Principal Balance (after taking into account distributions
of the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions
of the Class M-1 Principal Distribution Amount on such Distribution Date), (C)
the Class M-2 Certificate Principal Balance (after taking into account
distributions of the Class M-2 Principal Distribution Amount on such
Distribution Date) and (D) the Class M-3 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 67.80% 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 Class
A Certificates, the Class M-1 Certificates and the Class M-2 Certificates has
been reduced to zero, the Class M-3 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 M-1 and Class M-2 Certificates and (II)
in no event will the Class M-3 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-3 Certificate Principal Balance.
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 Certificate
Principal Balance of such Class M-3 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
21
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 that
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, in the form of Exhibit A hereto, 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 Current
Interest or 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 interest 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
Initial Optional Termination Date, 0.570% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.855% per annum.
Class M-4 Pass-Through Rate: For the first Distribution Date, 5.140% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-4 Margin, (2) the Floating Rate Subordinate Available Funds Cap
and (3) the Floating Rate Subordinate 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 Class A Certificate Principal Balance, Class
M-1 Certificate Principal Balance and Class M-2 Certificate Principal Balance
and the Class M-3 Certificate Principal Balance 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 Class A Certificate Principal
Balance (after taking into account distributions of the Class A Principal
Distribution Amount on such Distribution Date), (B) the Class M-1 Certificate
Principal Balance (after taking into account distributions of the Class M-1
Principal Distribution Amount on such Distribution Date), (C) the Class M-2
Certificate Principal Balance (after taking into account distributions of the
Class M-2 Principal Distribution Amount on such Distribution Date), (D) the
Class M-3 Certificate Principal Balance (after taking into account distributions
of the Class M-3 Principal Distribution Amount on such Distribution Date and (E)
the Class M-4 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 71.90% 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 Class A Certificates, the Class
M-1 Certificates, the Class M-2 Certificates, and the Class M-3 Certificates
have 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
22
M-4 Certificates and (y) 100% of the Principal Distribution Amount remaining
after any distributions on such Class A, 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 that
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, in the form of Exhibit A hereto, 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 Current
Interest or 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 interest 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
Initial Optional Termination Date, 0.590% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.885% per annum.
Class M-5 Pass-Through Rate: For the first Distribution Date, 5.160% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-5 Margin, (2) the Floating Rate Subordinate Available Funds Cap
and (3) the Floating Rate Subordinate 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 Class A Certificate Principal Balance, Class
M-1 Certificate Principal Balance and Class M-2 Certificate Principal Balance,
the Class M-3 Certificate Principal Balance and the Class M-4 Certificate
Principal Balance 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 Class A Certificate Principal Balance (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after taking into
account distributions of the Class M-1 Principal
23
Distribution Amount on such Distribution Date), (C) the Class M-2 Certificate
Principal Balance (after taking into account distributions of the Class M-2
Principal Distribution Amount on such Distribution Date), (D) the Class M-3
Certificate Principal Balance (after taking into account distributions of the
Class M-3 Principal Distribution Amount on such Distribution Date, (E) 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 (F)
the Class M-5 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 75.80% 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 Class A Certificates, the Class
M-1 Certificates, the Class M-2 Certificates, the Class M-3 Certificates and the
Class M-4 Certificates have 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
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 that
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, in the form of Exhibit A hereto, 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 Current
Interest or 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 interest 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
Initial Optional Termination Date, 0.710% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 1.065% per annum.
24
Class M-6 Pass-Through Rate: For the first Distribution Date, 5.280% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-6 Margin, (2) the Floating Rate Subordinate Available Funds Cap
and (3) the Floating Rate Subordinate 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 Class A Certificate Principal Balance, Class
M-1 Certificate Principal Balance and Class M-2 Certificate Principal Balance,
the Class M-3 Certificate Principal Balance, the Class M-4 Certificate Principal
Balance and the Class M-5 Certificate Principal Balance 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 Class A Certificate
Principal Balance (after taking into account distributions of the Class A
Principal Distribution Amount on such Distribution Date), (B) the Class M-1
Certificate Principal Balance (after taking into account distributions of the
Class M-1 Principal Distribution Amount on such Distribution Date), (C) the
Class M-2 Certificate Principal Balance (after taking into account distributions
of the Class M-2 Principal Distribution Amount on such Distribution Date), (D)
the Class M-3 Certificate Principal Balance (after taking into account
distributions of the Class M-3 Principal Distribution Amount on such
Distribution Date, (E) the Class M-4 Certificate Principal Balance (after taking
into account distributions of the Class M-4 Principal Distribution Amount on
such Distribution Date), (F) 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 (G) the Class M-6 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 79.50% 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 Class
A Certificates, the Class M-1 Certificates, the Class M-2 Certificates, the
Class M-3 Certificates, the Class M-4 Certificates and the Class M-5
Certificates have 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 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: The Class R Certificate executed by the Trustee and
authenticated by the Trustee in substantially the form set forth in Exhibit A.
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
25
Distribution Date plus the portion of any previous distributions on such Class
in respect of Current Interest or a Class R 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 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 interest 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
Initial Optional Termination Date, 0.220% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.440% per annum.
Class R Pass-Through Rate: For the first Distribution Date, 4.790% 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 and (3) the Class
A-1 Maximum Rate Cap for such Distribution Date.
Closing Date: February 7, 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, as servicer, for Xxxxx Fargo Bank, N.A., as Trustee, in
trust for registered holders of Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage
Loan Asset-Backed Certificates, Series 2006-HE1." 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 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: With respect to any Mortgage Loan and any
Distribution Date, an amount equal to the portion of any Prepayment Interest
Shortfalls required to be deposited in the Collection Account by the Servicer
pursuant to Section 4.02 hereof.
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
26
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 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-1A Interest, the Class B-1A
Certificates. With respect to the Class LTB-1B Interest, the Class B-1B
Certificates. With respect to the Class LTB-2A Interest, the Class B-2A
Certificates. With respect to the Class LTB-2B Interest, the Class B-2B
Certificates. With respect to the Class LTB-3A Interest, the Class B-3A
Certificates. With respect to the Class LTB-3B Interest, the Class B-3B
Certificates.
Current Interest: Any of the Class A-1 Current Interest, the Class R
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 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-1A Current Interest, the
Class B-1B Current Interest, and the Class B-2A Current Interest, the Class B-2B
Current Interest, the Class B-3A Current Interest, and the Class B-3B Current
Interest.
Cut-off Date: January 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.
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. With
respect to any Mortgage Loan due on any day other than the first day of the
month, such Mortgage Loan shall be deemed to be due on the first day of the
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
27
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 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 February 2006.
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 bank 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
28
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, F-1 by Fitch or Prime-1 by Xxxxx'x at the time any deposits
are held on deposit therein, (vii) a trust account or accounts maintained with
the corporate trust department of a federal or state chartered depository
institution or trust company having capital and surplus of not less than
$50,000,000 or (viii) otherwise acceptable to each Rating Agency, as evidenced
by a letter from each Rating Agency to the Trustee.
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 Certificates and the 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.
Event of Default: As defined in Section 7.01 hereof.
Excess Interest: On any Distribution Date, for the Class A Certificates,
Class M Certificates, and the 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.
Extra Principal Distribution Amount: With respect to any Distribution
Date, (1) prior to 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) $42,582,247 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 (x) the Aggregate
Certificate Principal Balance immediately preceding such Distribution Date,
reduced by the Principal Funds with respect to such Distribution Date and (y)
the greater of (a) 10.90% of the Pool Stated Principal Balance of the Mortgage
Loans and (b) the Minimum Required Overcollateralization Amount over (B) the
Pool Stated Principal Balance of the Mortgage Loans as of such Distribution
Date;
29
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 Pool Stated Principal Balance of the
Mortgage Loans (and will remain fixed at the applicable percentage of the
aggregate Stated Principal Balance of the Mortgage 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 any successor in interest.
Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate which is fixed.
Fixed Rate Subordinate 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 the current Certificate Principal Balance of the
Class A-1 and Class R Certificates, in the case of Group One, or the Class A-2
Certificates, in the case of Group Two, from the aggregate Stated Principal
Balance of the Mortgage Loans in each Mortgage Group as of the immediately
preceding Distribution Date (or, in the case of the first Distribution Date, as
of the Cut-off Date)) of the Class A-1 Available Funds Cap and the Class A-2
Available Funds Cap each multiplied by the actual number of days in the related
accrual period and divided by 30.
Fixed Rate Subordinate Certificates: The Class B-1B, the Class B-2B and
the Class B-3B Certificates.
Fixed Rate Subordinate 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 the
Mortgage Loans in each Mortgage Group as of the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, as of the
Cut-off Date) the current Certificate Principal Balance of the Class A-1 and
Class R Certificates, in the case of Group One, or the Class A-2 Certificates,
in the case of Group Two) of the Class A-1 Maximum Rate Cap and the Class A-2
Maximum Rate Cap each multiplied by the actual number of days in the related
accrual period and divided by 30.
Floating Rate Certificate Carryover: With respect to a Distribution Date,
in the event that the Pass-Through Rate for a class of the Class A, Class M and
Class B Certificates is based upon the related Available Funds Cap, 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, 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 (A) 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 (B) the quotient obtained by dividing (I)
an amount equal to the proceeds, if any, payable under the related Cap Contract
with respect to such Distribution Date by (II) the aggregate Certificate
Principal Balance of each of the Classes of Certificates to which the Cap
Contract relates for such Distribution Date over (2) the amount of interest such
class was entitled to receive on such Distribution Date based on the related
Available Funds Cap together with (A) the unpaid portion of any such excess from
prior Distribution Dates (and interest accrued thereon at the then applicable
Pass-Through Rate for such class,
30
without giving effect to the applicable Available Funds Cap) and (B) 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.
Floating Rate Subordinate 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 the current Certificate Principal
Balance of the Class A-1 and Class R Certificates, in the case of Group One, or
the Class A-2 Certificates, in the case of Group Two, from the aggregate Stated
Principal Balance of the Mortgage Loans in each Mortgage Group as of the
immediately preceding Distribution Date (or, in the case of the first
Distribution Date, as of the Cut-off Date)) of the Class A-1 Available Funds Cap
and the Class A-2 Available Funds Cap.
Floating Rate Subordinate Certificates: The Class M, the Class B-1A,
the Class B-2A and the Class B-3A Certificates.
Floating Rate Subordinate 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 the
Mortgage Loans in each Mortgage Group as of the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, as of the
Cut-off Date) the current Certificate Principal Balance of the Class A-1 and
Class R Certificates, in the case of Group One, or the Class A-2 Certificates,
in the case of Group Two) of the Class A-1 Maximum Rate Cap and the Class A-2
Maximum Rate Cap.
Form 8-K Disclosure Information: Has the meaning set forth in Section
3.20.
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 identified in the Group One
Mortgage Loan Schedule attached hereto as Exhibit B-2.
Group One Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (1) the sum of the respective Certificate
Principal Balances of the Class A-1 and Class R Certificates and (2) 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 the
Distribution Date on which the Certificate Principal Balance of each Class of
the Class A-2 Certificates is initially reduced to zero (so long as the Class
A-1 and Class R Certificates are outstanding), the excess of (i) the Group Two
Principal Distribution Percentage of the Class A Principal Distribution Amount
over (ii) the amount necessary to reduce the Certificate Principal Balance of
each of the Class A-2 Certificates to zero will be added to the Group One
Principal Distribution Amount and (B) with respect to any Distribution Date
31
thereafter, the Group One Principal Distribution Amount shall 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 with respect to such Distribution Date received
with respect to Group One Mortgage Loans, and the denominator of which is the
amount of all Principal Funds with respect to such Distribution Date received on
all the Mortgage Loans.
Group Two: The portion of the Mortgage Pool identified as "Group Two"
in the Prospectus Supplement.
Group Two Mortgage Loan: Any Mortgage Loan identified in the Group Two
Mortgage Loan Schedule attached hereto as Exhibit B-3.
Group Two Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (1) the sum of the Certificate Principal Balance
of the Class A-2 Certificates and (2) 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 the Distribution Date on which the
Certificate Principal Balance of the Class A-1 and Class R Certificates is
initially reduced to zero (so long as any of the Class A-2 Certificates is
outstanding), the excess of (i) the Group One Principal Distribution Percentage
of the Class A Principal Distribution Amount over (ii) the amount necessary to
reduce the Certificate Principal Balances of the Class A-1 Certificates to zero
will be added to the Group Two Principal Distribution Amount and (B) with
respect to any Distribution Date thereafter, the Group Two Principal
Distribution Amount shall 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 with respect to such Distribution Date received
with respect to Group Two Mortgage Loans, and the denominator of which is the
amount of all Principal Funds with respect to such Distribution Date received on
all the Mortgage Loans.
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 Class A, Class
M, Class B or Class C Certificate, 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.
Initial Optional Termination Date: The Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is equal to or less
than 10% of the aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-off Date.
Institutional Accredited Investors: Institutions which are "accredited
investors" within the meaning of Rule 501(a)(1), (2), (3) or (7) promulgated
pursuant to Regulation D.
32
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 the
Mortgagor 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 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-1A Interest Carry Forward
Amount, the Class B-1B Interest Carry Forward Amount, the Class B-2A Interest
Carry Forward Amount, the Class B-2B Interest Carry Forward Amount, the Class
B-3A Interest Carry Forward Amount, the Class B-3B Interest Carry Forward Amount
or the Class C Interest Carry Forward Amount, as the case may be.
Interest Determination Date: With respect to the Class A, Class M and
Class B Certificates (other than the Class B-1B, Class B-2B and Class B-3B
Certificates), (i) for any Accrual Period other than the first Accrual Period,
the second LIBOR Business Day preceding the commencement of such Accrual Period
and (ii) for the first Accrual Period, February 3, 2006.
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) all proceeds of
any purchase pursuant to Section 2.02 or 2.03 during the related Prepayment
Period or pursuant to Section 9.01 not later than the related Determination Date
(to the extent that such proceeds relate to interest) less the Servicing Fee and
(6) all 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, the Trustee and a
custodian pursuant to this Agreement.
Issuing Entity: Xxxxxxx Xxxxx Mortgage Investors Trust, Series
2006-HE1.
Latest Possible Maturity Date: The latest maturity date for any
Mortgage Loan in the Trust Fund plus one year.
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.
33
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that either (a) has been liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization as provided
by applicable law governing the real property subject to the related Mortgage
and any security agreements and as to which the 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) is not a first lien Mortgage Loan and is delinquent 180 days or longer,
as to which the Servicer has certified in a certificate of an officer of the
Servicer delivered to the Depositor and to 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 Condemnation Proceeds and
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.
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 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 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-1A Interest, the Class LTB-1B Interest, the Class
LTB-2A Interest, the Class LTB-2B Interest, the Class LTB-3A Interest, the Class
LTB-3B Interest, 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 LTR Interest.
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 and the Class LTII2B 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 Regular Interests: Each of the Lower Tier REMIC
Interests other than the Class LTR Interest.
Lower Tier REMIC Subordinated 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.
34
Maximum Rate Cap: Any of the Class A-1 Maximum Rate Cap, the Class A-2
Maximum Rate Cap, the Floating Rate Subordinate Maximum Rate Cap and the Fixed
Rate Subordinate 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.
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.
MIN: The loan number for any MERS Loan.
MLML: Xxxxxxx Xxxxx Mortgage Lending, Inc., a Delaware corporation, or
its successors in interest.
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 second lien or a 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 Trustee 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 (for
clarification purposes, the Trustee has physical possession of the Mortgage
Files) and from time to time subject to this Agreement, attached hereto as
Exhibit B-1, Exhibit B-2 and Exhibit B-3, setting forth the following
information with respect to each Mortgage Loan:
(i) the loan number;
(ii) borrower name and address;
(iii) the unpaid principal balance of the Mortgage Loans;
35
(iv) the Initial Mortgage Rate;
(v) the original maturity date and the months remaining before
maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment due date of the Mortgage Loan;
(ix) 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;
(x) a code indicating whether the residential dwelling at the
time of origination was represented to be owner-occupied;
(xi) a code indicating the property type;
(xii) 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;
(xiii) location of the related Mortgaged Property;
(xiv) a code indicating whether a Prepayment Charge is applicable
and, if so,
(A) the period during which such Prepayment Charge is in
effect;
(B) the amount of such Prepayment Charge;
(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; and
(xv) the Credit Score and date obtained.
36
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 Issuing Entity.
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 set out on Exhibit B-1.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note
from time to time.
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: With respect to any interest in any REMIC and any Distribution
Date, the product of (x) the weighted average Net Mortgage Rate for the Mortgage
Loans 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) and (y)
a fraction, the numerator of which is 30 and the denominator of which is the
actual number of days in the related Accrual Period for such interest.
NIM Notes: The notes to be issued pursuant to the Indenture.
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 related to the Mortgage Loans.
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 related to the Mortgage
Loans.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Offered Certificates: The Class A, Class M and Class B 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
37
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 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.
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 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 or the Servicer, (2) not have any direct
financial interest in the Depositor or the Servicer or in any Affiliate of
either such party, 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.
Optional Termination: The termination of the Trust Fund hereunder
pursuant to clause (a) of Section 9.01 hereof.
Optional Termination Amount: The repurchase price received by the
Trustee in connection with any repurchase of all of the Mortgage Loans
pursuant to Section 9.01.
Optional Termination Price: On any date after the Initial Optional
Termination Date, an amount equal to the sum of (A) the aggregate Stated
Principal Balance of each Mortgage Loan (other than any Mortgage Loan that has
become an REO Property) as of the Distribution Date on which the proceeds of the
Optional Termination are distributed to the Certificateholders, plus accrued
interest thereon at the applicable Mortgage Rate as of the Due Date preceding
the Distribution Date on which the proceeds of the Optional Termination are
distributed to Certificateholders and the fair market value of any REO Property,
plus accrued interest thereon as of the Distribution Date on which the proceeds
of the Optional Termination are distributed to Certificateholders, (B) any
unreimbursed out-of-pocket costs and expenses owed to the Trustee (including any
amounts incurred by the Trustee in connection with conducting the Auction) or
the Servicer and any unpaid or unreimbursed Servicing Fees, Advances and
Servicing Advances, and (C) any unreimbursed costs, penalties and/or damages
incurred by the Issuing Entity in
38
connection with any violation relating to any of the Mortgage Loans of any
predatory or abusive lending law.
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).
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 the Class A-1 Certificates, the Class
A-1 Pass-Through Rate; with respect to the Class A-2A Certificates, the Class
A-2A Pass-Through Rate; with respect to the Class A-2B Certificates, the Class
A-2B Pass-Through Rate; with respect to the Class A-2C Certificates, the Class
A-2C Pass-Through Rate; with respect to the Class A-2D Certificates, the Class
A-2D Pass-Through Rate; with respect to the Class M-1 Certificates, the Class
M-1 Pass-Through Rate; with respect to the Class M-2 Certificates, the Class M-2
Pass-Through Rate; with respect to the Class M-3 Certificates, the Class M-3
Pass-Through Rate; with respect to the Class M-4 Certificates, the Class M-4
Pass-Through Rate; with respect to the Class M-5 Certificates, the Class M-5
Pass-Through Rate; with respect to the Class M-6 Certificates, the Class M-6
Pass-Through Rate; with respect to the Class B-1A Certificates, the Class B-1A
Pass-Through Rate; with respect to the Class B-1B Certificates, the Class B-1B
Pass-Through Rate; with respect to the Class B-2A Certificates, the Class B-2A
Pass-Through Rate; with respect to the Class B-2B Certificates, the Class B-2B
Pass-Through Rate; with respect to the Class B-3A Certificates, the Class B-3A
Pass-Through Rate; with respect to the Class B-3B Certificates, the Class B-3B
Pass-Through Rate; and with respect to the Class R Certificate, the Class R
Pass-Through Rate.
PCAOB: The Public Company Accounting Oversight Board.
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
39
Class; except that in the case of any Class P Certificates,
the 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 trust created pursuant
to this Agreement which shall be:
(i) holding the Mortgage Loans transferred from the Depositor and
other assets of the Issuing Entity, including the Cap
Contracts 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
Trust Fund;
(iii) receiving collections on the Mortgage Loans 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 the timely payment of such obligations is 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;
40
(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 at least one Rating Agency and
the highest applicable long term rating of each Rating Agency
rating such fund, if so rated; 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, other than 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 shall receive an Opinion of Counsel, 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) each 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.
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,
41
International Organization or any agency or instrumentality of either of the
foregoing, (iii) an organization (except certain farmers' cooperatives described
in Section 521 of the Code) that is exempt from tax imposed by Chapter 1 of the
Code (including the tax imposed by Section 511 of the Code on unrelated business
taxable income) on any excess inclusions (as defined in Section 860E(c)(1) of
the Code) with respect to a 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.
Prepayment Assumption: A rate or rates of prepayment, as described in
the Prospectus Supplement in the definition of "Modeling Assumptions,"
relating to the Offered Certificates.
Prepayment Charges: Any prepayment premium or charge payable by a
Mortgagor in connection with any Principal Prepayment on a Mortgage Loan
pursuant to the terms of the related Mortgage Note or Mortgage, as applicable.
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.
42
Prepayment Period: As to any Distribution Date, the period beginning with
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 Cut-off Date) and ending 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 required to be advanced by the Servicer on or before the related Servicer
Remittance Date, (2) prepayments of principal 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) all 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, the Trustee and the custodian 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, 3.12 and 9.01 hereof) that
is received or recovered 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 February 2,
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 or the applicable Transferor 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 unreimbursed costs, penalties and/or damages
incurred by the Issuing Entity in connection with any violation relating to such
Mortgage Loan of any predatory or abusive lending law.
Rating Agency: Either of S&P or Xxxxx'x. 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
43
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to (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 that 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 the first Distribution Date, the Closing
Date. With respect to any other Distribution Date, the close of business on the
last Business Day of the month preceding the month in which the applicable
Distribution Date occurs.
Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, N.A.,
Citibank, N.A., Xxxxx Fargo Bank, 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 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.
Regulation S: Regulation S promulgated under the Securities Act or any
successor provision thereto, in each case as the same may be amended from time
to time; and all references to any rule, section or subsection of, or definition
or term contained in, Regulation S means such rule, section, subsection,
definition or term, as the case may be, or any successor thereto, in each case
as the same may be amended from time to time.
Regulation S Global Securities: The Book-Entry Regulation S Global
Securities and the Definitive Regulation S Global Securities.
Relevant Servicing Criteria: The Servicing Criteria applicable to the
various parties, as set forth on Exhibit Q attached hereto. For clarification
purposes, multiple parties can have responsibility for the same Relevant
Servicing Criteria. With respect to a Sub-Contractor engaged by the Trustee or
the Servicer, the term "Relevant Servicing Criteria" may refer to one or more
discrete functions specified in the Relevant Servicing Criteria applicable to
the Servicer or the Trustee.
Relief Act: The Servicemembers Civil Relief Act or any similar state
or local law.
Relief Act Shortfall: With respect to any Distribution Date and any
Mortgage Loan, any reduction in the amount of interest or principal collectible
on such Mortgage Loan for the most recently ended calendar month as a result of
the application of the Relief Act.
44
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 either of (or, as the context requires, both of) the Lower Tier REMIC and
the Upper Tier REMIC.
REMIC Pass-Through Rate: The Class A-1 Available Funds Cap (in the case of
a Class included in Certificate Group One), the Class A-2 Available Funds Cap
(in the case of a Class included in Certificate Group Two), the Floating Rate
Subordinate Available Funds Cap (in the case of the Floating Rate Subordinate
Certificates) and the Fixed Rate Subordinate Available Funds Cap (in the case of
the Fixed Rate Subordinate Certificates).
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
REMIC Regular Interests: (i) any of the rights under any of the
Certificates (other than the Class P Certificates, the Class R Certificate and
the Class C Certificates) other than the rights in interest rate cap contracts
described in Section 2.07 and (ii) the Uncertificated Class C Interest.
Remittance Report: As defined in Section 4.04(j) hereof.
REO Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by a Sponsor 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, 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
Combined Loan-to-Value Ratio, in the case of the 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.
Reportable Event: Has the meaning set forth in Section 3.20
45
Request for Release: The Request for Release of Documents submitted by the
Servicer to the Trustee (or its custodian), 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: As of any Distribution Date, the quotient of (1) the
excess of (A) the Stated Principal Balances of the Mortgage Loans as of such
Distribution Date, over (B) the Certificate Principal Balance of the most senior
Class of Certificates outstanding, prior to giving effect to distributions to be
made on such Distribution Date and (2) the Stated Principal Balance of the
Mortgage Loans as of such Distribution Date.
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 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 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 the
Servicer, any officer of the Trustee or the 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, a division of The XxXxxx-Xxxx Companies, Inc.,
or any successor in interest.
Sale Agreement: The Mortgage Loan Sale and Assignment Agreement, dated
as of January 1, 2006, between the Depositor and MLML.
Xxxxxxxx-Xxxxx Certification: Has the meaning set forth in Section
3.20.
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.
46
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 immediately preceding Business Day) of the month in
which such Distribution Date occurs.
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, inspection, restoration and protection of a Mortgaged
Property, including without limitation advances in respect of 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 Mortgagors or payable under this
Agreement; (5) correcting errors of prior servicers, tax tracking, title
research, flood certifications, 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.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to the product of (x) the Servicing Fee Rate and (y) 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: 0.50% 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 Transfer Costs: In the event that the Servicer does not
reimburse the Trustee under 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.
Sponsor: MLML, or its successors in interest.
47
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 later to occur of (1) the Distribution Date in February
2009 or (2) the first Distribution Date on which (A) the Class A Certificate
Principal Balance (reduced by the Principal Funds with respect to such
Distribution Date) is less than or equal to (B) 48.00% of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date.
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 REQUIRED LOSS PERCENTAGE
------------------------------ ------------------------
February 2008 - January 2009 1.65% with respect to February 2008,
plus an additional 1/12th of 2.05% for
each month thereafter
February 2009 - January 2010 3.70% with respect
to February 2009, plus an additional
1/12th of 2.15% for each month
thereafter
February 2010 - January 2011 5.85% with respect
to February 2010, plus an additional
1/12th of 1.65% for each month
thereafter
February 2011 - January 2012 7.50% with respect
to February 2011, plus an additional
1/12th of 0.85% for each month
thereafter
February 2012 and thereafter 8.35%
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 60 or more
days Delinquent measured on a rolling three month basis (including, for the
purposes of this calculation, Mortgage Loans in foreclosure and REO Properties)
and (B) the Stated Principal Balance of the Mortgage Loans as of the last day of
the preceding calendar month, equals or exceeds the product of (i) 30.75% and
(ii) the 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 more than 5% of the
Mortgage Loans under the direction or
48
authority of a Servicer or the Trustee (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 Certificates: The Class M and Class B Certificates.
Subordinated Certificate Cap Contract: The confirmation and agreement,
between the Issuing Entity or Trustee and the Cap Contract Counterparty (in the
form of Exhibit N-3 hereto).
Subordinated Certificate Cap Contract Notional Balance: With respect to
any Distribution Date, the lesser of (x) the Subordinated Certificate Cap
Contract Notional Balance set forth for such Distribution Date in the Floating
Rate Subordinate Certificate One-Month LIBOR Cap Table attached hereto as
Exhibit O-3 and (y) the outstanding Certificate Principal Balance of the
Floating Rate Subordinate Certificates.
Subordinated Certificate Cap Contract Termination Date: The
Distribution Date in September 2008.
Subordinated Certificate Upper Collar: With respect to each Distribution
Date with respect to which payments are received on the Subordinated Certificate
Cap Contract, a rate equal to the lesser of One-Month LIBOR and 8.85% per annum.
Subsequent Recovery: Any amount received on a Mortgage Loan (net of
amounts reimbursed to the Servicer related to Liquidated Mortgage Loans)
subsequent to such Mortgage Loan being determined to be a Liquidated Mortgage
Loan.
