EXECUTION COPY
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XXXXXXX XXXXX MORTGAGE INVESTORS, INC.,
Depositor
CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC,
Seller
XXXXXX LOAN SERVICING LP,
Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 2006
2006-CB8 Trust
C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-CB8
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS................................................. 10
Section 1.01 Defined Terms......................................... 10
Section 1.02 Accounting............................................ 51
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF
CERTIFICATES................................................ 52
Section 2.01 Conveyance of Mortgage Loans.......................... 52
Section 2.02 Acceptance by Trustee................................. 54
Section 2.03 Repurchase or Substitution of Mortgage Loans by the
Seller................................................ 55
Section 2.04 Representations and Warranties of the Seller with
Respect to the Mortgage Loans......................... 58
Section 2.05 Representations, Warranties and Covenants of the
Servicer.............................................. 59
Section 2.06 Representations and Warranties of the Depositor....... 60
Section 2.07 Issuance of Certificates and the Uncertificated
Regular Interests..................................... 61
Section 2.08 Representations and Warranties of the Seller.......... 62
Section 2.09 Covenants of the Seller............................... 63
ARTICLE III ADMINISTRATION AND SERVICING OF THE TRUST FUND.............. 64
Section 3.01 Servicer to Act as Servicer........................... 64
Section 3.02 Collection of Mortgage Loan Payments.................. 65
Section 3.03 Realization Upon Defaulted Mortgage Loans............. 66
Section 3.04 Collection Account and Distribution Account........... 67
Section 3.05 Permitted Withdrawals From the Collection Account..... 68
Section 3.06 Establishment of Escrow Account; Deposits in
Escrow Account........................................ 69
Section 3.07 Permitted Withdrawals From Escrow Account............. 70
Section 3.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder................................ 70
Section 3.09 Transfer of Accounts.................................. 71
Section 3.10 Maintenance of Hazard Insurance....................... 71
Section 3.11 Maintenance of Mortgage Impairment Insurance Policy... 72
Section 3.12 Fidelity Bond, Errors and Omissions Insurance......... 72
Section 3.13 Title, Management and Disposition of REO Property
and Certain Delinquent Mortgage Loans................. 73
Section 3.14 Due-on-Sale Clauses; Assumption and Substitution
Agreements............................................ 74
Section 3.15 Notification of Adjustments........................... 75
Section 3.16 Optional Purchases of Mortgage Loans by Servicer...... 76
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TABLE OF CONTENTS
(continued)
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Section 3.17 Trustee to Cooperate; Release of Files................ 76
Section 3.18 Servicing Compensation................................ 77
Section 3.19 Annual Statement as to Compliance..................... 77
Section 3.20 Reports on Assessment of Compliance and Attestation... 78
Section 3.21 Access to Certain Documentation and Information
Regarding the Mortgage Loans.......................... 80
Section 3.22 Reserved.............................................. 80
Section 3.23 Obligations of the Servicer in Respect of
Compensating Interest................................. 80
Section 3.24 Obligations of the Servicer in Respect of Mortgage
Interest Rates and Monthly Payments................... 81
Section 3.25 Investment of Funds in the Collection Account and
the Distribution Account.............................. 81
Section 3.26 Liability of Servicer; Indemnification................ 82
Section 3.27 Reports of Foreclosure and Abandonment of Mortgaged
Properties............................................ 83
Section 3.28 Protection of Assets.................................. 83
Section 3.29 Periodic Filings...................................... 83
Section 3.30 Advance Facility...................................... 86
ARTICLE IV FLOW OF FUNDS............................................... 89
Section 4.01 Interest Distributions................................ 89
Section 4.02 Distributions of Principal and Monthly Excess
Cashflow Amounts...................................... 90
Section 4.03 Allocation of Losses.................................. 99
Section 4.04 Method of Distribution................................ 99
Section 4.05 Distributions on Book-Entry Certificates.............. 99
Section 4.06 Statements............................................ 99
Section 4.07 Remittance Reports; Advances.......................... 102
ARTICLE V THE CERTIFICATES............................................ 104
Section 5.01 The Certificates...................................... 104
Section 5.02 Registration of Transfer and Exchange of
Certificates.......................................... 104
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates..... 110
Section 5.04 Persons Deemed Owners................................. 110
Section 5.05 Appointment of Paying Agent........................... 110
ARTICLE VI THE SELLER, THE SERVICER AND THE DEPOSITOR.................. 111
Section 6.01 Liability of the Seller, the Servicer and the
Depositor............................................. 111
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TABLE OF CONTENTS
(continued)
PAGE
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Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller, the Servicer or the
Depositor............................................. 111
Section 6.03 Limitation on Liability of the Servicer and Others.... 111
Section 6.04 Servicer Not to Resign................................ 112
Section 6.05 Delegation of Duties.................................. 113
ARTICLE VII DEFAULT..................................................... 113
Section 7.01 Servicer Events of Termination........................ 113
Section 7.02 Trustee to Act; Appointment of Successor.............. 114
Section 7.03 Waiver of Defaults.................................... 116
Section 7.04 Notification to Certificateholders.................... 116
Section 7.05 Survivability of Servicer Liabilities................. 116
ARTICLE VIII THE TRUSTEE................................................. 116
Section 8.01 Duties of Trustee..................................... 116
Section 8.02 Certain Matters Affecting the Trustee................. 118
Section 8.03 Trustee Not Liable for Certificates or Mortgage
Loans................................................. 119
Section 8.04 Trustee May Own Certificates.......................... 119
Section 8.05 Seller to Pay Trustee Fees and Expenses............... 120
Section 8.06 Eligibility Requirements for Trustee.................. 120
Section 8.07 Resignation or Removal of Trustee..................... 121
Section 8.08 Successor Trustee..................................... 121
Section 8.09 Merger or Consolidation of Trustee.................... 122
Section 8.10 Appointment of Co-Trustee or Separate Trustee......... 122
Section 8.11 Limitation of Liability............................... 123
Section 8.12 Trustee May Enforce Claims Without Possession of
Certificates.......................................... 123
Section 8.13 Suits for Enforcement................................. 123
Section 8.14 Waiver of Bond Requirement............................ 124
Section 8.15 Waiver of Inventory, Accounting and Appraisal
Requirement........................................... 124
ARTICLE IX REMIC AND GRANTOR TRUST ADMINISTRATION...................... 124
Section 9.01 REMIC Administration.................................. 124
Section 9.02 Prohibited Transactions and Activities................ 130
Section 9.03 Indemnification with Respect to Certain Taxes and Loss
of REMIC Status....................................... 130
Section 9.04 REO Property.......................................... 130
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TABLE OF CONTENTS
(continued)
PAGE
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ARTICLE X TERMINATION................................................. 131
Section 10.01 Termination........................................... 131
Section 10.02 Additional Termination Requirements................... 133
ARTICLE XI MISCELLANEOUS PROVISIONS.................................... 133
Section 11.01 Amendment............................................. 133
Section 11.02 Recordation of Agreement; Counterparts................ 135
Section 11.03 Limitation on Rights of Certificateholders............ 135
Section 11.04 Governing Law; Jurisdiction........................... 136
Section 11.05 Notices............................................... 136
Section 11.06 Severability of Provisions............................ 136
Section 11.07 Article and Section References........................ 136
Section 11.08 Notice to the Rating Agencies......................... 137
Section 11.09 Further Assurances.................................... 137
Section 11.10 Benefits of Agreement................................. 137
Section 11.11 Acts of Certificateholders............................ 138
Section 11.12 Compliance with Regulation AB......................... 138
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EXHIBITS:
Exhibit A-1 Form of Class A-1 Certificates
Exhibit A-2 Form of Class A-2A Certificates
Exhibit A-3 Form of Class A-2B Certificates
Exhibit A-4 Form of Class A-2C Certificate
Exhibit A-5 Form of Class A-2D Certificates
Exhibit B-1-1 Form of Class B-1 Certificates (144A)
Exhibit B-1-2 Form of Class B-1 Certificates (Regulation S)
Exhibit B-2-1 Form of Class B-2 Certificates (144A)
Exhibit B-2-2 Form of Class B-2 Certificates (Regulation S)
Exhibit B-3-1 Form of Class B-3 Certificates (144A)
Exhibit B-3-2 Form of Class B-3 Certificates (Regulation S)
Exhibit C-1-1 Form of Class R Certificate
Exhibit C-1-2 Form of Class R-X Certificates
Exhibit C-2 Form of Class M-1 Certificates
Exhibit C-3 Form of Class M-2 Certificates
Exhibit C-4 Form of Class M-3 Certificates
Exhibit C-5 Form of Class M-4 Certificates
Exhibit C-6 Form of Class M-5 Certificates
Exhibit C-7 Form of Class M-6 Certificates
Exhibit C-8 Form of Class M-7 Certificates
Exhibit C-9 Form of Class M-8 Certificates
Exhibit C-10 Form of Class P Certificates
Exhibit C-11-1 Form of Class CE-1 Certificates
Exhibit C-11-2 Form of Class CE-2 Certificates
Exhibit D-1 Mortgage Loan Schedule
Exhibit D-2 Group I Mortgage Loans
Exhibit D-3 Group II Mortgage Loans
Exhibit E Form of Request for Release of Documents
Exhibit F-1 Form of Custodian's Initial Certification
Exhibit F-2 Form of Custodian's Final Certification
Exhibit F-3 Form of Receipt of Mortgage Note
Exhibit G Mortgage Loan Purchase Agreement
Exhibit H Form of Lost Note Affidavit
Exhibit I Form of ERISA Representation
Exhibit J Forms of Investment Letters
Exhibit K Form of Residual Certificate Transfer Affidavit
Exhibit L Form of Transferor Certificate
Exhibit M Monthly Information Provided by Servicer
Exhibit N-1 Form of Swap Agreement
Exhibit N-2 Form of Cap Agreement
Exhibit O Form of Power of Attorney
Exhibit P-1 Form of 1122(d) Servicing Criteria Letter
Exhibit P-2 Servicing Criteria (Exhibit A to Form of Assessment of
Compliance)
Exhibit P-3 Form of Xxxxxxxx-Xxxxx Certification (Servicer)
Exhibit P-4 Form of Item 1123 Certification (Servicer)
Exhibit P-5 Form of Officer's Certificate (Trustee)
Exhibit Q Form of Officer's Certificate with Respect to Prepayments
Exhibit R Form 8-K Disclosure
Exhibit S Form 10-D Disclosure
Exhibit T Form 10-K Disclosure
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This Pooling and Servicing Agreement is dated as of October 1, 2006 (the
"Agreement"), among XXXXXXX XXXXX MORTGAGE INVESTORS, INC., as depositor (the
"Depositor"), CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC, as seller
(the "Seller"), XXXXXX LOAN SERVICING LP, as servicer ("Xxxxxx" or the
"Servicer") and U.S. BANK NATIONAL ASSOCIATION, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell pass-through certificates (collectively, the
"Certificates"), to be issued hereunder in multiple Classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of twenty-one Classes of
Certificates, designated as (i) the Class A-1, Class A-2A, Class A-2B, Class
A-2C and Class A-2D Certificates, (ii) the Class M-1, Class M-2, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7 and Class M-8 Certificates, (iii) the
Class B-1, Class B-2 and Class B-3 Certificates, (iv) the Class P Certificates,
(v) the Class CE-1 and Class CE-2 Certificates, (vi) the Class R Certificates
and the Class R-X Certificates.
As provided herein, the Trustee shall elect that the Trust Fund (other than
amounts distributable to the Class P Certificates, the Swap Agreement, the Cap
Agreement and the Supplemental Interest Trust) be treated for federal income tax
purposes as nine separate real estate mortgage investment conduits (each a
"REMIC" or, in the alternative, the "SWAP REMIC," "REMIC 1," "REMIC 2," "REMIC
B-1," "REMIC B-2," "REMIC B-3," "REMIC CE-1," "REMIC IO" and "REMIC CE-2"
respectively). The REMIC CE-2 Regular Interests represent all of the "regular
interests" in REMIC CE-2. The REMIC IO Regular Interests represent all of the
"regular interests" in REMIC IO. The REMIC CE-1 Regular Interests represent all
of the "regular interests" in REMIC CE-1. The REMIC B-3 Regular Interests
represent all of the "regular interests" in REMIC B-3. The REMIC B-2 Regular
Interests represent all of the "regular interests" in REMIC B-2. The REMIC B-1
Regular Interests represent all of the "regular interests" in REMIC B-1. The
REMIC 2 Regular Interests represent all of the "regular interests" in REMIC 2.
The REMIC 1 Regular Interests represent all of the "regular interests" in REMIC
1. The SWAP REMIC Regular Interests represent all of the "regular interests" in
the SWAP REMIC. Each Class of Cap Carryover Certificates (other than the Class B
Certificates) represents beneficial ownership of the Corresponding REMIC 2
Regular Interest, the right to receive payments in respect of Excess Interest
and obligations with respect to Class Payment Shortfalls. The Class B-1
Certificates represent beneficial ownership of the REMIC B-1 Regular Interest,
the right to receive payments in respect of Excess Interest and obligations with
respect to Class Payment Shortfalls. The Class B-2 Certificates represent
beneficial ownership of the REMIC B-2 Regular Interest, the right to receive
payments in respect of Excess Interest and obligations with respect to Class
Payment Shortfalls. The Class B-3 Certificates represent beneficial ownership of
the REMIC B-3 Regular Interest and the right to receive payments in respect of
Excess Interest and obligations with respect to Class Payment Shortfalls.
For federal income tax purposes, the Class CE-2 Certificates shall
represent a "regular interest" in REMIC CE-2 entitled to 100% of the payments on
the REMIC 2 CE-2 Interest. For federal income tax purposes, the Class CE-1
Certificates shall represent (i) the right to receive all distributions with
respect to the REMIC Regular Interests represented by the REMIC CE-1 CE-1
Interest and the REMIC IO IO Interest, (ii) the obligation to pay amounts in
respect of Excess Interest and the right to receive amounts in respect of Class
Payment Shortfalls as described in Section 9.01(l) and (iii) ownership of the
Swap Agreement, the Cap Agreement and the Supplemental Interest Trust. The Class
P Certificates shall be entitled to the amounts distributable in respect of
prepayment penalties on the Mortgage Loans pursuant to Section 4.01 hereof and
shall not represent a REMIC regular interest. Each of the Class R-SW, Class R-1
and Class R-2 Interests, represented collectively by the Class R Certificates,
represents the sole Class of "residual interest" in the SWAP REMIC, REMIC 1 and
REMIC 2, respectively, for purposes of the
REMIC Provisions. Each of the Class R-B-1, Class R-B-2, Class R-B-3, Class
R-CE-1, Class R-IO and Class R-CE-2 Interests, represented collectively by the
Class R-X Certificates, represent the sole Class of "residual interest" in REMIC
B-1, REMIC B-2, REMIC B-3, REMIC CE-1, REMIC IO and REMIC CE-2, respectively,
for purposes of the REMIC provisions.
The assets of the Trust Fund (other than the Supplemental Interest Trust,
the Swap Agreement, the Cap Agreement and the rights to payments distributable
to the Class P Certificates) will be held as assets of the SWAP REMIC. The SWAP
REMIC Regular Interests will be held as assets of REMIC 1. The REMIC 1 Regular
Interests will be held as assets of REMIC 2. The REMIC 2 B-1 Interest will be
held as the sole asset of REMIC B-1. The REMIC 2 B-2 Interest will be held as
the sole asset of REMIC B-2. The REMIC 2 B-3 Interest will be held as the sole
asset of REMIC B-3. The REMIC 2 CE-1 Interest will be held as the sole asset of
REMIC CE-1. The REMIC 2 IO Interest will be held as the sole asset of REMIC IO.
The REMIC 2 CE-2 Interest will be held as the sole asset of REMIC CE-2. The
"latest possible maturity date" for federal income tax purposes of all interests
created hereby will be the Distribution Date in May 2046.
THE SWAP REMIC
The following table sets forth the designations, initial principal balances
and interest rates for each interest in the SWAP REMIC:
Class Initial Principal Balance Interest Rate
------ ------------------------- -------------
SW-Z $56,469,720.780 (1)
SW-1A $ 5,248,669.500 (2)
SW-1B $ 5,248,669.500 (3)
SW-2A $ 6,195,309.500 (2)
SW-2B $ 6,195,309.500 (3)
SW-3A $ 7,119,259.000 (2)
SW-3B $ 7,119,259.000 (3)
SW-4A $ 8,016,460.500 (2)
SW-4B $ 8,016,460.500 (3)
SW-5A $ 8,819,628.500 (2)
SW-5B $ 8,819,628.500 (3)
SW-6A $ 9,565,219.000 (2)
SW-6B $ 9,565,219.000 (3)
SW-7A $10,026,225.500 (2)
SW-7B $10,026,225.500 (3)
SW-8A $10,101,866.000 (2)
SW-8B $10,101,866.000 (3)
SW-9A $10,008,117.000 (2)
SW-9B $10,008,117.000 (3)
SW-10A $ 9,882,412.500 (2)
SW-10B $ 9,882,412.500 (3)
SW-11A $ 9,455,237.000 (2)
SW-11B $ 9,455,237.000 (3)
SW-12A $ 9,259,408.500 (2)
SW-12B $ 9,259,408.500 (3)
SW-13A $ 8,805,980.500 (2)
2
Class Initial Principal Balance Interest Rate
------ ------------------------- -------------
SW-13B $ 8,805,980.500 (3)
SW-14A $ 8,380,384.000 (2)
SW-14B $ 8,380,384.000 (3)
SW-15A $ 7,966,257.500 (2)
SW-15B $ 7,966,257.500 (3)
SW-16A $ 7,628,820.000 (2)
SW-16B $ 7,628,820.000 (3)
SW-17A $ 8,217,131.000 (2)
SW-17B $ 8,217,131.000 (3)
SW-18A $ 9,925,857.500 (2)
SW-18B $ 9,925,857.500 (3)
SW-19A $ 9,933,114.000 (2)
SW-19B $ 9,933,114.000 (3)
SW-20A $ 9,182,628.500 (2)
SW-20B $ 9,182,628.500 (3)
SW-21A $10,217,192.000 (2)
SW-21B $10,217,192.000 (3)
SW-22A $ 8,939,693.500 (2)
SW-22B $ 8,939,693.500 (3)
SW-23A $ 7,048,552.500 (2)
SW-23B $ 7,048,552.500 (3)
SW-24A $ 6,048,985.500 (2)
SW-24B $ 6,048,985.500 (3)
SW-25A $ 487,192.000 (2)
SW-25B $ 487,192.000 (3)
SW-26A $ 2,709,588.500 (2)
SW-26B $ 2,709,588.500 (3)
SW-27A $ 2,559,395.500 (2)
SW-27B $ 2,559,395.500 (3)
SW-28A $ 2,417,787.000 (2)
SW-28B $ 2,417,787.000 (3)
SW-29A $ 2,283,716.000 (2)
SW-29B $ 2,283,716.000 (3)
SW-30A $ 2,157,877.500 (2)
SW-30B $ 2,157,877.500 (3)
SW-31A $ 2,039,193.500 (2)
SW-31B $ 2,039,193.500 (3)
SW-32A $ 1,926,766.500 (2)
SW-32B $ 1,926,766.500 (3)
SW-33A $ 1,821,248.500 (2)
SW-33B $ 1,821,248.500 (3)
SW-34A $ 1,721,757.000 (2)
SW-34B $ 1,721,757.000 (3)
SW-35A $ 1,627,795.500 (2)
SW-35B $ 1,627,795.500 (3)
SW-36A $ 1,539,258.000 (2)
SW-36B $ 1,539,258.000 (3)
SW-37A $ 1,455,716.500 (2)
3
Class Initial Principal Balance Interest Rate
------ ------------------------- -------------
SW-37B $ 1,455,716.500 (3)
SW-38A $ 1,376,872.500 (2)
SW-38B $ 1,376,872.500 (3)
SW-39A $ 1,302,483.000 (2)
SW-39B $ 1,302,483.000 (3)
SW-40A $ 1,232,275.000 (2)
SW-40B $ 1,232,275.000 (3)
SW-41A $ 1,166,006.000 (2)
SW-41B $ 1,166,006.000 (3)
SW-42A $ 1,103,449.500 (2)
SW-42B $ 1,103,449.500 (3)
SW-43A $ 1,044,391.000 (2)
SW-43B $ 1,044,391.000 (3)
SW-44A $ 988,586.000 (2)
SW-44B $ 988,586.000 (3)
SW-45A $18,660,360.500 (2)
SW-45B $18,660,360.500 (3)
R-SW (4) (4)
SW-CE2 (5) (5)
(1) The interest rate on the Class SW-Z Interest shall be a per annum rate
equal to the Net WAC.
(2) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest ending with the designation "A" shall be a per annum rate equal to
2 times the Net WAC, subject to a maximum rate of 2 times the REMIC Swap
Rate for such Distribution Date.
(3) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest ending with the designation "B" shall be a per annum rate equal to
the greater of (x) the excess, if any, of (i) 2 times the Net WAC over (ii)
2 times the REMIC Swap Rate for such Distribution Date and (y) 0.00%.
(4) The Class R-SW Interest shall have no principal amount and shall bear no
interest.
(5) The Class SW-CE2 Interest shall be entitled to distributions in the same
amounts as all distributions on the Class CE-2 Certificates.
REMIC 1
The following table specifies the class designation, interest rate, initial
principal amount and Class of Related Certificate for each class of REMIC 1
Interests.
4
Designation Interest Rate Initial Principal Amount Related Certificate
----------- ------------- ------------------------ -------------------
LT1-A1 (1) (3) Class A-1
LT1-A2A (1) (3) Class A-2A
LT1-A2B (1) (3) Class A-2B
LT1-A2C (1) (3) Class A-2C
LT1-A2D (1) (3) Class A-2D
LT1-M1 (1) (3) Class M-1
LT1-M2 (1) (3) Class M-2
LT1-M3 (1) (3) Class M-3
LT1-M4 (1) (3) Class M-4
LT1-M5 (1) (3) Class M-5
LT1-M6 (1) (3) Class M-6
LT1-M7 (1) (3) Class M-7
LT1-M8 (1) (3) Class M-8
LT1-B1 (1) (3) Class B-1
LT1-B2 (1) (3) Class B-2
LT1-B3 (1) (3) Class B-3
LT1-X1 (1) (4) N/A
LT1-IO (5) (5) N/A
LT1-CE2 (6) (6) N/A
R-1 (2) (2) N/A
----------
(1) For any Distribution Date, the interest rate for these interests shall be a
per annum rate (but not less than zero) equal to the product of (i) the
weighted average of the interest rates on the SWAP REMIC Regular Interests
(other than the Class SW-CE2 Interest) for such Distribution Date and (ii)
a fraction the numerator of which is 30 and the denominator of which is the
actual number of days in the Interest Accrual Period for the Class A-1
Certificates, provided however, that for any Distribution Date on which the
Class LT1-IO Interest is entitled to a portion of interest accruals on a
SWAP REMIC Regular Interest ending with a designation "A" as described in
footnote 5 below, such weighted average shall be computed by first
subjecting the rate on such SWAP REMIC Regular Interest to a cap equal to
Swap LIBOR for such Distribution Date.
(2) The Class R-1 Interest shall represent the sole class of residual interest
in REMIC 1. The Class R-1 Interest will not have a principal amount or an
interest rate. The Class R-1 Interest shall be represented by the Class R
Certificate.
(3) The initial principal amount of these interests shall be an amount equal to
50% of the initial principal amount of the related certificates.
(4) The initial principal amount of this interest shall be an amount equal to
the excess of (i) the aggregate Cut-off Date Principal Balance of the
Mortgage Loans over (ii) the aggregate initial principal amount of the
Marker Interests.
(5) The Class LT1-IO Interest is an interest-only class that does not have a
principal balance. For only those Distribution Dates listed in the first
column of the table below, the Class LT1-IO Interest shall be entitled to
interest accrued on the SWAP REMIC Regular Interest listed in the second
column below at a per annum rate equal to the excess, if any, of (i) the
interest rate for such SWAP REMIC Regular Interest for such Distribution
Date over (ii) Swap LIBOR for such Distribution Date.
5
Distribution Date SWAP REMIC Regular Interest
----------------- ---------------------------
1 Class SW-1A
1-2 Class SW-2A
1-3 Class SW-3A
1-4 Class SW-4A
1-5 Class SW-5A
1-6 Class SW-6A
1-7 Class SW-7A
1-8 Class SW-8A
1-9 Class SW-9A
1-10 Class SW-10A
1-11 Class SW-11A
1-12 Class SW-12A
1-13 Class SW-13A
1-14 Class SW-14A
1-15 Class SW-15A
1-16 Class SW-16A
1-17 Class SW-17A
1-18 Class SW-18A
1-19 Class SW-19A
1-20 Class SW-20A
1-21 Class SW-21A
1-22 Class SW-22A
1-23 Class SW-23A
1-24 Class SW-24A
1-28 Class SW-25A
1-29 Class SW-26A
1-30 Class SW-27A
1-31 Class SW-28A
1-32 Class SW-29A
1-33 Class SW-30A
1-34 Class SW-31A
1-35 Class SW-32A
1-36 Class SW-33A
1-37 Class SW-34A
1-38 Class SW-35A
1-39 Class SW-36A
1-40 Class SW-37A
1-41 Class SW-38A
1-42 Class SW-39A
1-43 Class SW-40A
1-44 Class SW-41A
1-45 Class SW-42A
1-46 Class SW-43A
1-47 Class SW-44A
1-48 Class SW-45A
6
(6) The Class LT1-CE2 Interest shall be entitled to distributions in the same
amounts as all distributions on the Class CE-2 Certificates.
All computations with respect to any REMIC 1 Interest shall be taken out to
ten decimal places.
REMIC 2
The sole assets of REMIC 2 shall be the REMIC 1 Regular Interests. The
regular interests in REMIC 2 shall be the REMIC 2 Regular Interests. The
residual interest in REMIC 2 will be the Class R-2 Interest, which will be
represented by the Class R Certificate.
REMIC B-1
The sole asset of REMIC B-1 shall be the REMIC 2 B-1 Interest. The sole
regular interest in REMIC B-1 will be the REMIC B-1 B-1 Interest. The residual
interest in REMIC B-1 will be the Class R-B-1 Interest, which will be
represented by the Class R-X Certificate.
REMIC B-2
The sole asset of REMIC B-2 shall be the REMIC 2 B-2 Interest. The sole
regular interest in REMIC B-2 will be the REMIC B-2 B-2 Interest. The residual
interest in REMIC B-2 will be the Class R-B-2 Interest, which will be
represented by the Class R-X Certificate.
REMIC B-3
The sole asset of REMIC B-3 shall be the REMIC 2 B-3 Interest. The sole
regular interest in REMIC B-3 will be the REMIC B-3 B-3 Interest. The residual
interest in REMIC B-3 will be the Class R-B-3 Interest, which will be
represented by the Class R-X Certificate.
REMIC CE-1
The sole asset of REMIC CE-1 shall be the REMIC 2 CE-1 Interest. The sole
regular interest in REMIC CE-1 will be the REMIC CE-1 CE-1 Interest. The
residual interest in REMIC CE-1 will be the Class R-CE-1 Interest, which will be
represented by the Class R-X Certificate.
REMIC IO
The sole asset of REMIC IO shall be the REMIC 2 IO Interest. The sole
regular interest in REMIC IO will be the REMIC IO IO Interest. The residual
interest in REMIC IO will be the Class R-IO Interest, which will be represented
by the Class R-X Certificate.
REMIC CE-2
The sole asset of REMIC CE-2 shall be the REMIC 2 CE-2 Interest. The sole
regular interest in REMIC CE-2 will be the Class CE-2 Certificates. The residual
interest in REMIC CE-2 will be the Class R-CE-2 Interest, which will be
represented by the Class R-X Certificate.
The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance, for each
Class of Certificates comprising the interests in the Trust Fund created
hereunder:
7
Original Class
Certificate
Principal Balance or Pass-Through Final
Class Notional Amount Rate Maturity Dates
----- -------------------- ------------ --------------
A-1 $183,951,000 (1) October 25, 2036
A-2A $144,285,000 (2) October 25, 2036
A-2B $ 29,890,000 (3) October 25, 2036
A-2C $ 38,412,000 (4) October 25, 2036
A-2D $ 10,796,000 (5) October 25, 2036
M-1 $ 22,296,000 (6) October 25, 2036
M-2 $ 30,012,000 (7) October 25, 2036
M-3 $ 11,436,000 (8) October 25, 2036
M-4 $ 11,719,000 (9) October 25, 2036
M-5 $ 13,720,000 (10) October 25, 2036
M-6 $ 8,003,000 (11) October 25, 2036
M-7 $ 10,576,000 (12) October 25, 2036
M-8 $ 2,858,000 (13) October 25, 2036
B-1 $ 15,435,000 (14) October 25, 2036
B-2 $ 10,576,000 (15) October 25, 2036
B-3 $ 9,718,000 (16) October 25, 2036
CE-1 N/A (17) N/A
CE-2 N/A (18) N/A
P N/A (19) N/A
R N/A N/A N/A
R-X N/A N/A N/A
Total $553,683,000
(1) Interest will accrue on the Class A-1 Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class A-1
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(2) Interest will accrue on the Class A-2A Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class A-2A
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(3) Interest will accrue on the Class A-2B Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class A-2B
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(4) Interest will accrue on the Class A-2C Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class A-2C
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(5) Interest will accrue on the Class A-2D Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class A-2D
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(6) Interest will accrue on the Class M-1 Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class M-1
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(7) Interest will accrue on the Class M-2 Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class M-2
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
8
(8) Interest will accrue on the Class M-3 Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class M-3
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(9) Interest will accrue on the Class M-4 Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class M-4
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(10) Interest will accrue on the Class M-5 Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class M-5
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(11) Interest will accrue on the Class M-6 Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class M-6
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(12) Interest will accrue on the Class M-7 Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class M-7
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(13) Interest will accrue on the Class M-8 Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class M-8
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(14) Interest will accrue on the Class B-1 Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class B-1
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(15) Interest will accrue on the Class B-2 Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class B-2
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(16) Interest will accrue on the Class B-3 Certificates during each Interest
Accrual Period at a rate equal to the least of: (i) the Class B-3
Pass-Through Rate, (ii) the Net WAC Cap for such Distribution Date and
(iii) the Maximum Rate Cap.
(17) For federal income tax purposes, the Class CE-1 Certificate shall represent
(i) the right to receive all distributions with respect to the REMIC
Regular Interests represented by the REMIC CE-1 CE-1 Interest and the REMIC
IO IO Interest, (ii) the obligation to pay amounts in respect of Excess
Interest and the right to receive amounts in respect of Class Payment
Shortfalls as described in Section 9.01(l) and (iii) ownership of the Swap
Agreement, the Cap Agreement and the Supplemental Interest Trust.
(18) The Class CE-2 Certificate shall represent the right to receive the Excess
Servicing Fee.
(19) The Class P Certificates shall be entitled to the amounts distributable in
respect of prepayment penalties on the Mortgage Loans pursuant to Section
4.01 hereof and shall not represent a REMIC regular interest.
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, interest on
the Class A and Class M Certificates and on the REMIC 1 Regular Interests and
the REMIC 2 CE-1 Interest will be calculated on the basis of the actual number
of days in the related Interest Accrual Period and a 360-day year. Interest on
the Class B Certificates and the SWAP
9
REMIC Regular Interests will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
"1933 Act": The Securities Act of 1933, as amended.
"60+ Day Delinquent Loan": With respect to any date of determination, each
Mortgage Loan with respect to which any portion of a Monthly Payment is, as of
the last day of the prior Collection Period, two months or more past due, each
Mortgage Loan in foreclosure, all REO Property and each Mortgage Loan for which
the Mortgagor has filed for bankruptcy after the Closing Date.
"Account": Any of the Collection Account, the Distribution Account, the
Swap Account, the Cap Account and the Escrow Account.
"Accountant's Attestation": As defined in Section 3.20.
"Accrued Certificate Interest": With respect to each Distribution Date and
Class of Certificates, an amount equal to the interest accrued at the applicable
rate set forth or described for such Class in the table in the Preliminary
Statement during the related Interest Accrual Period on the Certificate
Principal Balance or Notional Amount of such Class of Certificates, reduced by
such Class's Interest Percentage of Relief Act Interest Shortfalls for such
Distribution Date.
"Adjustment Date": With respect to each adjustable rate Mortgage Loan, each
adjustment date, on which the Mortgage Interest Rate of an adjustable rate
Mortgage Loan changes pursuant to the related Mortgage Note. The first
Adjustment Date following the Cut-off Date as to each adjustable rate Mortgage
Loan is set forth in the Mortgage Loan Schedule.
"Adjustment Period": As defined in the Preliminary Statement.
"Advance": As to any Mortgage Loan or REO Property, any advance made by the
Servicer in respect of any Distribution Date pursuant to Section 4.07.
"Advance Facility": As defined in Section 3.30(a) hereof.
"Advance Facility Notice": As defined in Section 3.30(b) hereof.
"Advance Financing Person": As defined in Section 3.30(a) hereof.
"Advance Reimbursement Amounts": As defined in Section 3.30(b) hereof.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For 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 "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all amendments and
supplements hereto.