Sub-Servicer: 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 and meets any of the criteria of Item 1108(a)(2)(i) through (iii) 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 Sub-Servicer 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
Sub-Servicer shall meet the qualifications set forth in Section 3.02. For
classification purposes, the Trustee shall not be deemed a Sub-Servicer.
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(c).
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.
49
Transfer Agreement: Each document set out on Exhibit J hereto pursuant to
which the Sponsor acquired any Mortgage Loan from the Transferor of such
Mortgage Loan.
Transferor: Each originator of a Mortgage Loan.
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; (v) the Cap Contracts and Cap Contract Account; and (vi)
all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property.
Trustee: Xxxxx Fargo Bank, N.A. a national banking association, not in its
individual capacity, but solely in its capacity as trustee for the benefit of
the Certificateholders under this Agreement, and any successor thereto, and any
corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder.
Uncertificated Class C Interest: An uncertificated interest with an
initial principal amount equal to the initial Overcollateralization Amount and
having (i) the same rights to payments as the Class C Certificates, other than
the rights to payments of amounts with respect to the Cap Contracts, and (ii)
the rights to the payments treated as distributed to the Class C Certificates
under Section 2.07(d), provided, however, that such interest shall have no
obligation to make any payments treated as paid by the Class C Certificates
pursuant to interest rate cap agreements under Section 2.07(d).
United States Person: (i) A citizen or resident of the United States, (ii)
a corporation, partnership or other entity treated as a corporation or
partnership for federal income tax purposes organized in or under the laws of
the United States or any state thereof or the District of Columbia (unless, in
the case of a partnership, Treasury regulations provide otherwise), (iii) an
estate the income of which is includible in gross income for United States tax
purposes regardless of its source or (iv) 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. Notwithstanding the preceding sentence, to
the extent provided in Treasury regulations, certain trusts in existence on
August 20, 1996, and treated as United States persons prior to such date, that
elect to continue to be treated as United States persons will also be United
States Persons.
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 Tier REMIC: As described in the Preliminary Statement and Section
2.07.
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 as follows: (1) 98% to the Class A, Class M, and Class B
Certificates, with the allocation among such Certificates to be in proportion to
the Class Certificate Principal Balance of
50
each Class relative to the Class Certificate Principal Balance of all other
Classes and (2) each Class of the Class C and Class P will be allocated 1% of
the Voting Rights Certificates. 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
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).
It is agreed and understood by the Depositor, the Servicer and the Trustee
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; or (iv) a
"High-Cost Home Loan" as defined by the Indiana High Cost Home Loan Law
effective January 1, 2005.
In connection with such assignment, the Depositor does hereby deliver to,
and deposit with, the Trustee (or its custodian), the following documents or
instruments with respect to each Mortgage Loan:
(A) The original Mortgage Note endorsed in blank or, "Pay to the order of
Xxxxx Fargo Bank, N.A., as trustee, without recourse" together with all riders
thereto. The Mortgage Note shall include all intervening endorsements showing a
complete chain of the title from the originator to [___________] or "Pay to the
order of Xxxxx Fargo Bank, N.A., as trustee, without recourse."
(B) Except as provided below and for each Mortgage Loan that is not a MERS
Loan, the original recorded Mortgage together with all riders thereto, with
evidence of recording thereon, or, if the original Mortgage has not yet been
returned from the recording office, a copy of the original Mortgage together
with all riders thereto certified to be a true copy of the original of the
Mortgage that has been delivered for recording in the appropriate recording
office of the jurisdiction in which the Mortgaged Property is located and in the
case of each MERS Loan, the original Mortgage together with all riders thereto,
noting the presence of the MIN of the Loan and either language indicating that
the Mortgage Loan is a MOM Loan or if the Mortgage Loan was not a MOM Loan at
origination, the original Mortgage and the assignment thereof to MERS, with
evidence of recording indicated thereon, or a copy of the Mortgage certified by
the public recording office in which such Mortgage has been recorded.
(C) In the case of each Mortgage Loan that is not a MERS Loan, the
original Assignment of each Mortgage endorsed either in blank or, to "Xxxxx
Fargo Bank, N.A., as trustee."
(D) The original policy of title insurance (or a preliminary title report,
commitment or binder if the original title insurance policy has not been
received from the title insurance company).
51
(E) Originals of any intervening assignments of the Mortgage, with
evidence of recording thereon or, if the original intervening assignment has not
yet been returned from the recording office, a copy of such assignment certified
to be a true copy of the original of the assignment which has been sent for
recording in the appropriate jurisdiction in which the Mortgaged Property is
located.
(F) Originals of all assumption and modification agreements, if any.
(G) 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 (or its custodian, if
applicable) 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 (or its custodian, if
applicable) 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.
(H) With respect to any Mortgage Loan, none of the Depositor, the Servicer
or the Trustee (or its custodian) shall be obligated to cause to be recorded the
Assignment of Mortgage referred to in this Section 2.01. In the event an
Assignment of Mortgage is not recorded, the Servicer shall have no liability for
its failure to receive and 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 on behalf of the
Certificateholders. 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 (or its
custodian) 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
52
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.
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, the rights in
the Transfer Agreements described therein, 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.
2.02. Acceptance by the 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 (or its
custodian, on its behalf) 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 Trustee within 45 Business Days of the Closing Date.
The Trustee acknowledges receipt of the Cap Contracts (the form of each of
which is attached hereto), the Transfer Agreements, the Bring Down Letters and
the Sale Agreement.
The Trustee agrees, for the benefit of Certificateholders, to review (or
cause to be reviewed by its custodian, on its behalf pursuant to a custodial
agreement) each Mortgage File delivered to it within 60 days after the Closing
Date. The Trustee (or its custodian, as applicable) will ascertain and certify,
within 70 days of the Closing Date, to the Depositor and the Servicer that all
documents required by Section 2.01 have been executed and received, and that
such documents relate to the Mortgage Loans identified in Exhibit B-1 that have
been conveyed to it. If the Trustee (or its custodian) 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 (or its custodian, as applicable) shall promptly (and in any event
within no more than five Business Days) after such finding so notify the other
(as applicable) and the Servicer, the Sponsor and the Depositor. In addition,
the Trustee (or its custodian, as applicable) shall also notify the other (as
applicable) and the Servicer, the Sponsor and the Depositor if the original
Mortgage with evidence of recording thereon with respect to a Mortgage Loan is
not received within 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
53
appropriate public recording office 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 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 90 days from the date the Trustee (or its custodian, as
applicable) 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 Certificate Account or Collection Account, as
appropriate, promptly upon receipt, and, upon receipt by the Trustee of written
notification of such deposit signed by a Servicing Officer or the Trustee (or
its custodian), 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, as shall be
requested by the Sponsor and 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 Transfer Agreements and the Bring Down Letters. 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 Servicer and the Trustee shall keep confidential the name of
each Mortgagor except as required by this Agreement and the Servicer and the
Trustee shall not solicit any such Mortgagor for the purpose of refinancing the
related Mortgage Loan; notwithstanding anything herein to the contrary, the
foregoing shall not be construed to prohibit (i) disclosure of any and all
information that is or becomes publicly known, or information obtained by the
Trustee from sources other than the other parties hereto, (ii) disclosure of any
and all information (A) if required to do so by any applicable law, rule or
regulation, (B) to any government agency or regulatory body having or claiming
authority to regulate or oversee any aspects of the Trustee's (or its
custodian's) business or that of any Affiliate, (C) pursuant to any subpoena,
civil investigation demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which the Trustee (or its custodian) or
any Affiliate or an officer, director, employer or shareholder thereof is a
party or (D) to any Affiliate, independent or internal auditor, agent, employee
or attorney of the Trustee (or its custodian) having a need to know the same,
provided that the Trustee (or its custodian, as applicable) advises such
recipient of the confidential nature of the information being disclosed, or
(iii) any other disclosure authorized by the Depositor.
Within 70 days of the Closing Date, the Trustee (or its custodian) shall
deliver to the Depositor and the Servicer the Final Certification, substantially
in the form of Exhibit D attached hereto, evidencing the completeness of the
Mortgage Files, with any exceptions noted thereto.
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
54
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 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.
(b) The representations and warranties of each Transferor with
respect to the related Mortgage Loans in the applicable Transfer Agreement,
which have been assigned to the Trustee hereunder, were made as of the date
specified in the applicable Transfer Agreement and brought forward to the
Closing Date pursuant to the related Bring Down Letter. The representations and
warranties of each Transferor with respect to the Mortgage Loans contained in
the Bring Down Letter were made as of the Closing Date. The representations and
warranties of the Sponsor with respect to the Mortgage Loans
55
contained in the Sale Agreement were made as of the Closing Date. To the extent
that any fact, condition or event with respect to a Mortgage Loan constitutes a
breach of both (i) a representation or warranty of the applicable Transferor
under the applicable Transfer Agreement or Bring Down Letter and (ii) a
representation or warranty of the Sponsor under the Sale Agreement, the
obligations of the Sponsor under the Sale Agreement shall be enforced against
the Transferor or the Sponsor, as applicable, as set forth in the Sale
Agreement. The Trustee acknowledges that the Sponsor shall have no obligation or
liability with respect to any breach of a representation or warranty made by it
with respect to any related Mortgage Loans, except as otherwise set forth in the
Sale Agreement, if the fact, condition or event constituting such breach also
constitutes a breach of a representation or warranty made by the related
Transferor in the related Transfer Agreement or Bring Down Letter, without
regard to whether the related Transferor fulfills its contractual obligations in
respect of such representation or warranty. The Trustee also acknowledges that
the Sponsor shall have no obligation or liability with respect to any breach of
a representation or warranty made solely by the Transferors with respect to the
Mortgage Loans, without regard to whether the related Transferor fulfills its
contractual obligations in respect of such representation or warranty. The
Trustee further 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.
In addition to the representations and warranties of the Transferors in
the Transfer Agreements that were brought forward to the Closing Date pursuant
to the related Bring Down Letter, with respect to each Mortgage Loan, each
Transferor made certain additional covenants regarding such Mortgage Loan, as
set forth in the related Transfer Agreement. With respect to any breach of such
additional covenants that materially and adversely affects the interests of the
Certificateholders in such Mortgage Loan, the Sponsor shall (1) use reasonable
efforts to enforce such covenant against the related Transferor and (2) if the
Sponsor successfully enforces any obligation of the related Transferor to
repurchase such Mortgage Loan, the Sponsor shall repurchase such Mortgage Loan
in accordance with this Section 2.03. If the Sponsor does not successfully
enforce the obligation, if any, of the Transferor to repurchase a Mortgage Loan
with respect to any breach of any such additional covenants, the Sponsor shall
have no obligation or right to repurchase or cure such Mortgage Loan.
(c) Upon discovery by any of the Depositor, the Servicer or the
Trustee (or its custodian) of a breach of any of such representations and
warranties that adversely and materially affects the 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 90 days of the discovery of such breach of any representation or
warranty, the applicable Transferor or the Sponsor, as applicable, 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 any
Transferor or the Sponsor, the Trustee's rights shall be enforced under the
applicable Transfer Agreement and the Sale Agreement for the benefit of
Certificateholders. If a breach of the representations and warranties set forth
in the Transfer Agreement hereof exists solely due to the unenforceability of a
Prepayment Charge, the Trustee or the other party having notice thereof shall
notify the Servicer thereof and not seek to enforce the repurchase remedy
provided for herein unless such Mortgage Loan is not current. In the event of a
breach of the representations and warranties with respect to the Mortgage Loans
set forth in a Transfer 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). 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
in the related Transfer Agreement which adversely and materially affects the
value of such Mortgage
56
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. The
Sponsor shall indemnify and hold harmless the Issuing Entity, the Trustee (or
its custodian, as applicable), the Depositor, the Servicer and each
Certificateholder 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 (or its custodian,
as applicable), 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. In furtherance of the foregoing, if the Transferor or the Sponsor,
as applicable, is not a member of MERS and repurchases a Mortgage Loan which is
registered on the MERS System, the Transferor or the Sponsor, as applicable, at
its own expense and without any right of reimbursement, shall cause MERS to
execute and deliver an assignment of the Mortgage in recordable form to transfer
the Mortgage from MERS to the Transferor or the Sponsor, as applicable, and
shall cause such Mortgage to be removed from registration on the MERS System in
accordance with MERS' rules and regulations.
With respect to any Mortgage Loan repurchased by the Sponsor pursuant to
the Sale Agreement or by any Transferor pursuant to the applicable Transfer
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 in the Certificate Account pursuant to Section
3.05. Upon receipt by the Trustee of notice from the Servicer of receipt by the
Servicer of the full amount of the Purchase Price for a Deleted Mortgage Loan,
and upon receipt by the Trustee (or its custodian, on behalf of the Trustee) of
the Mortgage File for a Replacement Mortgage Loan substituted for a Deleted
Mortgage Loan and a Request for Release, the Trustee shall release and reassign
to the Sponsor or the applicable Transferor, 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 Depositor,
the Sponsor or the related Transferor, and the Trustee (and its custodian) shall
have no 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 applicable Transferor or the Sponsor, as applicable, must
deliver to the Trustee (or its custodian) the Mortgage File for the Replacement
Mortgage Loan containing the documents set forth in Section 2.01 along with a
written certification certifying as to the Mortgage Loan satisfying all
requirements under the definition of Replacement Mortgage Loan and the delivery
of such Mortgage File and containing the granting language set forth in 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 (or its
custodian, on its behalf) 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(A)-(B), (C) (if applicable), and (D)-(E) have been
executed and received.
57
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") plus an amount equal to any unreimbursed
costs, penalties and/or damages incurred by the Issuing Entity in connection
with any violation relating to such Deleted Mortgage Loan of any predatory or
abusive lending law shall be remitted by the Sponsor to the Trustee for deposit
into the Certificate Account by the Sponsor 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.
Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Replacement Mortgage Loan for a
Deleted Mortgage Loan shall be made unless the Trustee shall have received an
Opinion of Counsel (at the expense of the party seeking to make the
substitution) that, under current law, such substitution will not (A) affect
adversely the status of any REMIC established hereunder as a REMIC, or of the
related "regular interests" as "regular interests" in any such REMIC, or (B)
cause any such REMIC to engage in a "prohibited transaction" or prohibited
contribution pursuant to the REMIC Provisions.
The Trustee 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.
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.
(d) It is understood and agreed that the representations, warranties
and indemnification (i) set forth in this Section 2.03, (ii) of the Sponsor and
the Depositor set forth in the Sale Agreement and assigned to the Trustee by the
Depositor hereunder and (iii) of each Transferor, assigned by the Sponsor to the
Depositor pursuant to 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.
(e) The Depositor shall deliver a copy of the Mortgage Loan Schedule
to the Servicer on the Closing Date.
(f) The Depositor shall notify the Servicer and the Trustee when any
NIM Notes are issued and when such NIM Notes are no longer outstanding.
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:
(a) The Servicer is duly organized and is validly existing as a
corporation in good standing under the laws of the State of Nevada 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
58
Mortgaged Property is located or is otherwise not required under applicable law
to effect such qualification and, in any event, is in compliance with the doing
business laws of any such state, to the extent necessary to ensure its ability
to enforce each Mortgage Loan, to service the Mortgage Loans in accordance with
the terms of this Agreement and to perform any of its other obligations under
this Agreement in accordance with the terms hereof.
(b) The Servicer has the corporate power and authority to service
each Mortgage Loan, and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary corporate action on 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 hereunder may be brought.
(c) 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.
(d) The Servicer is an approved servicer of mortgage loans for
Xxxxxx Xxx and is an approved servicer of mortgage loans for Xxxxxxx Mac.
(e) 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.
(f) 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.
(g) 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.
59
2.05. Substitutions and Repurchases of Mortgage Loans that 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 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, upon the written direction of the Depositor, 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.
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,
as authenticating agent, 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.
2.07. REMIC Elections.
(a) The Depositor hereby instructs and authorizes the Trustee to
make an appropriate election to treat each of the Upper Tier REMIC and the Lower
Tier REMIC as a REMIC. The Trustee shall sign the returns providing for such
elections and such other tax or information returns that 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 Upper Tier REMIC
and the Lower 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" for purposes of the REMIC Provisions shall be
the Closing Date. Each REMIC's fiscal year shall be the calendar year.
The Lower Tier 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 Lower Tier REMIC,
(iii) the grantor trusts described in this Section 2.07 hereof and (iv) each Cap
Contract and the Cap Contract Account. 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 that 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.
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, (i) the pass-through rate on the REMIC Regular Interests
represented by the Class A-1 Certificates and on the sole class of residual
interest in the Upper Tier REMIC shall be subject
60
to a cap equal to the Class A-1 Available Funds Cap; (ii) the pass-through rate
on the REMIC Regular Interests represented by the Class A-2 Certificates shall
be subject to a cap equal to the Class A-2 Available Funds Cap; (iii) the
pass-through rate on the REMIC Regular Interests represented by the Floating
Rate Subordinate Certificates shall be subject to a cap equal to the Floating
Rate Subordinate Available Funds Cap; and (iv) the pass-through rate on the
REMIC Regular Interests represented by the Fixed Rate Subordinate Certificates
shall be subject to a cap equal to the Fixed Rate Subordinate Available Funds
Cap.
The beneficial ownership of the Class LTR Interest and the Residual
Interest shall be represented by the Class R Certificate. The Class LTR Interest
shall not have a principal balance or bear interest.
(c) The "tax matters person" with respect to the Lower Tier REMIC
and the Upper Tier 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) It is intended that the rights of each Class of the Class A,
Class M 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 each Class of the
Class A, Class M 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 (other than the Class R Certificate),
Class M Certificates, Class B Certificates and the residual interest in the
Upper Tier REMIC held by the holder of the Class R Certificate. For information
reporting requirements, the rights of the Class A, Class M and Class B
Certificates to receive payments in respect of Excess Interest shall be assumed
to have zero or a de minimis value. 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, Class M and Class B Certificates
receive payments in respect of Excess Interest, such amounts, to the extent not
derived from payments on the Cap Contracts, 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(g) and then paid to the relevant Class of
Certificates pursuant to the related interest rate cap agreement.
(e) The parties intend that the portion of the Trust Fund consisting
of the Uncertificated Class C Interest, the Cap Contracts, the Cap Contract
Account, 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, Class M 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, Class M, Class B 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 amounts distributable to the Class P Certificates
pursuant to Section 4.04(b)(i) hereof shall be
61
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) [RESERVED]
(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) received from the Mortgage
Loans 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 the 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 and 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 Subordinated Balance Ratio is maintained) and finally, any remaining
distributions of 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 Subordinated 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
62
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
Holder of a Class R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such 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 such 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
63
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 a Class R Certificate, as
applicable, nor for any such Losses resulting from misinformation provided by
the Holder of such 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 such 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).
2.08. [RESERVED]
2.09. Covenants of the Servicer.
The Servicer hereby covenants to each of the other parties to this
Agreement as follows:
(a) 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;
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor or the
Trustee, any Affiliate of the Depositor or the Trustee and prepared by the
Servicer pursuant to this Agreement will be inaccurate in any material respect,
provided, however, that the Servicer shall not be responsible for inaccurate
information provided to it by third parties.
64
2.10. [RESERVED]
2.11. Permitted Activities of the Trust. The Trust 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 Trust, and to perform the duties and obligations of the
Trustee under, the Cap Contracts and any other agreement or instrument related
thereto, in each case in such form as the Depositor shall direct or shall
approve, the execution and delivery of any such agreement by the Depositor to be
conclusive evidence of its approval thereof.
2.12. Qualifying Special Purpose Entity. For purposes of SFAS 140, the
parties hereto intend that the Trust Fund 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 or SFAS 140.
2.13. Depositor Notification of NIM Notes. The Depositor shall notify the
Servicer in writing when NIM Notes are issued and when all previously issued NIM
Notes are no longer outstanding.
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
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 the Accepted Servicing
Practices. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through Sub-Servicers,
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 Trust Fund 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. 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 that 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. The Servicer shall represent and protect the
interest of the Trust Fund 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.
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, or of partial or full release or
discharge, subordinations 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
65
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, to the extent that the Servicer is
not permitted to execute and deliver such documents pursuant to the preceding
sentence. Upon receipt of such documents, the Depositor and/or the Trustee shall
execute such documents and deliver them to the Servicer. For purposes of this
Section 3.01, the Trustee hereby grants to the Servicer a limited power of
attorney to execute and file any and all documents necessary to fulfill the
obligations of the Servicer under this Section 3.01.
The Servicer shall not be required to make any Servicing Advance with
respect to a Mortgage Loan that is 150 days or more delinquent.
The Servicer shall deliver a list of Servicing Officers 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.
With respect to any second lien 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;
(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.
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 Sub-Servicer, which may be an Affiliate (each, a "Sub-Servicer")
pursuant to a subservicing agreement (each, a "Subservicing Agreement")
including, at the Servicer's option, if requested to do so by the Holder of the
Class C Certificate; 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
66
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 Sub-Servicer or reference to actions
taken through a Sub-Servicer 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 Sub-Servicer 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 Sub-Servicer 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. The Trustee shall have no obligations,
duties or liabilities with respect to a Sub-Servicer, including without
limitation, any obligation, duty or liability to monitor such Sub-Servicer or to
pay a Sub-Servicer's fees and expenses.
(b) For purposes of this Agreement, the Servicer shall be deemed to
have received any collections, recoveries or payments with respect to the
related Mortgage Loans that are received by a Sub-Servicer regardless of whether
such payments are remitted by the Sub-Servicer to the Servicer.
(c) The Servicer shall not permit a Sub-Servicer to perform any
servicing responsibilities hereunder with respect to the Mortgage Loans unless
that Sub-Servicer first agrees in writing with the Servicer to deliver an Annual
Statement of Compliance, an Assessment of Compliance and an Accountant's
Attestation in such manner and at such times that permits that Servicer to
comply with Sections 3.17 and 3.18 of this Agreement.
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.
3.04. Trustee to Act as Servicer.
Subject to Sections 6.04 and 7.02, 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 so by applicable
law, (iii) obligated to effectuate repurchases or substitutions of Mortgage
Loans hereunder, including pursuant to Section 2.02 or 2.03 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 or resignation 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
67
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 succeed to the rights and 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 30 days of the date of the
Trustee's invoice thereof, such amounts shall be payable out of the Certificate
Account; provided that if the Servicer has been terminated by reason of an Event
of Default, 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 this Agreement.
The Servicer shall, upon request of the Trustee, but at the expense of the
Servicer if the Servicer has been terminated by reason of an Event of Default,
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.
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, the Servicer may in
its discretion (i) waive any late payment charge or, if applicable, any default
interest charge, or (ii) subject to Section 3.01, 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 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 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 or
68
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 Servicer has not been provided with information sufficient
to enable it to collect the Prepayment Charge, 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. 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 Certificateholders, a Collection Account. The Servicer shall deposit into
such Collection Account daily, within two 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:
(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
(x) interest due on the Mortgage Loans on or prior to the Cut-off Date and
(y) Prepayment Interest Excess;
(iii) all Liquidation Proceeds, other than proceeds to be
applied to the restoration or repair of the Mortgaged Property or released
to the Mortgagor in accordance with the 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;
69
(vii) any amounts required to be deposited by the Servicer
pursuant to Section 3.10 hereof;
(viii) all Advances made by the Servicer pursuant to Section
4.01;
(ix) all Prepayment Charges; and
(x) 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, and any Prepayment Interest Excess need not
be remitted by the Servicer. Rather, such fees and charges may be retained by
the Servicer as additional servicing compensation. 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.
The Servicer shall give notice to the Trustee of the location of the
Collection Account maintained by it when established and prior to any change
thereof. Not later than twenty days after each Distribution Date, the Servicer
shall forward to the Trustee and the Depositor the most current available bank
statement for the Collection Account. Copies of such statement shall be provided
by the Trustee to any Certificateholder and to any Person identified to the
Trustee as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such statement is delivered by the
Servicer to the Trustee.
(e) 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;
(ii) the Purchase Price and any Substitution Adjustment
Amount;
(iii) any amount required to be deposited by the Trustee
pursuant to Section 3.05(g) in connection with any losses on Permitted
Investments; and
(iv) the Optional Termination Amount paid by the winning
bidder at the Auction or by the Servicer pursuant to Section 9.01.
Any amounts received by the Trustee prior to 1:00 p.m. New York City time
(or such earlier deadline for investment in the Permitted Investments designated
by the Trustee) that are required to be deposited in the Certificate Account by
the Servicer shall be invested in Permitted Investments on the Business Day on
which they were received. The foregoing requirements for remittance by the
Servicer
70
and deposit by the Trustee into the Certificate Account shall be exclusive. If
the Servicer fails to remit any funds due by the time designated herein, the
Servicer shall pay to the Trustee, for its own account, interest accrued on such
funds at the then-current prime rate (as published by Xxxxx Fargo Bank, N.A.)
from and including the applicable due date, to but excluding the day such funds
are paid to the Trustee. 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 cause the Trustee to 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. The Trustee shall give notice to the Servicer
of the location of the Certificate Account maintained by it when established and
prior to any change thereof.
(f) 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 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
Trustee 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 out of
the Trustee's own funds immediately as realized.
3.06. Collection of Taxes, Assessments and Similar Items; Escrow Accounts.
To the extent required by the related 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 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.
71
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.
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 made by it (or to
reimburse the Advance Financing Person for Advances 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, 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 any Non-Recoverable Servicing Advances
previously made to the extent that, in the case of Non-Recoverable
Servicing Advances, reimbursement therefor constitutes "unanticipated
expenses" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii);
(iv) to pay to the Servicer earnings on or investment income
with respect to funds in or credited to the Collection Account;
(v) to reimburse the Servicer from Insurance Proceeds for
Insured Expenses covered by the related Insurance Policy;
(vi) [reserved];
(vii) to pay to the Servicer any unpaid Servicing Fees and to
reimburse it for any unreimbursed Servicing Advances (to the extent that
reimbursement for Servicing Advances would constitute an "unanticipated
expense" within the meaning of Treasury Regulation Section
1.860-1(b)(3)(ii)), 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
72
Mortgage Loan(s)(including, for this purpose, Liquidation Proceeds and
purchase and repurchase proceeds) that represent late recoveries of the
payments for which such advances were made pursuant to Section 3.01 or
Section 3.06;
(viii) to pay 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;
(ix) 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;
(x) to reimburse the Servicer, the Trustee or the Depositor
for expenses incurred by any of them in connection with the Mortgage Loans
or Certificates and reimbursable pursuant to Section 3.04, Section 3.25 or
Section 6.03 hereof provided that reimbursement therefor would constitute
"unanticipated" expenses within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii);
(xi) 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 (xi) only to the extent that
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;
(xii) [reserved];
(xiii) to withdraw pursuant to Section 3.05 any amount
deposited in the Collection Account and not required to be deposited
therein; and
(xiv) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
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, to the extent on deposit,
and such amount shall be deposited in the Certificate Account; provided,
however, if the Trustee does not receive such Interest Funds and Principal Funds
by 2:00 p.m. Eastern Time, such Interest Funds and Principal Funds shall be
deposited in the Certificate Account on the next Business Day. In the event such
funds are not deposited by 2:00 p.m. Eastern Time on the Servicer Remittance
Date, the Servicer shall pay, out of its own funds, interest on such amount at a
rate equal to the then current "prime rate" (as published by Xxxxx Fargo Bank,
N.A.) for each date or part thereof until such amount is paid in full.
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 (vii) above.
73
Unless otherwise specified, any amounts reimbursable to the Servicer or
the Trustee from amounts on deposit in the Collection Account or the Certificate
Accounts shall be deemed to come from first, Interest Funds, and thereafter,
Principal Funds for the related Distribution Date.