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"Applicable Regulations": As to any Mortgage Loan, all federal, state and
local laws, statutes, rules and regulations applicable thereto, including with
respect to each FHA Loan, the FHA Regulations and the related FHA Insurance
Contract and with respect to each VA Loan, the VA Regulations and the related VA
Guaranty.
"Applied Realized Loss Amount": With respect to each Distribution Date, the
excess, if any, of (a) the aggregate of the Certificate Principal Balances of
the Certificates (after giving effect to all distributions on such Distribution
Date) over (b) the Pool Balance as of the end of the related Collection Period.
"Assessment of Compliance": As defined in Section 3.20.
"Assignment": An assignment of Mortgage, notice of transfer or equivalent
instrument, in recordable form, which is sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect or
record the sale of the Mortgage.
"Available Funds": As to any Distribution Date, an amount equal to the
excess of (i) the sum of (a) the aggregate of the Monthly Payments due during
the related Collection Period and received by the Servicer on or prior to the
related Determination Date, (b) Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds, Principal Prepayments, Substitution Adjustment Amounts,
the Purchase Price for any repurchased Mortgage Loan, the Termination Price with
respect to the termination of the Trust pursuant to Section 10.01 hereof, any
Reimbursement Amount or Subsequent Recovery deposited to the Collection Account
and other unscheduled recoveries of principal and interest (excluding prepayment
penalties) in respect of the Mortgage Loans during the related Prepayment
Period, (c) the aggregate of any amounts received in respect of an REO Property
withdrawn from any REO account and deposited in the Collection Account for such
Distribution Date, (d) any Compensating Interest for such Distribution Date, and
(e) the aggregate of any Advances made by the Servicer for such Distribution
Date over (ii) the sum of (a) amounts reimbursable or payable to the Servicer
pursuant to Section 3.05, (b) Stayed Funds, (c) the Servicing Fee, (d) expenses
reimbursable pursuant to Section 6.03 and fees, expenses and indemnities due
pursuant to Section 8.05 and (d) amounts deposited in the Collection Account or
the Distribution Account, as the case may be, in error.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the payment of
the unamortized principal balance of such Mortgage Loan in a single payment at
the maturity of such Mortgage Loan that is substantially greater than the
preceding monthly payment.
"Balloon Payment": A payment of the unamortized principal balance of a
Mortgage Loan in a single payment at the maturity of such Mortgage Loan that is
substantially greater than the preceding Monthly Payment.
"Bankruptcy Code": Title 11 of the United States Code, as amended.
"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 5.02 hereof). On the Closing Date, the
Class A, Class M and Class B Certificates shall be Book-Entry Certificates.
"Book-Entry Regulation S Global Security": As defined in Section 5.01.
11
"Business Day": Any day other than a Saturday, a Sunday or a day on which
banking institutions in the State of Delaware, the State of New York, the State
of Minnesota or in the city in which the Corporate Trust Office of the Trustee
is located are authorized or obligated by law or executive order to be closed.
"Cap": Either the Net WAC Cap or the Maximum Rate Cap.
"Cap Account": The separate Eligible Account created and maintained by
the Trustee pursuant to Section 4.02(i)(i) in the name of the Trustee for the
benefit of the Trust Fund and designated "U.S. Bank, as trustee, in trust for
registered holders of 2006-CB8 Trust, C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2006-CB8." Funds in the Cap Account shall be held in trust
for the Trust Fund for the uses and purposes set forth in this Agreement.
"Cap Agreement": The interest rate cap agreement, dated October 30, 2006
between the Cap Counterparty and the Trustee on behalf of the Supplemental
Interest Trust, relating to the Class A and Class M Certificates.
"Cap Carryover Certificates": The Class A, Class M and Class B
Certificates.
"Cap Counterparty": Barclays Bank PLC.
"Cap Payment": With respect to the Cap Agreement and for any Distribution
Date, the amount, if any, required to be paid by the Cap Counterparty on such
Distribution Date under the Cap Agreement.
"Certificate": Any Regular Certificate or Residual Certificate.
"Certificate Custodian": Initially, U.S. Bank National Association;
thereafter any other Certificate Custodian acceptable to the Depository and
selected by the Trustee.
"Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class of Certificates
(other than the Class P, Class CE-1, Class CE-2 and Residual Certificates) and
any Distribution Date, the Original Class Certificate Principal Balance reduced
by the sum of (i) all amounts actually distributed in respect of principal of
such Class on all prior Distribution Dates and (ii) Applied Realized Loss
Amounts allocated thereto. The Class CE-1, Class CE-2, Class P and Residual
Certificates do not have a Certificate Principal Balance. With respect to any
Certificate (other than a Class CE-1, Class CE-2, Class P or a Residual
Certificate) of a Class and any Distribution Date, the portion of the
Certificate Principal Balance of such Class represented by such Certificate
equal to the product of the Percentage Interest evidenced by such Certificate
and the Certificate Principal Balance of such Class. Notwithstanding the
foregoing on any Distribution Date relating to a Collection 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 amount of any Subsequent
Recovery allocable to principal distributed on such date to the
Certificateholders (reduced by the amount of the increase in the Certificate
Principal Balance of any more senior Class of Certificates pursuant to this
sentence on such Distribution Date).
"Certificate Register" and "Certificate Registrar": The register maintained
and registrar appointed pursuant to Section 5.02 hereof.
"Certificateholder" or "Holder": The Person in whose name a Certificate is
registered in the Certificate Register, except that a Disqualified Organization
or Disqualified Non-U.S. Person shall not be a Holder of a Residual Certificate
for any purpose hereof.
12
"Class": Collectively, Certificates or REMIC Regular Interests which have
the same priority of payment and bear the same class designation and the form of
which is identical except for variation in the Percentage Interest evidenced
thereby.
"Class A Certificate": Any one of the Certificates with an "A" designated
on the face thereof substantially in the form annexed hereto as Exhibits X-0,
X-0, X-0, X-0 and A-5, executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the right
to distributions as set forth herein and therein.
"Class A Certificateholders": Collectively, the Holders of the Class A
Certificates.
"Class A Interest Carry Forward Amount": For any Distribution Date, the sum
of the Interest Carry Forward Amounts for the Class A Certificates for such
Distribution Date.
"Class A Principal Distribution Amount": As of any Distribution Date, the
sum of the Group I Principal Distribution Amount and the Group II Principal
Distribution Amount.
"Class A-1 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 0.140% per annum, and (ii) following the
Optional Termination Date, 0.280% per annum.
"Class A-1 Pass-Through Rate": For each Distribution Date, the least of (i)
LIBOR as of the related LIBOR Determination Date, plus the Class A-1 Certificate
Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
"Class A-2A Certificate Margin": For each Distribution Date, (i) on or
prior to the Optional Termination Date, 0.050% per annum and (ii) following the
Optional Termination Date, 0.100% per annum.
"Class A-2A Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date plus the Class A-2A
Certificate Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
"Class A-2B Certificate Margin": For each Distribution Date, (i) on or
prior to the Optional Termination Date, 0.110% per annum and (ii) following the
Optional Termination Date, 0.220% per annum.
"Class A-2B Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date plus the Class A-2B
Certificate Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
"Class A-2C Certificate Margin": For each Distribution Date, (i) on or
prior to the Optional Termination Date, 0.150% per annum and (ii) following the
Optional Termination Date, 0.300% per annum.
"Class A-2C Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date plus the Class A-2C
Certificate Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
13
"Class A-2D Certificate Margin": For each Distribution Date, (i) on or
prior to the Optional Termination Date, 0.230% per annum and (ii) following the
Optional Termination Date, 0.460% per annum.
"Class A-2D Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date plus the Class A-2D
Certificate Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
"Class B Certificate": Any one of the Certificates with a "B" designated on
the face thereof substantially in the form annexed hereto as Exhibits X-0-0,
X-0-0, X-0-0, X-0-0, B-3-1 and B-3-2, executed by the Trustee on behalf of the
Trust and authenticated and delivered by the Certificate Registrar, representing
the right to distributions as set forth herein and therein.
"Class B Certificateholders": Collectively, the Holders of the Class B
Certificates.
"Class B-1 Applied Realized Loss Amount": As to the Class B-1 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class B-1 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class B-2 Applied Realized Loss
Amount and the Class B-3 Applied Realized Loss Amount, each case as of such
Distribution Date.
"Class B-1 Pass-Through Rate": For each Distribution Date, the least of (i)
(a) on or prior to the Optional Termination Date, 7.000% per annum and (b)
following the Optional Termination Date, 7.500% per annum, (ii) the Net WAC Cap
and (iii) the Maximum Rate Cap.
"Class B-1 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Principal Balance of the Class M-1, Class M-2 and Class M-3
Certificates (after taking into account the payment of the Class M-1/M-2/M-3
Principal Distribution Amount on such Distribution Date), (iii) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date), (iv) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the payment of the Class M-5 Principal Distribution
Amount on such Distribution Date), (v) the Certificate Principal Balance of the
Class M-6 Certificates (after taking into account the payment of the Class M-6
Principal Distribution Amount on such Distribution Date) (vi) the Certificate
Principal Balance of the Class M-7 Certificates (after taking into account the
payment of the Class M-7 Principal Distribution Amount on such Distribution
Date), (vii) the Certificate Principal Balance of the Class M-8 Certificates
(after taking into account the payment of the Class M-8 Principal Distribution
Amount on such Distribution Date) and (viii) the Certificate Principal Balance
of the Class B-1 Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) approximately 86.60% and (ii) the Pool
Balance as of the last day of the related Collection Period and (B) the Pool
Balance as of the last day of the related Collection Period minus the product of
(i) 0.50% and (ii) the Pool Balance on the Cut-off Date.
"Class B-1 Realized Loss Amortization Amount": As to the Class B-1
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B-1 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
14
of the amounts described in Section 4.02(b)(i) through (xxix) hereof, in each
case for such Distribution Date.
"Class B-2 Applied Realized Loss Amount": As to the Class B-2 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class B-2 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the Applied Realized Loss Amount as of such
Distribution Date over (ii) the Class B-3 Applied Realized Loss Amount, in each
case as of such Distribution Date.
"Class B-2 Pass-Through Rate": For each Distribution Date, the least of (i)
(a) on or prior to the Optional Termination Date, 7.000% per annum and (b)
following the Optional Termination Date, 7.500% per annum, (ii) the Net WAC Cap
and (iii) the Maximum Rate Cap.
"Class B-2 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Principal Balance of the Class M-1, Class M-2 and Class M-3
Certificates (after taking into account the payment of the Class M-1/M-2/M-3
Principal Distribution Amount on such Distribution Date), (iii) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date), (iv) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the payment of the Class M-5 Principal Distribution
Amount on such Distribution Date), (v) the Certificate Principal Balance of the
Class M-6 Certificates (after taking into account the payment of the Class M-6
Principal Distribution Amount on such Distribution Date) (vi) the Certificate
Principal Balance of the Class M-7 Certificates (after taking into account the
payment of the Class M-7 Principal Distribution Amount on such Distribution
Date), (vii) the Certificate Principal Balance of the Class M-8 Certificates
(after taking into account the payment of the Class M-8 Principal Distribution
Amount on such Distribution Date), (viii) the Certificate Principal Balance of
the Class B-1 Certificates (after taking into account the payment of the Class
B-1 Principal Distribution Amount on such Distribution Date) and (ix) the
Certificate Principal Balance of the Class B-2 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i)
approximately 90.30% and (ii) the Pool Balance as of the last day of the related
Collection Period and (B) the Pool Balance as of the last day of the related
Collection Period minus the product of (i) 0.50% and (ii) the Pool Balance on
the Cut-off Date.
"Class B-2 Realized Loss Amortization Amount": As to the Class B-2
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B-2 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xxxii) hereof, in each
case for such Distribution Date.
"Class B-3 Applied Realized Loss Amount": As to the Class B-3 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class B-3 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the Applied Realized Loss Amount as of such Distribution Date.
15
"Class B-3 Pass-Through Rate": For each Distribution Date, the least of (i)
(a) on or prior to the Optional Termination Date, 7.000% per annum and (b)
following the Optional Termination Date, 7.500% per annum, (ii) the Net WAC Cap
and (iii) the Maximum Rate Cap.
"Class B-3 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Principal Balance of the Class M-1, Class M-2 and Class M-3
Certificates (after taking into account the payment of the Class M-1/M-2/M-3
Principal Distribution Amount on such Distribution Date), (iii) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date), (iv) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the payment of the Class M-5 Principal Distribution
Amount on such Distribution Date), (v) the Certificate Principal Balance of the
Class M-6 Certificates (after taking into account the payment of the Class M-6
Principal Distribution Amount on such Distribution Date) (vi) the Certificate
Principal Balance of the Class M-7 Certificates (after taking into account the
payment of the Class M-7 Principal Distribution Amount on such Distribution
Date), (vii) the Certificate Principal Balance of the Class M-8 Certificates
(after taking into account the payment of the Class M-8 Principal Distribution
Amount on such Distribution Date), (viii) the Certificate Principal Balance of
the Class B-1 Certificates (after taking into account the payment of the Class
B-1 Principal Distribution Amount on such Distribution Date), (ix) the
Certificate Principal Balance of the Class B-2 Certificates (after taking into
account the payment of the Class B-2 Principal Distribution Amount on such
Distribution Date) and (x) the Certificate Principal Balance of the Class B-3
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) approximately 93.70% and (ii) the Pool Balance as of the
last day of the related Collection Period and (B) the Pool Balance as of the
last day of the related Collection Period minus the product of (i) 0.50% and
(ii) the Pool Balance on the Cut-off Date.
"Class B-3 Realized Loss Amortization Amount": As to the Class B-3
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B-3 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xxxv) hereof, in each
case for such Distribution Date.
"Class CE-1": Any one of the Class CE-1 Certificates as designated on the
face thereof substantially in the form annexed hereto as Exhibit C-11, executed
by the Trustee on behalf of the Trust and authenticated and delivered by the
Certificate Registrar, representing the right to distributions as set forth
herein and therein.
"Class CE-1 Distributable Amount": On any Distribution Date, the excess of
(i) the sum of (x) the initial Overcollateralization Amount, (y) the aggregate
REMIC 2 CE-1 Interest Current Interest for such Distribution Date and all prior
Distribution Dates and (z) amounts treated as received by the Class CE-1
Certificates in respect of Class Payment Shortfalls described in Section
9.01(l)(ii) over (ii) the sum of (w) the aggregate payments in respect of Excess
Interest for such Distribution Date and all prior Distribution Dates, (x) all
prior distributions to the Class CE-1 Certificates under Section 4.02(b)(xl)
hereof, (y) all payments treated as distributed by REMIC CE-1 to the REMIC CE-1
CE Interest then paid to the Swap Counterparty as described in Section 9.01(o)
and (z) all payments treated as paid by the Class A, Class M and Class B
Certificates to the Class CE-1 Certificates in respect of Class Payment
Shortfalls then paid to the Swap Counterparty as described in Section 9.01(o).
16
"Class CE-2": Any one of the Class CE-2 Certificates as designated on the
face thereof substantially in the form annexed hereto as Exhibit C-11-2,
executed by the Trustee on behalf of the Trust and authenticated and delivered
by the Certificate Registrar, representing the right to distributions as set
forth herein and therein.
"Class CE-2 Distributable Amount": On any Distribution Date, the Excess
Servicing Fee.
"Class M Certificate": Any one of the Certificates with an "M" designated
on the face thereof substantially in the form annexed hereto as Exhibits X-0,
X-0, X-0, X-0, X-0, X-0, C-8 and C-9, executed by the Trustee on behalf of the
Trust and authenticated and delivered by the Certificate Registrar, representing
the right to distributions as set forth herein and therein.
"Class M Certificateholders": Collectively, the Holders of the Class M
Certificates.
"Class M-1/M-2/M-3 Principal Distribution Amount" means, as of any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect, the excess of (x) the sum of (i) the sum of the Certificate
Principal Balances of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date)
and (ii) the aggregate of the Certificate Principal Balances of the Class M-1,
Class M-2 and Class M-3 Certificates immediately prior to such Distribution Date
over (y) the lesser of (A) the product of (i) approximately 64.80% and (ii) the
Pool Balance as of the last day of the related Collection Period and (B) the
Pool Balance as of the last day of the related Collection Period minus the
product of (i) 0.50% and (ii) the Pool Balance on the Cut-off Date.
"Class M-1 Applied Realized Loss Amount": As to the Class M-1 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-1 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-2 Applied Realized Loss
Amount, the Class M-3 Applied Realized Loss Amount, the Class M-4 Applied
Realized Loss Amount, the Class M-5 Applied Realized Loss Amount, the Class M-6
Applied Realized Loss Amount, the Class M-7 Applied Realized Loss Amount, the
Class M-8 Applied Realized Loss Amount, the Class B-1 Applied Realized Loss
Amount, the Class B-2 Applied Realized Loss Amount and the Class B-3 Applied
Realized Loss Amount, in each case as of such Distribution Date.
"Class M-1 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 0.250% per annum, and (ii) following the
Optional Termination Date, 0.375% per annum.
"Class M-1 Pass-Through Rate": For each Distribution Date, the least of (i)
LIBOR as of the related LIBOR Determination Date, plus the Class M-1 Certificate
Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
"Class M-1 Realized Loss Amortization Amount": As to the Class M-1
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-1 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (v) hereof, in each case
for such Distribution Date.
"Class M-2 Applied Realized Loss Amount": As to the Class M-2 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the
17
distribution of the Principal Distribution Amount on such Distribution Date, but
prior to the application of the Class M-2 Applied Realized Loss Amount, if any,
on such Distribution Date) and (y) the excess of (i) the related Applied
Realized Loss Amount as of such Distribution Date over (ii) the sum of the Class
M-3 Applied Realized Loss Amount, the Class M-4 Applied Realized Loss Amount,
the Class M-5 Applied Realized Loss Amount, the Class M-6 Applied Realized Loss
Amount, the Class M-7 Applied Realized Loss Amount, the Class M-8 Applied
Realized Loss Amount, the Class B-1 Applied Realized Loss Amount, the Class B-2
Applied Realized Loss Amount and the Class B-3 Applied Realized Loss Amount, in
each case as of such Distribution Date.
"Class M-2 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 0.300% per annum, and (ii) following the
Optional Termination Date, 0.450% per annum.
"Class M-2 Pass-Through Rate": For each Distribution Date, the least of (i)
LIBOR as of the related LIBOR Determination Date, plus the Class M-2 Certificate
Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
"Class M-2 Realized Loss Amortization Amount": As to the Class M-2
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-2 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (viii) hereof, in each
case for such Distribution Date.
"Class M-3 Applied Realized Loss Amount": As to the Class M-3 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-3 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-4 Applied Realized Loss
Amount, the Class M-5 Applied Realized Loss Amount, the Class M-6 Applied
Realized Loss Amount, the Class M-7 Applied Realized Loss Amount, the Class M-8
Applied Realized Loss Amount, the Class B-1 Applied Realized Loss Amount, the
Class B-2 Applied Realized Loss Amount and the Class B-3 Applied Realized Loss
Amount, in each case as of such Distribution Date.
"Class M-3 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 0.330% per annum, and (ii) following the
Optional Termination Date, 0.495% per annum.
"Class M-3 Pass-Through Rate": For each Distribution Date, the least of (i)
LIBOR as of the related LIBOR Determination Date, plus the Class M-3 Certificate
Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
"Class M-3 Realized Loss Amortization Amount": As to the Class M-3
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-3 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xi) hereof, in each case
for such Distribution Date.
"Class M-4 Applied Realized Loss Amount": As to the Class M-4 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
18
the Class M-4 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-5 Applied Realized Loss
Amount, the Class M-6 Applied Realized Loss Amount, the Class M-7 Applied
Realized Loss Amount, the Class M-8 Applied Realized Loss Amount, the Class B-1
Applied Realized Loss Amount, the Class B-2 Applied Realized Loss Amount and the
Class B-3 Applied Realized Loss Amount, in each case as of such Distribution
Date.
"Class M-4 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 0.350% per annum, and (ii) following the
Optional Termination Date, 0.525% per annum.
"Class M-4 Pass-Through Rate": For each Distribution Date, the least of (i)
LIBOR as of the related LIBOR Determination Date, plus the Class M-4 Certificate
Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
"Class M-4 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Principal Balance of the Class M-1, Class M-2 and Class M-3
Certificates (after taking into account the payment of the Class M-1/M-2/M-3
Principal Distribution Amount on such Distribution Date) and (iii) the
Certificate Principal Balance of the Class M-4 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i)
approximately 68.90% and (ii) the Pool Balance as of the last day of the related
Collection Period and (B) the Pool Balance as of the last day of the related
Collection Period minus the product of (i) 0.50% and (ii) the Pool Balance on
the Cut-off Date.
"Class M-4 Realized Loss Amortization Amount": As to the Class M-4
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-4 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xiv) hereof, in each
case for such Distribution Date.
"Class M-5 Applied Realized Loss Amount": As to the Class M-5 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-5 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-6 Applied Realized Loss
Amount, the Class M-7 Applied Realized Loss Amount, the Class M-8 Applied
Realized Loss Amount, the Class B-1 Applied Realized Loss Amount, the Class B-2
Applied Realized Loss Amount and the Class B-3 Applied Realized Loss Amount, in
each case as of such Distribution Date.
"Class M-5 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 0.380% per annum, and (ii) following the
Optional Termination Date, 0.570% per annum.
"Class M-5 Pass-Through Rate": For each Distribution Date, the least of (i)
LIBOR as of the related LIBOR Determination Date, plus the Class M-5 Certificate
Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
19
"Class M-5 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Principal Balance of the Class M-1, Class M-2 and Class M-3
Certificates (after taking into account the payment of the Class M-1/M-2/M-3
Principal Distribution Amount on such Distribution Date), (iii) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date) and (iv) the Certificate Principal Balance of the Class M-5 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) approximately 73.70% and (ii) the Pool Balance as of the last day
of the related Collection Period and (B) the Pool Balance as of the last day of
the related Collection Period minus the product of (i) 0.50% and (ii) the Pool
Balance on the Cut-off Date.
"Class M-5 Realized Loss Amortization Amount": As to the Class M-5
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-5 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xvii) hereof, in each
case for such Distribution Date.
"Class M-6 Applied Realized Loss Amount": As to the Class M-6 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-6 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-7 Applied Realized Loss
Amount, the Class M-8 Applied Realized Loss Amount, the Class B-1 Applied
Realized Loss Amount, the Class B-2 Applied Realized Loss Amount and the Class
B-3 Applied Realized Loss Amount, in each case as of such Distribution Date.
"Class M-6 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 0.440% per annum, and (ii) following the
Optional Termination Date, 0.660% per annum.
"Class M-6 Pass-Through Rate": For each Distribution Date, the least of (i)
LIBOR as of the related LIBOR Determination Date, plus the Class M-6 Certificate
Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
"Class M-6 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Principal Balance of the Class M-1, Class M-2 and Class M-3
Certificates (after taking into account the payment of the Class M-1/M-2/M-3
Principal Distribution Amount on such Distribution Date), (iii) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date), (iv) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the payment of the Class M-5 Principal Distribution
Amount on such Distribution Date) and (v) the Certificate Principal Balance of
the Class M-6 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) approximately 76.50% and (ii) the Pool
Balance as of the last day of the related Collection Period and (B) the Pool
Balance as of the last day of the related Collection Period minus the product of
(i) 0.50% and (ii) the Pool Balance on the Cut-off Date.
20
"Class M-6 Realized Loss Amortization Amount": As to the Class M-6
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-6 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xx) hereof, in each case
for such Distribution Date.
"Class M-7 Applied Realized Loss Amount": As to the Class M-7 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-7 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-8 Applied Realized Loss
Amount, the Class B-1 Applied Realized Loss Amount, the Class B-2 Applied
Realized Loss Amount and the Class B-3 Applied Realized Loss Amount, in each
case as of such Distribution Date.
"Class M-7 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 0.720% per annum, and (ii) following the
Optional Termination Date, 1.080% per annum.
"Class M-7 Pass-Through Rate": For each Distribution Date, the least of (i)
LIBOR as of the related LIBOR Determination Date, plus the Class M-7 Certificate
Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
"Class M-7 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Principal Balance of the Class M-1, Class M-2 and Class M-3
Certificates (after taking into account the payment of the Class M-1/M-2/M-3
Principal Distribution Amount on such Distribution Date), (iii) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date), (iv) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the payment of the Class M-5 Principal Distribution
Amount on such Distribution Date), (v) the Certificate Principal Balance of the
Class M-6 Certificates (after taking into account the payment of the Class M-6
Principal Distribution Amount on such Distribution Date) and (vi) the
Certificate Principal Balance of the Class M-7 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i)
approximately 80.20% and (ii) the Pool Balance as of the last day of the related
Collection Period and (B) the Pool Balance as of the last day of the related
Collection Period minus the product of (i) 0.50% and (ii) the Pool Balance on
the Cut-off Date.
"Class M-7 Realized Loss Amortization Amount": As to the Class M-7
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-7 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xxiii) hereof, in each
case for such Distribution Date.
"Class M-8 Applied Realized Loss Amount": As to the Class M-8 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-8 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i)
21
the related Applied Realized Loss Amount as of such Distribution Date over (ii)
the sum of the Class B-1 Applied Realized Loss Amount, the Class B-2 Applied
Realized Loss Amount and the Class B-3 Applied Realized Loss Amount, in each
case as of such Distribution Date.
"Class M-8 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 1.000% per annum, and (ii) following the
Optional Termination Date, 1.500% per annum.
"Class M-8 Pass-Through Rate": For each Distribution Date, the least of (i)
LIBOR as of the related LIBOR Determination Date, plus the Class M-8 Certificate
Margin, (ii) the Net WAC Cap and (iii) the Maximum Rate Cap.
"Class M-8 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Principal Balance of the Class M-1, Class M-2 and Class M-3
Certificates (after taking into account the payment of the Class M-1/M-2/M-3
Principal Distribution Amount on such Distribution Date), (iii) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date), (iv) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the payment of the Class M-5 Principal Distribution
Amount on such Distribution Date), (v) the Certificate Principal Balance of the
Class M-6 Certificates (after taking into account the payment of the Class M-6
Principal Distribution Amount on such Distribution Date), (vi) the Certificate
Principal Balance of the Class M-7 Certificates (after taking into account the
payment of the Class M-7 Principal Distribution Amount on such Distribution
Date) and (vii) the Certificate Principal Balance of the Class M-8 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) approximately 81.20% and (ii) the Pool Balance as of the last day
of the related Collection Period and (B) the Pool Balance as of the last day of
the related Collection Period minus the product of (i) 0.50% and (ii) the Pool
Balance on the Cut-off Date.
"Class M-8 Realized Loss Amortization Amount": As to the Class M-8
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-8 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xxvi) hereof, in each
case for such Distribution Date.
"Class P Certificate": Any one of the Certificates with an "P" designated
on the face thereof substantially in the form annexed hereto as Exhibit C-10,
executed by the Trustee on behalf of the Trust and authenticated and delivered
by the Certificate Registrar, representing the right to distributions as set
forth herein and therein.
"Class Payment Shortfall": As defined in Section 9.01(l)(ii) herein.
"Class R Certificate": The Class R Certificate executed by the Trustee on
behalf of the Trust, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit C-1-1 and
evidencing the ownership of the Residual Interest in each of the SWAP REMIC,
REMIC 1 and REMIC 2. The Class R Certificate represents the ownership of the
Class R-SW Interest, Class R-1 Interest and Class R-2 Interest.
"Class R-1 Interest": The uncertificated residual interest in REMIC 1.
22
"Class R-2 Interest": The uncertificated residual interest in REMIC 2.
"Class R-B-1 Interest": The uncertificated residual interest in REMIC B-1.
"Class R-B-2 Interest": The uncertificated residual interest in REMIC B-2.
"Class R-B-3 Interest": The uncertificated residual interest in REMIC B-3.
"Class R-CE-1 Interest": The uncertificated residual interest in REMIC
CE-1.
"Class R-CE-2 Interest": The uncertificated residual interest in REMIC
CE-2.
"Class R-IO Interest": The uncertificated residual interest in REMIC IO.
"Class R-SW Interest": The uncertificated residual interest in the SWAP
REMIC.
"Class R-X Certificate": The Class R-X Certificate executed by the Trustee
on behalf of the Trust, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit C-1-2 and
evidencing the ownership of the Residual Interest in each of REMIC B-1, REMIC
B-2, REMIC B-3, REMIC CE-1, REMIC IO and REMIC CE-2. The Class R-X Certificate
represents the ownership of the Class R-B-1 Interest, Class R-B-2 Interest,
Class R-B-3 Interest, Class R-CE-1 Interest, Class R-IO Interest and Class
R-CE-2 Interest.
"Closing Date": October 30, 2006.
"Code": The Internal Revenue Code of 1986, as it may be amended from time
to time.
"Collection Account": The account or accounts created and maintained by the
Servicer pursuant to Section 3.04, which shall be entitled "Collection Account,
Xxxxxx Loan Servicing LP, as Servicer for the registered Holders of the
2006-CB8, C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-CB8," and
which must be an Eligible Account.
"Collection Period": With respect to any Distribution Date, the period from
the second day of the calendar month preceding the month in which such
Distribution Date occurs through the first day of the month in which such
Distribution Date occurs.
"Combined Loan-to-Value Ratio": As of any date and Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the Principal
Balance of the Mortgage Loan as of the Cut-off Date plus the principal balance
of any related senior mortgage loan, if any, at origination of the Mortgage Loan
and the denominator of which is the Value of the related Mortgaged Property.
"Compensating Interest": As defined in Section 3.23 hereof.
"Condemnation Proceeds": All awards or settlements in respect of a taking
of a Mortgaged Property by exercise of the power of eminent domain or
condemnation.
"Corporate Trust Office": With respect to the Trustee, the principal
corporate trust office of the Trustee at which at any particular time (a) its
corporate trust business in connection with this Agreement shall be
administered, and (b) certificates may be presented for transfer and exchange
and for purpose of surrender for the final distribution thereon, which office at
the date of execution of this Agreement is
23
located at: 00 Xxxxxxxxxx Xxxxxx, Mail Code EP-MN-WS3D, Xx. Xxxx, Xxxxxxxxx
00000-0000, Attention: Structured Finance/C-BASS 2006-CB8, or at such other
addresses as the Trustee may designate from time to time by notice to the
Certificateholders, the Depositor, the Servicer and the Seller.
"Corresponding Cap Carryover Certificate" and "Corresponding REMIC 2
Regular Interest": For any REMIC 2 Regular Interest set forth below, the
corresponding Cap Carryover Certificate set forth below, and for any Cap
Carryover Certificate set forth below, the corresponding REMIC 2 Regular
Interest set forth below:
Corresponding Cap Carryover Certificate Corresponding REMIC 2 Regular Interest
--------------------------------------- --------------------------------------
Class A-1 Certificate REMIC 2 A-1 Interest
Class A-2A Certificate REMIC 2 A-2A Interest
Class A-2B Certificate REMIC 2 A-2B Interest
Class A-2C Certificate REMIC 2 A-2C Interest
Class A-2D Certificates REMIC 2 A-2D Interest
Class M-1 Certificate REMIC 2 M-1 Interest
Class M-2 Certificate REMIC 2 M-2 Interest
Class M-3 Certificate REMIC 2 M-3 Interest
Class M-4 Certificate REMIC 2 M-4 Interest
Class M-5 Certificate REMIC 2 M-5 Interest
Class M-6 Certificate REMIC 2 M-6 Interest
Class M-7 Certificate REMIC 2 M-7 Interest
Class M-8 Certificate REMIC 2 M-8 Interest
Class B-1 Certificate REMIC 2 B-1 Interest
Class B-2 Certificate REMIC 2 B-2 Interest
Class B-3 Certificate REMIC 2 B-3 Interest
"Custodial Agreement": The Custodial Agreement, dated as of October 1,
2006, among the Trustee, the Servicer and the Custodian, as the same may be
amended or supplemented pursuant to the terms thereof.
"Custodian": The Bank of New York, a New York banking corporation, or any
successor custodian appointed pursuant to the terms of the Custodial Agreement.
"Cut-off Date": October 1, 2006.
24
"Cut-off Date Principal Balance": With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-off Date after application of
funds received or advanced on or before such date (or as of the applicable date
of substitution with respect to an Eligible Substitute Mortgage Loan).
"DBRS": Dominion Bond Rating Service, Inc. and its successors, and if such
company shall for any reason no longer perform the functions of a securities
rating agency, "DBRS" shall be deemed to refer to any other "nationally
recognized statistical rating organization" as set forth on the most current
list of such organizations released by the Securities and Exchange Commission.
If DBRS is designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 11.08 the address for notices to DBRS shall be Dominion Bond
Rating Service, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx Xxxx, or such other address as DBRS may hereafter furnish to the
Depositor, the Trustee and the Servicer.
"Debt Service Reduction": With respect to any Mortgage Loan, a reduction in
the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
resulting from a Deficient Valuation.
"Defaulted Swap Termination Payment": Any payment required to be made by
the Supplemental Interest Trust to the Swap Counterparty pursuant to the Swap
Agreement as a result of an "Event of Default" (as defined in the Swap
Agreement) with respect to which the Swap Counterparty is the defaulting party
or a termination event (including a Downgrade Termination Event) under that
agreement (other than illegality or a tax event) with respect to which the Swap
Counterparty is the sole "Affected Party" (as defined in the Swap Agreement).