(b) The Trustee shall withdraw funds from the Certificate Account
for distribution to the Certificateholders in the manner specified in this
Agreement (and shall withhold from the amounts so withdrawn, the amount of any
taxes that it is authorized to retain pursuant to this Agreement). In addition,
prior to making such distributions to the Certificateholders, the Trustee may
from time to time make withdrawals from the Certificate Account for the
following purposes:
(i) to withdraw pursuant to Section 3.05 any amount
deposited in the Certificate Account and not required to be deposited
therein;
(ii) to clear and terminate the Certificate Account upon
termination of the Agreement pursuant to Section 9.01 hereof (after paying
all amounts necessary to the Trustee or the Servicer in connection with
any such termination);
(iii) to pay to the Trustee (or any custodian) for any fees,
expenses and indemnification reimbursable pursuant to this Agreement,
including without limitation Sections 3.04, 6.03, 8.05 and 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.
3.09. [RESERVED]
3.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained, for each Mortgage Loan secured
by a first lien, fire and 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 replacement value of the improvements that are part of such Mortgaged
Property and (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. 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 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 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 as a Servicing Advance
to the extent provided in Section 3.08(a)(vii) hereof. It is understood and
agreed that no earthquake or other additional insurance is to be required of any
Mortgagor or maintained on property acquired in respect of a Mortgage other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property
with respect to a Mortgage Loan secured by a first lien 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
74
insurance shall be in an amount equal to the lesser of (i) the original
principal balance of the related Mortgage Loan, (ii) the replacement value of
the improvements that are part of such Mortgaged Property, 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
3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, except as set forth below, to the extent it has
knowledge of such conveyance or prospective conveyance, exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; 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; provided, further, that the Servicer shall not take any action in relation
to the enforcement of any "due-on-sale" clause that would adversely affect or
jeopardize coverage under any Required Insurance Policy. An Opinion of Counsel
at the expense of the Servicer (which expense shall constitute a Servicing
Advance) delivered to the Trustee and the Depositor shall conclusively establish
the reasonableness of the Servicer's belief that any "due-on-sale" clause is not
enforceable under applicable law, but which shall not be required. In such
event, the Servicer shall make reasonable efforts to enter into an assumption
and modification agreement 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 or the Mortgage, the
Mortgagor remains liable thereon. If the foregoing is not permitted under
applicable law, the Servicer is authorized 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 Note. 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 interests of the
Certificateholders. The Mortgage Loan, as assumed, shall conform in all respects
to the requirements, representations and warranties of this Agreement. The
Servicer shall notify the Trustee that any such assumption or substitution
agreement has been completed by forwarding to the Trustee the original copy of
such assumption or substitution agreement (indicating the Mortgage File to which
it relates), which copy shall be added by the Trustee to the related Mortgage
File and which 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. The Servicer shall be responsible for recording any such
assumption or substitution agreements. In connection with any such assumption or
substitution agreement, the Monthly Payment on the related Mortgage Loan shall
not be changed but shall remain as in effect immediately prior to the assumption
or substitution, the stated maturity or outstanding principal amount of such
Mortgage Loan shall not be changed nor shall any required monthly payments of
principal or interest be deferred or forgiven. Any fee collected by the Servicer
for consenting to any such
75
conveyance or entering into an assumption or substitution agreement shall be
retained by or paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
3.12. Realization Upon Defaulted Mortgage Loans; Determination of Excess
Proceeds; Special Loss Mitigation.
(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. Any
Mortgage Loan that is charged off may be sold to the majority Certificateholder
of the Class C Certificates, at its option, at its fair market value after the
time period specified in (e) below. If the Servicer has knowledge that a
Mortgaged Property that it 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.
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 itself and the Certificateholders for the period
prior to the sale of such REO Property. The Servicer or an Affiliate thereof 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.
76
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, in accordance
with applicable procedures for obtaining an automatic extension of the grace
period, more than 60 days prior to the day on which such three-year period would
otherwise expire, an extension of the three-year grace period, 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 (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 or extension 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 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 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.
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 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.
77
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 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 sent to the Trustee) to purchase for its own account
from the Issuing Entity any Mortgage Loan that is 91 days or more Delinquent at
a price equal to the Purchase Price. The Purchase Price for any Mortgage Loan
purchased hereunder shall be delivered to the Trustee for deposit to the
Certificate Account and the Trustee (or its custodian, as applicable) upon
receipt of such confirmation of deposit and a Request for Release from the
Servicer in the form of Exhibit I hereto, shall release 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, as shall
be necessary to vest in the Servicer any Mortgage Loan 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, and all security and documents, free of
any further obligation to the Certificateholders with respect thereto.
(d) With respect to such of the Mortgage Loans as come into and
continue in default, the Servicer will decide, in its reasonable business
judgment, whether to (i) foreclose upon the Mortgaged Properties securing those
Mortgage Loans pursuant to Section 3.12(a), (ii) write off the unpaid principal
balance of the Mortgage Loans as bad debt (provided that the Servicer has
determined that no net recovery is possible through foreclosure proceedings or
other liquidation of the related Mortgaged Property), (iii) take a deed in lieu
of foreclosure, (iv) accept a short sale or short refinance; (v) arrange for a
repayment plan, or (vi) agree to a modification of such Mortgage Loan. As to any
Mortgage Loan that becomes 120 days delinquent, the Servicer will be required to
have obtained or to obtain a broker's price opinion, the cost of which will be
reimbursable as a Servicing Advance. After obtaining the broker's price opinion,
the Servicer will determine, in its reasonable business judgment, whether a net
recovery is possible through foreclosure proceedings or other liquidation of the
related Mortgage Property. If the Servicer determines that no such recovery is
possible, it must charge off the related Mortgage Loan at the time it becomes
180 days delinquent. Once a Mortgage Loan has been charged off, the Servicer
will discontinue making Advances, the Servicer will not be entitled to future
Servicing Fees with respect to such Mortgage Loan except as provided below, and
the Mortgage Loan will be treated as a Liquidated Mortgage Loan. If the Servicer
determines that such net recovery is possible through foreclosure proceedings or
other liquidation of the related Mortgaged Property on a Mortgage Loan that
becomes 180 days delinquent, the Servicer need not charge off the Mortgage Loan
and may continue making Advances, the Servicer will continue to be entitled to
Servicing Fees and the Servicer will be required to notify the Trustee of such
decision.
(e) Any Mortgage Loan that is charged off, pursuant to (d) above,
may continue to be serviced by the Servicer for the Certificateholders using
specialized collection procedures (including foreclosure, if appropriate). The
Servicer will be entitled to Servicing Fees and reimbursement of expenses in
connection with such Mortgage Loans after the date of charge off, only to the
extent of funds available from any recoveries on any such Mortgage Loans. Any
such Mortgage Loans serviced in accordance with the specialized collection
procedures shall be serviced for approximately six months.
78
Any net recoveries received on such Mortgage Loans during such six month period
will be treated as Subsequent Recoveries. On the date which is six months after
the date on which the Servicer begins servicing such Mortgage Loans using the
specialized collection procedures, unless specific net recoveries are
anticipated by the Servicer on a particular Mortgage Loan, such charged off loan
will be released to the majority holder of the Class C Certificates and
thereafter, (i) the majority holder of the Class C Certificates will be entitled
to any amounts subsequently received in respect of any such released loans, (ii)
the majority holder of the Class C Certificates may designate any servicer to
service any such released loan and (iii) the majority holder of the Class C
Certificates may sell any such released loan to a third party.
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 a copy of such request, the Trustee or its designee
shall promptly release the related Mortgage File to the Servicer, and the
Servicer is authorized to cause the removal from the registration on the MERS
System of any such Mortgage if applicable, and the Servicer, on behalf of the
Trustee shall execute and deliver the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument releasing
the lien of the Mortgage 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 Issuing Entity 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 designee shall promptly release the related Mortgage File(s) within four (4)
Business Days of receipt of a properly completed Request for Release pursuant to
clauses (i), (ii) or (iii) above. Receipt of a properly completed Request for
Release 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 in a timely manner, the Trustee or its
designee, shall be liable for such penalties or damages respectively caused by
it.
79
On each day that the Servicer remits to the Trustee or its designee
Requests for Releases pursuant to clauses (ii) or (iii) above, the Servicer
shall also submit to the Trustee or its designee a summary of the total number
of such Requests for Releases requested on such day by the same method as
described in such clauses (ii) and (iii).
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
may deliver or cause to be delivered to the Trustee or its designee, for
signature, as appropriate or on behalf of the Trustee, execute 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.
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 Issuing Entity, 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, the 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.
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, 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, Prepayment Interest Excess, and all income and gain
net of any losses realized from Permitted Investments, together with other
benefits
80
received from amounts in the Collection Account, shall be retained by the
Servicer to the extent not required to be deposited in the Collection Account
pursuant to Sections 3.05, or 3.12(a) hereof. The Servicer shall be required to
pay all expenses incurred by it in connection with its servicing activities
hereunder and shall not be entitled to reimbursement therefor except as
specifically provided in this Agreement. In no event shall the Trustee be liable
for any Servicing Fee or for any differential between the Servicing Fee and the
amount necessary to induce a successor servicer to act as successor servicer
under this Agreement.
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, as
applicable, 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.
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 Trust, by April 15 of each calendar
year (or if such day is not a Business Day, the immediately preceding Business
Day) the Servicer and the Trustee shall deliver to the Trustee, the Servicer and
the Depositor, an Officer's Certificate in the form attached hereto as Exhibit S
stating, as to each signatory thereof, that (i) a review of the activities of
such signatory during the preceding calendar year, or portion thereof, and of
the performance of such signatory 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, such signatory 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 Sub-Servicer, the signatory shall deliver,
on behalf of that Sub-Servicer, the Officer's Certificate set forth in this
Section 3.17. Promptly after receipt of each such Officer's Certificate, the
Depositor may review such Officer's Certificate and, if applicable, consult with
the Servicer, any Sub-Servicer, and the Trustee, as applicable, as to the nature
of any failures by such party, in the fulfillment of any of such party's
obligations hereunder or, in the case of any Sub-Servicer, under such other
applicable agreement.
3.18. Annual Assessment of Compliance; Accountant's Attestation; Financial
Statements.
(a) (i) 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 Trust'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 and the Trustee each at its own expense, shall
furnish, and each of the preceding parties, as applicable, shall cause any
Sub-Servicer or Sub-Contractor engaged by it to furnish (unless in the case of a
Sub-Contractor, the Depositor has notified the Servicer and the Trustee in
writing that such compliance statement is not required for the Sub-Contractor)
and (ii) not later than April 15 of each calendar year with respect to any
calendar year during which the Trust's annual report on
81
Form 10-K is not required to be filed in accordance with the Exchange Act and
the rules and regulations of the Commission, the Servicer and the Trustee each
at its own expense, shall furnish, and each of the preceding parties, as
applicable, shall cause any Sub-Servicer engaged by it to furnish, to the
Trustee, the Servicer and the Depositor an officer's assessment of its
compliance with the Relevant 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 contain
(A) a statement by such party of its responsibility for assessing compliance
with the Relevant Servicing Criteria, (B) a statement that such party used the
Relevant Servicing Criteria to assess compliance with the Relevant Servicing
Criteria, (C) such party's assessment of compliance with the Relevant Servicing
Criteria as of and for the fiscal year covered by the Form 10-K required to be
filed pursuant to Section 3.20, including, if there has been any material
instance of noncompliance with the Relevant Servicing Criteria, a discussion of
each such failure and the nature and status thereof, and (D) a statement that a
registered public accounting firm has issued an attestation report on such
party's assessment of compliance with the Relevant Servicing Criteria as of and
for such period.
Promptly after receipt of each report on assessment of compliance, (i) the
Depositor may review each such report and, if applicable, consult with the
Servicer, and the Trustee, and any Sub-Servicer or Sub-Contractor engaged by
such parties as to the nature of any material instance of noncompliance with the
Relevant Servicing Criteria by the Servicer, the Trustee, and any Sub-Servicer
or Sub-Contractor engaged by such parties, and (ii) the Trustee shall confirm
that the assessments individually address the Relevant Servicing Criteria for
each party as set forth on Exhibit Q and notify the Depositor of any exceptions.
(b) (i) 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 Trust'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 and the Trustee each at its own expense, shall
cause, and each of the preceding parties, as applicable, shall cause any
Sub-Servicer or Sub-Contractor engaged by it to cause (unless in the case of a
Sub-Contractor, the Depositor has notified the Servicer and the Trustee in
writing that such report is not required for the Sub-Contractor) and (ii) not
later than April 15 of each calendar year with respect to any calendar year
during which the Trust'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, the Servicer and the Trustee each at its own expense, shall cause,
and each of the preceding parties, as applicable, shall cause any Sub-Servicer
engaged by it to cause, a nationally or regionally recognized firm of
independent registered public accountants (who may also render other services to
the Servicer, the Trustee, the Sponsor or any affiliate thereof) which is a
member of the American Institute of Certified Public Accountants to furnish a
report (the "Accountants Attestation") to the Trustee, the Servicer and the
Depositor to the effect that (i) it has obtained a representation regarding
certain matters from the management of such party, which includes an assertion
that such party has complied with the Relevant Servicing Criteria, and (ii) on
the basis of an examination conducted by such firm in accordance with standards
for attestation engagements issued or adopted by the PCAOB, it is expressing an
opinion as to whether such party's compliance with the Relevant Servicing
Criteria was fairly stated in all material respects, or it cannot express an
overall opinion regarding such party's assessment of compliance with the
Relevant Servicing Criteria. In the event that an overall opinion cannot be
expressed, such registered public accounting firm shall state in such report why
it was unable to express such an opinion. Such report must be available for
general use and not contain restricted use language. 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) Promptly after receipt of such report from the Servicer and
the Trustee, and any Sub-Servicer or Sub-Contractor engaged by such parties, (i)
the Depositor may review the report and, if
82
applicable, consult with such parties as to the nature of any defaults by any of
such parties, as the case may be, in the fulfillment of such party's obligations
hereunder or under any other applicable agreement, and (ii) the Trustee shall
confirm that each assessment submitted pursuant to Section 3.18(a) is coupled
with an attestation meeting the requirements of this Section 3.18(b) and notify
the Depositor of any exceptions.
(d) [Reserved].
(e) [Reserved].
(f) 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. 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.
3.19. [RESERVED]
3.20. Periodic Filings.
Within four (4) Business Days after the occurrence of an event requiring
disclosure on Form 8-K (each such event, a "Reportable Event"), and if requested
by the Depositor and to the extent it receives the Form 8-K Disclosure
Information described below, the Trustee shall prepare and file on behalf of the
Trust a Form 8-K, as required by the Exchange Act, provided that the Depositor
shall file the initial Form 8-K in connection with the issuance of the
Certificates. Any disclosure or information related to a Reportable Event or
that is otherwise required to be included on Form 8-K ("Form 8-K Disclosure
Information") shall, pursuant to the paragraph immediately below, be reported by
the parties set forth on Exhibit X and directed and approved by the Depositor,
and the Trustee will have no duty or liability for any failure hereunder to
determine or prepare any Form 8-K Disclosure Information absent such reporting,
direction and approval.
For so long as the Trust is subject to the reporting requirements of the
Exchange Act, following the occurrence of a Reportable Event (i) each party
listed on Exhibit X hereto shall use commercially reasonable best efforts to
provide immediate notice to the Trustee, the Depositor and the Servicer, by fax
and by phone or by e-mail and by phone (using the contact information set forth
in Section 10.05 or, in the case of the Trustee, set forth on Exhibit T), (ii)
each such party shall be required to provide to the Trustee, the Servicer and
the Depositor, to the extent known, in Word format or such other
XXXXX-compatible format as agreed upon by the Trustee, the Depositor and such
party, the Form 8-K Disclosure Information described on Exhibit X applicable to
such party, together with the form set forth on Exhibit T (the "Additional
Disclosure Notification") by Noon New York City time on the 2nd Business Day
following the occurrence of such Reportable Event, (iii) the Servicer shall
provide to the Trustee, within 2 Business Days of its receipt of notice pursuant
to clause (i) above, an executed signature page for Form 8-K to be held by the
Trustee until its release by the Servicer to the Trustee, and (iv) the
Depositor, by the end of business New York City time on the 2nd day following
such Reportable Event, shall approve, as to form and substance, or disapprove,
as the case may be, the inclusion of the Form 8-K Disclosure Information on Form
8-K. The Trustee has no duty under this Agreement to monitor or enforce the
performance by the parties listed on Exhibit X of their duties under this
paragraph or proactively solicit or procure from such parties any
83
Form 8-K Disclosure Information. The Depositor will be responsible for any
reasonable fees and expenses assessed or incurred by the Trustee in connection
with including any Form 8-K Disclosure Information on Form 8-K pursuant to this
paragraph.
After preparing the Form 8-K, the Trustee shall forward electronically, no
later than noon New York City time on the 3rd Business Day after the Reportable
Event, a draft copy of the Form 8-K to the Depositor and the Servicer for
review. No later than [1:00 pm] New York City time on the 4th Business Day after
the Reportable Event, a senior officer of the Servicer shall release the
signature page to the Form 8-K delivered pursuant to clause (iii) of the
preceding paragraph (with an original executed hard copy to follow by overnight
mail to the Trustee). 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 the third to last paragraph of this Section 3.20. Promptly (but no
later than 1 Business Day) after filing with the Commission, the Trustee will
make available on its internet website a final executed copy of each Form 8-K
prepared by the Trustee. The signing party at the Servicer can be contacted at
(000) 000-0000 or (000) 000-0000. The parties to this Agreement acknowledge that
the performance by the Trustee or the Servicer of its respective duties under
this Section 3.20 related to the timely preparation and filing of Form 8-K is
contingent upon the other parties hereto strictly observing all applicable
deadlines in the performance of their duties under this Section 3.20. Neither
the Trustee nor the Servicer shall have any liability for any loss, expense,
damage or claim arising out of or with respect to any failure to properly
prepare and/or timely file such Form 8-K, where such failure results from the
Trustee's or the Servicer's, as applicable, inability or failure to receive, on
a timely basis, any information from any other party hereto needed to prepare,
arrange for execution or file such Form 8-K.
Within fifteen days after each Distribution Date (subject to permitted
extensions under the Exchange Act), the Trustee shall, on behalf of the Issuing
Entity and in accordance with industry standards, prepare and file with the
Securities and Exchange Commission (the "Commission") via the Electronic Data
Gathering and Retrieval System (XXXXX), a Form 10-D with (1) a copy of the
report to the Certificateholders for such Distribution Date as an exhibit
thereto. Any necessary disclosure in addition to the Monthly Statement that is
required to be included on Form 10-D ("Additional Form 10-D Disclosure") shall,
pursuant to the paragraph immediately below, be reported by the parties set
forth on Exhibit Y and directed and approved by the Depositor, and the Trustee
will have no duty or liability for any failure hereunder to determine or prepare
any Additional Form 10-D Disclosure absent such reporting, direction and
approval.
As set forth in Schedule Y hereto, for so long as the Issuing Entity is
subject to the reporting requirements of the Exchange Act, within five (5)
calendar days after the related Distribution Date (i) each party hereto shall be
required to provide to the Depositor and the Trustee, to the extent known, 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), applicable to such party, and (ii) the Depositor will
approve, as to form and substance, or disapprove, as the case may be, the
inclusion of the Additional Form 10-D Disclosure and shall forward such
Additional Form 10-D Disclosure to the Trustee in Word format or such other
XXXXX-compatible format as agreed by the Trustee and the Depositor, together
with the Additional Disclosure Notification. The Trustee and the Servicer have
no duty under this Agreement to monitor or enforce the performance by the
parties listed on Exhibit Y of their duties under this paragraph or proactively
solicit or procure from such parties any Additional Form 10-D Disclosure
Information. 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. No later than two (2) Business Days after
receipt of a final copy after the related Distribution Date, 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. If a
Form 10-D cannot be filed on time or if a previously filed Form 10-D needs to be
amended, the Trustee will follow the procedures set forth in the third to last
paragraph of this
84
Section. Promptly (but not later than one Business Day) after filing with the
Commission, the Trustee will make available on its internet website a final
executed copy of each Form 10-D. The parties to this Agreement acknowledge that
the performance by the Trustee or the Servicer of its respective duties under
this Section 3.20 related to the timely preparation and filing of Form 10-D is
contingent upon the other parties hereto strictly observing all applicable
deadlines in the performance of their duties under this Section 3.20. Neither
the Trustee nor the Servicer will have any liability for any loss, expense,
damage or claim arising out of or with respect to any failure to properly
prepare, and/or timely file such Form 10-D resulting from the Trustee's or the
Servicer's, as applicable, inability or failure to receive any information
needed to prepare, arrange for execution or file such Form 10-D on a timely
basis.
On or prior to the 90th calendar day after the end of the fiscal year for
the Issuing Entity or such earlier date as may be required by the Exchange Act
(the "10-K Filing Deadline") (it being understood that the fiscal year for the
Issuing Entity ends on December 31st of each year) commencing in March 2007, 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, as applicable, 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 Trustee, the Servicer and each Sub-Servicer,
as described in Section 3.17 of the Agreement, (ii)(A) the annual reports on
assessment of compliance with servicing criteria for the Trustee, the Servicer
and each Sub-Servicer and Sub-Contractor (unless the Depositor 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 such party'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, 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 Trustee, the Servicer and each
Sub-Servicer and Sub-Contractor (if applicable), as described in Section 3.18 of
this Agreement, and (B) if any registered public accounting firm attestation
report described under Section 3.18 of this 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 Xxxxxxxx-Xxxxx Certification (defined below) in the form attached hereto
as Exhibit R, executed by the senior officer in charge of securitizations of the
Servicer. Any disclosure or information in addition to (i) through (iv) above
that is required to be included on Form 10-K ("Additional Form 10-K Disclosure")
shall be reported by the parties as set forth in Exhibit Z and directed and
approved by 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 absent such reporting, direction or
approval.
As set forth in Schedule Z hereto, no later than March 12 of each year
that the Issuing Entity is subject to the Exchange Act reporting requirements,
commencing in March 2007, (i) certain parties to the transaction shall be
required to provide to the Depositor, the Servicer and the Trustee, to the
extent known, any Additional Form 10-K Disclosure, applicable to such party, and
(ii) the Depositor will approve, as to form and substance, or disapprove, as the
case may be, the inclusion of the Additional Form 10-K Disclosure and shall
forward such Additional Form 10-K Disclosure to the Trustee in Word format or
such other XXXXX-compatible format as agreed by the Trustee and the Depositor,
together with the Additional Disclosure Notification. The Trustee and the
Servicer have no duty under this Agreement to monitor or enforce the performance
by the parties listed on Exhibit Z of their duties under this paragraph or
proactively solicit or procure from such parties any Additional Form 10-K
Disclosure Information. 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, no later than the 6th
Business Day prior to the 10-K Filing Deadline, forward electronically a draft
copy of the Form 10-K to the Depositor and the Servicer for review. No later
than the end of business New York City time on the 3rd Business Day after
85
receipt thereof, 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. 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 the third to last paragraph of this Section. Promptly
(but no later than one Business Day) 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 parties to this Agreement
acknowledge that the performance by the Trustee of its duties under this Section
3.20 related to the timely preparation and filing of Form 10-K is contingent
upon such parties (and any Sub-Servicer or Sub-Contractor) strictly observing
all applicable deadlines in the performance of their duties under this Section
3.20, Section 3.17 and Section 3.18. The Trustee shall have no liability for any
loss, expense, damage or claim arising out of or with respect to any failure to
properly prepare and/or timely file such Form 10-K resulting from the Trustee's
inability or failure to receive any information needed to prepare, arrange for
execution or file such Form 10-K on a timely basis.
Each Form 10-K shall include a certification (the "Xxxxxxxx-Xxxxx
Certification") which shall be in the form attached hereto as Exhibit R. 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 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, the Servicer and any Sub-Servicer,
shall sign and provide, and each such party shall cause any Sub-Servicer (to the
extent required by the Exchange Act and the rules and regulations of the
Commission) engaged by it to sign and provide, to the Servicer by March 12 of
each year in which the Issuing Entity is subject to the reporting requirements
of the Exchange Act and otherwise within a reasonable period of time upon
request, a certification (a "Back-Up Certification") (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 Form
10-K Certification. In the event the Servicer, any Sub-Servicer, the Trustee or
any Sub-Contractor engaged by any such party is terminated or resigns (to the
extent the Servicer or Trustee, as applicable, can reasonably obtain such)
pursuant to the terms of this Agreement, or any other applicable agreement, as
the case may be, such party shall provide a Back-Up Certification to the
Servicer pursuant to this Section 3.20 with respect to the period of time it was
subject to this Agreement or any other applicable agreement, as the case may be.
The Servicer agrees to furnish to the Trustee promptly, from time to time
upon request, such further information, reports, and financial statements within
its control related to this Agreement and the Mortgage Loans as the Depositor
reasonably deems appropriate 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 and the Servicer shall
execute any and all Form 10-Ds, 8-Ks and 10-Ks required hereunder.
On or prior to January 30 of the first year in which the Trustee is able
to do so under applicable law, the Trustee shall prepare and file a Form 15
Suspension Notification relating to the automatic suspension of reporting in
respect of the Trust under the Exchange Act.
In the event that the Trustee is unable to timely file with the Commission
all or any required portion of any Form 8-K, 10-D or 10-K required to be filed
by 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 or for any other reason, the Trustee will promptly notify the
Depositor and the Servicer of such inability to make a timely filing with the
Commission. In the case of Form 10-D and 10-K, the Depositor, Servicer and
Trustee will cooperate to prepare and file a Form 12b-25 and a 10-DA and 10KA
86
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 required Form 8-K Disclosure
Information and upon the approval and direction of the Depositor, include such
disclosure information on the next succeeding Form 10-D to be filed for the
Trust. In the event that any previously filed Form 8-K, 10-D or 10-K needs to be
amended, the Trustee will notify the Depositor and the Servicer and such parties
agree to cooperate to prepare any necessary 8-K/A, 10-D/A or 10-K/A. Any Form
15, Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K shall be signed by a
senior officer of the Servicer. The Depositor and Servicer acknowledge that the
performance by the Trustee 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, 10-D or 10-K is contingent upon the Servicer and the Depositor performing
their duties under this Section. The Trustee shall have no liability for any
loss, expense, damage or 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, 10-D or 10-K, where such failure results from the
Trustee's inability or failure to receive, on a timely basis, any information
from any other party hereto needed to prepare, arrange for execution or file
such Form 15, Form 12b-25 or any amendments to Forms 8-K, 10-D or 10-K.
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
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.
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 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.
87
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 such Servicer or any related
Sub-Servicer or Subcontractor to deliver or cause to be delivered 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 as to
Compliance provided on its behalf pursuant to Section 3.18 or 3.17, as
applicable, 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.
3.23. Prepayment Charge Reporting Requirements.
Promptly after each Distribution Date, the Servicer shall provide to the
Depositor and the Trustee 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; and
(vi) Prepayment Charge amount collected.
3.24. Information to the Trustee.
Two Business Days after the 15th day of each month, but not later than the
18th day of each month, the Servicer shall furnish to the Trustee a monthly
remittance advice in the form set forth in Exhibit M-2 (or such other form or
forms as the Trustee and the Servicer may from time to time agree) for the
period ending on the last Business Day of the preceding month (and with respect
to prepayments in full, for the period ending on the 14th day of the month in
which such report is to be furnished); provided, however, that in the event the
18th day is not a Business Day, the aforementioned reports shall be furnished by
the Servicer to the Trustee on the next Business Day; and provided, further,
that in the event there are three non-Business Days preceding the 18th day, the
Servicer will (a) furnish to the Trustee, on or before the 18th day of the
month, the aforementioned reports, which will not include information arising
from the related Prepayment Period, and (b) furnish to the Trustee, by 3:00
P.M., Eastern time, on
88
the next succeeding Business Day after the 18th day, a cumulative version of the
aforementioned reports which includes such information arising from the related
Prepayment Period.