"Defective Mortgage Loan": A Mortgage Loan replaced or to be replaced by
one or more Eligible Substitute Mortgage Loans.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding principal balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.02(c) hereof.
"Delinquent": Any Mortgage Loan with respect to which the Monthly Payment
and/or any Escrow Payment due on a Due Date is not made by the close of business
on the next scheduled Due Date for such Mortgage Loan or any Mortgage Loan with
respect to which any Servicing Advances made on or before the Cut-off Date has
not been reimbursed by the related Mortgagor.
"Depositor": Xxxxxxx Xxxxx Mortgage Investors, Inc., a Delaware
corporation, or any successor in interest.
"Depository": The initial depository shall be The Depository Trust Company,
whose nominee is Cede & Co., or any other organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
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"Depository Participant": A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to any Distribution Date, the 16th day
of the calendar month in which such Distribution Date occurs or, if such 16th
day is not a Business Day, the Business Day immediately following such 16th day.
"Disqualified Non-U.S. Person": With respect to a Residual Certificate, any
(A) non-U.S. Person or agent thereof or (B) U.S. Person with respect to whom
income from a Residual Certificate is attributable to a foreign permanent
establishment or fixed base, within the meaning of an applicable income tax
treaty, of such Person or any other U.S. Person.
"Disqualified Organization": A "disqualified organization" under Section
860E of the Code, which as of the Closing Date is any of: (i) the United States,
any state or political subdivision thereof, any possession of the United States,
any foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (ii) any organization (other than a
cooperative described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code unless such organization is subject to the tax
imposed by Section 511 of the Code, (iii) any organization described in Section
1381(a)(2)(C) of the Code, or (iv) any other Person so designated by the Trustee
based upon an Opinion of Counsel provided by nationally recognized counsel to
the Trustee that the holding of an ownership interest in a Residual Certificate
by such Person may cause the Trust Fund or any Person having an ownership
interest in any Class of Certificates (other than such Person) to incur
liability for any federal tax imposed under the Code that would not otherwise be
imposed but for the transfer of an ownership interest in a Residual Certificate
to such Person. A corporation will not be treated as an instrumentality of the
United States or of any state or political subdivision thereof if all of its
activities are subject to tax and a majority of its board of directors is not
selected by a governmental unit. The term "United States," "state" and
"international organization" shall have the meanings set forth in Section 7701
of the Code.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.04(b) which shall be entitled
"Distribution Account, U.S. Bank National Association, as Trustee, in trust for
the registered Holders of the 2006-CB8 Trust, C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2006-CB8" and which must be an Eligible Account.
"Distribution Date": The 25th day of any calendar month or, if such 25th
day is not a Business Day, the Business Day immediately following such 25th day,
commencing in November 2006.
"Distribution Information": The items calculated and reported by the
Trustee pursuant to Section 4.06(a)(i)-(iv), (xii), (xiv), (xvi)-(xix),
(xxi)-(xxvi), (xxx)-(xxxii) and any other information included in the Monthly
Statement aggregated or calculated by the Trustee from (a) information contained
in the Remittance Report or (b) other information furnished to the Trustee by
the Servicer pursuant to Section 4.06(a).
"Downgrade Termination Event": An event whereby (x) the Swap Counterparty
(or its guarantor) ceases to have short term unsecured and/or long term debt
ratings at least equal to the levels specified in the Swap Agreement, and (y) at
least one of the following events has not occurred (except to the extent
otherwise approved by the Rating Agencies): (i) within the time period specified
in the Swap Agreement with respect to such downgrade, the Swap Counterparty
shall transfer the Swap Agreement, in whole, but not in part, to a substitute
swap counterparty that satisfies the requirements set forth in the
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Swap Agreement, subject to the satisfaction of the Rating Agency Condition or
(ii) within the time period specified in the Swap Agreement with respect to such
downgrade, the Swap Counterparty shall collateralize its exposure to the Trust
Fund pursuant to an ISDA Credit Support Annex, subject to the satisfaction of
the Rating Agency Condition; provided that such ISDA Credit Support Annex shall
be made a credit support document for the Swap Counterparty pursuant to an
amendment to the Swap Agreement.
"Due Date": With respect to each Mortgage Loan and any Distribution Date,
the day of the calendar month in which such Distribution Date occurs on which
the Monthly Payment for such Mortgage Loan was due, exclusive of any grace
period.
"Eligible Account": Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
commercial paper, demand deposit or other short-term unsecured debt obligations
of which (or, in the case of a depository institution or trust company that is
the principal subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated "A-2" (or the equivalent) by each
of the Rating Agencies at the time any amounts are held on deposit therein, (ii)
an account or accounts the deposits in which are fully insured by the FDIC (to
the limits established by such corporation), the uninsured deposits in which
account are otherwise secured such that, as evidenced by an Opinion of Counsel
delivered to the Trustee and to each Rating Agency, the Certificateholders will
have a claim with respect to the funds in such account or a perfected first
priority security interest against such 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, (iii) a trust account or accounts maintained with the
trust department of a federal or state chartered depository institution,
national banking association or trust company acting in its fiduciary capacity
or (iv) an account otherwise acceptable to each Rating Agency without reduction
or withdrawal of their then current ratings of the Certificates as evidenced by
a letter from each Rating Agency to the Trustee.
"Eligible Substitute Mortgage Loan": A mortgage loan substituted for a
Defective Mortgage Loan pursuant to the terms of this Agreement which must, on
the date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of, and not more than 5% less
than, the outstanding principal balance of the Defective Mortgage Loan as of the
Due Date in the calendar month during which the substitution occurs, (ii) have a
Mortgage Interest Rate, with respect to an adjustable rate Mortgage Loan, not
less than the Mortgage Interest Rate of the Defective Mortgage Loan and not more
than 1% in excess of the Mortgage Interest Rate of such Defective Mortgage Loan,
(iii) if an adjustable rate Mortgage Loan, have a Maximum Loan Rate not less
than the Maximum Loan Rate for the Defective Mortgage Loan, (iv) if an
adjustable rate Mortgage Loan, have a Minimum Loan Rate not less than the
Minimum Loan Rate of the Defective Mortgage Loan, (v) if an adjustable rate
Mortgage Loan, have a Gross Margin equal to or greater than the Gross Margin of
the Defective Mortgage Loan, (vi) if an adjustable rate Mortgage Loan, have the
same Index as the Defective Mortgage Loan, (vii) if an adjustable rate Mortgage
Loan, have a next Adjustment Date not more than two months later than the next
Adjustment Date on the Defective Mortgage Loan, (viii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Defective Mortgage Loan, (ix) be current as of the date of substitution, (x)
have a Combined Loan-to-Value Ratio as of the date of substitution equal to or
lower than the Combined Loan-to-Value Ratio of the Defective Mortgage Loan as of
such date, (xi) have a risk grading determined by the Seller at least equal to
the risk grading assigned on the Defective Mortgage Loan, (xii) have been
reunderwritten by the Seller in accordance with the same underwriting criteria
and guidelines as the Defective Mortgage Loan, (xiii) have the same Due Date as
the Defective
27
Mortgage Loan and (xiv) conform to each representation and warranty set forth in
Section 2.04 hereof applicable to the Defective Mortgage Loan. In the event that
one or more mortgage loans are substituted for one or more Defective Mortgage
Loans, the amounts described in clause (i) hereof shall be determined on the
basis of aggregate principal balances, the Mortgage Interest Rates described in
clause (ii) hereof shall be determined on the basis of weighted average Mortgage
Interest Rates, the risk gradings described in clause (xi) hereof shall be
satisfied as to each such mortgage loan, the terms described in clause (viii)
hereof shall be determined on the basis of weighted average remaining term to
maturity, the Combined Loan-to-Value Ratios described in clause (x) hereof shall
be satisfied as to each such mortgage loan and, except to the extent otherwise
provided in this sentence, the representations and warranties described in
clause (xiv) hereof must be satisfied as to each Eligible Substitute Mortgage
Loan or in the aggregate, as the case may be.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"ERISA-Qualifying Underwriting": A best efforts or firm commitment
underwriting or private placement that would satisfy the requirements of
Prohibited Transaction Exemption 90-25, 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 Certificate": The Class B, Class P, Class CE-1 and Class
CE-2 Certificates and any other Certificate, as long as the acquisition and
holding of such Certificate is not covered by and exempt under Prohibited
Transaction Exemption 90-25, 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).
"Escrow Account": The account or accounts created and maintained pursuant
to Section 3.06.
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard insurance
premiums and other payments required to be escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage Loan.
"Estate in Real Property": A fee simple estate in a parcel of real
property.
"Excess Interest": On any Distribution Date, for each Class of the Class A,
Class M and Class B Certificates, the excess, if any, of (1) the amount of
interest such Class of Certificates is entitled to receive on such Distribution
Date over (2) the amount of interest such Class of Certificates would have been
entitled to receive on such Distribution Date at an interest rate equal to the
REMIC Pass-Through Rate.
"Excess Servicing Fee": For any Distribution Date that Xxxxxx is the
servicer of the Mortgage Loans, one-twelfth of the product of (i) the excess of
the Servicing Fee Rate over the Xxxxxx Servicing Fee, if any, multiplied by (ii)
the Principal Balance of the related Mortgage Loan on which interest on such
Mortgage Loan accrues as of the Distribution Date in the preceding calendar
month; for any Distribution Date that Xxxxxx is not the servicer of the Mortgage
Loans, zero.
"Expense Fee Rate": The sum of (i) the Trustee Fee Rate and (ii) the
Servicing Fee Rate.
"Extended Period": As defined in Section 9.04(b).
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"Extra Principal Distribution Amount": As of any Distribution Date, the
lesser of (x) the excess of (i) the Monthly Excess Cashflow Amount for such
Distribution Date over (ii) amounts distributed pursuant to Section 4.02(b)(i)
and 4.02(b)(ii) on such Distribution Date and (y) the Overcollateralization
Deficiency for such Distribution Date.
"FDIC": Federal Deposit Insurance Corporation or any successor thereto.
"Fidelity Bond": Shall have the meaning assigned thereto in Section 3.12.
"Final Maturity Date": As to each Class of Certificates, the date set forth
as such in the Preliminary Statement.
"Final Recovery Determination": With respect to any defaulted Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property purchased by the
Seller or the Servicer pursuant to or as contemplated by Section 2.03 or 10.01),
a determination made by the Servicer that all Insurance Proceeds, Liquidation
Proceeds and other payments or recoveries which the Servicer, in its reasonable
good faith judgment, expects to be finally recoverable in respect thereof have
been so recovered. The Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination made thereby.
"First Lien Mortgage Loan": Any of the Mortgage Loans which are secured by
a first mortgage lien that is senior to a Second Lien Mortgage Loan on the
related Mortgaged Property.
"Fitch": Fitch Ratings and its successors, and if such company shall for
any reason no longer perform the functions of a securities rating agency,
"Fitch" shall be deemed to refer to any other "nationally recognized statistical
rating organization" as set forth on the most current list of such organizations
released by the Securities and Exchange Commission.
"Foreclosure Price": The amount reasonably expected to be received from the
sale of the related Mortgaged Property net of any expenses associated with
foreclosure proceedings.
"Gross Margin": With respect to each adjustable rate Mortgage Loan, the
fixed percentage, if any, set forth in the related Mortgage Note that is added
to the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Interest Rate for such Mortgage
Loan.
"Group I Interest Remittance Amount" means, as of any Distribution Date,
the sum, without duplication, of (i) all interest received by the Servicer on or
prior to the related Determination Date for such Distribution Date or advanced
with respect to Monthly Payments due during the related Collection Period on the
Group I Mortgage Loans (less the portion of the Servicing Fee relating to Group
I Mortgage Loans, certain amounts available for reimbursement of Advances and
Servicing Advances and certain other reimbursable expenses), (ii) the portion of
any full or partial principal prepayment related to interest with respect to a
Group I Mortgage Loan received during the related Prepayment Period, (iii) all
Compensating Interest paid by the Servicer on the related Determination Date
with respect to the Group I Mortgage Loans, (iv) the portion of any payment in
connection with any Purchase Price, substitution, Subsequent Recoveries,
liquidation proceeds (net of certain expenses), insurance proceeds or
condemnation proceeds relating to interest with respect to the Group I Mortgage
Loans received during the related Prepayment Period, (v) with respect to the
related Distribution Date on which the Trust is to be terminated in accordance
with this Agreement, that portion of the Termination Price with respect to the
29
Group I Mortgage Loans in respect of interest and (vi) the portion of any
Reimbursement Amount related to the Group I Mortgage Loans received during the
related Prepayment Period.
"Group I Mortgage Loan": Any Mortgage Loan listed in Exhibit D-2 attached
hereto.
"Group I Principal Distribution Amount": As of any Distribution Date, the
product of (x) the Group I Senior Principal Allocation Percentage and (y) the
Senior Principal Distribution Amount.
"Group I Principal Remittance Amount": With respect to any Distribution
Date, to the extent of funds available therefor, the amount equal to the sum
(less, with respect to the Group I Mortgage Loans, certain amounts available for
reimbursement of Advances and Servicing Advances pursuant to Sections 3.05 and
6.03) of the following amounts (without duplication) with respect to the Group I
Mortgage Loans and the immediately preceding Collection Period: (i) each payment
of principal on a Group I Mortgage Loan due during such Collection Period and
received by the Servicer on or prior to the related Determination Date,
including any Advances with respect thereto, (ii) all full and partial principal
prepayments received by the Servicer during the related Prepayment Period on the
Group I Mortgage Loans, (iii) the insurance proceeds or condemnation proceeds,
Subsequent Recoveries and liquidation proceeds (net of certain expenses)
allocable to principal actually collected by the Servicer during the related
Prepayment Period on the Group I Mortgage Loans, (iv) the portion of the
Purchase Price allocable to principal of all repurchased Defective Mortgage
Loans in Loan Group I with respect to such Prepayment Period, (v) any
Substitution Adjustments allocable to principal received during the related
Prepayment Period, and (vi) on the Distribution Date on which the Trust is to be
terminated in accordance with this Agreement, that portion of the Termination
Price in respect of principal on the Group I Mortgage Loans.
"Group I Senior Principal Allocation Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is (x) the Group I Principal Remittance Amount for that Distribution Date
and the denominator of which is (y) the Principal Remittance Amount for that
Distribution Date.
"Group II Interest Remittance Amount" means, as of any Distribution Date,
the sum, without duplication, of (i) all interest received by the Servicer on or
prior to the related Determination Date for such Distribution Date or advanced
with respect to Monthly Payments due during the related Collection Period on the
Group II Mortgage Loans (less the portion of the Servicing Fee relating to Group
II Mortgage Loans, certain amounts available for reimbursement of Advances and
Servicing Advances and certain other reimbursable expenses), (ii) the portion of
any full or partial principal prepayment related to interest with respect to a
Group II Mortgage Loan received during the related Prepayment Period, (iii) all
Compensating Interest paid by the Servicer on the related Determination Date
with respect to the Group II Mortgage Loans, (iv) the portion of any payment in
connection with any Purchase Price, substitution, Subsequent Recoveries,
liquidation proceeds (net of certain expenses), insurance proceeds or
condemnation proceeds relating to interest with respect to the Group II Mortgage
Loans received during the related Prepayment Period, (v) with respect to the
related Distribution Date on which the Trust is to be terminated in accordance
with this Agreement, that portion of the Termination Price with respect to the
Group II Mortgage Loans in respect of interest and (vi) the portion of any
Reimbursement Amount related to the Group II Mortgage Loans received during the
related Prepayment Period.
"Group II Mortgage Loan": Any Mortgage Loan listed in Exhibit D-3 attached
hereto.
"Group II Principal Distribution Amount": As of any Distribution Date, the
product of (x) the Group II Senior Principal Allocation Percentage and (y) the
Senior Principal Distribution Amount.
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"Group II Principal Remittance Amount": With respect to any Distribution
Date, to the extent of funds available therefor, the amount equal to the sum
(less, with respect to the Group II Mortgage Loans, certain amounts available
for reimbursement of Advances and Servicing Advances pursuant to Sections 3.05
and 6.03) of the following amounts (without duplication) with respect to the
Group II Mortgage Loans and the immediately preceding Collection Period: (i)
each payment of principal on a Group II Mortgage Loan due during such Collection
Period and received by the Servicer on or prior to the related Determination
Date, including any Advances with respect thereto, (ii) all full and partial
principal prepayments received by the Servicer during the related Prepayment
Period on the Group II Mortgage Loans, (iii) the insurance proceeds or
condemnation proceeds, Subsequent Recoveries and liquidation proceeds (net of
certain expenses) allocable to principal actually collected by the Servicer
during the related Prepayment Period on the Group II Mortgage Loans, (iv) the
portion of the Purchase Price allocable to principal of all repurchased
Defective Mortgage Loans in Loan Group II with respect to such Prepayment
Period, (v) any Substitution Adjustments allocable to principal received during
the related Prepayment Period, and (vi) on the Distribution Date on which the
Trust is to be terminated in accordance with this Agreement, that portion of the
Termination Price in respect of principal on the Group II Mortgage Loans.
"Group II Senior Principal Allocation Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is (x) the Group II Principal Remittance Amount for that Distribution Date
and the denominator of which is (y) the Principal Remittance Amount for that
Distribution Date.
"HUD": The United States Department of Housing and Urban Development, or
any successor thereto, including the Federal Housing Commissioner and the
Secretary of Housing and Urban Development where appropriate under the FHA
Regulations.
"Independent": When used with respect to any specified Person, any such
Person who (i) is in fact independent of the Depositor, the Servicer and their
respective Affiliates, (ii) does not have any direct financial interest in or
any material indirect financial interest in the Depositor or the Servicer or any
Affiliate thereof, and (iii) is not connected with the Depositor or the Servicer
or any Affiliate thereof as an officer, employee, promoter, underwriter,
trustee, partner, director or Person performing similar functions; provided,
however, that a Person shall not fail to be Independent of the Depositor or the
Servicer or any Affiliate thereof merely because such Person is the beneficial
owner of 1% or less of any Class of securities issued by the Depositor or the
Servicer or any Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the Servicer)
that would be an "independent contractor" with respect to the Trust Fund within
the meaning of Section 856(d)(3) of the Code if the Trust Fund were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35 percent or more of any Class of Certificates), so long as the
Trust Fund does not receive or derive any income from such Person and provided
that the relationship between such Person and the Trust Fund is at arm's length,
all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any
other Person (including the Servicer) if the Trustee has received an Opinion of
Counsel, which Opinion of Counsel shall be an expense of the Trust Fund, to the
effect that the taking of any action in respect of any REO Property by such
Person, subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.
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"Index": With respect to each adjustable rate Mortgage Loan and with
respect to each related Adjustment Date, the index as specified in the related
Mortgage Note.
"Initial Certificate Principal Balance": With respect to any Certificate of
a Class other than a Class P, Class CE-1, Class CE-2 or Residual Certificate,
the amount designated "Initial Certificate Principal Balance" on the face
thereof.
"Initial Delinquency Date": As defined in Section 3.16
"Initial Overcollateralization Amount": $18,014,969.78.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or other
insurance policy covering a Mortgage Loan, to the extent such proceeds are not
to be 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, subject to the
terms and conditions of the related Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution Date and (i)
with respect to the Class A and Class M Certificates and the REMIC 1 Regular
Interests and the REMIC 2 CE-1 Interest, the period from the preceding
Distribution Date through the day prior to the current Distribution Date (or, in
the case of the first Distribution Date, the period from the Closing Date
through and including November 26, 2006), and (ii) with respect to the Class B
Certificates, the Class CE-2 Certificates and the SWAP REMIC Regular Interests,
the calendar month immediately preceding the month in which such Distribution
Date occurs.
"Interest Carry Forward Amount": For any Class of Certificates (other than
the Residual Certificates) and any Distribution Date, the sum of (a) the excess,
if any, of the Accrued Certificate Interest and any Interest Carry Forward
Amount for each Class for the prior Distribution Date, over the amount in
respect of interest actually distributed on such Class on such prior
Distribution Date and (b) interest on such excess at the applicable Pass-Through
Rate (x) with respect to the Class A and Class M Certificates, on the basis of
the actual number of days elapsed on the basis of a 360-day year since the prior
Distribution Date, and (y) with respect to the Class B Certificates, on the
basis of a 360-day year consisting of twelve 30-day months.
"Interest Percentage": With respect to any Class of Certificates and any
Distribution Date, the ratio (expressed as a decimal carried to ten places) of
the Accrued Certificate Interest for such Class to the sum of the Accrued
Certificate Interest for all Classes of Certificates, in each case with respect
to such Distribution Date and without regard to shortfalls caused by the Relief
Act or similar state law.
"Interest Remittance Amount": As of any Distribution Date, the sum of the
Group I Interest Remittance Amount and the Group II Interest Remittance Amount.
"Late Collections": With respect to any Mortgage Loan, all amounts received
subsequent to the Determination Date immediately following any related
Collection Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent late payments or
collections of principal and/or interest due (without regard to any acceleration
of payments under the related Mortgage and Mortgage Note) but delinquent on a
contractual basis for such Collection Period and not previously recovered.
"Lender": As defined in Section 3.30(a) hereof.
32
"LIBOR": With respect to each Interest Accrual Period, the rate determined
by the Trustee on the related LIBOR Determination Date on the basis of the
offered rate for one-month United States dollar deposits, as such rate appears
on the Telerate Page 3750, as of 11:00 a.m. (London time) on such LIBOR
Determination Date. If no such quotations are available on an LIBOR
Determination Date, LIBOR for the related Interest Accrual Period will be
established by the Trustee as follows:
(i) If on such LIBOR Determination Date two or more Reference
Banks provide quotations as to the rate at which deposits in U.S. Dollars are
offered as of 11:00 a.m. (London time) to prime banks in the London interbank
market for a period of one month in amounts approximately equal to the aggregate
Certificate Principal Balance of the Class A and Class M Certificates, LIBOR for
the related Interest Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole multiple of
0.001%);
(ii) If on such LIBOR Determination Date fewer than two Reference
Banks provide such offered quotations, LIBOR for the related Interest Accrual
Period shall be the arithmetic mean of the rates quoted by one or more major
banks in New York City, selected by the Trustee after consultation with the
Servicer, as of 11:00 a.m., New York City time, on such date for loans in U.S.
Dollars to leading European banks for a period of one month in amounts
approximately equal to the aggregate Certificate Principal Balance of the Class
A and Class M Certificates; and
(iii) If no such quotations can be obtained, LIBOR for the
related Interest Accrual Period shall be LIBOR for the prior Distribution Date.
"LIBOR Business Day": Any day on which banks in London, England and The
City of New York are open and conducting transactions in foreign currency and
exchange.
"LIBOR Determination Date": With respect to the Class A and Class M
Certificates, (i) for the first Distribution Date, the second LIBOR Business Day
preceding the Closing Date and (ii) for each subsequent Distribution Date, the
second LIBOR Business Day prior to the immediately preceding Distribution Date.
"Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage Loan
in respect of which the Servicer has determined, in accordance with the
servicing procedures specified herein, as of the end of the related Prepayment
Period, that all Liquidation Proceeds and Insurance Proceeds which it expects to
recover with respect to the liquidation of the Mortgage Loan or disposition of
the related REO Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 10.01. With respect to
any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property; or (ii) such REO Property is
removed from the Trust Fund by reason of its being sold or purchased pursuant to
Section 3.13 or Section 10.01.
"Liquidation Proceeds": The amount (other than amounts received in respect
of the rental of any REO Property prior to REO Disposition) received by the
Servicer in connection with (i) the taking of all or a part of a Mortgaged
Property by exercise of the power of eminent domain or condemnation or (ii) the
liquidation of a defaulted Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise.
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"Liquidation Report": The report with respect to a Liquidated Mortgage Loan
in such form and containing such information as is agreed to by the Servicer and
the Trustee.
"Xxxxxx Servicing Fee": For so long as Xxxxxx is the servicer of the
Mortgage Loans and with respect to each Mortgage Loan, 0.15% per annum.
"Loan Group": Either of Loan Group I or Loan Group II, as applicable.
"Loan Group I": The group of Mortgage Loans listed in Exhibit D-2 attached
hereto.
"Loan Group II": The group of Mortgage Loans listed in Exhibit D-3 attached
hereto.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which the
original Mortgage Note has been permanently lost or destroyed and has not been
replaced, an affidavit from the Seller certifying that the original Mortgage
Note has been lost, misplaced or destroyed (together with a copy of the related
Mortgage Note and indemnifying the Trust against any loss, cost or liability
resulting from the failure to deliver the original Mortgage Note) in the form of
Exhibit H hereto.
"Majority Certificateholders": The Holders of Certificates evidencing at
least 51% of the Voting Rights.
"Majority Class R Certificateholders": The Holders of Class R Certificates
evidencing at least a 51% Percentage Interest in the Class R Certificates.
"Marker Interest": Each of the Class LT1-A1 Interest, the Class LT1-A2A
Interest, the Class LT1-A2B Interest, the Class LT1-A2C Interest, the Class
LT1-A2D Interest, the Class LT1-M1 Interest, the Class LT1-M2 Interest, the
Class LT1-M3 Interest, the Class LT1-M4 Interest, the Class LT1-M5 Interest, the
Class LT1-M6 Interest, the Class LT1-M7 Interest, the Class LT1-M8 Interest, the
Class LT1-B1 Interest, the Class LT1-B2 Interest and the Class LT1-B3 Interest.
"Maximum Loan Rate": With respect to each adjustable rate Mortgage Loan,
the percentage set forth in the related Mortgage Note as the maximum Mortgage
Interest Rate thereunder.
"Maximum Rate Cap": With respect to any Distribution Date, will be a per
annum rate equal to 12 times the quotient of (x) the total scheduled interest
that would have accrued on the Mortgage Loans at their maximum lifetime Net
Mortgage Interest Rates plus any Net Swap Payment and Swap Termination Payment
(other than a Defaulted Swap Termination Payment), if any, made to the
Supplemental Interest Trust and (y) the aggregate Principal Balance of the
Mortgage Loans (as of the first day of the related Collection Period) expressed
in the case of the Class A and Class M Certificates on the basis of a 360 day
year and the actual number of days elapsed in the related Interest Accrual
Period and, with respect to the Class B Certificates, on the basis of an assumed
360 day year consisting of twelve 30 day months.
"Minimum Loan Rate": With respect to each adjustable rate Mortgage Loan,
the percentage set forth in the related Mortgage Note as the minimum Mortgage
Interest Rate thereunder or if no such percentage is set forth in the related
Mortgage Note, the Gross Margin set forth in the related Mortgage Note.
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"Monthly Excess Cashflow Allocation": Shall have the meaning assigned
thereto in Section 4.02.
"Monthly Excess Cashflow Amount": The sum of the Monthly Excess Interest
Amount, the Overcollateralization Release Amount and (without duplication) any
portion of the Principal Distribution Amount remaining after principal
distributions on the Class A, Class M and Class B Certificates.
"Monthly Excess Interest Amount": With respect to each Distribution Date,
the amount, if any, by which the Group I Interest Remittance Amount and Group II
Interest Remittance Amount for such Distribution Date exceeds the aggregate
amount distributed on such Distribution Date pursuant to the first paragraph of
Section 4.01 and paragraphs (i) through (xvi) under such Section 4.01.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled monthly
payment of principal and interest on such Mortgage Loan which is payable by the
related Mortgagor from time to time under the related Mortgage Note, determined:
(a) after giving effect to (i) any Deficient Valuation and/or Debt Service
Reduction with respect to such Mortgage Loan and (ii) any reduction in the
amount of interest collectible from the related Mortgagor pursuant to the Relief
Act or similar state laws; (b) without giving effect to any extension granted or
agreed to by the Servicer pursuant to Section 3.01; and (c) on the assumption
that all other amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's": Xxxxx'x Investors Service, Inc. and its successors, and if such
company shall for any reason no longer perform the functions of a securities
rating agency, "Moody's" shall be deemed to refer to any other "nationally
recognized statistical rating organization" as set forth on the most current
list of such organizations released by the Securities and Exchange Commission.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on, or first or second priority security interest in, a
Mortgaged Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
"Mortgage Interest Rate": With respect to each Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate (i) in
the case of each adjustable rate Mortgage Loan (A) as of any date of
determination until the first Adjustment Date following the Cut-off Date shall
be the rate set forth in the Mortgage Loan Schedule as the Mortgage Interest
Rate in effect immediately following the Cut-off Date and (B) as of any date of
determination thereafter shall be the rate as adjusted on the most recent
Adjustment Date, to equal the sum, rounded to the nearest 0.125% as provided in
the Mortgage Note, of the Index, determined as set forth in the related Mortgage
Note, plus the related Gross Margin subject to the limitations set forth in the
related Mortgage Note and (ii) in the case of each fixed rate Mortgage Loan
shall remain constant at the rate set forth in the Mortgage Loan Schedule as the
Mortgage Interest Rate in effect immediately following the Cut-off Date. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.
"Mortgage Loan": Each mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.03(d) as from time to time held as a part
of the Trust Fund, the Mortgage Loans so held being identified in the Mortgage
Loan Schedule and set forth in Exhibit D-1 attached hereto.
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"Mortgage Loan Purchase Agreement": The agreement between the Seller and
the Depositor, dated as of October 1, 2006, regarding the transfer of the
Mortgage Loans by the Seller to or at the direction of the Depositor attached
hereto as Exhibit G.
"Mortgage Loan Schedule": As of any date (i) with respect to the Mortgage
Loans, the list of such Mortgage Loans included in the Trust Fund on such date.
The Mortgage Loan Schedule shall be prepared by the Seller and shall set forth
the following information with respect to each Mortgage Loan:
(1) the Seller's Mortgage Loan identifying number;
(2) the city, state, and zip code of the Mortgaged Property;
(3) the type of Residential Dwelling constituting the Mortgaged Property or
a designation that the Mortgaged Property is a multi-family property;
(4) the occupancy status of the Mortgaged Property at origination;
(5) the original months to maturity;
(6) the date of origination;
(7) the first payment date;
(8) the stated maturity date;
(9) the stated remaining months to maturity;
(10) the original principal amount of the Mortgage Loan;
(11) the Principal Balance of each Mortgage Loan as of the Cut-off Date;
(12) the Mortgage Interest Rate of the Mortgage Loan as of the Cut-off
Date;
(13) the current principal and interest payment of the Mortgage Loan as of
the Cut-off Date;
(14) the contractual interest paid to date of the Mortgage Loan;
(15) if the Mortgage Loan is not owner-financed, the Combined Loan-to-Value
Ratio at origination;
(16) a code indicating the loan performance status of the Mortgage Loan as
of the Cut-off Date;
(17) a code indicating whether the Mortgaged Property is in bankruptcy or
in its forbearance period as of the Cut-off Date;
(18) [reserved;]
(19) a code indicating the Index that is associated with such Mortgage
Loan;
(20) the Gross Margin;
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(21) the Periodic Rate Cap;
(22) the Minimum Loan Rate;
(23) the Maximum Loan Rate;
(24) a code indicating whether the Mortgage Loan has a prepayment penalty
and the type of prepayment penalty;
(25) the first Adjustment Date immediately following the Cut-off Date;
(26) the rate adjustment frequency;
(27) the payment adjustment frequency;
(28) a code indicating whether the Mortgage Loan is owner-financed;
(29) a code indicating whether the Mortgage Loan is an interest only
Mortgage Loan and, if so, the interest only period at origination; and
(30) a code indicating whether the Mortgage Loan is a Second Lien Mortgage
Loan.
The Mortgage Loan Schedule shall set forth the following information, as of
the Cut-off Date, with respect to the Mortgage Loans in the aggregate: (1) the
number of Mortgage Loans; (2) the current Principal Balance of the Mortgage
Loans; (3) the weighted average Mortgage Interest Rate of the Mortgage Loans;
and (4) the weighted average maturity of the Mortgage Loans. The Mortgage Loan
Schedule shall be amended from time to time by the Seller in accordance with the
provisions of this Agreement. With respect to any Eligible Substitute Mortgage
Loan, Cut-off Date shall refer to the related Cut-off Date for such Mortgage
Loan, determined in accordance with the definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Exhibit D from
time to time, and any REO Properties acquired in respect thereof.
"Mortgaged Property": The underlying property securing a Mortgage Loan,
including any REO Property, consisting of an Estate in Real Property improved by
a Residential Dwelling or multi-family dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated Mortgage Loan or
any other disposition of related Mortgaged Property (including REO Property) the
related Liquidation Proceeds net of Advances, Servicing Advances, Servicing Fees
and any other accrued and unpaid servicing fees received and retained in
connection with the liquidation of such Mortgage Loan or Mortgaged Property.
"Net Mortgage Interest Rate": With respect to any Mortgage Loan, the
Mortgage Interest Rate borne by such Mortgage Loan minus the Expense Fee Rate.
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"Net Rate": The per annum rate set forth in footnote 1 to the description
of REMIC 1 in the Preliminary Statement hereto (such rate being based on the
weighted average of the interest rates on the SWAP REMIC Regular Interests as
adjusted and as set forth in such footnote).