3.25. Indemnification.
The Servicer shall indemnify the Sponsor, the Issuing Entity, the Trustee,
the Depositor and their officers, directors, employees and agents 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 negligence, willful misfeasance or bad faith of the
Servicer in the performance of its duties or by reason of reckless disregard of
its 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
Depositor and the Trustee with a written report of all expenses and advances
incurred by the Servicer pursuant to this Section 3.25, and the Servicer shall
promptly reimburse itself from the assets of the Issuing Entity in the
Collection Account for all amounts advanced by it pursuant to the preceding
sentence except when and to the extent a determination has been made that 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.
3.26. Nonsolicitation.
For as long as the Servicer services the Mortgage Loans, the Servicer
covenants that it will not, and that it will ensure that its Affiliates and
agents will not, directly solicit or provide information for any other party to
solicit for prepayment or refinancing of any of the Mortgage Loans by the
related Mortgagors. It is understood that the promotions undertaken by the
Servicer or its Affiliates or agents which are directed to the general public at
large, or certain segments thereof, shall not constitute solicitation as that
term is used in this Section 3.26.
3.27. 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 thereof; the Servicer may terminate its servicing thereof; and such
determination shall be deemed to materially and adversely affect the interests
of the Certificateholders in such Mortgage Loan, and the related Transferor or
the Sponsor will repurchase the Mortgage Loan within a 30 day period from the
date of the notice in the manner described in Section 2.05.
89
ARTICLE IV.
DISTRIBUTIONS
4.01. Advances.
(a) 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 4:00 p.m. Eastern 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 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 the earlier of
(i) such Mortgage Loan is paid in full, (ii) 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, (iii) the Servicer determines in its good faith judgment that such
amounts would constitute a Non-Recoverable Advance as provided in the preceding
paragraph or (iv) the date on which such Mortgage Loan becomes 150 days
delinquent as set forth below.
(b) Notwithstanding anything in this Agreement to the contrary
(including, but not limited to, Sections 3.01 and 4.01(a) hereof), no Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
Advance or Servicing Advance would, if made, constitute a Non-Recoverable
Advance or a Non-Recoverable Servicing Advance. The determination by the
Servicer that it has made a Non-Recoverable Advance or a Non-Recoverable
Servicing Advance or that any proposed Advance or Servicing Advance, if made,
would constitute a Non-Recoverable Advance or a Non-Recoverable Servicing
Advance, respectively, shall be evidenced by an Officer's Certificate of the
90
Servicer delivered to the Depositor and the Trustee. In addition, the Servicer
shall not be required to advance any Relief Act Shortfalls.
(c) Notwithstanding the foregoing, the Servicer shall not be
required to make any Advances for any Mortgage Loan after such Mortgage Loan
becomes 150 days delinquent. The Servicer shall identify such delinquent
Mortgage Loans in the Servicer Statement referenced in Section 3.24. In
addition, the Servicer shall provide the Trustee with an Officer's Certificate
listing such delinquent Mortgage Loans and certifying that such loans are 150
days or more delinquent.
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 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.
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 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.
4.04. Distributions.
(a) Reserved.
(b) On each 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, an amount equal to any
Prepayment Charges collected on the Mortgage Loans during the related
Prepayment Period and all amounts paid by the Servicer, the Sponsor or the
Transferors in respect of Prepayment Charges pursuant to this Agreement,
the Sale Agreement or the Transfer Agreements, as applicable, and all
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 or the related Transfer
Agreement, in each case for the related Prepayment Period;
(ii) concurrently, to each class of the Class A Certificates,
the Current Interest and any Interest Carry Forward Amount with respect to
such Class; provided, however, if
91
such amount is not sufficient to make a full distribution of the Current
Interest and any Interest Carry Forward Amount with respect to the Class A
Certificates, such amount will be distributed pro rata among classes of
the Class A Certificates based on the ratio of (x) the Current Interest
and Interest Carry Forward Amount for each class of the Class A
Certificates to (y) the total amount of Current Interest and any Interest
Carry Forward Amount for the Class A Certificates in the aggregate;
(iii) to the Class M-1 Certificates, the Class M-1 Current
Interest and any Class M-1 Interest Carry Forward Amount;
(iv) to the Class M-2 Certificates, the Class M-2 Current
Interest and any Class M-2 Interest Carry Forward Amount;
(v) to the Class M-3 Certificates, the Class M-3 Current
Interest and any Class M-3 Interest Carry Forward Amount;
(vi) to the Class M-4 Certificates, the Class M-4 Current
Interest and any Class M-4 Interest Carry Forward Amount;
(vii) to the Class M-5 Certificates, the Class M-5 Current
Interest and any Class M-5 Interest Carry Forward Amount;
(viii) to the Class M-6 Certificates, the Class M-6 Current
Interest and any Class M-6 Interest Carry Forward Amount;
(ix) concurrently, to each class of the Class B-1
Certificates, the Current Interest and any Interest Carry Forward Amount
with respect to such Class; provided, however, if such amount is not
sufficient to make a full distribution of the Current Interest and any
Interest Carry Forward Amount with respect to the Class B-1 Certificates,
such amount will be distributed pro rata among classes of the Class B-1
Certificates based on the ratio of (x) the Current Interest and Interest
Carry Forward Amount for each class of the Class B-1 Certificates to (y)
the total amount of Current Interest and any Interest Carry Forward Amount
for the Class B-1 Certificates in the aggregate;
(x) concurrently, to each class of the Class B-2
Certificates, the Current Interest and any Interest Carry Forward Amount
with respect to such Class; provided, however, if such amount is not
sufficient to make a full distribution of the Current Interest and any
Interest Carry Forward Amount with respect to the Class B-2 Certificates,
such amount will be distributed pro rata among classes of the Class B-2
Certificates based on the ratio of (x) the Current Interest and Interest
Carry Forward Amount for each class of the Class B-2 Certificates to (y)
the total amount of Current Interest and any Interest Carry Forward Amount
for the Class B-2 Certificates in the aggregate;
(xi) concurrently, to each class of the Class B-3
Certificates, the Current Interest and any Interest Carry Forward Amount
with respect to such Class; provided, however, if such amount is not
sufficient to make a full distribution of the Current Interest and any
Interest Carry Forward Amount with respect to the Class B-3 Certificates,
such amount will be distributed pro rata among classes of the Class B-3
Certificates based on the ratio of (x) the Current Interest and Interest
Carry Forward Amount for each class of the Class B-3 Certificates to (y)
the total amount of Current Interest and any Interest Carry Forward Amount
for the Class B-3 Certificates in the aggregate; and
92
(xii) any remainder pursuant to Section 4.04(f) hereof.
On each Distribution Date, subject to the proviso in (ii) 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-2A,
Class A-2B, Class A-2C and Class A-2D 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) [Reserved]
(d) On each Distribution Date, the Trustee shall, to the extent of
funds then available, 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 Class A Certificates, the Class A Principal
Distribution Amount will be distributed as follows:
(A) the Group One Principal Distribution Amount will
be distributed first, to the Class R Certificate until its
Certificate Principal Balance has been reduced to zero, and second,
to the Class A-1 Certificate until the Class A-1 Certificate
Principal Balance has been reduced to zero; and
(B) the Group Two Principal Distribution Amount will
be distributed sequentially to the Class A-2A, Class A-2B, Class
A-2C and Class A-2D Certificates until the Certificate Principal
Balance of each such class has been reduced to zero; provided,
however, that on and after the Distribution Date on which the
aggregate Certificate Principal Balance of the Class M, Class B and
Class C Certificates has been reduced to zero, any principal
distributions allocated to the Class A-2A, Class A-2B, Class A-2C
and Class A-2D 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;
(ii) to the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount;
(iii) to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount;
(iv) to the Class M-3 Certificates, the Class 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;
93
(vii) to the Class M-6 Certificates, the Class M-6 Principal
Distribution Amount;
(viii) pro rata based on their respective Certificate
Principal Balances, to each class of the Class B-1 Certificates, the Class
B-1 Principal Distribution Amount;
(ix) pro rata based on their respective Certificate
Principal Balances, to each class of the Class B-2 Certificates, the Class
B-2 Principal Distribution Amount;
(x) pro rata based on their respective Certificate
Principal Balances, to each class of the Class B-3 Certificates, the Class
B-3 Principal Distribution Amount;
(xi) any remainder pursuant to Section 4.04(f) hereof.
(e) [Reserved]
(f) On each Distribution Date, the Trustee shall, to the extent of
funds then available, make the following distributions up to the following
amounts from the Certificate Account of the remainders pursuant to Section
4.04(b)(xii) and (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) for distribution as part of the Principal Distribution
Amount, the Extra Principal Distribution Amount;
(ii) to the Class M-1 Certificates, the Class M-1 Unpaid
Realized Loss Amount;
(iii) to the Class M-2 Certificates, the Class M-2 Unpaid
Realized Loss Amount;
(iv) to the Class M-3 Certificates, the Class M-3 Unpaid
Realized Loss Amount;
(v) to the Class M-4 Certificates, the Class M-4 Unpaid
Realized Loss Amount;
(vi) to the Class M-5 Certificates, the Class M-5 Unpaid
Realized Loss Amount;
(vii) to the Class M-6 Certificates, the Class M-6 Unpaid
Realized Loss Amount;
(viii) pro rata based on their respective Certificate
Principal Balances, to each class of the Class B-1 Certificates, the Class
B-1 Unpaid Realized Loss Amount;
(ix) pro rata based on their respective Certificate
Principal Balances, to each class of the Class B-2 Certificates, the Class
B-2 Unpaid Realized Loss Amount;
(x) pro rata based on their respective Certificate
Principal Balances, to each class of the Class B-3 Certificates, the Class
B-3 Unpaid Realized Loss Amount;
94
(xi) to the Class A, Class M and Class B Certificates, on a
pro rata basis, based upon outstanding Floating Rate Certificate Carryover
for each such Class, the Floating Rate Certificate Carryover for each
Class; and
(xii) the remainder pursuant to Section 4.04(g) hereof.
(g) on each Distribution Date, the Trustee shall allocate the
remainders pursuant to Section 4.04(f)(xii) as follows:
(i) to the Class C Certificates in the following order of
priority, (A) the Class C Current Interest, (B) the Class C Interest Carry
Forward Amount, (C) as principal on the Class C Certificate until the
Certificate Principal Balance of the Class C Certificates has been reduced
to zero and (D) the Class C Unpaid Realized Loss Amount; and
(ii) the remainder pursuant to Section 4.04(h) hereof.
(h) On each Distribution Date, the Trustee shall allocate the
remainder pursuant to Section 4.04(g)(ii) hereof (i) to the Trustee (and its
custodian) to reimburse amounts or pay indemnification amounts owing to the
Trustee (and its custodian, as applicable) from the Issuing Entity pursuant to
Section 8.06 and (ii) 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.
(i) 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 the Subordinated 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 (pro rata between the
Class B-3A and the Class B-3B Certificates based on their respective
Certificate Principal Balances) until the Class B-3 Certificate Principal
Balance is reduced to zero;
(iii) to the Class B-2 Certificates (pro rata between the
Class B-2A and the Class B-2B Certificates based on their respective
Certificate Principal Balances) until the Class B-2 Certificate Principal
Balance is reduced to zero;
(iv) to the Class B-1 Certificates (pro rata between the
Class B-1A and the Class B-1B Certificates based on their respective
Certificate Principal Balances) 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;
95
(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.
(j) 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 Certificates registered in the
name of a Depository shall be made to such Depository in immediately available
funds.
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 electronic means as the Servicer and
the Trustee may agree from time to time) containing such data and information as
to permit the Trustee to prepare the Monthly Statement to Certificateholders and
make the required distributions for the related Distribution Date. The Trustee
will prepare the Monthly Report based solely upon the information received from
the Servicer.
(k) The Trustee is hereby directed by the Depositor to execute the
Cap Contracts on behalf of the Issuing Entity in the form presented to it by the
Depositor and shall have no responsibility for the contents, adequacy or
sufficiency of the 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
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 Offered
Certificates (other than holders of the Fixed Rate Subordinate Certificates) up
to the amount of any Floating Rate Certificate Carryover remaining after the
application of Section 4.04(f)(xi) on such Distribution Date; provided, however,
that payments received on the Cap Contract will not be used to pay any Floating
Rate Certificate Carryover that results from a failure to allocate Applied
Realized Loss Amounts to the Class A Certificates. Any amounts in the Cap
Contract Account on any Distribution Date in excess of amounts required, subject
to the restrictions set forth in the preceding sentence, to pay outstanding
Floating Rate Certificate Carryovers (other than with respect to the Fixed Rate
Subordinate Certificates) on such Distribution Date will be distributed to the
holders of the Class C Certificates. Payments in respect of such Floating Rate
Certificate Carryovers from proceeds of a Cap Contract shall be paid to the
related Classes of Offered Certificates (other than the Fixed Rate Subordinate
Certificates), pro rata based upon such Floating Rate Certificate Carryovers for
each such class of Offered Certificates. Amounts received on the Class A-1 Cap
Contract will only be available to make payments on the Class A-1 and Class R
certificates, amounts received on the Class A-2 Cap Contract will only be
available to make payments on the Class A-2 certificates, amounts received on
the Subordinated Certificate Cap Contract will only be available to make
payments on the Floating Rate Subordinate Certificates.
96
(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 the related 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 Offered Certificates to the
extent provided in the immediately preceding paragraph. 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 related Cap Contract will equal the product of (i) the excess of (x)
One-Month 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
related Cap Contract), over (y) the rate with respect to such Distribution
Date as shown under the heading "1ML Strike Lower Collar" in the schedule
to the related Cap Contract, (ii) an amount equal to the lesser of (x) the
related Cap Contract Notional Balance for such Distribution Date and (y)
the outstanding Certificate Principal Balance of (A) in the case of the
Class A-1 Cap Contract, the Class A-1 Certificates, (B) in the case of the
Class A-2 Cap Contract, the Class A-2 Certificates and (C) in the case of
the Subordinated Certificate Cap Contract, the Floating Rate 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, information regarding such
distribution will be included in the monthly statement made available on
the Trustee's website pursuant to Section 4.05 hereof.
(ii) Amounts on deposit in the Cap Contract Account will
remain uninvested pending distribution to Certificateholders.
(iii) Each Cap Contract is scheduled to remain in effect until
the related 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 related Cap
Contract Counterparty (after a grace period of three (3) Local Business
Days, as defined in the related Cap Contract, after notice of such failure
is received by the Cap Contract Counterparty) to make a payment due under
the related Cap Contract, the failure by the Cap Contract Counterparty or
the Trustee (after a cure period of 20 days after notice of such failure
is received) to perform any other agreement made by it under the related
Cap Contract, the termination of the Trust Fund and the Cap Contract
becoming illegal or subject to certain kinds of taxation.
4.05. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, based on information
provided by the Servicer to the extent required by this Agreement, the Trustee
shall prepare and make available on its website located at xxx.xxxxxxx.xxx to
each Holder of a Class of Certificates of the Issuing Entity, the Servicer, the
Trustee, 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 (xxii) through (xxxi) below are not required to be included
in such statement during any such calendar year:
(i) the amount of the related distribution to Holders of
each Class allocable to principal, separately identifying (A) the
aggregate amount of any Principal Prepayments included therein, (B) the
aggregate of all scheduled payments of principal included therein, (C)
97
the Extra Principal Distribution Amount, if any, and (D) the aggregate
amount of Prepayment Charges, if any;
(ii) the amount of such distribution to Holders of each
Class allocable to interest, together with any Non-Supported Interest
Shortfalls allocated to each Class;
(iii) any Interest Carry Forward Amount for each Class of the
Offered Certificates;
(iv) the Class Certificate Principal Balance of each Class
after giving effect (i) to all distributions allocable to principal on
such Distribution Date and (ii) the allocation of any Applied Realized
Loss Amounts for such Distribution Date;
(v) the Pool Stated Principal Balance for such Distribution
Date;
(vi) the amount of the Servicing Fee paid to or retained by
the Servicer and any amounts constituting reimbursement or indemnification
of the Servicer;
(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 and with respect
to Group One Mortgage Loans and Group Two Mortgage Loans;
(x) the amount of (A) Realized Losses and (B) Applied
Realized Loss Amounts with respect to such Distribution Date, in the
aggregate and with respect to Group One Mortgage Loans and Group Two
Mortgage Loans;
(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, (3) 91 to 120 days, (4) 121 to 150 days,
(5) 151 to 180 days and (6) 181 or more days, and (B) in foreclosure and
Delinquent (1) 31 to 60 days, (2) 61 to 90 days, (3) 91 to 120 days, (4)
121 to 150 days, (5) 151 to 180 days and (6) 181 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
Group One Mortgage Loans and Group Two Mortgage Loans;
(xii) the total number and principal balance of any REO
Properties 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 Group One Mortgage Loans and Group Two Mortgage Loans;
(xiii) the aggregate Stated Principal Balance of all
Liquidated Loans as of the preceding Distribution Date, in the aggregate
and with respect to Group One Mortgage Loans and Group Two Mortgage Loans;
(xiv) whether a Stepdown Trigger Event or Class A-1 Trigger
Event has occurred and is in effect;
98
(xv) 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;
(xvi) with respect to each Class of Certificates, any
Floating Rate Certificate Carryover with respect to such Distribution Date
for each such Class, any Floating Rate Certificate Carryover paid for each
such Class and any remaining Floating Rate Certificate Carryover for each
such Class;
(xvii) the number 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;
(xviii) 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;
(xix) as of each Distribution Date, the amount, if any, to
be deposited in the Certificate Account pursuant to the related Cap
Contract as described in Section 4.04(k) and the amount thereof to be paid
to the Offered Certificates described in Section 4.04(k) hereof;
(xx) the amount and purpose of any withdrawal from the
Collection Account pursuant to Section 3.08(a)(v);
(xxi) 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";
(xxii) the aggregate amount of all Advances recovered during
the related Due Period;
(xxiii) the allocation to each Class of Certificate of any
Realized Losses during the related Due Period;
(xxiv) with respect to each Class of Certificates, the
amount of any Non-Supported Interest Shortfalls on such Distribution Date;
(xxv) the number and amount of pool assets at the beginning
and ending of each period, and updated pool composition information;
(xxvi) any material changes to methodology regarding
calculations of delinquencies and charge-offs;
(xxvii) information on the amount, terms and general purpose
of any advances made or reimbursed during the period, including the
general use of funds advanced and the general source of funds for
reimbursements;
99
(xxviii) 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;
(xxix) material breaches of pool asset representations or
warranties or transaction covenants;
(xxx) information on ratio, coverage or other tests used
for determining any early amortization, liquidation or other performance
trigger and whether the trigger was met; and
(xxxi) 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), and cash flows available
for future purchases, such as the balances of any prefunding or revolving
accounts, if applicable.
(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.xxxxxxx.xxx."
Assistance in using the website can be obtained by calling the Trustee's
customer service desk at (000) 000-0000. Parties that are unable to use the
website are entitled to have a paper copy mailed to them via first class mail by
calling the customer service desk and indicating such. 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 Trustee shall also be entitled to rely on but shall not be responsible
for the content or accuracy of any information provided by third parties for
purposes of preparing the monthly statement and may affix thereto any disclaimer
it deems appropriate in its reasonable discretion (without suggesting liability
on the part of any other party hereto).
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) [Reserved].
(d) If so requested in writing within a reasonable period of time
after the end of each calendar year, the Trustee shall make available on its
website or cause to be furnished to each Person who at any time during the
calendar year was a Certificateholder of record, 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 as are from time to time in effect.
(e) Upon filing with the Internal Revenue Service, the Trustee
shall furnish to the Holders 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:
100
(i) The original projected principal and interest cash flows
on the Closing Date on each Class of regular and residual interests
created hereunder and on the Mortgage Loans, based on the Prepayment
Assumption;
(ii) The projected remaining principal and interest cash
flows as of the end of any calendar quarter with respect to each Class of
regular and residual interests created hereunder and the Mortgage Loans,
based on the Prepayment Assumption;
(iii) The 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
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:
Minimum Integral Multiples in Original Certificate
Class Denomination Excess of Minimum Principal Balance
----- ------------ ----------------- -----------------
A-1 $25,000.00 $1.00 $355,063,000
A-2A $25,000.00 $1.00 $131,097,000
A-2B $25,000.00 $1.00 $32,811,000
A-2C $25,000.00 $1.00 $39,655,000
A-2D $25,000.00 $1.00 $19,554,000
M-1 $25,000.00 $1.00 $30,862,000
101
Minimum Integral Multiples in Original Certificate
Class Denomination Excess of Minimum Principal Balance
----- ------------ ----------------- -----------------
M-2 $25,000.00 $1.00 $28,909,000
M-3 $25,000.00 $1.00 $17,579,000
M-4 $25,000.00 $1.00 $16,017,000
M-5 $25,000.00 $1.00 $15,235,000
M-6 $25,000.00 $1.00 $14,454,000
B-1A $25,000.00 $1.00 $7,423,000
B-1B $25,000.00 $1.00 $7,422,000
B-2A $25,000.00 $1.00 $6,251,000
B-2B $25,000.00 $1.00 $6,250,000
B-3A $25,000.00 $1.00 $5,079,000
B-3B $25,000.00 $1.00 $5,078,000
C (1) (1) 100%
P (2) (2) (2)
R $100.00 N/A $100.00
----------
(1) The Class C Certificates shall not have minimum dollar denominations
or certificate notional amounts and shall be issued in a minimum percentage
interest of 25%.
(2) The Class P Certificates shall not have minimum dollar denominations
or Certificate Principal Balances and shall be issued in a minimum percentage
interest of 25%.
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, as authenticating agent, 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, as authenticating
agent, shall authenticate the Certificates to be issued at the written direction
of the Depositor, or any Affiliate thereof.
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, as authenticating agent, shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Class and of like
aggregate Percentage Interest.
102
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Trustee. Whenever any Certificates are
so surrendered for exchange, the Trustee shall execute and, in its capacity as
authenticating agent, 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 the
Trustee duly executed by the holder thereof or his attorney duly authorized in
writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.
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 any transfers of a Class C or a 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 form 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 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.
By acceptance of a Regulation S Global Security, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will only transfer such a Certificate as provided herein. In
addition, each Holder of a Regulation S Global Security shall be deemed to have
represented and warranted to the Depositor, the Trustee and any of their
respective successors that: (i) such Person is not a "U.S. person" within the
meaning of Regulation S and was, at the time the buy order was originated,
outside the United States and (ii) such Person understands that such
Certificates have not been registered under the Securities Act and that (x)
until the expiration of the 40-day distribution compliance period (within the
meaning of Regulation S), no offer, sale, pledge or other transfer of such
Certificates or any interest therein shall be made in the United States or to or
for the account or benefit of a U.S. person (each as defined in
103
Regulation S), (y) if in the future it decides to offer, resell, pledge or
otherwise transfer such Certificates, such Certificates may be offered, resold,
pledged or otherwise transferred only (A) to a person which the seller
reasonably believes is a "qualified institutional buyer" (a "QIB") as defined in
Rule 144A under the Securities Act, that is purchasing such Certificates for its
own account or for the account of a qualified institutional buyer to which
notice is given that the transfer is being made in reliance on Rule 144A or (B)
in an offshore transaction (as defined in Regulation S) in compliance with the
provisions of Regulation S, in each case in compliance with the requirements of
this Agreement; and it will notify such transferee of the transfer restrictions
specified in this Section.
No transfer of an ERISA Restricted Certificate or a Class R Certificate
will be registered unless the Trustee has received (I) a representation that the
transferee is not an employee benefit plan 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, a "Plan"), or any Person
directly or indirectly acquiring such Certificate for, on behalf of, or with any
assets of any such Plan or (II) solely in the case of an ERISA Restricted
Certificate, (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 Sections I and III of PTCE 95-60 and the acquisition and
holding of the Certificate is covered and exempt under Sections 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
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 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 a Definitive Certificate, the representations as set
forth in the immediately preceding paragraph of this Subsection 5.02(a), 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 the Certificate
(or the acceptance by a Certificate Owner of the beneficial interest in any
Certificate).
Notwithstanding any other provision herein to the contrary, any purported
transfer of an ERISA Restricted Certificate or a Class R 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 or transfer of any ERISA Restricted Certificate or a Class R
Certificate that is in fact not permitted by this Section 5.02(a), 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 ERISA Restricted
Certificate or a Class R Certificate that was in fact a Plan and that held such
Certificate in violation of this Section 5.02(a) all payments made on such ERISA
Restricted Certificate or a Class R 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.
(b) 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:
104
(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 the Trustee shall not register the Transfer of any Class
R Certificate unless, in addition to the certificates required to be
delivered to the Trustee under subparagraph (a) 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(b)(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(b) 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(b), 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(a) and
this Section 5.02(b) or for making any payments due on such Certificate to
the Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement 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 LTR Interest and the residual interest in the Upper Tier REMIC
may be severed and represented by separate certificates (with the separate
certificate that represents the Residual Interest also
105
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 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(a) and (b) will apply to
each such separate certificate as if the separate certificate 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 LTR Interest and the Residual Interest in the Upper Tier REMIC 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(b) 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, 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 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.
(c) The transferor of the Class R Certificate shall notify the
Trustee in writing upon the transfer of the Class R Certificate.
(d) 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.
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 them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 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 and its counsel) 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.
106
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.
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.
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 Class C, Class P and Class R Certificates shall be Definitive
Certificates (as described below). 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;
107
(f) the Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this Section
shall control.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.
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, the Trustee shall give all such
notices and communications to the Depository.
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 Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor notifies the Trustee and the Depository of its
intent to terminate the book-entry system through the Depository and, upon
receipt of notice of such intent from the Depository, the Certificate Owners of
the Book-Entry Certificates agree to initiate such termination 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, as
authenticating agent, shall authenticate and the Trustee shall 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.
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
offices at Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000,
108
Attention: Client Services Manager - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-HE1 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.
5.10. [Reserved]
ARTICLE VI.
THE DEPOSITOR AND THE SERVICER
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.
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 the Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Servicer shall be a party, or any Person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the 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
the Servicer shall be qualified to sell mortgage loans to, and to service
mortgage loans on behalf of, Xxxxxx Mae or Xxxxxxx Mac.
6.03. Limitation on Liability of the Depositor, the Servicer and Others.
None of the Depositor, the Servicer nor 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 or 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 or 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
109
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 in its discretion may 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 the interests of the Trustee
and the Certificateholders hereunder. In such event, the legal expenses and
costs of such action and any liability resulting therefrom shall be, expenses,
costs and liabilities of the 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.
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 Section 7.01 and 7.02 as
obligations that survive the resignation or termination of the Servicer.
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 or policies and
bond shall, together, comply with the requirements from time to time of Xxxxxx
Xxx or Xxxxxxx Mac for Persons performing servicing for mortgage loans purchased
by Xxxxxx Mae or Xxxxxxx Mac. The Servicer shall provide the Trustee, upon
request, with copies of such policies and fidelity bond or a certification from
the insurance provider evidencing such policies and fidelity bond. 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.
6.06. Special Servicing Agreements.
The Servicer may enter into a special servicing advisory agreement with an
unaffiliated holder of the Class R Certificate and/or one or more other classes
of subordinated certificates or an advisor thereto 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 advisor may advise the
Servicer with respect to the commencement of foreclosure proceedings or other
actions to liquidate delinquent Mortgage Loans and/or any other efforts to
maximize recoveries with respect to such Mortgage Loans.
110
ARTICLE VII.
DEFAULT; TERMINATION OF SERVICER
7.01. Events of Default.
(a) "Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Servicer to deposit in the Collection
Account or the Certificate Account or remit to the Trustee (a) any payment
(excluding Advances) required to be made under the terms of this
Agreement, which failure shall continue unremedied for three (3) Business
Days or (b) Advances required to be made under Section 4.01 hereof, which
failure shall continue unremedied as of 3:00 p.m. New York City Time on
the Business Day immediately prior to the related Distribution Date; 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 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 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, 3.20 and
3.22 of this Agreement which failure continues unremedied 3 Business Days
after receipt by the Servicer of notice thereof.