"Net Swap Payment": With respect to any Distribution Date, any net payment
(other than a Swap Termination Payment or Defaulted Swap Termination Payment)
made by the Supplemental Interest Trust to the Swap Counterparty on the related
Fixed Rate Payer Payment Date (as defined in the Swap Agreement) or made by the
Swap Counterparty to the Supplemental Interest Trust on the related Floating
Rate Payer Payment Date (as defined in the Swap Agreement). In each case, the
Net Swap Payment shall not be less than zero.
"Net WAC": With respect to any Distribution Date, a per annum rate equal to
12 times the quotient of (x) the total scheduled interest on the Mortgage Loans
for the related Collection Period at their Net Mortgage Rates and (y) the
aggregate Principal Balance of the Mortgage Loans (as of the first day of the
related Collection Period).
"Net WAC Cap": With respect to any Distribution Date, a per annum rate
equal to 12 times the quotient of (x) the total scheduled interest on the
Mortgage Loans for the related Collection Period at their Net Mortgage Interest
Rate less any Net Swap Payment or any Swap Termination Payment (other than a
Defaulted Swap Termination Payment) owed to the Swap Counterparty and (y) the
aggregate Principal Balance of the Mortgage Loans (as of the first day of the
related Collection Period), expressed in the case of the Class A and Class M
Certificates on the basis of a 360 day year and the actual number of days
elapsed in the related Interest Accrual Period and, with respect to the Class B
Certificates, on the basis of an assumed 360-day year consisting of twelve
30-day months.
"Net WAC Carryover Amount": If on any Distribution Date, the Accrued
Certificate Interest for any class of the Class A, Class M or Class B
Certificates is based on the Net WAC Cap, the excess of (i) the amount of
interest such class would have been entitled to receive on such Distribution
Date based on clauses (i) and (iii) only of its Pass-Through Rate over (ii) the
amount of interest such class was entitled to receive on such Distribution Date
based on the Net WAC Cap, together with the unpaid portion of any such excess
from prior Distribution Dates (and interest accrued thereon at the then
applicable Pass-Through Rate (based on clauses (i) and (iii) only of its
Pass-Through Rate) on such class).
"New Lease": Any lease of REO Property entered into on behalf of the Trust,
including any lease renewed or extended on behalf of the Trust if the Trust has
the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the Servicer, will not or, in the case of a
proposed Advance or Servicing Advance, would not be ultimately recoverable from
Late Collections on such Mortgage Loan or REO Property as provided herein.
"Officer's Certificate": A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President or a vice president (however
denominated), or by the Treasurer, the Secretary, or one of the assistant
treasurers or assistant secretaries of the Servicer, the Seller or the
Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Servicer except that
any opinion of counsel relating to (a) the qualification of any REMIC as a REMIC
or (b) compliance with the REMIC Provisions must be an opinion of Independent
counsel.
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"Optional Termination Date": The first Distribution Date on which the
Servicer may elect to terminate the Mortgage Pool pursuant to Section 10.01.
"Original Class Certificate Principal Balance": With respect to each Class
of Certificates, the Certificate Principal Balance thereof on the Closing Date,
as set forth opposite such Class in the Preliminary Statement, except with
respect to the Class P, Class CE-1, Class CE-2 and Residual Certificates, which
have an Original Class Certificate Principal Balance of zero.
"Originator": Any originator contemplated by Item 1110 (Section 229.1110)
of Regulation AB.
"Overcollateralization Amount": As of any Distribution Date, the excess, if
any, of (x) the Pool Balance as of the last day of the immediately preceding
Collection Period over (y) the aggregate Certificate Principal Balances of all
the Class A, Class M and Class B Certificates (after taking into account all
distributions of principal on such Distribution Date).
"Overcollateralization Deficiency": As of any Distribution Date, the
excess, if any, of (x) the Targeted Overcollateralization Amount for such
Distribution Date over (y) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after taking into account the
reduction on such Distribution Date of the Certificate Principal Balances of all
Classes of the Class A, Class M and Class B Certificates resulting from the
distribution of the Principal Distribution Amount (but not the Extra Principal
Distribution Amount) on such Distribution Date, but prior to taking into account
any Applied Realized Loss Amounts on such Distribution Date.
"Overcollateralization Release Amount": With respect to any Distribution
Date on or after the Stepdown Date on which a Trigger Event is not in effect,
the lesser of (x) the Principal Remittance Amount for such Distribution Date and
(y) the excess, if any, of (i) the Overcollateralization Amount for such
Distribution Date, assuming that 100% of the Principal Remittance Amount is
applied as a principal payment on the Class A, Class M and Class B Certificates
on such Distribution Date, over (ii) the Targeted Overcollateralization Amount
for such Distribution Date. With respect to any Distribution Date on which a
Trigger Event is in effect, the Overcollateralization Release Amount will be
zero.
"Ownership Interest": As to any Certificate, any ownership or security
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, as owner or as pledgee.
"Pass-Through Rate": Any of the Class A-1 Pass-Through Rate, the Class A-2A
Pass-Through Rate, the Class A-2B Pass-Through Rate, the Class A-2C Pass-Through
Rate, the Class A-2D Pass-Through Rate, the Class M-1 Pass-Through Rate, the
Class M-2 Pass-Through Rate, the Class M-3 Pass-Through Rate, the Class M-4
Pass-Through Rate, the Class M-5 Pass-Through Rate, the Class M-6 Pass-Through
Rate, the Class M-7 Pass-Through Rate, the Class M-8 Pass-Through Rate, the
Class B-1 Pass-Through Rate, the Class B-2 Pass-Through Rate and the Class B-3
Pass-Through Rate.
"Paying Agent": Any paying agent appointed pursuant to Section 5.05.
"Percentage Interest": With respect to any Certificate (other than a Class
P, Class CE-1, Class CE-2 or Residual Certificate), a fraction, expressed as a
percentage, the numerator of which is the Initial Certificate Principal Balance
represented by such Certificate and the denominator of which is the Original
Class Certificate Principal Balance of the related Class. With respect to a
Class CE-1, Class CE-2, Class P or Residual Certificate, the portion of the
Class evidenced thereby, expressed as a percentage, as stated
39
on the face of such Certificate; provided, however, that the sum of all such
percentages for each such Class totals 100%.
"Periodic Rate Cap": With respect to each adjustable rate Mortgage Loan and
any Adjustment Date therefor, the fixed percentage set forth in the related
Mortgage Note, which is the maximum amount by which the Mortgage Interest Rate
for such Mortgage Loan may increase or decrease (without regard to the Maximum
Loan Rate or the Minimum Loan Rate) on such Adjustment Date from the Mortgage
Interest Rate in effect immediately prior to such Adjustment Date.
"Permitted Investments": Any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, regardless of
whether issued or managed by the Depositor, the Servicer, the Trustee or any of
their respective Affiliates or for which an Affiliate of the Trustee serves as
an advisor:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the full faith
and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agents acting in
their respective commercial capacities) incorporated under the laws of the
United States of America or any state thereof and subject to supervision and
examination by federal and/or state authorities, so long as, at the time of such
investment or contractual commitment providing for such investment, such
depository institution or trust company or its ultimate parent has a short-term
uninsured debt rating in one of the two highest available rating categories of
S&P and Moody's and the highest available rating category of Fitch and DBRS and
provided that each such investment has an original maturity of no more than 365
days and (B) any other demand or time deposit or deposit which is fully insured
by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (i) above and entered into with
a depository institution or trust company (acting as principal) rated A-1+ or
higher by S&P and Fitch and rated A2 or higher by Moody's, provided, however,
that collateral transferred pursuant to such repurchase obligation must be of
the type described in clause (i) above and must (A) be valued daily at current
market prices plus accrued interest or (B) pursuant to such valuation, be equal,
at all times, to 105% of the cash transferred by the Trustee in exchange for
such collateral and (C) be delivered to the Trustee or, if the Trustee is
supplying the collateral, an agent for the Trustee, in such a manner as to
accomplish perfection of a security interest in the collateral by possession of
certificated securities;
(iv) securities bearing interest or sold at a discount that are
issued by any corporation incorporated under the laws of the United States of
America or any State thereof and that are rated by each Rating Agency in its
highest long-term unsecured rating categories at the time of such investment or
contractual commitment providing for such investment;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than 30 days after the date of acquisition thereof) that
is rated by each Rating Agency in its highest short-term unsecured debt rating
available at the time of such investment;
40
(vi) units of money market funds registered under the Investment
Company Act of 1940 including funds managed or advised by the Trustee or
affiliates thereof having the highest rating category by each applicable Rating
Agency; and
(vii) if previously confirmed in writing to the Trustee, any
other demand, money market or time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agencies in writing as a
permitted investment of funds backing securities having ratings equivalent to
its highest initial rating of the Class A Certificates;
provided, that (i) no instrument described hereunder shall evidence either the
right to receive (a) only interest with respect to the obligations underlying
such instrument or (b) both principal and interest payments derived from
obligations underlying such instrument and the interest and principal payments
with respect to such instrument provide a yield to maturity at par greater than
120% of the yield to maturity at par of the underlying obligations and (ii) each
such investment must be a "permitted investment" within the meaning of Section
860G(a)(5) of the Code.
"Permitted Transferee": Any transferee of a Residual Certificate other than
a Disqualified Organization or a Disqualified Non-U.S. Person.
"Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, limited liability company,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pool Balance": As of any date of determination, the aggregate Principal
Balance of the Mortgage Loans.
"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 at the
applicable Net Mortgage Interest 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 during the related Prepayment Period the subject of
a Principal Prepayment in full that was applied by the Servicer to reduce the
outstanding principal balance of such loan on a date preceding the related Due
Date, an amount equal to interest at the applicable Mortgage Interest Rate (net
of the Servicing Fee Rate) on the amount of such Principal Prepayment for the
number of days commencing on the date on which the prepayment is applied and
ending on the last day of the prior calendar month.
"Prepayment Period": With respect to any Distribution Date, Date means the
period commencing on the 16th day of the calendar month preceding the calendar
month in which such Distribution Date occurs (or, in the case of the first
Distribution Date, from October 1, 2006) and ending on the 15th day of the
calendar month in which such Distribution Date occurs.
"Primary Insurance Policy": Each policy of primary guaranty mortgage
insurance issued by a Qualified Insurer in effect with respect to any Mortgage
Loan, or any replacement policy therefor obtained by the Servicer pursuant to
Section 3.08.
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"Principal Balance": As to any Mortgage Loan and any day, other than a
Liquidated Mortgage Loan, the related Cut-off Date Principal Balance, minus the
sum of (i) all collections and other amounts credited against the principal
balance of any such Mortgage Loan, (ii) the principal portion of Advances, (iii)
any Deficient Valuation and (iv) any principal reduction resulting from a
Servicer Modification. For purposes of this definition, a Liquidated Mortgage
Loan shall be deemed to have a Principal Balance equal to the Principal Balance
of the related Mortgage Loan as of the final recovery of related Liquidation
Proceeds and a Principal Balance of zero thereafter. As to any REO Property and
any day, the Principal Balance of the related Mortgage Loan immediately prior to
such Mortgage Loan becoming REO Property minus any REO Principal Amortization
received with respect thereto on or prior to such day.
"Principal Distribution Amount": As to any Distribution Date, the sum of
(i) the Principal Remittance Amount minus, for Distribution Dates occurring on
and after the Stepdown Date and for which a Trigger Event is not in effect, the
Overcollateralization Release Amount, if any, and (ii) the Extra Principal
Distribution Amount, if any.
"Principal Prepayment": Any payment of principal made by the Mortgagor on a
Mortgage Loan which is received in advance of its scheduled Due Date and which
is not accompanied by an amount of interest representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to the
month of prepayment.
"Principal Remittance Amount": With respect to any Distribution Date, the
sum of the Group I Principal Remittance Amount and the Group II Principal
Remittance Amount.
"Private Certificates": Any of the Class B-1, Class B-2, Class B-3, Class
P, Class CE-1, Class CE-2 and Residual Certificates.
"Property Insurance Proceeds": Proceeds of any title policy, hazard policy
or other insurance policy covering a Mortgage Loan, to the extent such proceeds
are received by the Servicer and are not to be applied to the restoration of the
related Mortgaged Property or released to the Mortgagor in accordance with the
Servicer's servicing procedures, subject to the terms and conditions of the
related Mortgage Note and Mortgage.
"Prospectus Supplement": That certain Prospectus Supplement dated October
26, 2006, relating to the public offering of the Class A and Class M
Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO Property to be
purchased pursuant to or as contemplated by Section 2.03 or 10.01, and as
confirmed by an Officer's Certificate from the Servicer to the Trustee, an
amount equal to the sum of (i) 100% of the Principal Balance thereof as of the
date of purchase (or such other price as provided in Section 10.01), (ii) in the
case of (x) a Mortgage Loan, accrued interest on such Principal Balance at the
applicable Mortgage Interest Rate in effect from time to time from the Due Date
as to which interest was last covered by a payment by the Mortgagor or an
Advance by the Servicer, which payment or Advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected, and (y) an REO Property, its fair
market value, determined in good faith by the Servicer, (iii) any unreimbursed
Servicing Advances and Advances and any unpaid Servicing Fees allocable to such
Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan or REO Property pursuant to
Section 3.13, and (v) in the case of a Mortgage Loan required to be purchased
pursuant to Section 2.03, (x) any costs and damages incurred by the Trust in
connection with any violation by such Mortgage Loan of any predatory and abusive
lending
42
law and (y) expenses reasonably incurred or to be incurred by the Servicer or
the Trustee in respect of the breach or defect giving rise to the purchase
obligation.
"Qualified Insurer": Any insurance company acceptable to Xxxxxx Xxx or
Xxxxxxx Mac.
"Rating Agency" or "Rating Agencies": DBRS, Fitch, Xxxxx'x and S&P, or
their respective successors. If such agencies or their successors are no longer
in existence, "Rating Agencies" shall be such nationally recognized statistical
rating organizations as set forth on the most current list of such organizations
released by the Securities and Exchange Commission and designated by the
Depositor, notice of which designation shall be given to the Trustee and the
Servicer.
"Rating Agency Condition": As defined in the Swap Agreement.
"Realized Loss": With respect to a Liquidated Mortgage Loan, the amount by
which the remaining unpaid Principal Balance of the Mortgage Loan plus accrued
and unpaid interest thereon at the Mortgage Interest Rate through the last day
of the month of liquidation, exceeds the amount of Net Liquidation Proceeds
applied to the principal balance of the related Mortgage Loan. With respect to
any Mortgage Loan, a Deficient Valuation or a reduction in the Principal Balance
thereof resulting from a Servicer Modification.
"Realized Loss Amortization Amount": Any of the Class M-1 Realized Loss
Amortization Amount, the Class M-2 Realized Loss Amortization Amount, the Class
M-3 Realized Loss Amortization Amount, the Class M-4 Realized Loss Amortization
Amount, the Class M-5 Realized Loss Amortization Amount, the Class M-6 Realized
Loss Amortization Amount, Class M-7 Realized Loss Amortization Amount, the Class
M-8 Realized Loss Amortization Amount, the Class B-1 Realized Loss Amortization
Amount, the Class B-2 Realized Loss Amortization Amount and the Class B-3
Realized Loss Amortization Amount.
"Record Date": With respect to Class A and Class M Certificates, the
Business Day immediately preceding such Distribution Date; provided, however,
that if any such Certificate becomes a Definitive Certificate, the Record Date
for such Certificate shall be the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs. With respect
to the Class B, Class P, Class CE-1, Class CE-2, Class R and Class R-X
Certificates, the last Business Day of the month immediately preceding the month
in which the related Distribution Date occurs or the Closing Date, in the case
of the first Distribution Date.
"Reference Banks": Those banks (i) with an established place of business in
London, England, (ii) not controlling, under the control of or under common
control with the Depositor or the Trustee, (iii) that have been designated as
such by the Trustee, after consultation with the Servicer and (iv) that are
engaged in transactions in the London interbank market.
"Regular Certificate": Any of the Class A, Class M, Class B, Class P, Class
CE-1 and Class CE-2 Certificates.
"Regulation AB": Subpart 22.1100 - 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 Securities and Exchange 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 Securities and Exchange Commission, or as may
be provided by the Securities and Exchange Commission or its staff from time to
time.
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"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.
"Reimbursement Amount": As defined in Section 2.03.
"Related Documents": With respect to any Mortgage Loan, the related
Mortgage Notes, Mortgages and other related documents.
"Relief Act": The Servicemembers Civil Relief Act and similar state laws.