If an Event of Default shall occur with respect to the Servicer pursuant
to subsection (i) of this Section 7.01, the Trustee 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. If an Event of Default shall occur with respect to the Servicer
pursuant to subsection (ii) - (vi) of this Section 7.01, 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, the Trustee may, 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 any such written notice,
all
111
authority and power of the Servicer hereunder, whether with respect to the
Mortgage Loans or otherwise, shall pass to and be vested in the Trustee. To the
extent the Event of Default resulted from the failure of the Servicer to make a
required Advance, the Trustee 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 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 Section 3.08(a), 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.
7.02. 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, the
Trustee shall be entitled to all fees, 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 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
112
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, 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.
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.
7.03. 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, the Depositor and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default,
the Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
ARTICLE VIII.
CONCERNING THE TRUSTEE
8.01. Duties of the 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 written 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 foregoing, shall deem most effectual to protect and enforce any of the
rights of the Trustee and the Certificateholders.
113
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 the Trustee's
satisfaction, 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:
(a) 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;
(b) the Trustee shall not, individually or as Trustee, be liable
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; and
(c) 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 in accordance with this
Agreement 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.
8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and conclusively rely upon and
shall be fully 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 Opinion of Counsel;
114
(iii) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(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 25% 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, custodians, accountants, attorneys or independent contractors and
the Trustee will not be responsible for any misconduct or negligence on
the part of any agent, custodian, accountant, attorney or independent
contractor appointed with due care by it hereunder;
(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);
(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 any of the Certificateholders, pursuant to the
provisions of this Agreement, unless the Certificateholders shall have
offered to the Trustee security or indemnity satisfactory to it against
the costs, expenses and liabilities that may be incurred therein or
thereby;
(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; and
(xi) the Trustee may rely on the sole judgment of the
Depositor in determining whether "Eligible Collateral" (as defined in the
related Cap Contract) has been delivered in an amount equal to the
"Exposure" (as defined in the related Cap Contract) as contemplated by
Section 4(10) of the related Cap Contract. The Trustee shall not be
liable, individually or as Trustee, for any action relating to the
determination of whether collateral delivered pursuant to the sentence
above constitutes "Eligible Collateral."
115
(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. The Trustee shall have no duty (A) to record, file or deposit
this Agreement or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to undertake any
rerecording, refiling or redepositing, as applicable, thereof, (B) to establish
or maintain any insurance or (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Issuing
Entity.
8.03. Trustee Not Liable for Certificates or 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 representation as to
the validity or sufficiency of this Agreement, of any Mortgage Loan, or of any
related document other than with respect to the execution and authentication of
the Certificates, if the Trustee executed or authorized 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
the Certificate Account by the Depositor or the Servicer.
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 was not
the Trustee.
8.05. Trustee's Fees and Expenses.
The Trustee shall be entitled to compensation (which shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust) for all services rendered by it in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee.
8.06. Indemnification and Expenses of Trustee.
(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 (i) any audit,
controversy or judicial proceeding relating to a governmental authority or any
legal proceeding 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 and (ii) the performance of their respective 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 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 and the Holders promptly after the Trustee shall have
obtained knowledge of a claim
116
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 reasonably cooperate and consult 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 or delayed;
and
(iv) indemnification therefor would constitute "unanticipated
expenses" within the meaning of Treasury Regulation 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 advances 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
advances 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 in the aggregate in any calendar year, excluding
(i) any Servicing Transfer Costs and (ii) any costs, damages or expenses
incurred by the Trustee in connection with any "high cost" home loans or any
predatory or abusive lending laws, which amounts shall in no case be subject to
any such limitation; provided, however, that such cap shall apply only if NIM
Notes have been issued and shall cease to apply after the date on which any NIM
Notes are paid in full; provided further, however, that amounts incurred by the
Trustee in excess of such annual limit in any calendar year shall be payable to
the Trustee in succeeding calendar years, subject to such annual limit for each
applicable calendar year. Any amounts reimbursable hereunder not in excess of
this cap may be withdrawn by the Trustee from the Certificate Account at any
time.
(d) The custodian shall be entitled to indemnification and
reimbursement of expenses to the same extent as the Trustee is entitled to such
amounts pursuant to subsections (a) and (b) of this Section 8.06, without regard
to subsection (c) of this Section 8.06.
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
117
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of 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 respective
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.
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 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 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 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 or (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, 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 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.
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.
118
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 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.
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).
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 compensated by the Issuing Entity and
subject to the written approval of the Servicer. The Trustee shall not be liable
for the actions of any co-trustee appointed with due care; provided that the
appointment of a co-trustee shall not relieve the Trustee of its obligations
hereunder. If the Servicer shall not have joined in such appointment within 15
days after the receipt by it of a request to do so, or in the case an Event of
Default shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 8.07 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:
(a) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform such act
or acts, in which event such rights, powers, duties and obligations (including
the holding of title to the
119
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;
(b) No trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(c) 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.
8.12. Tax Matters.
(a) It is intended that each of the REMICs provided for herein
shall constitute, and that the affairs of the Issuing Entity 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. 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 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 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 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, including without limitation, the
120
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 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; (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) pay, from the sources
specified in the last paragraph of this Section 8.12, 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); (i) sign or cause to be signed federal, state
or local income tax or information returns; (j) maintain records relating to
each of the REMICs provided for herein, including but not limited to the income,
expenses, assets and liabilities of each of the REMICs 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 (k) as and when
necessary and appropriate, represent each of the REMICs 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 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.
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
121
amounts (other than amounts received by the Issuing Entity as a payment on any
Cap Contract) otherwise to be distributed to the Class R Certificateholders (pro
rata) pursuant to Section 4.04, and second with amounts (other than amounts
received by the Issuing Entity as a payment on any Cap Contract) 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 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
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 earlier of (a) 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.
(b) On or before the Determination Date following the Initial
Optional Termination Date, the Trustee shall attempt to terminate the Trust Fund
by conducting an auction of all of the Mortgage Loans and REO Properties via a
solicitation of bids from at least three (3) bidders, each of which shall be a
nationally recognized participant in mortgage finance (the "Auction"). In
addition, the Trustee will also solicit a bid from each Holder of a Class C
Certificate. The Depositor and the Trustee agree to work in good faith to
develop bid procedures in advance of the Initial Optional Termination Date to
govern the operation of the Auction. The Trustee shall be entitled to retain an
investment banking firm and/or other agents in connection with the Auction, the
cost of which shall be included in the Optional Termination Price (unless an
Optional Termination does not occur in which case such costs shall be an expense
of the Issuing Entity). The Trustee shall accept the highest bid received at the
Auction; provided that the amount of such bid equals or exceeds the Optional
Termination Price. The Trustee shall determine the Optional Termination Price
based upon information provided by (i) the Servicer with respect to the amounts
described in clauses (A) and (B) of the definition of "Optional Termination
Price" (other than Trustee expenses), (ii) the Depositor with respect to the
information described in clause (C) of
122
the definition of "Optional Termination Price." The Trustee may conclusively
rely upon the information provided to it in accordance with the immediately
preceding sentence and shall not have any liability for the failure of any party
to provide such information.
If an Optional Termination does not occur as a result of the Auction's
failure to achieve the Optional Termination Price, the Servicer may, on any
Distribution Date following such Auction, at its option, terminate the Trust
Fund by purchasing all of the Mortgage Loans and REO Properties at a price equal
to the Optional Termination Price. In connection with such termination, the
Optional Termination Price shall be delivered to the Trustee no later than the
Business Day immediately preceding the related Distribution Date.
Notwithstanding anything to the contrary herein, the Optional Termination Amount
paid to the Trustee by the winning bidder at the Auction or by the Servicer
shall be deposited by the Trustee directly into the Certificate Account
immediately upon receipt. Upon any termination as a result of an Auction, the
Trustee shall, out of the Optional Termination Amount deposited into the
Certificate Account, (x) reimburse the Trustee for its costs and expenses
necessary to conduct the Auction and any other unreimbursed amounts owing to it
and (y) pay to the Servicer, the aggregate amount of any unreimbursed
out-of-pocket costs and expenses owed to the Servicer and any unpaid or
unreimbursed Servicing Fees, Advances and Servicing Advances.
(c) Notwithstanding anything to the contrary in clause (b) above,
in the event that the Trustee receives the written opinion of a nationally
recognized participant in mortgage finance acceptable to the Sponsor that the
Mortgage Loans and REO Properties to be included in the Auction will not be
saleable at a price sufficient to achieve the Optional Termination Price, the
Trustee need not conduct the Auction. In such event, the Servicer shall have the
option to purchase the Mortgage Loans and REO Properties at the Optional
Termination Price as of the Initial Optional Termination Date.
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.
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 no later than the last calendar day of
the month immediately preceding the month of such final distribution (or with
respect to an Auction, mailed no later than one Business Day following
completion of such Auction). 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
123
an amount equal to the final distribution in respect of the Certificates. Upon
such final deposit with respect to the Trust Fund, certification to the Trustee
that such required amount has been deposited in the Trust Fund and the receipt
by the Trustee of a Request for Release therefor, the Trustee (or its custodian)
shall promptly release the Mortgage Files for the Mortgage Loans.
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 Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto. Upon payment to the Class R Certificateholders of such
funds and assets, the Trustee shall have no further duties or obligations with
respect thereto.
9.03. Additional Termination Requirements.
(a) In the event the Trustee or the Servicer completes an Optional
Termination 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, at the expense of the Trustee or the
Servicer, as applicable, to the effect that the failure of the Trust Fund 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, and the Trustee 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 Servicer;
(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 Certificateholders all cash on
hand (other than cash retained to meet outstanding claims), 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 Certificateholders.
124
(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.
(c) The Trustee as agent for each REMIC hereby agrees, upon the
written request of the Depositor and the receipt of the Opinion of Counsel
referred to in Section 9.03(a), to adopt and sign such a plan of complete
liquidation prepared and delivered to it by the Depositor 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
any 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 (Limitation on Liability of the
Depositor, the Servicer and Others), 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 20 days prior to any termination of the Trust Fund, the
Trustee or 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 20 days after the termination date and on the
termination date, the Trustee or 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
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
to,
(i) to cure any ambiguity or correct any mistake,
(ii) to correct, modify or supplement any provision herein
which may be inconsistent with the Prospectus Supplement or 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
125
amendment will not, as evidenced by an Opinion of Counsel 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 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 form time
to time by the Depositor, the Servicer and the Trustee without the consent of
any of the Certificateholders 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
Issuing Entity or any of the REMICs provided for herein pursuant to the Code
that would be a claim against the Issuing Entity at any time prior to the final
redemption of the Certificates, provided that the Trustee shall have been
provided an Opinion of Counsel, 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 Issuing Entity, 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, 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 Issuing Entity, to the effect that such amendment will not cause the
imposition of any tax on the Issuing Entity, 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
126
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel, satisfactory to the Trustee
that (i) such amendment is permitted and is not prohibited by this Agreement and
that all requirements for amending this Agreement have been complied with; and
(ii) either (A) the amendment does not adversely affect in any material respect
the interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 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.
Notwithstanding anything to the contrary in this Section 11.01, the
Trustee and the Servicer shall reasonably cooperate with the Depositor and its
counsel to enter into such amendments or modifications to the Agreement as may
be necessary to comply with Regulation AB and any interpretation thereof by the
Commission.
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.
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.
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
127
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.
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 it
has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured;
(iii) The resignation or termination of the Trustee or the
Servicer and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans
pursuant to Sections 2.02, 2.03 and 3.12;
(v) The final payment to Certificateholders; and
(vi) Any change in the location of the Certificate Account.
(b) The Trustee shall promptly furnish or make available to each
Rating Agency copies of the following:
(i) Each report to Certificateholders described in Section
4.05;
(ii) Each annual statement as to compliance described in
Section 3.17; and
(iii) Each annual independent public accountants' servicing
report described in Section 3.18.
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 Rating Agencies, (i) Standard & Poor's Ratings
Services, a division of The XxXxxx-Xxxx Companies, Inc., 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000; and (ii) Xxxxx'x Investors Service, Inc., 00 Xxxxxx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; (c) in the case of the Servicer,
Wilshire Credit Corporation, 00000 X.X. Xxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxx 00000, Attention: Xxxxx Xxxxxxxx; (d) in the case of the Trustee, Xxxxx
Fargo Bank, N.A., 0000 Xxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention:
Client Services Manager - Xxxxxxx Xxxxx Mortgage Investors Trust, Series
2006-HE1; (e) in the case of the Cap Contract Counterparty, Bear Xxxxxxx
Financial Products, Inc., 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000; 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.
128
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 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.
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;
provided, however, the Servicer is hereby authorized to enter into an Advance
Facility under which (l) the Servicer sells, assigns or pledges to an Advancing
Person the Servicer's rights under this Agreement to be reimbursed for any
Advances or Servicing Advances and/or (2) an Advancing Person agrees to fund
some or all Advances or Servicing Advances required to be made by the Servicer
pursuant to this Agreement. No consent of the Trustee, Certificateholders or any
other party is required before the Servicer may enter into an Advance Facility.
Notwithstanding the existence of any Advance Facility under which an Advancing
Person agrees to fund Advances and/or Servicing Advances on the Servicer's
behalf, the Servicer shall remain obligated pursuant to this Agreement to make
Advances and Servicing Advances pursuant to and as required by this Agreement,
and shall not be relieved of such obligations by virtue of such Advance
Facility.
Reimbursement amounts shall consist solely of amounts in respect of
Advances and/or Servicing Advances made with respect to the Mortgage Loans for
which the Servicer would be permitted to reimburse itself in accordance with
this Agreement, assuming the Servicer had made the related Advance(s) and/or
Servicing Advance(s).
The Servicer shall maintain and provide to any successor Servicer a
detailed accounting on a loan by loan basis as to amounts advanced by, pledged
or assigned to, and reimbursed to any Advancing 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.
An Advancing Person who purchases or receives an assignment or pledge of
the rights to be reimbursed for Advances and/or Servicing Advances, and/or whose
obligations hereunder are limited to the funding of Advances and/or Servicing
Advances shall not be required to meet the criteria for qualification of a
Sub-Servicer set forth in this Agreement.
The documentation establishing any Advance Facility shall require that
such reimbursement amounts distributed with respect to each Mortgage Loan be
allocated to outstanding unreimbursed Advances or Servicing Advances (as the
case may be) made with respect to that Mortgage Loan on a "first in, first out"
(FIFO) basis. Such documentation shall also require the Servicer to provide to
the related Advancing Person or its designee loan by loan information with
respect to each such reimbursement amount distributed to such Advancing Person
or Advance Facility trustee on each Distribution Date, to enable the Advancing
Person or Advance Facility trustee to make the FIFO allocation of each such
reimbursement amount with respect to each Mortgage Loan. The Servicer shall
remain entitled to be reimbursed by the Advancing Person or Advance Facility
trustee for all Advances and Servicing Advances funded by the Servicer to the
extent the related rights to be reimbursed therefor have not been sold, assigned
or pledged to an Advancing Person.
129
Any amendment to this Section 10.07 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 10.07, including amendments to
add provisions relating to a successor Servicer, may be entered into by the
Trustee and the Servicer, without the consent of any Certificateholder
notwithstanding anything to the contrary in this Agreement, upon receipt by the
Trustee of an Opinion of Counsel that such amendment has no material adverse
effect on the Certificateholders or written confirmation from the Rating
Agencies that such amendment will not adversely affect the ratings on the
Certificates. Prior to entering into an Advance Facility, the Servicer shall
notify the lender under such facility in writing that: (a) the Advances financed
by and/or pledged to the lender are obligations owed to the Servicer on a non
recourse basis payable only from the cash flows and proceeds received under this
Agreement for reimbursement of Advances only to the extent provided herein, and
the Trustee and the Issuing Entity are not otherwise obligated or liable to
repay any Advances financed by the lender; (b) the Servicer will be responsible
for remitting to the lender the applicable amounts collected by it as
reimbursement for Advances funded by the lender, subject to the restrictions and
priorities created in 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 the lender.
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 indemnity satisfactory to it as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 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.
130
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 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 (except in the case of
the Trustee in which case such expenses shall be borne by the requesting
Certificateholder(s)); all other such expenses shall be borne by the Servicer.
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 Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee, as authenticating agent, pursuant to this Agreement, are and shall be
deemed fully paid.
10.11. Compliance with Regulation AB.
Each of the parties hereto acknowledges and agrees that the purpose of
Sections 3.17, 3.18 and 3.20 of this Agreement is to facilitate compliance by
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 (a) the
obligations of the parties hereunder shall be interpreted in such a manner as to
accomplish compliance with Regulation AB, (b) the parties' obligations hereunder
will be supplemented and modified as necessary to be consistent with any such
amendments, interpretive advice or guidance, or convention or consensus among
active participants in the asset-backed securities markets in respect of the
requirements of Regulation AB and (c) the parties shall comply with reasonable
requests made by the Depositor for delivery of that or different information as
is necessary to comply with the provisions of Regulation AB.
131
IN WITNESS WHEREOF, the Depositor, the Trustee and the Servicer have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.,
as Depositor
By:
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
XXXXX FARGO BANK, N.A.,
as Trustee
By:
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Assistant Vice President
WILSHIRE CREDIT CORPORATION,
as Servicer
By:
-------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
EXHIBIT A
FORMS OF CERTIFICATES
[INTENTIONALLY OMITTED]
A-1
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
[RESERVED]
C-1
EXHIBIT D
FORM OF FINAL 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
Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Re: Xxxxxxx Xxxxx Mortgage Investors Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-HE1
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing Agreement,
dated as of January 1, 2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as
depositor, Xxxxx Fargo Bank, N.A., as trustee, and Wilshire Credit Corporation,
as servicer (the "Pooling and Servicing Agreement"), the undersigned, as
custodian, 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:
(a) 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;
(b) In connection with each Mortgage Loan or Assignment thereof as to
which documentary evidence of recording was not received on the Closing Date, it
has received evidence of such recording; and
(c) Such documents have been reviewed by it and appear regular on
their face and relate to such Mortgage Loan.
The custodian has made no independent examination of any documents
contained in each Mortgage File beyond confirming (i) that the Mortgage
Loan number, the name of the Mortgagor, the street address (excluding zip
code), the mortgage interest rate at origination, the gross margin (if
applicable), the lifetime rate cap (if applicable), the periodic rate cap
(if applicable), the original principal balance, the first payment due date
and the original maturity date 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 (G), inclusive, of Section
2.01 in the Agreement. The custodian makes no representations or warranties
as to the validity,
D-1
legality, recordability, sufficiency, 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.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-referenced Pooling and Servicing
Agreement.
[XXXXX FARGO BANK, N.A.,
as Custodian]
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
D-2
EXHIBIT E-1
FORM OF CLASS R TRANSFEREE'S LETTER AND AFFIDAVIT
[DATE]
Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-HE1
Ladies and Gentlemen:
We propose to purchase Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage
Loan Asset-Backed Certificates, Series 2006-HE1, Class R, described in the
Prospectus Supplement, dated February 2, 2006, and Prospectus, dated August 26,
2005.
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.
4. We certify that we are 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 Code or a plan subject to federal, state,
local, 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 on behalf of or with any assets of a Plan.
1 Check appropriate box and if necessary fill in the name of the Transferee's
nominee.
E-1-1
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 Pooling and Servicing Agreement.
7. We hereby designate _______________________ as our fiduciary to act as
the tax matters person for each of the REMICs provided for in the Pooling and
Servicing Agreement.
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
Title:
Accepted as of__________ __, 200__
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
By:
------------------------------------
Name:
Title:
E-1-2
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 Xxxxxxx
Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-HE1, 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 MLMI (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;
E-1-3
B. the present value of the expected future distributions on such
residual interest; and
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 1.860E-1(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.
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
E-1-4
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-1-5
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-1-6
EXHIBIT E - 2
FORM OF CLASS R TRANSFEROR'S AFFIDAVIT
[DATE]
Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-HE1
Re: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-HE1
_______________________ (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
[DATE]
Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-HE1
RE: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-HE1
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 January 1,
2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Xxxxx Fargo
Bank, N.A., as trustee, and Wilshire Credit Corporation, as servicer.
Very truly yours,
----------------------------------------
Name of Transferor
By:
-------------------------------------
Name:
Title:
F-1
EXHIBIT G
FORM OF INVESTMENT LETTER
(ACCREDITED INVESTOR)
[DATE]
Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors
Trust, Series 2006-HE1
Re: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-HE1
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-HE1, Class [____] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement, dated as of January 1,
2006 (the "Pooling and Servicing Agreement"), among Xxxxxxx Xxxxx Mortgage
Investors, Inc., as depositor (the "Depositor"), Xxxxx Fargo Bank, N.A., as
trustee (the "Trustee"), and Wilshire Credit Corporation, as servicer (the
"Servicer"). [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 (i) 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
THE TRUSTEE SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE
TRUSTEE (A)
G-1
AN INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND (B)
REPRESENTATIONS FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE OF THE
CERTIFICATES.
3. The ERISA Restricted Certificates will bear a legend to the following
effect:
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE HAS
RECEIVED (A) A REPRESENTATION 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 STATE, LOCAL, FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO
THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW"), AND IS NOT
DIRECTLY OR INDIRECTLY ACQUIRING THIS CERTIFICATE BY, 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 CASE OF 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 SUCH CERTIFICATE BY THE PROSPECTIVE
TRANSFEREE 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 UNDERTAKEN BY SUCH
ENTITIES 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.
4. The Class R Certificate will bear a legend to the following effect:
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUSTEE WITH A REPRESENTATION 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 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 ("SIMILAR LAW"), AND IS NOT DIRECTLY OR
INDIRECTLY ACQUIRING THIS CERTIFICATE BY, ON BEHALF OF, OR WITH ANY ASSETS
OF ANY SUCH PLAN.
5. The Purchaser is acquiring the Transferred Certificates for its own
account [FOR INVESTMENT ONLY](2) and not with a view to or for sale or other
transfer in connection with any distribution
----------
2 Not required of a broker/dealer purchaser.
G-2
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. The Purchaser of an ERISA Restricted Certificate (A) is not an employee
benefit plan subject to Title I of ERISA, a plan subject to Section 4975 of the
Code, 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 such
Certificates by, on behalf of, or with any assets of any such Plan, or (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 event the Certificate is a Definitive Certificate, herewith
delivers 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.
9. The Purchaser of a Class R Certificate is not an employee benefit plan
subject to Title I of ERISA, a plan subject to Section 4975 of the Code, 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"), or a
Person directly or indirectly acquiring such Certificate by, on behalf of, or
with any assets of any such plan.
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 H to the Pooling and Servicing Agreement.
G-3
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]
Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors
Trust, Series 2006-HE1
Re: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-HE1
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-HE1, Class [____] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement, dated as of January 1,
2006 (the "Pooling and Servicing Agreement"), among Xxxxxxx Xxxxx Mortgage
Investors, Inc., as depositor (the "Depositor"), Xxxxx Fargo Bank, N.A. as
trustee (the "Trustee"), Wilshire Credit Corporation, as servicer (the
"Servicer"). [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 with respect to
ERISA Restricted Certificates, (A) we are 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"), 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"), or Persons directly or indirectly acting on behalf of or
using any assets of any such plan, or (B) if the Certificate has been the
subject of an ERISA-Qualifying Underwriting, we 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, we will 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
H-1
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, (e) we have not, nor has anyone acting
on our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates and (f) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
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 $____________(3) 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
----------
3 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
underwritten by insurance companies and which is 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.
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
H-4
provided above, the Buyer agrees that it will furnish to such parties updated
annual financial statements promptly after they become available.
By:
---------------------------------------
Name:
Title:
Date:
-------------------------------------
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 (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
[ ] The Buyer owned $___________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with
Rule 144A).
[ ] The Buyer is part of a Family of Investment Companies which owned in
the aggregate $__________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with
Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) 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
FORM OF REQUEST FOR RELEASE
[DATE]
To: Xxxxx Fargo Bank, N.A.
0000 00xx Xxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Re: Xxxxxxx Xxxxx Mortgage Investors Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-HE1
In connection with the administration of the Mortgage Loans held by you,
as Trustee, pursuant to the Pooling and Servicing Agreement, dated as of January
1, 2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Xxxxx Fargo
Bank, N.A., as trustee, and Wilshire Credit Corporation, as servicer (the
"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
Address to which the Custodian should deliver the Mortgage File:
By:
---------------------------------------
(authorized signer)
Address:
----------------------------------
Date:
-------------------------------------
I-1
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.
Please acknowledge the execution of the above request by your signature and date
below:
XXXXX FARGO BANK, N.A.,
as Custodian
BY:
--------------------------------- --------------------------------
SIGNATURE DATE
DOCUMENTS RETURNED TO CUSTODIAN:
BY:
--------------------------------- --------------------------------
SIGNATURE DATE
I-2
EXHIBIT J
MLML LIST OF TRANSFER AGREEMENTS AND BRING DOWN LETTERS
Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of April
1, 2005, between Xxxxxxx Xxxxx Mortgage Lending, Inc., as initial purchaser, and
Acoustic Home Loans, LLC., as seller and interim servicer.
Mortgage Loan Purchase and Interim Servicing Agreement, dated as of June 24,
2005, between Xxxxxxx Xxxxx Mortgage Lending, Inc., as initial purchaser, and
Ameriquest Mortgage Company, as seller and interim servicer.
Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of
August 1, 2005, between Xxxxxxx Xxxxx Mortgage Lending, Inc., as initial
purchaser, and NovaStar Mortgage, Inc., as seller and interim servicer.
Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of April
1, 2005, as amended, between Xxxxxxx Xxxxx Mortgage Lending, Inc., as initial
purchaser, and ComUnity Lending, Inc., as seller and interim servicer.
Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of
October 1, 2005, as amended, between Xxxxxxx Xxxxx Mortgage Lending, Inc., as
initial purchaser, and BayRock Mortgage Corporation, as seller and interim
servicer.
Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of June
1, 2005, between Xxxxxxx Xxxxx Mortgage Lending, Inc., as initial purchaser, and
CIT, as seller and interim servicer.
Master Seller's Warranties and Servicing Agreement, dated as of March 1, 2005,
as amended by joinder of Xxxxxxx Xxxxx Mortgage Lending, Inc. as of October 6,
2005, between Xxxxxxx Xxxxx Mortgage Holdings, Inc., as initial purchaser, and
First Horizon Home Loan Corporation, as seller and interim servicer.
Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of
September 1, 2005, as amended, between Xxxxxxx Xxxxx Mortgage Lending, Inc., as
initial purchaser, and First Street Financial, Inc., as seller and interim
servicer.
Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of March
1, 2005, among Xxxxxxx Xxxxx Mortgage Capital Inc. and Xxxxxxx Xxxxx Mortgage
Lending, Inc., each as initial purchasers, and Fremont Investment & Loan, as
seller and interim servicer.
Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of July
1, 2004, as amended, between Xxxxxxx Xxxxx Mortgage Capital Inc., as initial
purchaser, and Impac Funding Corporation, as seller and interim servicer.
Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of May
1, 2005, as amended, between Xxxxxxx Xxxxx Mortgage Lending, Inc., as initial
purchaser, and Lenders Direct Capital Corporation, as seller and interim
servicer.
Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of June
1, 2005, between Xxxxxxx Xxxxx Mortgage Lending, Inc., as initial purchaser, and
Liberty American Mortgage Corp., as seller and interim servicer.
J-1
Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of
December 1, 2005, between Xxxxxxx Xxxxx Mortgage Lending, Inc., as initial
purchaser, and WMC Mortgage Corp., as seller and interim servicer.
J-2
EXHIBIT K
FORM OF BACK-UP CERTIFICATION OF TRUSTEE
[DATE]
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 January 1,
2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Wilshire
Credit Corporation, as servicer, and Xxxxx Fargo Bank, N.A., as trustee,
relating to Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-HE1
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 Trust;
(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 relating to the trustee, 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) A review of the Trustee's activities during the preceding calendar
year or portion thereof and of such Trustee's performance under the Agreement
has been made under my supervision under Item 1123 of Regulation AB. Based on my
knowledge, based on such review, the Trustee has fulfilled all its obligations
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
K-1
(5) The report on assessment of compliance with servicing criteria for
asset-backed securities of the Trustee and its related 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 are described in such report and have
been disclosed in the Annual Report.
Xxxxx Fargo Bank, N.A.,
as Trustee
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
K-2
EXHIBIT L
FORM OF OFFICER'S CERTIFICATE OF SERVICER
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates,
Series 2006-HE1
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 Sub-Servicer, if any, engaged
by the Servicer provided to the Depositor and the Trustee for the Trust'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 Sub-Servicer [or
Subcontractor], if any, engaged or utilized by the Servicer provided to the
Depositor and the Trustee for the Trust'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 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
each Compliance Statement of the Servicer and, if applicable, reviewing each
Compliance Statement of each Sub-Servicer, if any, engaged by the Servicer, and
except as disclosed in such Compliance Statement[(s)], the Servicer [(directly
and through its Sub-Servicers, if any)] has fulfilled its obligations under the
Pooling and Servicing Agreement in all material respects.
(5) Each Servicing Assessment of the Servicer and of each Sub-Servicer [or
Subcontractor], if any, engaged or utilized by the Servicer and its related
Attestation Report required to be included in the
L-1
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:
---------------------------------
X-0
XXXXXXX X-0
[RESERVED]
X-0-0
XXXXXXX X-0
FORM OF MONTHLY REMITTANCE ADVICE
Standard File Layout - Scheduled/Scheduled
COLUMN NAME DESCRIPTION DECIMAL FORMAT COMMENT
----------- ----------- ------- --------------
LOAN_NBR Loan Number assigned by investor Text up to 10 digits
SERVICER LOAN_NBR Servicer Loan Number Text up to 10 digits
SCHED_PMT_AMT P&I constant 2 No commas(,) or dollar signs ($)
NOTE_INT_RATE Gross Interest Rate 4 Max length of 6
NET_RATE Gross Interest Rate less the Service Fee Rate 4 Max length of 6
SERV_FEE_RATE Service Fee Rate 4 Max length of 6
ARM_INDEX_RATE ARM loan's index Rate used 4 Max length of 6
ACTL_BEG_BAL Beginning Actual Balance 2 No commas(,) or dollar signs ($)
ACTL_END_BAL Ending Actual Balance 2 No commas(,) or dollar signs ($)
NEXT_DUE_DATE Borrower's next due date MM/DD/YYYY
CURT_AMT_1 Curtailment Amount 2 No commas(,) or dollar signs ($)
CURT_DATE_1 Due date Curtailment was applied to MM/DD/YYYY
CURT_ADJ_ AMT_1 Curtailment Interest if applicable 2 No commas(,) or dollar signs ($)
CURT_AMT_2 Curtailment Amount 2 2 No commas(,) or dollar signs ($)
CURT_DATE_2 Due date Curtailment was applied to MM/DD/YYYY
CURT_ADJ_ AMT2 Curtailment Interest if applicable 2 No commas(,) or dollar signs ($)
CURT_AMT_3 Curtailment Amount 3 2 No commas(,) or dollar signs ($)
CURT_DATE_3 Due date Curtailment was applied to MM/DD/YYYY
CURT_ADJ_AMT3 Curtailment Interest, if applicable 2 No commas(,) or dollar signs ($)
SCHED_BEG_BAL Beginning Scheduled Balance 2 No commas(,) or dollar signs ($)
SCHED_END_BAL Ending Scheduled Balance 2 No commas(,) or dollar signs ($)
SCHED_PRIN_AMT Scheduled Principal portion of P&I 2 No commas(,) or dollar signs ($)
SCHED_NET_INT Scheduled Net Interest (less Service Fee) portion of P&I 2 No commas(,) or dollar signs ($)
LIQ_AMT Liquidation Principal Amt to bring balance to zero 2 No commas(,) or dollar signs ($)
PIF_DATE Liquidation Date MM/DD/YYYY
ACTION_CODE Either 60 for liquidation or 65 for Repurchase Max length of 2
PRIN_ADJ_AMT Principal Adjustments made to loan, if applicable 2 No commas(,) or dollar signs ($)
INT_ADJ_AMT Interest Adjustment made to loan, if applicable 2 No commas(,) or dollar signs ($)
PREPAYMENT PENALTY AMT Prepayment penalty amount, if applicable 2 No commas(,) or dollar signs ($)
SOLDIER_SAILOR ADJ AMT Soldier and Sailor Adjustment amount, if applicable 2 No commas(,) or dollar signs ($)
NON ADV LOAN AMT Non Recoverable Loan Amount, if applicable 2 No commas(,) or dollar signs ($)
M-2-1
EXHIBIT N-1
FORM OF CLASS A-1 CAP CONTRACT
BEAR XXXXXXX BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
000-000-0000
DATE: February 7, 2006
TO: Xxxxx Fargo Bank, N.A., not in its individual
capacity but solely as Trustee for Xxxxxxx
Xxxxx Mortgage Investors Trust, Series 2006-HE 1
ATTENTION: MLMI 2006-HE1
TELEPHONE: 410-884-2000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 353-1-402-6225
FACSIMILE: 353-1-402-6223
SUBJECT: Fixed Income Derivatives Confirmation and
Agreement
REFERENCE NUMBER(S):
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the "Transaction") between Bear Xxxxxxx Financial Products Inc. ("BSFP") and
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1 ("Counterparty"). 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. This Agreement is subject to the 2000 ISDA Definitions (the
"Definitions"), as published by the International Swaps and Derivatives
Association, Inc. ("ISDA"). You and we have agreed to enter into this Agreement
and 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 shall be deemed to have been executed by you and us on the
date we entered into the Transaction. In the event of any inconsistency between
the provisions of this Agreement and the Definitions or the ISDA Form Master
Agreement, this Agreement shall prevail for purposes of the Transaction. For the
avoidance of doubt, this Agreement is intended to be a stand alone agreement and
is therefore not subject to any ISDA Master Agreement actually executed and
existing between the parties hereto. Terms capitalized but not defined herein
shall have the meanings attributed to them in the Pooling & Servicing Agreement
dated as of February 2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc.,
Wilshire Credit Corporation, as and Xxxxx Fargo Bank, National Association, as
Trustee (the "Pooling & Servicing Agreement").
N-1-1
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 2 of 15
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Type of Transaction Rate Cap
Notional Amount: With respect to any Calculation Period, the
lesser of (i) the amount set forth for such
period in Schedule I attached hereto and
(ii) the aggregate Certificate Balance of
the Class A-I Certificates immediately
prior to the related Floating Rate Payer
Payment Date.
Trade Date: February 2, 2006
Effective Date: February 7, 2006
Termination Date: August 25, 2012, subject to adjustment in
accordance with the Business Day Convention.
FIXED AMOUNT (PREMIUM)
Fixed Rate Payer: Counterparty
Fixed Rate Payer
Payment Date: February 7, 2006
Fixed Amount [___________]
FLOATING AMOUNTS:
Floating Rate Payer: BSFP
Cap Rate With respect to any Calculation Period the
rate set forth in Schedule I attached hereto
Floating Rate Payer
Period End Dates The 25th calendar day of each month
during the Term of this Transaction,
commencing February 25, 2006 and ending on the
Termination Date, subject to adjustment in
accordance with the Business Day Convention.
Floating Rate Payer
Payment Dates: Early Payment shall be applicable. The
Floating Rate Payer Payment shall be two
Business Days prior to each Floating Rate
Payer Period End Date.
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 3 of 15
Floating Rate Option: USD-LIBOR-BBA; provided, however, that if
the Floating Rate Option for any
Calculation Period is greater than 9.78000%
then the Floating Rate Option for such
Calculation Period shall be deemed to be
9.78000%
Designated Maturity: One month
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: The first day of each Calculation Period.
Compounding: Inapplicable
Business Days: New York
Business Day Convention: Modified Following
3. Additional Provisions: 1) 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 and in the Confirmation
relating to such Transaction, as
applicable. This paragraph (1) shall be
deemed repeated on the trade date of each
Transaction.
4. Provisions Deemed Incorporated in a Schedule to the ISDA Form Master
Agreement:
1) The parties agree that subparagraph (ii) of Section 2(c) of the ISDA Form
Master Agreement will apply to any Transaction.
2) Termination Provisions. For purposes of the Master Agreement:
(a) "Specified Entity" is not applicable to BSFP or Counterparty for any
purpose.
(b) "Specified Transaction" is not applicable to BSFP or Counterparty for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to BSFP or
Counterparty.
(c) The "Cross Default" provisions of Section 5(a)(vi) will apply to BSFP with
a Threshold of USD 10,000,000 and will not apply to Counterparty.
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 4 of 15
(d) The provisions of Section 5 (a) (ii), (iii), and (iv) will not apply to
Counterparty.
(e) "Bankruptcy". The provision of Section 5(a)(vii)(2) will not apply to
Counterparty.
(f) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not
apply to BSFP or Counterparty.
(g) The "Automatic Early Termination" provision of Section 6(a) will not apply
to BSFP or to Counterparty.
(h) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA
Form Master Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(i) "Termination Currency" means United States Dollars.
3) Tax Representations. Not applicable
4) [Reserved]
5) Documents to be Delivered. For the purpose of Section 4(a):
(1) Tax forms, documents, or certificates to be delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE
DELIVER DOCUMENT DELIVERED
BSFP and the Any document required or Promptly after the earlier of
Counterparty reasonably requested to allow the (i) reasonable demand by
other party to make payments either party or (ii) learning
under this Agreement without that such form or document is
any deduction or withholding for required
or on the account of any Tax or
with such deduction or
withholding at a reduced rate
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 5 of 15
(2) Other documents to be delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO COVERED BY SECTION
DELIVER DOCUMENT CERTIFICATE BE DELIVERED 3(d) REPRESENTATION
BSFP and the Any documents Upon the execution Yes
Counterparty required by the and delivery of
receiving party to this Agreement and
evidence the such Confirmation
authority of the
delivering party or
its Credit Support
Provider, if any,
for it to execute
and deliver this
Agreement, any
Confirmation , and
any Credit Support
Documents to which
it is a party, and
to evidence the
authority of the
delivering party or
its Credit Support
Provider to perform
its obligations
under this
Agreement, such
Confirmation and/or
Credit Support
Document, as the
case may be
BSFP and the A certificate of an Upon the execution Yes
Counterparty authorized officer of the and delivery ofthis
party, as to the Agreement and such
incumbency and Confirmation
authority of the
respective officers of the
party signing this
Agreement, any relevant
Credit Support
Document, or any
Confirmation, as the
case may be
6) Miscellaneous. Miscellaneous
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 6 of 15
(a) Address for Notices: For the purposes of Section 12(a) of the ISDA Form
Master Agreement:
Address for notices or communications to BSFP:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
(For all purposes)
Address for notices or communications to Counterparty:
Address: Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Client Manager - MLMI 2006-HE1
Facsimile: 000-000-0000
Phone: 000-000-0000
with copy to:
Address: 4 World Financial Center
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) Process Agent. For the purpose of Section 13(c):
BSFP appoints as its
Process Agent: Not Applicable
The Counterparty appoints as its
Process Agent: Not Applicable
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 7 of 15
(c) Offices. The provisions of Section 10(a) of the ISDA Form Master Agreement
will not apply to this Agreement; neither BSFP nor the Counterparty have any
Offices other than as set forth in the Notices Section and BSFP agrees that, for
purposes of Section 6(b) of the ISDA Form Master Agreement, 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) of the ISDA Form
Master Agreement:
BSFP is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is BSFP
(f) Credit Support Document. Not applicable for either BSFP or the
Counterparty.
(g) Credit Support Provider.
BSFP: Not Applicable
The 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
Obligation Law Section 5-1401.
(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) Consent to Recording. Each party hereto consents to the monitoring or
recording, at any time and from time to time, by the other party of any and all
communications between officers or
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 8 of 15
employees of the parties, waives any further notice of such monitoring or
recording, and agrees to notify its officers and employees of such monitoring or
recording.
(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) Transfer, Amendment and Assignment. Except for the initial assignment of
this Confirmation by Counterparty to its assignee, no transfer, amendment,
waiver, supplement, assignment or other modification of this Transaction shall
be permitted by either party unless the applicable Rating Agencies have been
provided notice of the same and confirms in writing (including by facsimile
transmission) within five Business Days after such notice is given that it will
not downgrade, withdraw or otherwise modify its then-current rating of any
securities related to this Confirmation (the "Securities"). BSFP shall not
unreasonably withhold its consent to any Assignment of this Confirmation.
(m) Proceedings. BSFP shall not institute or cause any other person to
institute against, or join any other person in instituting against, Counterparty
or any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy or
similar law for a period of one year and one day following payment in full of
the Securities.
(n) Trustee 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 Xxxxx Fargo Bank, N.A., not in its
individual capacity, but solely as Trustee of the Xxxxxxx Xxxxx Mortgage
Investors Trust, Series 2006-HE1 (the "Trust") under the Pooling & Servicing
Agreement, dated as of February 1, 2006 between the Trust and the Trustee, in
the exercise of the powers and authority conferred upon and vested in it
thereunder and pursuant to instructions set forth therein, (ii) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as a personal representation, undertaking or
agreement of Xxxxx Fargo Bank, N.A., but is made and intended for the purpose of
binding only the Trust, (iii) nothing herein contained shall be construed as
imposing any liability on Xxxxx Fargo Bank, N.A. individually or personally, to
perform any covenant 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 shall Xxxxx Fargo Bank, N.A. 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 by the Trust or
any other related documents.
7) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form
Master Agreement, provided that BSFP and Counterparty shall not be deemed to
have any Affiliates for purposes of this Agreement, including for purposes of
Section 6(b)(ii) of the ISDA Form Master Agreement.
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 9 of 15
8) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at
the end thereof the following subsection (g):
"(g) Relationship Between Parties.
Subject to part 6(n) of this Agreement, each party represents
to the other party on each date when it enters into a
Transaction that:--
(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) BSFP is acting for its own account. Each Party has made its own
independent decisions to enter into this Transaction and as to
whether this Transaction is appropriate or proper for it based upon
its own judgment and upon advice from such advisors as it has deemed
necessary. It is not relying on any communication (written or oral)
of the other party as investment advice or as a recommendation to
enter into this Transaction; it being understood that information
and explanations related to the terms and conditions of this
Transaction shall not be considered investment advice or a
recommendation to enter into this Transaction. It has not received
from the other party any assurance or guarantee as to the expected
results of this Transaction.
(ii) It is capable of evaluating and understanding (on its own behalf or
through independent professional advice), and understands and
accepts, the terms, conditions and risks of this Transaction. It is
also capable of assuming, and assumes, the financial and other risks
of this Transaction.
(iii) The other party is not acting as a fiduciary or an advisor for it in
respect of this Transaction.
(3) Purpose. It is an "eligible swap participant" as such
term is defined in Section 35.1(b)(2) of the regulations (17 C.F.R 35)
promulgated under, an and "eligible contract participant" as defined in Section
1(a)(12) of, the Commodity Exchange Act, as amended, and it is entering into the
Transaction for the purposes of managing its borrowings or investments, hedging
its underlying assets or liabilities or in connection with a line of business."
9) Additional Provisions. Notwithstanding the terms of Sections 5 and 6 of
the ISDA Form Master Agreement, if Counterparty has satisfied its payment
obligations under Section 2(a)(i) of the ISDA Form Master Agreement, then unless
BSFP is required pursuant to appropriate proceedings to return to Counterparty
or otherwise returns to Counterparty upon demand of
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 10 of 15
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
Counterparty shall not constitute an Event of Default or Potential Event of
Default with respect to Counterparty as the Defaulting Party and (b) BSFP shall
be entitled to designate an Early Termination Event 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 BSFP as the Affected Party or Section 5(b)(iii) of the ISDA Form
Master Agreement with respect to BSFP as the Burdened Party. For purposes of the
Transaction to which this Agreement relates, Counterparty's only obligation
under Section 2(a)(i) of the ISDA Form Master Agreement is to pay the Fixed
Amount on the Fixed Rate Payer Payment Date.
10) Set-off. The provisions for Set-off set forth in Section 6(e) of the ISDA
Form Master Agreement shall not apply for purposes of this Transaction.
11) Third Party Beneficiary. Each of Note Insurer and the Backup Note Insurer
insuring the Securities, if any, is a third party beneficiary of this Agreement
and is entitled to the rights and benefits hereunder and may enforce the
provisions hereof as if it were a party hereto.
12) Additional Termination Events. Additional Termination Events will apply:
(a) If a Rating Agency Downgrade has occurred and BSFP has not, within 30 days,
complied with Section 13 below, then an Additional Termination Event shall have
occurred with respect to BSFP and BSFP shall be the sole Affected Party with
respect to such an Additional Termination Event; (b) If, upon the occurrence of
a Swap Disclosure Event (as defined in Section 14 of this Agreement), BSFP has
not, within 10 days after such Swap Disclosure Event, complied with any of the
provisions set forth in Section 14(iii) of this Agreement,, then an Additional
Termination Event shall have occurred with respect to BSFP and Party A shall be
the sole Affected Party with respect to such Additional Termination Event.
13) Rating Agency Downgrade. If a Ratings Event (as defined below) occurs with
respect to BSFP, then BSFP shall, at is own expense, (i) assign this Transaction
hereunder to a third party within thirty (30) days of such Ratings Event that
meets or exceeds, or as to which any applicable credit support provider meets or
exceeds, the Approved Ratings Thresholds (as defined below) or (ii) deliver
Eligible Collateral in a form acceptable to Counterparty and with Valuation
Percentages as determined in Counterparty's sole discretion (provide that the
Valuation Percentage for USD will be 100%), and an executed 1994 ISDA Credit
Support Annex (subject to New York law), within thirty (30) days of such Ratings
Event and if any Securities are outstanding, subject to the applicable Rating
Agencies' written confirmation that delivery of such collateral in the context
of such downgrade will not result in a withdrawal, qualification or downgrade of
the then current ratings assigned to the Securities. Threshold shall mean zero
with respect to BSFP. Minimum Transfer Amounts shall mean zero. For the
avoidance of doubt, a downgrade of the rating on the Securities could occur in
the event that BSFP does not post sufficient collateral. For purposes of this
Transaction, a "RATINGS EVENT" shall occur with respect to BSFP, if its
counterparty credit rating ceases to be rated at least
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 11 of 15
"AA-" by S&P, and at least "Aa3" by Moody's (including in connection with a
merger, consolidation or other similar transaction by BSFP) such ratings being
referred to herein as the "Approved Ratings Thresholds", (unless, within 30 days
after such withdrawal or downgrade, the applicable Rating Agencies have
reconfirmed the rating of the Securities, as applicable, which was in effect
immediately prior to such withdrawal or downgrade). The provisions of Section
6(c) of the ISDA Form Master Agreement shall apply to Counterparty. For the
purposes hereunder, "Rating Agencies" shall mean: Xxxxx'x Investors Service,
Inc. ("Moody's") and Standard & Poor's Ratings Services ("S&P").
14) Compliance with Regulation AB.
(i) BSFP agrees and acknowledges that Xxxxxxx Xxxxx Mortgage Investors
Trust, Series 2006-HE1 ("MLMIT") is required under Regulation AB
under the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (" Regulation
AB"), to disclose financial information regarding BSFP or its group
of affiliated entities, if applicable, depending on the aggregate
"significance percentage" of this Agreement and any other derivative
contracts between BSFP or its group of affiliated entities, if
applicable, and Counterparty, as calculated from time to time in
accordance with Item 1115 of Regulation AB.
(ii) It shall be a swap disclosure event ("Swap Disclosure Event") if, on
any Business Day after the date hereof, MLMIT requests from BSFP the
applicable financial information described in Item 1115 of
Regulation AB (such request to be based on a reasonable
determination by MLMIT, in good faith, that such information is
required under Regulation AB) (the "Swap Financial Disclosure").
(iii) Upon the occurrence of a Swap Disclosure Event, BSFP, at its own
expense, shall (a) provide to MLMIT the Swap Financial Disclosure,
(b) secure another entity to replace BSFP as party to this Agreement
on terms substantially similar to this Agreement and subject to
prior notification to the Swap Rating Agencies, which entity (or a
guarantor therefor) meets or exceeds the Approved Rating Thresholds
(or which satisfies the Rating Agency Condition) and which entity is
able to comply with the requirements of Item 1115 of Regulation AB
or (c) obtain a guaranty of the BSFP's obligations under this
Agreement from an affiliate of the BSFP that is able to comply with
the financial information disclosure requirements of Item 1115 of
Regulation AB, such that disclosure provided in respect of the
affiliate will satisfy any disclosure requirements applicable to the
Swap Provider, and cause such affiliate 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 Exchange Act.
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 12 of 15
(iv) BSFP if obligations of Swap Provider are guaranteed, the guarantor
must cover this indemnity obligation agrees that, in the event that
BSFP provides Swap Financial Disclosure to MLMIT in accordance with
Part 14(iii)(a) or causes its affiliate to provide Swap Financial
Disclosure to MLMIT in accordance with Part 14(iii)(c), it will
indemnify and hold harmless MLMIT, its respective directors or
officers and any person controlling MLMIT, from and against any and
all losses, claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of a material fact contained
in such Swap Financial Disclosure or caused by any omission or
alleged omission to state in such Swap Financial Disclosure a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
15) Third Party Beneficiary. Xxxxxxx Xxxxx Mortgage Lending, Inc. ("MLML")
shall be a third party beneficiary of this Agreement.
16) MLML agrees and acknowledges 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. MLML or any of its affiliates
receives any such amounts, will promptly remit (or, if such amounts are received
by an affiliate of MLML hereby agrees that it will cause such affiliate to
promptly remit) such amounts to the applicable Trustee, whereupon such Trustee
will promptly remit such amounts to Bear Xxxxxxx Financial Products Inc. MLML
further agrees to provide notice to Bear Xxxxxxx Financial Products Inc. upon
any remittance to the Trustee; such delivery will be made to:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
NEITHER THE BEAR XXXXXXX COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE
OF THE BEAR XXXXXXX COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A
CREDIT SUPPORT PROVIDER ON THIS AGREEMENT.
5. Account Details and Settlement Information:
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 13 of 15
PAYMENTS TO BSFP:
PAYMENTS TO COUNTERPARTY:
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
document.
Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to BSFP a facsimile of the fully-executed
Confirmation to 000-000-0000. For inquiries regarding U.S. Transactions, please
contact XXXXX XXXXXX by telephone at 000-000-0000. For all other inquiries
please contact DERIVATIVES DOCUMENTATION by telephone at 000-0-000-0000.
Originals will be provided for your execution upon your request.
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 14 of 15
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,
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
By: _____________________
Name:
Title:
Counterparty, acting through its duly authorized signatory, hereby agrees to,
accepts and confirms the terms of the foregoing as of the Trade Date.
XXXXX FARGO BANK, N.A., NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS TRUSTEE
FOR XXXXXXX XXXXX MORTGAGE INVESTORS TRUST, SERIES 2006-HE 1
By: _____________________
Name:
Title:
Reference Number: FXNEC7841
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 15 of 15
SCHEDULE I
EXHIBIT N-2
FORM OF CLASS A-2 CAP CONTRACT
BEAR XXXXXXX BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
000-000-0000
DATE: February 7, 2006
TO: Xxxxx Fargo Bank, N.A., not in its individual capacity
but solely as Trustee for Xxxxxxx Xxxxx Mortgage
Investors Trust, Series 2006-HE 1
ATTENTION: MLMI 2006-HE1
TELEPHONE: 410-884-2000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 353-1-402-6225
FACSIMILE: 353-1-402-6223
SUBJECT: Fixed Income Derivatives Confirmation and Agreement
REFERENCE NUMBER(S):
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the "Transaction") between Bear Xxxxxxx Financial Products Inc. ("BSFP") and
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1 ("Counterparty"). 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. This Agreement is subject to the 2000 ISDA Definitions (the
"Definitions"), as published by the International Swaps and Derivatives
Association, Inc. ("ISDA"). You and we have agreed to enter into this Agreement
and 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 shall be deemed to have been executed by you and us on the
date we entered into the Transaction. In the event of any inconsistency between
the provisions of this Agreement and the Definitions or the ISDA Form Master
Agreement, this Agreement shall prevail for purposes of the Transaction. For the
avoidance of doubt, this Agreement is intended to be a stand alone agreement and
is therefore not subject to any ISDA Master Agreement actually executed and
existing between the parties hereto. Terms capitalized but not defined herein
shall have the meanings attributed to them in the Pooling & Servicing Agreement
dated as of February 1, 2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc.,
Wilshire Credit Corporation, as Servicer and Xxxxx Fargo Bank, National
Association, as Trustee and Administrator (the "Pooling & Servicing Agreement").
N-2-1
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 2 of 14
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Type of Transaction Rate Cap
Notional Amount: With respect to any Calculation Period, the
lesser of (i) the amount set forth for such
period in Schedule I attached hereto and
(ii) the aggregate Certificate Balance of
the Class A-2 Certificates immediately prior
to the related Floating Rate Payer Payment
Date.
Trade Date: February 2, 2006
Effective Date: February 7, 2006
Termination Date: September 25, 2008, subject to adjustment in
accordance with the Business Day Convention.
FIXED AMOUNT (PREMIUM):
Fixed Rate Payer: Counterparty
Fixed Rate Payer
Payment Date: February 7, 2006
Fixed Amount [__________]
FLOATING AMOUNTS:
Floating Rate Payer: BSFP
Cap Rate With respect to any Calculation Period the
rate set forth in Schedule I attached hereto
Floating Rate Payer
Period End Dates The 25th calendar day of each month during
the Term of this Transaction, commencing
February 25, 2006 and ending on the
Termination Date, subject to adjustment in
accordance with the Business Day Convention.
Floating Rate Payer
Payment Dates: Early Payment shall be applicable. The
Floating Rate Payer Payment shall be two
Business Days prior to each Floating Rate
Payer Period End Date.
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 3 of 14
Floating Rate Option: USD-LIBOR-BBA; provided, however, that if
the Floating Rate Option for any Calculation
Period is greater than 9.31000% then the
Floating Rate Option for such Calculation
Period shall be deemed to be 9.31000%
Designated Maturity: One month
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: The first day of each Calculation Period.
Compounding: Inapplicable
Business Days: New York
Business Day Convention: Modified Following
3. Additional Provisions: 1) 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 and in the Confirmation
relating to such Transaction, as applicable.
This paragraph (1) shall be deemed repeated
on the trade date of each Transaction.
4. Provisions Deemed Incorporated in a Schedule to the ISDA Form Master
Agreement:
1) The parties agree that subparagraph (ii) of Section 2(c) of the ISDA Form
Master Agreement will apply to any Transaction.
2) Termination Provisions. For purposes of the Master Agreement:
(a) "Specified Entity" is not applicable to BSFP or Counterparty for any
purpose.
(b) "Specified Transaction" is not applicable to BSFP or Counterparty for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to BSFP or
Counterparty.
(c) The "Cross Default" provisions of Section 5(a)(vi) will apply to BSFP with
a Threshold of USD 10,000,000 and will not apply to Counterparty.
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 4 of 14
(d) The provisions of Section 5 (a) (ii), (iii), and (iv) will not apply to
Counterparty.
(e) "Bankruptcy". The provision of Section 5(a)(vii)(2) will not apply to
Counterparty.
(f) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not
apply to BSFP or Counterparty.
(g) The "Automatic Early Termination" provision of Section 6(a) will not apply
to BSFP or to Counterparty.
(h) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA
Form Master Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(i) "Termination Currency" means United States Dollars.
3) Tax Representations. Not applicable
4) [Reserved]
5) Documents to be Delivered. For the purpose of Section 4(a):
(1) Tax forms, documents, or certificates to be delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE COVERED BY SECTION
DELIVER DOCUMENT DELIVERED 3(d) REPRESENTATION
BSFP and the Any documents required by the Upon the execution and Yes
Counterparty receiving party to evidence the delivery of this Agreement
authority of the delivering party and such Confirmation
or its Credit Support Provider,
if any, for it to execute and
deliver this Agreement, any
Confirmation , and any Credit
Support Documents to which it is
a party, and to evidence the
authority of the delivering party
or its Credit Support Provider to
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 5 of 14
perform its obligations under
this Agreement, such Confirmation
and/or Credit Support
(2) Other documents to be delivered are:
PARTY REQUIRED TO DELIVER FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE COVERED BY SECTION 3(d)
DOCUMENT DELIVERED REPRESENTATION
Document, as the case may be
BSFP and the Counterparty A certificate of an Upon the execution and Yes
authorized officer of the delivery of this Agreement
party, as to the incumbency and such Confirmation
and authority of the
respective officers of the
party signing this Agreement,
any relevant Credit Support
Document, or any
Confirmation, as the case may
be
6) Miscellaneous. Miscellaneous
(a) Address for Notices: For the purposes of Section 12(a) of the ISDA Form
Master Agreement:
Address for notices or communications to BSFP:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 6 of 14
(For all purposes)
Address for notices or communications to Counterparty:
Address: Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Client Manager - MLMI 2006-HE1
Facsimile: 000-000-0000
Phone: 000-000-0000
with copy to:
Address: 4 World Financial Center
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) Process Agent. For the purpose of Section 13(c):
BSFP appoints as its
Process Agent: Not Applicable
The Counterparty appoints as its
Process Agent: Not Applicable
(c) Offices. The provisions of Section 10(a) of the ISDA Form Master Agreement
will not apply to this Agreement; neither BSFP nor the Counterparty have any
Offices other than as set forth in the Notices Section and BSFP agrees that, for
purposes of Section 6(b) of the ISDA Form Master Agreement, 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) of the ISDA Form
Master Agreement:
BSFP is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is BSFP
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 7 of 14
(f) Credit Support Document. Not applicable for either BSFP or the
Counterparty.
(g) Credit Support Provider.
BSFP: Not Applicable
The 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
Obligation Law Section 5-1401.
(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) Consent to Recording. Each party hereto consents to the monitoring or
recording, at any time and from time to time, by the other party of any and all
communications between officers or employees of the parties, waives any further
notice of such monitoring or recording, and agrees to notify its officers and
employees of such monitoring or recording.
(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) Transfer, Amendment and Assignment. Except for the initial assignment of
this Confirmation by Counterparty to its assignee, no transfer, amendment,
waiver, supplement, assignment or other modification of this Transaction shall
be permitted by either party unless the applicable Rating Agencies have been
provided notice of the same and confirms in writing (including by facsimile
transmission) within five Business Days after such notice is given that it will
not downgrade, withdraw or otherwise modify its then-current rating of any
securities related to this Confirmation (the "Securities"). BSFP shall not
unreasonably withhold its consent to any Assignment of this Confirmation.
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 8 of 14
(m) Proceedings. BSFP shall not institute against or cause any other person to
institute against, or join any other person in instituting against, Counterparty
or any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy or
similar law for a period of one year and one day following payment in full of
the Securities.
(n) Trustee 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 Xxxxx Fargo Bank, N.A., not in its
individual capacity, but solely as Trustee of the Xxxxxxx Xxxxx Mortgage
Investors Trust, Series 2006-HE1 (the "Trust") under the Pooling & Servicing
Agreement, dated as of February 1, 2006 between the Trust and the Trustee, in
the exercise of the powers and authority conferred upon and vested in it
thereunder and pursuant to instructions set forth therein, (ii) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as a personal representation, undertaking or
agreement of Xxxxx Fargo Bank, N.A., but is made and intended for the purpose of
binding only the Trust, (iii) nothing herein contained shall be construed as
imposing any liability on Xxxxx Fargo Bank, N.A. individually or personally, to
perform any covenant 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 shall Xxxxx Fargo Bank, N.A. 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 by the Trust or
any other related documents.
7) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form
Master Agreement, provided that BSFP and Counterparty shall not be deemed to
have any Affiliates for purposes of this Agreement, including for purposes of
Section 6(b)(ii) of the ISDA Form Master Agreement.
8) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at
the end thereof the following subsection (g):
"(g) Relationship Between Parties.
Subject to part 6(n) of this Agreement, each party represents
to the other party on each date when it enters into a
Transaction that:--
(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.
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 9 of 14
(i) BSFP is acting for its own account. Each Party has made its own
independent decisions to enter into this Transaction and as to
whether this Transaction is appropriate or proper for it based upon
its own judgment and upon advice from such advisors as it has deemed
necessary. It is not relying on any communication (written or oral)
of the other party as investment advice or as a recommendation to
enter into this Transaction; it being understood that information
and explanations related to the terms and conditions of this
Transaction shall not be considered investment advice or a
recommendation to enter into this Transaction. It has not received
from the other party any assurance or guarantee as to the expected
results of this Transaction.
(ii) It is capable of evaluating and understanding (on its own behalf or
through independent professional advice), and understands and
accepts, the terms, conditions and risks of this Transaction. It is
also capable of assuming, and assumes, the financial and other risks
of this Transaction.
(iii) The other party is not acting as a fiduciary or an advisor for it in
respect of this Transaction.
(3) Purpose. It is an "eligible swap participant" as such
term is defined in Section 35.1(b)(2) of the regulations (17 C.F.R 35)
promulgated under, an and "eligible contract participant" as defined in Section
1(a)(12) of, the Commodity Exchange Act, as amended, and it is entering into the
Transaction for the purposes of managing its borrowings or investments, hedging
its underlying assets or liabilities or in connection with a line of business."
9) Additional Provisions. Notwithstanding the terms of Sections 5 and 6 of
the ISDA Form Master Agreement, if Counterparty has satisfied its payment
obligations under Section 2(a)(i) of the ISDA Form Master Agreement, then unless
BSFP is required pursuant to appropriate proceedings to return to Counterparty
or otherwise returns to Counterparty upon demand of 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 Counterparty shall not constitute an
Event of Default or Potential Event of Default with respect to Counterparty as
the Defaulting Party and (b) BSFP shall be entitled to designate an Early
Termination Event 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 BSFP as the
Affected Party or Section 5(b)(iii) of the ISDA Form Master Agreement with
respect to BSFP as the Burdened Party. For purposes of the Transaction to which
this Agreement relates, Counterparty's only obligation under Section 2(a)(i) of
the ISDA Form Master Agreement is to pay the Fixed Amount on the Fixed Rate
Payer Payment Date.
10) Set-off. The provisions for Set-off set forth in Section 6(e) of the ISDA
Form Master Agreement shall not apply for purposes of this Transaction.
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 10 of 14
11) Third Party Beneficiary. Each of the Note Insurer and the Backup Note
Insurer insuring the Securities, if any, is a third party beneficiary of this
Agreement and is entitled to the rights and benefits hereunder and may enforce
the provisions hereof as if it were a party hereto.
12) Additional Termination Events. Additional Termination Events will apply:
(a) If a Rating Agency Downgrade has occurred and BSFP has not, within 30 days,
complied with Section 13 below, then an Additional Termination Event shall have
occurred with respect to BSFP and BSFP shall be the sole Affected Party with
respect to such an Additional Termination Event; (b) If, upon the occurrence of
a Swap Disclosure Event (as defined in Section 14 of this Agreement), BSFP has
not, within 10 days after such Swap Disclosure Event, complied with any of the
provisions set forth in Section 14(iii) of this Agreement,, then an Additional
Termination Event shall have occurred with respect to BSFP and Party A shall be
the sole Affected Party with respect to such Additional Termination Event.
13) Rating Agency Downgrade. If a Ratings Event (as defined below) occurs with
respect to BSFP, then BSFP shall, at is own expense, (i) assign this Transaction
hereunder to a third party within thirty (30) days of such Ratings Event that
meets or exceeds, or as to which any applicable credit support provider meets or
exceeds, the Approved Ratings Thresholds (as defined below) or (ii) deliver
Eligible Collateral in a form acceptable to Counterparty and with Valuation
Percentages as determined in Counterparty's sole discretion (provide that the
Valuation Percentage for USD will be 100%), and an executed 1994 ISDA Credit
Support Annex (subject to New York law), within thirty (30) days of such Ratings
Event and if any Securities are outstanding, subject to the applicable Rating
Agencies' written confirmation that delivery of such collateral in the context
of such downgrade will not result in a withdrawal, qualification or downgrade of
the then current ratings assigned to the Securities. Threshold shall mean zero
with respect to BSFP. Minimum Transfer Amounts shall mean zero. For the
avoidance of doubt, a downgrade of the rating on the Securities could occur in
the event that BSFP does not post sufficient collateral. For purposes of this
Transaction, a "RATINGS EVENT" shall occur with respect to BSFP, if its
counterparty credit rating ceases to be rated at least "AA-" by S&P, and at
least "Aa3" by Moody's (including in connection with a merger, consolidation or
other similar transaction by BSFP) such ratings being referred to herein as the
"Approved Ratings Thresholds", (unless, within 30 days after such withdrawal or
downgrade, the applicable Rating Agencies have reconfirmed the rating of the
Securities, as applicable, which was in effect immediately prior to such
withdrawal or downgrade). The provisions of Section 6(c) of the ISDA Form Master
Agreement shall apply to Counterparty. For the purposes hereunder, "Rating
Agencies" shall mean: Xxxxx'x Investors Service, Inc. ("Moody's") and Standard &
Poor's Ratings Services ("S&P").
14) Compliance with Regulation AB.
(i) BSFP agrees and acknowledges that Xxxxxxx Xxxxx Mortgage Investors
Trust, Series 2006-HE1 ("MLMIT") is required under Regulation AB
under the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 11 of 14
amended (the "Exchange Act") (" Regulation AB"), to disclose certain
financial information regarding BSFP or its group of affiliated
entities, if applicable, depending on the aggregate "significance
percentage" of this Agreement and any other derivative contracts
between BSFP or its group of affiliated entities, if applicable, and
Counterparty, as calculated from time to time in accordance with
Item 1115 of Regulation AB.
(ii) It shall be a swap disclosure event ("Swap Disclosure Event") if, on
any Business Day after the date hereof, MLMIT requests from BSFP the
applicable financial information described in Item 1115 of
Regulation AB (such request to be based on a reasonable
determination by MLMIT, in good faith, that such information is
required under Regulation AB) (the "Swap Financial Disclosure").
(iii) Upon the occurrence of a Swap Disclosure Event, BSFP, at its own
expense, shall (a) provide to MLMIT the Swap Financial Disclosure,
(b) secure another entity to replace BSFP as party to this Agreement
on terms substantially similar to this Agreement and subject to
prior notification to the Swap Rating Agencies, which entity (or a
guarantor therefor) meets or exceeds the Approved Rating Thresholds
(or which satisfies the Rating Agency Condition) and which entity is
able to comply with the requirements of Item 1115 of Regulation AB
or (c) obtain a guaranty of the BSFP's obligations under this
Agreement from an affiliate of the BSFP that is able to comply with
the financial information disclosure requirements of Item 1115 of
Regulation AB, such that disclosure provided in respect of the
affiliate will satisfy any disclosure requirements applicable to the
Swap Provider, and cause such affiliate 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 Exchange Act.
(iv) BSFP if obligations of Swap Provider are guaranteed, the guarantor
must cover this indemnity obligation agrees that, in the event that
BSFP provides Swap Financial Disclosure to MLMIT in accordance with
Part 14(iii)(a) or causes its affiliate to provide Swap Financial
Disclosure to MLMIT in accordance with Part 14(iii)(c), it will
indemnify and hold harmless MLMIT, its respective directors or
officers and any person controlling MLMIT, from and against any and
all losses, claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of a material fact contained
in such Swap Financial Disclosure or caused by any omission or
alleged omission to state in such Swap Financial Disclosure a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 12 of 14
15) Third Party Beneficiary. Xxxxxxx Xxxxx Mortgage Lending, Inc. ("MLML")
shall be a third party beneficiary of this Agreement.
16) 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. MLML or any of its affiliates
receives any such amounts, will promptly remit (or, if such amounts are received
by an affiliate of MLML hereby agrees that it will cause such affiliate to
promptly remit) such amounts to the applicable Trustee set forth on Schedule A,
whereupon such Trustee will promptly remit such amounts to Bear Xxxxxxx
Financial Products Inc. MLML further agrees to provide notice to Bear Xxxxxxx
Financial Products Inc. upon any remittance to the Trustee; such delivery will
be made to:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
NEITHER THE BEAR XXXXXXX COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF
THE BEAR XXXXXXX COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A CREDIT
SUPPORT PROVIDER ON THIS AGREEMENT.
5. Account Details and
Settlement Information: PAYMENTS TO BSFP:
PAYMENTS TO COUNTERPARTY:
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.
Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to BSFP a facsimile of the fully-executed
Confirmation to 000-000-0000. For inquiries regarding U.S. Transactions, please
contact XXXXX XXXXXX by telephone at 000-000-0000. For all other inquiries
please contact DERIVATIVES DOCUMENTATION by telephone at 000-0-000-0000.
Originals will be provided for your execution upon your request.
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 13 of 14
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,
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
By: _____________________
Name:
Title:
Counterparty, acting through its duly authorized signatory, hereby agrees to,
accepts and confirms the terms of the foregoing as of the Trade Date.
XXXXX FARGO BANK, N.A., NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS TRUSTEE FOR
XXXXXXX XXXXX MORTGAGE INVESTORS TRUST, SERIES 2006-HE1
By: _____________________
Name:
Title:
Reference Number: FXNEC7842
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1
February 7, 2006
Page 14 of 14
SCHEDULE I
EXHIBIT N-3
FORM OF SUBORDINATED CERTIFICATE CAP CONTRACT
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
212-2724009
DATE: February 7, 2006
TO: Xxxxx Fargo Bank, N.A., not in its individual
capacity but solely as Trustee for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE1
ATTENTION: MLMI 2006-HE1
TELEPHONE: 410-884-2000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 353-1-402-6225
FACSIMILE: 353-1-402-6223
SUBJECT: Fixed Income Derivatives Confirmation and Agreement
REFERENCE NUMBER(S):
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the "Transaction") between Bear Steams Financial Products Inc. ("BSFP") and
Xxxxx Fargo Bank, NA, not in its individual capacity but solely as Trustee for
Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-HE1 ("Counterparty"). 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. This Agreement is subject to the 2000 ISDA Definitions (the "Definitions"),
as published by the International Swaps and Derivatives Association, Inc.
("ISDA"). You and we have agreed to enter into this Agreement and 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
shall be deemed to have been executed by you and us on the date we entered into
the Transaction. In the event of any inconsistency between the provisions of
this Agreement and the Definitions or the ISDA Form Master Agreement, this
Agreement shall prevail for purposes of the Transaction. For the avoidance of
doubt, this Agreement is intended to be a stand alone agreement and is therefore
not subject to any ISDA Master Agreement actually executed and existing between
the parties hereto. Terms capitalized but not defined herein shall 17,ve the
meanings attributed to them in the Pooling & Servicing Agreement dated as of
February 1, 2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc, Wilshire Credit
Corporation, as Servicer and Xxxxx Fargo Bank, National Association, as Trustee
(the "Pooling & Servicing Agreement").
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
Type of Transaction: Rate Cap
N-3-1
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 2 of 16
Notional Amount: With respect to any Calculation
Period, the lesser of (i) the amount
set forth for such period in Schedule
I attached hereto and (ii) the
aggregate Certificate Balance of the
Class M, Class B-1A, Class B-2A and
Class B-3A Certificates immediately
prior to the related Floating Rate
Payer Payment Date.
Trade Date: February 2, 2006
Effective Date: February 7, 2006
Termination Date: September 25, 2008, subject to
adjustment in accordance with the
Business Day Convention.
FIXED AMOUNT (PREMIUM):
Fixed Rate Payer: Counterparty
Fixed Rate Payer
Payment Date: February 7, 2006
Fixed Amount:
FLOATING AMOUNTS:
Floating Rate Payer: BSFP
Cap Rate: With respect to any Calculation Period
the rate set forth in Schedule I
attached hereto.
Floating Rate Payer
Period End Dates: The 25th calendar day of each month
during the Term of this Transaction,
commencing February 25, 2006 and
ending on the Termination Date,
subject to adjustment in accordance
with Business Day Convention.
Floating Rate Payer
Payment Dates: Early Payment shall be applicable. The
Floating Rate Payer Payment shall be
two Business Days prior to each
Floating Rate Payer Period End Date.
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 3 of 16
Floating Rate Option: USD-LIBOR-BBA; provided, however, that
if the Floating Rate Option for any
Calculation Period is greater than
8.85000% then the Floating Rate Option
for such Calculation Period shall be
deemed to be 8.85000%
Designated Maturity: One month
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: The first day of each Calculation
Period.
Compounding: Inapplicable
Business Days: New York
Business Day Convention: Modified Following
3. Additional Provisions: 1) 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 and in the
Confirmation relating to such
Transaction, as applicable. This
paragraph (1) shall be deemed repeated
on the trade date of each Transaction.
4. Provisions Deemed Incorporated in a Schedule to the ISDA Form Master
Agreement
(1) The parties agree that subparagraph (ii) of Section 2(c)
of the ISDA Form Master Agreement will apply to any
Transaction.
(2) Termination Provisions. For purposes of the Master
Agreement:
(a) "Specified Entity" is not applicable to BSFP or
Counterparty for any purpose.
(b) "Specified Transaction" is not applicable to BSFP or
Counterparty for any purpose, and, accordingly, Section
5(a)(v) shall not apply to BSFP or Counterparty.
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 4 of 16
(c) The "Cross Default" provisions of Section 5(a)(vi) will
apply to BSFP with a Threshold of USD 10,000,000 and will
not apply to Counterparty.
(d) The provisions of Section 5 (a) (ii), (iii), and (iv) will
not apply to Counterparty.
(e) "Bankruptcy". The provision of Section 5(a)(vii)(2) will
not apply to Counterparty.
(f) The "Credit Event Upon Merger" provisions of Section
5(b)(iv) will not apply to BSFP or Counterparty.
(g) The "Automatic Early Termination" provision of Section
6(a) will not apply to BSFP or to Counterparty.
(h) Payments on Early Termination. For the purpose of Section
6(e) of the ISDA Form Master Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(i) "Termination Currency" means United States Dollars.
(3) Tax Representations. Not applicable
(4) [Reserved]
(5) Documents to be Delivered. For the purpose of Section
4(a):
(1) Tax forms, documents, or certificates to he
delivered are:
PARTY REQUIRED TO DELIVER FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE
DOCUMENT DELIVERED
BSFP and the Counterparty Any document required or reasonably Promptly after the
requested to allow the other party to earlier of (i) reasonable
make payments under this Agreement demand by either party or
without any deduction or withholding for (ii) learning that such
or on the account of any Tax or with form or document is
such deduction or withholding at a required
reduced rate
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 5 of 16
(2) Other documents to be delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO BE COVERED BY SECTION
DELIVER DOCUMENT CERTIFICATE DELIVERED 3(D) REPRESENTATION
BSFP and the Counterparty Any documents required by the Upon the execution and delivery Yes
receiving party to evidence the of this Agreement and such
authority of the delivering Confirmation.
party or its Credit Support
Provider, if any, for it to
execute and deliver this
Agreement, any Confirmation,
and any Credit Support
Documents to which it is a
party, and to evidence the
authority of the delivering
party or its Credit Support
Provider to perform its
obligations under this
Agreement, such Confirmation
and/or Credit Support Document,
as the case may be
BSFP and the Counterparty A certificate of an authorized Upon the execution and delivery Yes
officer of the party, as to the of this Agreement and such
incumbency and authority of the Confirmation.
respective officers of the
party signing this Agreement,
any relevant Credit Support
Document, or any Confirmation,
as the case may be
(6) Miscellaneous. Miscellaneous
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 6 of 16
(a) Address for Notices: For the purposes of Section 12(a) of the ISDA
Form Master Agreement:
Address for notices or communications to BSFP:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx,
Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
(For all purposes)
Address for notices or communications to the Counterparty:
Address: Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Client Manager - MLM12006-HEI
Facsimile: 000-000-0000
Phone: 000-000-0000
with copy to:
Address: 4 World Financial Center
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) Process Agent. For the purpose of Section 13(c):
BSFP appoints as its
Process Agent: Not Applicable
The Counterparty appoints as its
Process Agent: Not Applicable
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 7 of 16
(c) Offices. The provisions of Section 10(a) of the ISDA Form Master
Agreement will not apply to this Agreement; neither BSFP nor the
Counterparty have any Offices other than as set forth in the
Notices Section and BSFP agrees that, for purposes of Section 6(b)
of the ISDA Form Master Agreement, 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) of the ISDA
Form Master Agreement:
BSFP is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is BSFP
(f) Credit Support Document. Not applicable for either BSFP or the
Counterparty.
(g) Credit Support Provider.
BSFP: Not Applicable
The 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 Obligation Law Section 5-1401.
(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.
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 8 of 16
(j) Consent to Recording. Each party hereto consents to the monitoring
or recording, at any time and from time to time, by the other
party of any and all communications between officers or employees
of the parties, waives any further notice of such monitoring or
recording, and agrees to notify its officers and employees of such
monitoring or recording.
(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) Transfer, Amendment and Assignment. Except for the initial
assignment of this Confirmation by Counterparty to its assignee,
no transfer, amendment, waiver, supplement, assignment or other
modification of this Transaction shall be permitted by either
party unless the applicable Rating Agencies have been provided
notice of the same and confirms in writing (including by facsimile
transmission) within five Business Days after such notice is given
that it will not downgrade, it draw or otherwise modify its
then-current rating of any securities related to this Confirmation
(the "Securities"). BSFP shall not unreasonably withhold its
consent to any Assignment of this Confirmation.
(m) Proceedings. BSFP shall not institute against or cause any other
person to institute against, or join any other person in
instituting against, Counterparty or any bankruptcy,
reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state
bankruptcy or similar law for a period of one year and one day
following payment in full of the Securities.
(n) Trustee 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
Xxxxx Fargo Bank, N.A., not in its individual capacity, but solely
as Trustee of the Xxxxxxx Xxxxx Mortgage Investors Trust, Series
2006-HE1 (the "Trust") under the Pooling & Servicing Agreement,
dated as of February 1, 2006 between the Trust and the Trustee, in
the exercise of the powers and authority conferred upon and vested
in it thereunder and pursuant to instructions set forth therein,
(ii) each of the representations, undertakings and agreements
herein made on the part of the Trust is made and intended not as a
personal representation, undertaking or agreement of Xxxxx Fargo
Bank, N.A., but is made and intended for the purpose of binding
only the Trust, (iii) nothing herein contained shall be construed
as imposing any liability on Xxxxx Fargo Bank, N.A. individually
or personally, to perform any covenant 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 shall Xxxxx Fargo Bank, N.A. in its individual
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 9 of 16
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 by the Trust or any other
related documents.
(7) "Affiliate" will have the meaning specified in Section 14 of the
ISDA Form Master Agreement, provided that BSFP and Counterparty
shall not be deemed to have any Affiliates for purposes of this
Agreement, including for purposes of Section 6(b)(ii) of the IS DA
Form Master Agreement.
(8) Section 3 of the ISDA Form Master Agreement is hereby amended by
adding at the end thereof the following subsection (g):
"(g) Relationship Between Parties.
Subject to part 6(n) of this Agreement, each party
represents to the other party on each date when it enters
into a Transaction that:--
(1) Nonreliance. It is not relaying 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.
(ii) BSFP is acting for its own account. Each Party has made its
own independent decisions to enter into this Transaction and as to
whether this Transaction is appropriate or proper for it based upon its
own judgment and upon advice from such advisors as it has deemed
necessary. It is not relying on any communication (written or oral) of
the other party as investment advice or as a recommendation to enter
into this Transaction; it being understood that information and
explanations related to the terms and conditions of this Transaction
shall not be considered investment advice or a recommendation to enter
into this Transaction. It has not received from the other party any
assurance or guarantee as to the expected results of this Transaction.
(iii) It is capable of evaluating and understanding (on its own
behalf or through independent professional advice), and understands and
accepts, the terms, conditions and risks of this Transaction. It is also
capable of assuming, and assumes, the financial and other risks of this
Transaction.
(iv) The other party is not acting as a fiduciary or an advisor
for it in respect of this Transaction.
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 10 of 16
(3) Purpose. It is an "eligible swap participant" as such
term is defined in Section 35.1(b)(2) of the regulations (17 C.F.R 35)
promulgated under, an and "eligible contract participant" as defined in Section
1(a)(12) of, the Commodity Exchange Act, as amended, and it is entering into the
Transaction for the purposes of managing its borrowings or investments, hedging
its underlying assets or liabilities or in connection with a line of business."
(9) Additional Provisions. Notwithstanding the terms of Sections 5 and
6 of the ISDA Form Master Agreement, if Counterparty has satisfied
its payment obligations under Section 2(a)(i) of the ISDA Form
Master Agreement, then unless BSFP is required pursuant to
appropriate proceedings to return to Counterparty or otherwise
returns to Counterparty upon demand of 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
Counterparty shall not constitute an Event of Default or Potential
Event of Default with respect to Counterparty as the Defaulting
Party and (b) BSFP shall be entitled to designate an Early
Termination Event 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 BSFP as the Affected Party or Section
5(b)(iii) of the ISDA Form Master Agreement with respect to BSFP
as the Burdened Party. For purposes of the Transaction to which
this Agreement relates, Couriterparty's only obligation under
Section 2(a)(i) of the ISDA Form Master Agreement is to pay the
Fixed Amount on the Fixed Rate Payer Payment Date.
(10) Set-off. The provisions for Set-off set forth in Section 6(e) of
the ISDA Form Master Agreement shall not apply for purposes of
this Transaction.
(11) Third party Beneficiary. Each of the Note Insurer and the Backup
Note Insurer insuring the Securities, if any, is a third party
beneficiary of this Agreement and is entitled to the rights and
benefits hereunder and may enforce the provisions hereof as if it
were a party hereto.
(12) Additional Termination Events. Additional Termination Events will
apply: (a) If a Rating Agency Downgrade has occurred and BSFP has
not, within 30 days, complied with Section 13 below, then an
Additional Termination Event shall have occurred with respect to
BSFP and BSFP shall be the sole Affected Party with respect to
such an Additional Termination Event; (b) If, upon the occurrence
of a Swap Disclosure Event (as defined in Section 14 of this
Agreement), BSFP has not, within 10 days after such Swap
Disclosure Event, complied with any of the provisions set forth in
Section 14(iii) of this Agreement, then an Additional Termination
Event shall have occurred with respect to BSFP and Party A shall
be the sole Affected Party with respect to such Additional
Termination Event.
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 11 of 16
(13) Rating Agency Downgrade. If a Ratings Event (as defined below)
occurs with respect to BSFP, then BSFP shall, at is own expense,
(i) assign this Transaction hereunder to a third party within
thirty (30) days of such Ratings Event that meets or exceeds, or
as to which any applicable credit support provider meets or
exceeds, the Approved Ratings Thresholds (as defined below) or
(ii) deliver Eligible Collateral in a form acceptable to
Counterparty and with Valuation Percentages as determined in
Counterparty's sole discretion (provide that the Valuation
Percentage for USD will be 100%), and an executed 1994 ISDA Credit
Support Annex (subject to New York law), within thirty (30) days
of such Ratings Event and if any Securities are outstanding,
subject to the applicable Rating Agencies' written confirmation
that delivery of such collateral in the context of such downgrade
will not result in a withdrawal, qualification or downgrade of the
then current ratings assigned to the Securities. Threshold shall
mean zero with respect to BSFP. Minimum Transfer Amounts shall
mean zero. For the avoidance of doubt, a downgrade of the rating
on the Securities could occur in the event that BSFP does not post
sufficient collateral. For purposes of this Transaction, a
"RATINGS EVENT" shall occur with respect to BSFP, if its
counterparty credit rating ceases to be rated at least "AA-" by
S&P, and at least "Aa3" by Moody's (including in connection with a
merger, consolidation or other similar transaction by BSFP) such
ratings being referred to herein as the "Approved Ratings
Thresholds", (unless, within 30 days after such withdrawal or
downgrade, the applicable Rating Agencies have reconfirmed the
rating of the Securities, as applicable, which was in effect
immediately prior to such withdrawal or downgrade). The provisions
of Section 6(c) of the SDA Form Master Agreement shall apply to
Counterparty. For the purposes hereunder, "Rating Agencies" shall
mean: Xxxxx'x Investors Service, Inc. ("Moody's") and Standard &
Poor's Ratings Services ("S&P").
(14) Compliance with Regulation AB.
(i) BSFP agrees and acknowledges that Xxxxxxx Xxxxx Mortgage
Investors Trust, Series 2006- HEI ("MLMIT") is required under Regulation AB
under the Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended (the "Exchange Act") ("Regulation AB"), to disclose certain
financial information regarding BSFP or its group of affiliated entities, if
applicable, depending on the aggregate "significance percentage" of this
Agreement and any other derivative contracts between BSFP or its group of
affiliated entities, if applicable, and Counterparty, as calculated from time to
time in accordance with Item 1115 of Regulation AB.
(ii) It shall be a swap disclosure event ("Swap Disclosure Event")
if, on any Business Day after the date hereof, MLMIT requests from BSFP the
applicable financial information described in Item 1.115 of Regulation AB (such
request to be based on a reasonable
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 12 of 16
determination by MLMIT, in good faith, that such information is required under
Regulation AB) (the "Swap Financial Disclosure").
(iii) Upon the occurrence of a Swap Disclosure Event, BSFP, at its
own expense, shall (a) provide to MLMIT the Swap Financial Disclosure, (b)
secure another entity to replace BSFP as party to this Agreement on terms
substantially similar to this Agreement and subject to prior notification to the
Swap Rating Agencies, which entity (or a guarantor therefor) meets or exceeds
the Approved Rating Thresholds (or which satisfies the Rating Agency Condition)
and which entity is able to comply with the requirements of Item 1115 of
Regulation AB or (c) obtain a guaranty of the BSFP' s obligations under this
Agreement from an affiliate of the BSFP that is able to comply with the
financial information disclosure requirements of Item 1115 of Regulation AB,
such that disclosure provided in respect of the affiliate will satisfy any
disclosure requirements applicable to the Swap Provider, and cause such
affiliate 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 Exchange Act.
(iv) BSFP if obligations of Swap Provider are guaranteed, the
guarantor must cover this indemnity obligation agrees that, in the event that
BSFP provides Swap Financial Disclosure to MLMIT in accordance with Part
14(iii)(a) or causes its affiliate to provide Swap Financial Disclosure to MLMIT
in accordance with Part 14(iii)(c), it will indemnify and hold harmless MLMIT,
its respective directors or officers and any person controlling MLMIT, from and
against any and all losses, claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of a material fact contained in such Swap
Financial Disclosure or caused by any omission or alleged omission to state in
such Swap Financial Disclosure a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading
(15) Third Party Beneficiary. Xxxxxxx Xxxxx Mortgage Lending, Inc.
("MLML") shall be a third party beneficiary of this Agreement.
(16) 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 hereby agrees that it will cause such
affiliate to promptly remit) such amounts to the applicable
Trustee, whereupon such Trustee will promptly remit such amounts
to Bear Xxxxxxx Financial Products Inc. MLML further agrees to
provide notice to Bear Steams Financial Products Inc. upon any
remittance to the Trustee; such delivery will be made to:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 13 of 16
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
NEITHER THE BEAR XXXXXXX COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE
OF THE BEAR XXXXXXX COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A
CREDIT SUPPORT PROVIDER ON THIS AGREEMENT.
5. Account Details and
Settlement Information: PAYMENTS TO BSFP:
PAYMENTS TO COUNTERPARTY:
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.
Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to BSFP a facsimile of the fully-executed
Confirmation to 000-000-0000. For inquiries regarding U.S. Transactions, please
contact XXXXX XXXXXX by telephone at 000-000-0000. For all other inquiries
please contact DERIVATIVES DOCUMENTATION by telephone at 000-0-000-0000
Originals will be provided for your execution upon your request.
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,
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
By:
------------------------------
Name:
Title:
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 14 of 16
Counterparty, acting through its duly authorized signatory, hereby agrees to,
accepts and confirms the terms of the foregoing as of the Trade Date.
XXXXX FARGO BANK, N.A., NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS TRUSTEE FOR
XXXXXXX XXXXX MORTGAGE INVESTORS TRUST, SERIES 2006- HE 1
By:
------------------------------
Name:
Title:
Reference Number: FXNEC7840
Xxxxx Fargo Bank, N.A., not in its individual capacity but solely as Trustee
for Xxxxxxx Xxxxx
Mortgage Investors Trust, Series 2006-HE I
February 7, 2006
Page 15 of 16
SCHEDULE I
EXHIBIT O-1
CLASS A-1 ONE-MONTH LIBOR CAP TABLE
1ML 1ML
STRIKE STRIKE
NOTIONAL LOWER UPPER
BEGINNING ENDING BALANCE COLLAR COLLAR
PERIOD ACCRUAL ACCRUAL ($) (%) (%)
-----------------------------------------------------------------------
1 02/07/06 02/25/06 355,063,000 9.780 9.780
2 02/25/06 03/25/06 350,380,470 7.274 9.780
3 03/25/06 04/25/06 344,670,828 6.549 9.780
4 04/25/06 05/25/06 337,944,187 6.774 9.780
5 05/25/06 06/25/06 330,218,641 6.549 9.780
6 06/25/06 07/25/06 321,520,382 6.774 9.780
7 07/25/06 08/25/06 311,914,581 6.549 9.780
8 08/25/06 09/25/06 301,587,655 6.549 9.780
9 09/25/06 10/25/06 290,668,933 6.775 9.780
10 10/25/06 11/25/06 279,409,635 6.550 9.780
11 11/25/06 12/25/06 268,436,378 6.775 9.780
12 12/25/06 01/25/07 257,767,819 6.550 9.780
13 01/25/07 02/25/07 247,395,343 6.550 9.780
14 02/25/07 03/25/07 237,307,012 7.276 9.780
15 03/25/07 04/25/07 227,498,575 6.551 9.780
16 04/25/07 05/25/07 217,962,114 6.777 9.780
17 05/25/07 06/25/07 208,689,942 6.552 9.780
18 06/25/07 07/25/07 199,674,591 6.778 9.780
19 07/25/07 08/25/07 190,439,721 6.552 9.780
20 08/25/07 09/25/07 180,043,110 6.692 9.780
21 09/25/07 10/25/07 166,073,005 7.351 9.780
22 10/25/07 11/25/07 152,663,709 8.302 9.780
23 11/25/07 12/25/07 139,980,153 8.612 9.780
24 12/25/07 01/25/08 128,225,594 8.309 9.780
25 01/25/08 02/25/08 117,907,364 8.294 9.780
26 02/25/08 03/25/08 110,386,707 8.920 9.780
27 03/25/08 04/25/08 103,216,754 8.455 9.780
28 04/25/08 05/25/08 96,279,674 9.126 9.780
29 05/25/08 06/25/08 89,570,760 8.827 9.780
30 06/25/08 07/25/08 83,077,509 9.116 9.780
31 07/25/08 08/25/08 76,792,412 8.804 9.780
32 08/25/08 09/25/08 70,708,524 8.836 9.780
33 09/25/08 10/25/08 64,819,672 9.320 9.780
34 10/25/08 11/25/08 59,120,223 9.529 9.780
35 11/25/08 12/25/08 53,609,091 9.780 9.780
36 12/25/08 01/25/09 48,273,489 9.527 9.780
37 01/25/09 02/25/09 43,107,208 9.510 9.780
38 02/25/09 03/25/09 43,107,208 9.780 9.780
39 03/25/09 04/25/09 43,107,208 9.664 9.780
40 04/25/09 05/25/09 43,107,208 9.780 9.780
41 05/25/09 06/25/09 43,107,208 9.780 9.780
42 06/25/09 07/25/09 43,107,208 9.780 9.780
43 07/25/09 08/25/09 43,107,208 9.780 9.780
44 08/25/09 09/25/09 43,107,208 9.780 9.780
45 09/25/09 10/25/09 43,107,208 9.780 9.780
46 10/25/09 11/25/09 43,107,208 9.780 9.780
47 11/25/09 12/25/09 43,107,208 9.780 9.780
48 12/25/09 01/25/10 43,107,208 9.780 9.780
49 01/25/10 02/25/10 43,107,208 9.780 9.780
50 02/25/10 03/25/10 43,107,208 9.780 9.780
51 03/25/10 04/25/10 43,107,208 9.780 9.780
52 04/25/10 05/25/10 43,107,208 9.780 9.780
53 05/25/10 06/25/10 43,107,208 9.780 9.780
54 06/25/10 07/25/10 43,107,208 9.780 9.780
55 07/25/10 08/25/10 43,107,208 9.780 9.780
56 08/25/10 09/25/10 43,107,208 9.780 9.780
57 09/25/10 10/25/10 43,107,208 9.780 9.780
58 10/25/10 11/25/10 43,107,208 9.780 9.780
59 11/25/10 12/25/10 42,420,984 9.780 9.780
60 12/25/10 01/25/11 41,220,787 9.780 9.780
61 01/25/11 02/25/11 40,057,252 9.780 9.780
62 02/25/11 03/25/11 38,929,195 9.780 9.780
63 03/25/11 04/25/11 37,835,487 9.780 9.780
64 04/25/11 05/25/11 36,775,008 9.780 9.780
65 05/25/11 06/25/11 35,746,690 9.780 9.780
66 06/25/11 07/25/11 34,749,501 9.780 9.780
67 07/25/11 08/25/11 33,782,442 9.780 9.780
68 08/25/11 09/25/11 32,844,550 9.780 9.780
69 09/25/11 10/25/11 31,934,900 9.780 9.780
70 10/25/11 11/25/11 31,052,582 9.746 9.780
71 11/25/11 12/25/11 30,196,724 9.780 9.780
72 12/25/11 01/25/12 29,366,484 9.697 9.780
73 01/25/12 02/25/12 28,561,047 9.673 9.780
74 02/25/12 03/25/12 27,779,626 9.780 9.780
75 03/25/12 04/25/12 27,021,466 9.628 9.780
76 04/25/12 05/25/12 26,285,828 9.780 9.780
77 05/25/12 06/25/12 25,571,997 9.580 9.780
78 06/25/12 07/25/12 24,879,283 9.780 9.780
79 07/25/12 08/25/12 24,207,021 9.532 9.780
With respect to any Distribution Date, if One-Month LIBOR (as determined by the
Cap Contract Counterparty and subject to a cap equal to 9.78%) exceeds the
amount set out for such Distribution Date in the column headed "1 ML Strike
Lower Collar," the Issuing Entity will receive payments pursuant to the Class
A-1 Cap Contract.
O-1-2
EXHIBIT O-2
CLASS A-2 ONE-MONTH LIBOR CAP TABLE
NOTIONAL
BALANCE 1ML STRIKE
PERIOD BEGINNING ENDING LOWER UPPER
ACCRUAL ACCRUAL ($) COLLAR (%) COLLAR (%) 1ML STRIKE
---------------------------------------------------------------------------------
1 02/07/06 02/25/06 223,117,000 9.310 9.310
2 02/25/06 03/25/06 220,409,911 7.265 9.310
3 03/25/06 04/25/06 217,053,813 6.545 9.310
4 04/25/06 05/25/06 213,052,528 6.770 9.310
5 05/25/06 06/25/06 208,418,289 6.546 9.310
6 06/25/06 07/25/06 203,161,899 6.772 9.310
7 07/25/06 08/25/06 197,312,447 6.548 9.310
8 08/25/06 09/25/06 190,934,296 6.550 9.310
9 09/25/06 10/25/06 184,115,441 6.777 9.310
10 10/25/06 11/25/06 176,954,626 6.556 9.310
11 11/25/06 12/25/06 169,947,450 6.784 9.310
12 12/25/06 01/25/07 163,136,619 6.563 9.310
13 01/25/07 02/25/07 156,496,374 6.566 9.310
14 02/25/07 03/25/07 150,043,188 7.294 9.310
15 03/25/07 04/25/07 143,771,674 6.573 9.310
16 04/25/07 05/25/07 137,676,604 6.802 9.310
17 05/25/07 06/25/07 131,752,904 6.580 9.310
18 06/25/07 07/25/07 126,007,386 6.810 9.310
19 07/25/07 08/25/07 120,338,751 6.588 9.310
20 08/25/07 09/25/07 114,332,546 6.629 9.310
21 09/25/07 10/25/07 105,393,775 7.135 9.310
22 10/25/07 11/25/07 96,613,827 8.530 9.310
23 11/25/07 12/25/07 88,317,180 8.956 9.310
24 12/25/07 01/25/08 80,503,654 8.655 9.310
25 01/25/08 02/25/08 73,390,626 8.649 9.310
26 02/25/08 03/25/08 68,460,132 9.269 9.310
27 03/25/08 04/25/08 63,880,052 8.741 9.310
28 04/25/08 05/25/08 59,450,096 9.310 9.310
29 05/25/08 06/25/08 55,168,606 9.295 9.310
30 06/25/08 07/25/08 51,027,501 9.310 9.310
31 07/25/08 08/25/08 47,021,544 9.284 9.310
32 08/25/08 09/25/08 43,146,172 9.290 9.310
With respect to any Distribution Date, if One-Month LIBOR (as determined by the
Cap Contract Counterparty and subject to a cap equal to 9.31%) exceeds the
amount set out for such Distribution Date in the column headed "1 ML Strike
Lower Collar,," the Issuing Entity will receive payments pursuant to the Class
A-2 Cap Contract.
O-2-1
EXHIBIT O-3
SUBORDINATED CERTIFICATE ONE-MONTH LIBOR CAP TABLE
NOTIONAL
BALANCE 1ML STRIKE
PERIOD BEGINNING ENDING LOWER UPPER
ACCRUAL ACCRUAL ($) COLLAR (%) COLLAR (%) 1ML STRIKE
---------------------------------------------------------------------------------
1 02/07/06 02/25/06 141,809,000 8.850 8.850
2 02/25/06 03/25/06 141,809,000 6.829 8.850
3 03/25/06 04/25/06 141,809,000 6.106 8.850
4 04/25/06 05/25/06 141,809,000 6.331 8.850
5 05/25/06 06/25/06 141,809,000 6.106 8.850
6 06/25/06 07/25/06 141,809,000 6.332 8.850
7 07/25/06 08/25/06 141,809,000 6.107 8.850
8 08/25/06 09/25/06 141,809,000 6.108 8.850
9 09/25/06 10/25/06 141,809,000 6.334 8.850
10 10/25/06 11/25/06 141,809,000 6.110 8.850
11 11/25/06 12/25/06 141,809,000 6.337 8.850
12 12/25/06 01/25/07 141,809,000 6.113 8.850
13 01/25/07 02/25/07 141,809,000 6.115 8.850
14 02/25/07 03/25/07 141,809,000 6.841 8.850
15 03/25/07 04/25/07 141,809,000 6.118 8.850
16 04/25/07 05/25/07 141,809,000 6.345 8.850
17 05/25/07 06/25/07 141,809,000 6.121 8.850
18 06/25/07 07/25/07 141,809,000 6.349 8.850
19 07/25/07 08/25/07 141,809,000 6.124 8.850
20 08/25/07 09/25/07 141,809,000 6.226 8.850
21 09/25/07 10/25/07 141,809,000 6.826 8.850
22 10/25/07 11/25/07 141,809,000 7.948 8.850
23 11/25/07 12/25/07 141,809,000 8.303 8.850
24 12/25/07 01/25/08 141,809,000 8.001 8.850
25 01/25/08 02/25/08 141,809,000 7.989 8.850
26 02/25/08 03/25/08 141,809,000 8.613 8.850
27 03/25/08 04/25/08 141,809,000 8.124 8.850
28 04/25/08 05/25/08 141,809,000 8.850 8.850
29 05/25/08 06/25/08 141,809,000 8.566 8.850
30 06/25/08 07/25/08 141,809,000 8.850 8.850
31 07/25/08 08/25/08 141,809,000 8.547 8.850
32 08/25/08 09/25/08 141,809,000 8.570 8.850
With respect to any Distribution Date, if One-Month LIBOR (as determined by the
Cap Contract Counterparty and subject to a cap equal to 8.85%) exceeds the
amount set out for such Distribution Date in the column headed "1 ML Strike
Lower Collar," the Issuing Entity will receive payments pursuant to the
Subordinated Certificate Cap Contract.
O-3-1
EXHIBIT P
FORM OF ASSESSMENT OF COMPLIANCE
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Center, 10th Floor
New York, New York 10080
Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-HE1
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
January 1, 2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as
depositor, Wilshire Credit Corporation, as servicer, and Xxxxx Fargo
Bank, N.A., as trustee, relating to Xxxxxxx Xxxxx Mortgage Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-HE1 (the
"Trust")
For the calendar year ending December 31, [2006] or portion thereof,
[Wilshire Credit Corporation, as Servicer] [Xxxxx Fargo Bank, N.A., as Trustee]
for the Trust has complied in all material respects with the Relevant Servicing
Criteria in Exhibit Q of the Agreement.
All capitalized terms used herein but not defined herein shall have the
meanings assigned to them in the Agreement.
Date:
---------------------------------
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
P-1
EXHIBIT Q
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
SERVICING CRITERIA CORPORATION XXXXX FARGO
REG AB REFERENCE GENERAL SERVICING CONSIDERATIONS (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
----------------------------------------------------------------------------------------------------------------
1122(d)(1)(i) Policies and procedures are X
instituted to monitor any
performance or other triggers and
events of default in accordance
with the transaction agreements.
1122(d)(1)(ii) If any material servicing X X
activities are outsourced to third
parties, policies and procedures
are instituted to monitor the
third party's performance and
compliance with such servicing
activities.
1122(d)(1)(iii) Any requirements in the N/A
transaction agreements to maintain
a back-up servicer for the Pool
Assets are maintained.
1122(d)(1)(iv) A fidelity bond and errors and X
omissions policy 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 X X
deposited into the appropriate
custodial bank accounts and
related bank clearing accounts no
more than two business days
following receipt, or such other
number of days specified in the
transaction agreements.
1122(d)(2)(ii) Disbursements made via wire X X Servicer disburses
transfer on behalf of an obligor funds to trustee.
or to an investor are made only by Trustee disburses
authorized personnel. funds to
certificateholders.
1122(d)(2)(iii) Advances of funds or guarantees X
regarding 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.
Q-1
WILSHIRE
CREDIT
SERVICING CRITERIA CORPORATION XXXXX FARGO
REG AB REFERENCE GENERAL SERVICING CONSIDERATIONS (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
----------------------------------------------------------------------------------------------------------------
1122(d)(2)(iv) The related accounts for the X X
transaction, such 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 X X
maintained at a 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 X X
as to prevent unauthorized access.
1122(d)(2)(vii) Reconciliations are prepared on a X X
monthly basis 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 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 90 calendar days
of their original identification,
or such other number of days
specified in the transaction
agreements.
INVESTOR REMITTANCES AND REPORTING
1122(d)(3)(i) Reports to investors, including X X
those to be 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 X X Wilshire remits cash
allocated and remitted in and loan level data to
accordance with timeframes, trustees based on
distribution priority and other timelines established
terms set forth in the transaction in the PSA. The
agreements. trustee is responsible
for the allocation of
funds to
certificateholders
using the appropriate
distribution priority
as established by the
PSA.
Q-2
WILSHIRE
CREDIT
SERVICING CRITERIA CORPORATION XXXXX FARGO
REG AB REFERENCE GENERAL SERVICING CONSIDERATIONS (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
----------------------------------------------------------------------------------------------------------------
1122(d)(3)(iii) Disbursements made to an investor X Trustee disburses
are posted within two business funds to
days to the Servicer's investor certificateholders.
records, or such other number of
days specified in the transaction
agreements.
1122(d)(3)(iv) Amounts remitted to investors per X X Servicer remits funds
the investor reports agree with and provides certain
cancelled checks, or other form of investor reports to
payment, or custodial bank trustees within
statements. guidelines and
timeframes established
in PSA. Trustee
disburses funds to
certificateholders.
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on pool X X
assets is maintained as required
by the transaction agreements or
related pool asset documents.
1122(d)(4)(ii) Pool assets and related documents X X
are safeguarded as required by the
transaction agreements
1122(d)(4)(iii) Any additions, removals or X
substitutions to the asset pool
are made, reviewed and approved in
accordance with any conditions or
requirements in the transaction
agreements.
1122(d)(4)(iv) Payments on pool assets, including X
any payoffs, made in accordance
with the related pool asset
documents are posted to the
Servicer's obligor records
maintained no more than two
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 X
the pool assets 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 an obligor's pool
assets (e.g., loan modifications
or re-agings) are made, reviewed
and approved by authorized X
personnel in accordance with the
transaction agreements and related
pool asset documents.
1122(d)(4)(vii) Loss mitigation or recovery
actions (e.g., forbearance plans,
modifications and deeds in lieu of
foreclosure, foreclosures and
repossessions, as applicable) are X
initiated, conducted and concluded
in accordance with the timeframes
or other requirements established
by the transaction agreements.
Q-3
WILSHIRE
CREDIT
SERVICING CRITERIA CORPORATION XXXXX FARGO
REG AB REFERENCE GENERAL SERVICING CONSIDERATIONS (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
----------------------------------------------------------------------------------------------------------------
1122(d)(4)(viii) Records documenting collection X
efforts are 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
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 X
rates of return 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 (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 X
accordance with applicable pool
asset documents and state laws;
and (C) such funds are returned to
the obligor within 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 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 X
support has been received by the
servicer at least 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 any payment to be
made on behalf of an obligor are
paid from the Servicer's funds and X
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 posted within two
business days to the obligor's
records maintained by the X
servicer, or such other number of
days specified in the transaction
agreements.
1122(d)(4)(xiv) Delinquencies, charge-offs and
uncollectible accounts are
recognized and recorded in X
accordance with the transaction
agreements.
Q-4
WILSHIRE
CREDIT
SERVICING CRITERIA CORPORATION XXXXX FARGO
REG AB REFERENCE GENERAL SERVICING CONSIDERATIONS (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
----------------------------------------------------------------------------------------------------------------
1122(d)(4)(xv) Any external enhancement or other X
support, identified in Item
1114(a)(1) through (3) or Item
1115 of Regulation AB, is
maintained as set forth in the
transaction agreements.
Q-5
EXHIBIT R
XXXXXXXX-XXXXX 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 XX Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Re: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-HE1
I, [identify the certifying individual], certify that:
1. I 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, 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 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.
R-1
[In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties [name of
servicer, sub-servicer, co-servicer, depositor or trustee].]
Date:
---------------------------
--------------------------------------
[Signature]
[Title]
R-2
EXHIBIT S
FORM OF ITEM 1123 CERTIFICATION OF SERVICER
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Center, 10th Floor
New York, New York 10080
Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-HE1
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of January 1,
2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Wilshire
Credit Corporation, as servicer, and Xxxxx Fargo Bank, National
Association, as trustee, relating to Xxxxxxx Xxxxx Mortgage Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-HE1
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:
----------------------------------
S-1
EXHIBIT T
ADDITIONAL DISCLOSURE NOTIFICATION
**SEND VIA FAX TO [XXX-XXX-XXXX] AND VIA EMAIL TO [ ] AND VIA OVERNIGHT MAIL TO
THE ADDRESS IMMEDIATELY BELOW88
Xxxxx Fargo Bank, N.A., as Trustee
Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Corporate Trust Services- [DEAL NAME] -- SEC REPORT PROCESSING
RE: **Additional Form [10-D][10-K][8-K] Disclosure** Required
Ladies and Gentlemen:
In accordance with Section [ ] of the Pooling and Servicing Agreement, ,
dated as of [ ][ ], 2006, among [ ], as [ ], [ ], as [ ], [ ], as [ ] and [ ],
as [ ]. the undersigned, as [ ], hereby notifies you that certain events have
come to our attention that [will] [may] need to be disclosed on Form
[10-D][10-K][8-K].
Description of Additional Form [10-D][10-K][8-K] Disclosure:
List of any Attachments hereto to be included in the Additional Form
[10-D][10-K][8-K] Disclosure:
Any inquiries related to this notification should be directed to [ ],
phone number: [ ]; email address: [ ].
[NAME OF PARTY],
as [role]
By:
-------------------------------------
Name:
Title:
T-1
SCHEDULE X
ITEM ON FORM 8-K PARTY RESPONSIBLE
--------------------------------------------------------------------------------
*Item 1.01- Entry into a Material All parties
Definitive Agreement
*Item 1.02- Termination of a Material All parties
Definitive Agreement
Item 1.03- Bankruptcy or Receivership Depositor
Item 2.04- Triggering Events that Depositor, Trustee
Accelerate or Increase a Direct
Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement
*Item 3.03- Material Modification to Trustee
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, Primary Servicer, Trustee
Trustee
*Item 6.03- Change in Credit Depositor/Trustee
Enhancement or External Support
*Item 6.04- Failure to Make a Required Trustee
Distribution
Item 6.05- Securities Act Updating Depositor
Disclosure
Item 7.01- Reg FD Disclosure Depositor
Item 8.01 Depositor
Item 9.01 Depositor
Schedule X-1
SCHEDULE Y
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 monthly required by Regulation AB)
statement to Certificateholders
Item 2: Legal Proceedings per Item All parties to the PSA (as to
1117 of Reg AB themselves), the
depositor/trustee/servicer (to the
extent known) as to the issuing
entity, the depositor as to the
sponsor, any 1110 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/ Servicer
Assets
Item 7: Significant Enhancement Depositor/Sponsor
Provider Information
Item 8: Other Information Trustee and any other party
responsible for disclosure items on
Form 8-K
Item 9: Exhibits Trustee/Depositor
Schedule Y-1
00000000.0.XXXXXXXX
SCHEDULE Z
ITEM ON FORM 10-K PARTY RESPONSIBLE
--------------------------------------------------------------------------------
Item 1B: Unresolved Staff Comments Depositor
*Item 9B: Other Information Trustee and any other party
responsible for disclosure items on
Form 8-K
*Item 15: Exhibits, Financial Trustee/servicer/primary servicer/
Statement Schedules Sub-Servicers. Depositor
*Additional Item: All parties to the PSA (as to
themselves), the
Disclosure per Item 1117 of Reg AB depositor/trustee/servicer (to the
extent known) as to the issuing
entity, the depositor as to the
sponsor, any 1100 originator, any
1100(d)(1) party
*Additional Item: All parties to the PSA as to
themselves, the depositor as to the
Disclosure per Item 1119 of Reg AB sponsor, originator, significant
obligor, enhancement or support
provider
Additional Item: Depositor/Sponsor/Mortgage Loan
Sponsor/Servicer
Disclosure per Item 1112(b) of Reg AB
Additional Item: Depositor/Sponsor/Trustee
Disclosure per Items 1114(b) and
1115(b) of Reg AB
Schedule Z-1