"Relief Act Interest Shortfall": With respect to any Distribution Date, for
any Mortgage Loan with respect to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Collection Period as
a result of the application of the Relief Act or similar state laws, the amount
by which (i) interest collectible on such Mortgage Loan during such Collection
Period is less than (ii) one month's interest on the Principal Balance of such
Mortgage Loan at the Mortgage Interest Rate for such Mortgage Loan before giving
effect to the application of the Relief Act or similar state laws.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC Pass-Through Rate": In the case of a Class of the Class A, Class M
and Class B Certificates, the REMIC 2 Net WAC Cap.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
"REMIC Regular Interest": Any SWAP REMIC Regular Interest, REMIC 1 Regular
Interest, REMIC 2 Regular Interest, REMIC B-1 Regular Interest, REMIC B-2
Regular Interest, REMIC B-3 Regular Interest, REMIC CE-1 Regular Interest, REMIC
IO Regular Interest or REMIC CE-2 Regular Interest.
"REMIC Swap Rate": For each Distribution Date (and the related Interest
Accrual Period), a per annum rate equal to the Fixed Rate used to compute the
obligation of the Supplemental Interest Trust under the Swap Agreement for such
Distribution Date.
"REMIC 1": As defined in the Preliminary Statement.
"REMIC 1 Interest": Each interest in REMIC 1 as described in the
Preliminary Statement.
"REMIC 1 Regular Interest": Each REMIC 1 Interest other than the Class R-1
Interest.
"REMIC 2": As defined in the Preliminary Statement.
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"REMIC 2 Interest": Each of the REMIC 2 Regular Interests and the Class R-2
Interest.
"REMIC 2 Net WAC Cap": For each Distribution Date, the Net Rate as
adjusted, in the case of any Class of Certificates that accrues interest on a
"30/360" basis, to reflect accruals on such basis.
"REMIC 2 Regular Interest": Each of the REMIC 2 A-1 Interest, the REMIC 2
A-2A Interest, the REMIC 2 A-2B Interest, the REMIC 2 A-2C Interest, the REMIC 2
A-2D Interest, the REMIC 2 M-1 Interest, the REMIC 2 M-2 Interest, the REMIC 2
M-3 Interest, the REMIC 2 M-4 Interest, the REMIC 2 M-5 Interest, the REMIC 2
M-6 Interest, the REMIC 2 M-7 Interest, the REMIC 2 M-8 Interest, the REMIC 2
B-1 Interest, the REMIC 2 B-2 Interest, the REMIC 2 B-3 Interest, the REMIC 2
CE-1 Interest, the REMIC 2 IO Interest and the REMIC 2 CE-2 Interest.
"REMIC 2 A-1 Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class A-1 Certificates having the same rights to payments as
the Class A-1 Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC 2 A-2A Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class A-2A Certificates having the same rights to payments as
the Class A-2A Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC 2 A-2B Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class A-2B Certificates having the same rights to payments as
the Class A-2B Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC 2 A-2C Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class A-2C Certificates having the same rights to payments as
the Class A-2C Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC 2 A-2D Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class A-2D Certificates having the same rights to payments as
the Class A-2D Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC 2 M-1 Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class M-1 Certificates having the same rights to payments as
the Class M-1 Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC 2 M-2 Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class M-2 Certificates having the same rights to payments as
the Class M-2 Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC 2 M-3 Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class M-3 Certificates having the same rights to payments as
the Class M-3 Certificates other than the
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right to any payments in respect of Excess Interest and other than the
obligation to make payments in respect of Class Payment Shortfalls.
"REMIC 2 M-4 Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class M-4 Certificates having the same rights to payments as
the Class M-4 Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC 2 M-5 Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class M-5 Certificates having the same rights to payments as
the Class M-5 Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC 2 M-6 Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class M-6 Certificates having the same rights to payments as
the Class M-6 Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC 2 M-7 Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class M-7 Certificates having the same rights to payments as
the Class M-7 Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC 2 M-8 Interest": An uncertificated "regular interest" in REMIC 2
represented by the Class M-8 Certificates having the same rights to payments as
the Class M-8 Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC 2 B-1 Interest": An uncertificated "regular interest" in REMIC 2
held by REMIC B-1 having the same rights to payments as the Class B-1
Certificates other than the right to any payments in respect of Excess Interest
and other than the obligation to make payments in respect of Class Payment
Shortfalls.
"REMIC 2 B-2 Interest": An uncertificated "regular interest" in REMIC 2
held by REMIC B-2 having the same rights to payments as the Class B-2
Certificates other than the right to any payments in respect of Excess Interest
and other than the obligation to make payments in respect of Class Payment
Shortfalls.
"REMIC 2 B-3 Interest": An uncertificated "regular interest" in REMIC 2
held by REMIC B-3 having the same rights to payments as the Class B-3
Certificates other than the right to any payments in respect of Excess Interest
and other than the obligation to make payments in respect of Class Payment
Shortfalls.
"REMIC 2 CE-1 Interest": An uncertificated "regular interest" in REMIC 2
held by REMIC CE-1 having an initial principal balance equal to the Initial
Overcollateralization Amount and bearing interest at the REMIC 2 CE-1 Interest
Distributable Interest Rate on a notional balance equal to the aggregate of the
Principal Balance of the Mortgage Loans outstanding as of the beginning of the
related Interest Accrual Period.
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"REMIC 2 CE-1 Interest Current Interest": As of any Distribution Date, the
interest accrued during the related Interest Accrual Period at the REMIC 2 CE-1
Interest Distributable Interest Rate on a notional amount equal to the aggregate
of the Principal Balance of the Mortgage Loans outstanding as of the beginning
of such Interest Accrual Period (such amount of interest representing a
"specified portion" (within the meaning of Treasury Regulations Section
1.860G-1(a)(2)(i)(C)) of interest payments on the REMIC 1 Regular Interests
(other than the Class LT1-IO Interest and Class LT1-CE2 Interest)).
"REMIC 2 CE-1 Interest Distributable Interest Rate": The excess, if any, of
(a) the weighted average of the interest rates on the REMIC 1 Regular Interests
(other than the Class LT1-IO Interest and Class LT1-CE2 Interest) over (b) two
times the weighted average of the interest rates on the Marker Interests and the
Class LT1-X1 Interest (treating for purposes of this clause (b) the interest
rate on each of the Marker Interests as being subject to a cap equal to the
interest rate (as adjusted, if necessary, to reflect accruals on an "actual/360"
basis) or the Corresponding REMIC 2 Regular Interest of the Related Certificate
of such Marker Interest (as described in the Preliminary Statement) and treating
the interest rate on the Class LT1-X1 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 relevant REMIC 1 Regular Interests
immediately prior to any date of determination.
"REMIC 2 CE-2 Interest": An uncertificated "regular interest" in REMIC 2
held by REMIC CE-2 which shall not have a principal amount or an interest rate,
but which shall be entitled to 100% of the interest accrued with respect to the
Class LT1-CE2 Interest.
"REMIC 2 IO Interest": An uncertificated "regular interest" in REMIC 2 held
by REMIC IO which shall not have a principal amount or an interest rate, but
which shall be entitled to 100% of the interest accrued with respect to the
Class LT1-IO Interest.
"REMIC B-1": As defined in the Preliminary Statement.
"REMIC B-1 Interest": Each of the REMIC B-1 Regular Interests and the Class
R-B-1 Interest.
"REMIC B-1 Regular Interest": The REMIC B-1 B-1 Interest.
"REMIC B-1 B-1 Interest": An uncertificated "regular interest" in REMIC B-1
represented by the Class B-1 Certificates having the same rights to payments as
the Class B-1 Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC B-2": As defined in the Preliminary Statement.
"REMIC B-2 Interest": Each of the REMIC B-2 Regular Interests and the Class
R-B-2 Interest.
"REMIC B-2 Regular Interest": The REMIC B-2 B-2 Interest.
"REMIC B-2 B-2 Interest": An uncertificated "regular interest" in REMIC B-2
represented by the Class B-2 Certificates having the same rights to payments as
the Class B-2 Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC B-3": As defined in the Preliminary Statement.
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"REMIC B-3 Interest": Each of the REMIC B-3 Regular Interests and the Class
R-B-3 Interest.
"REMIC B-3 Regular Interest": The REMIC B-3 B-3 Interest.
"REMIC B-3 B-3 Interest": An uncertificated "regular interest" in REMIC B-3
represented by the Class B-3 Certificates having the same rights to payments as
the Class B-3 Certificates other than the right to any payments in respect of
Excess Interest and other than the obligation to make payments in respect of
Class Payment Shortfalls.
"REMIC CE-1": As defined in the Preliminary Statement.
"REMIC CE-1 Interest": Each of the REMIC CE-1 Regular Interests and the
Class R-CE-1 Interest.
"REMIC CE-1 Regular Interest": The REMIC CE-1 CE-1 Interest.
"REMIC CE-1 CE-1 Interest": An uncertificated "regular interest" in REMIC
CE-1 represented by the Class CE-1 Certificates and entitled to all payments in
respect of the REMIC 2 CE-1 Interest.
"REMIC CE-2": As defined in the Preliminary Statement.
"REMIC CE-2 Interest": Each of the REMIC CE-2 Regular Interests and the
Class R-CE-2 Interest.
"REMIC CE-2 Regular Interest": The Class CE-2 Certificates.
"REMIC IO": As defined in the Preliminary Statement.
"REMIC IO Interest": Each of the REMIC IO Regular Interests and the Class
R-IO Interest.
"REMIC IO Regular Interest": The REMIC IO IO Interest.
"REMIC IO IO Interest": An uncertificated "regular interest" in REMIC IO
represented by the Class CE-1 Certificates and entitled to all payments in
respect of the REMIC 2 IO Interest.
"Remittance Report": A report prepared by the Servicer and delivered to the
Trustee pursuant to Section 4.07, containing the information attached hereto as
Exhibit M.
"Rents from Real Property": With respect to any REO Property, gross income
of the character described in Section 856(d) of the Code.
"REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust Fund.
"REO Principal Amortization": With respect to any REO Property, for any
calendar month, the aggregate of all amounts received in respect of such REO
Property during such calendar month, whether in the form of rental income, sale
proceeds (including, without limitation, that portion of the Termination Price
paid in connection with a purchase of all of the Mortgage Loans and REO
Properties pursuant to Section 10.01 that is allocable to such REO Property) or
otherwise, net of any portion of such amounts (i) payable pursuant to Section
3.13 in respect of the proper operation, management and maintenance of such REO
Property or (ii) payable or reimbursable to the Servicer pursuant to Section
3.13 for unpaid
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Servicing Fees in respect of the related Mortgage Loan and unreimbursed
Servicing Advances and Advances in respect of such REO Property or the related
Mortgage Loan.
"REO Property": A Mortgaged Property acquired by the Servicer on behalf of
the Trust Fund through foreclosure or deed-in-lieu of foreclosure, as described
in Section 3.13.
"Request for Release": A release signed by a Servicing Officer, in the form
of Exhibit E attached hereto.
"Residential Dwelling": Any one of the following: (i) a one-family
dwelling, (ii) a two- to four-family dwelling, (iii) a one-family dwelling unit
in a Xxxxxx Xxx eligible condominium project, (iv) a one-family dwelling in a
planned unit development, which is not a co-operative, or (v) a mobile or
manufactured home (as defined in 00 Xxxxxx Xxxxxx Code, Section 5402(6)).
"Residual Certificates": The Class R Certificates and the Class R-X
Certificates.
"Residual Interest": The sole Class of "residual interests" in each REMIC
within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee, any officer
assigned to the Corporate Trust Division (or any successor thereto), including
any Vice President, Assistant Vice President, Trust Officer, any Assistant
Secretary, any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and in each case having direct responsibility for the administration of
this Agreement.
"S&P": Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc.,
and its successors, and if such company shall for any reason no longer perform
the functions of a securities rating agency, "S&P" shall be deemed to refer to
any other "nationally recognized statistical rating organization" as set forth
on the most current list of such organizations released by the Securities and
Exchange Commission.
"Second Lien Mortgage Loan": Any of the Mortgage Loans which are secured by
a second mortgage lien that is junior to a First Lien Mortgage Loan on the
related Mortgaged Property.
"Seller": Credit-Based Asset Servicing and Securitization LLC, or its
successor in interest, in its capacity as seller under the Mortgage Loan
Purchase Agreement.
"Senior Enhancement Percentage": For any Distribution Date, the percentage
obtained by dividing (x) the sum of (i) the aggregate Certificate Principal
Balances of the Subordinated Certificates and (ii) the Overcollateralization
Amount, in each case before taking into account the distribution of the
Principal Distribution Amount on such Distribution Date by (y) the Pool Balance
as of the last day of the related Collection Period.
"Senior Principal Distribution Amount": As of any Distribution Date (i)
before the Stepdown Date or on which a Trigger Event is in effect, the Principal
Distribution Amount and (ii) on or after the Stepdown Date and as long as a
Trigger Event is not in effect, the excess of (x) the Certificate Principal
Balance of the Class A Certificates immediately prior to that Distribution Date
over (y) the lesser of (A) the product of (1) approximately 42.50% and (2) the
Pool Balance of the Mortgage Loans as of the last day of the related Collection
Period after giving effect to principal prepayments in the related Prepayment
Period and (B) the Pool Balance of the Mortgage Loans as of the last day of the
related Collection Period minus the product of (i) 0.50% and (ii) the Pool
Balance on the Cut-off Date.
49
"Senior Specified Enhancement Percentage": On any date of determination
thereof, 57.50%.
"Servicer": Xxxxxx Loan Servicing LP, a Delaware limited partnership, or
any successor servicer appointed as herein provided, in its capacity as Servicer
hereunder.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer or which is 50% or more owned by the Servicer
and (ii) which is qualified to service residential mortgage loans.
"Servicer Event of Termination": One or more of the events described in
Section 7.01.
"Servicer Modification": A modification to the terms of a Mortgage Loan, in
accordance with the terms of Section 3.01, as to which the Mortgagor is in
default or as to which, in the judgment of the Servicer, default is reasonably
foreseeable.
"Servicer Remittance Date": With respect to any Distribution Date, one
Business Day prior to such Distribution Date. "Servicer's Assignee": As defined
in Section 3.30(b) hereof.
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred by the Servicer in the performance of its
servicing obligations to the extent such costs or expenses constitute
"unanticipated expenses" within the meaning of Treasury Regulations
1.860G-1(b)(3)(ii), including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property and (iv) compliance with the
obligations under Section 3.08.
"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": With respect to each Mortgage Loan (including each REO
Property) and for any calendar month, an amount equal to one month's interest
(or in the event of any payment of interest which accompanies a Principal
Prepayment in full made by the Mortgagor during such calendar month, interest
for the number of days covered by such payment of interest) at the Servicing Fee
Rate on the same principal amount on which interest on such Mortgage Loan
accrues for such calendar month.
"Servicing Fee Rate": With respect to each Mortgage Loan, 0.50% per annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose name
and specimen signature appear on a list of servicing officers furnished by the
Servicer to the Trustee and the Depositor on the Closing Date, as such list may
from time to time be amended.
"Servicing Rights Pledgee": One or more lenders, selected by the Servicer,
to which the Servicer may pledge and assign all of its right, title and interest
in, to and under this Agreement, including JPMorgan Chase Bank, National
Association, as the representative of certain lenders.
"Servicing Standard": Shall mean the standards set forth in Section 3.01.
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"Significance Estimate": With respect to any Distribution Date, and in
accordance with Item 1115 of Regulation AB, shall be an amount determined based
on the reasonable good-faith estimate by the Depositor or its affiliate of the
aggregate maximum probable exposure of the outstanding Certificates to the Swap
Agreement.
"Significance Percentage": With respect to any Distribution Date, and in
accordance with Item 1115 of Regulation AB, shall be a percentage equal to the
Significance Estimate divided by the aggregate outstanding Certificate Principal
Balance of the Certificates, prior to the distribution of the Principal
Distribution Amount on such Distribution Date.
"Special Hazard Loss": Any Realized Losses that result from direct physical
damage to Mortgaged Properties caused by natural disasters and other hazards (i)
which are not covered by hazard insurance policies (such as earthquakes) and
(ii) for which claims have been submitted and rejected by the related hazard
insurer and any shortfall in insurance proceeds for partial damage due to the
application of the co-insurance clauses contained in hazard insurance policies.
"SPV": As defined in Section 3.30(a) hereof.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stayed Funds": Any payment required to be made under the terms of the
Certificates and this Agreement but which is not remitted by the Servicer
because the Servicer is the subject of a proceeding under the Bankruptcy Code
and the making of such remittance is prohibited by Section 362 of the Bankruptcy
Code.
"Stepdown Date": The earlier to occur of (x) the Distribution Date on which
the aggregate Certificate Principal Balance of the Class A Certificates is
reduced to zero, and (y) the later of (A) the Distribution Date in November 2009
and (B) the first Distribution Date on which the Senior Enhancement Percentage
is greater than or equal to the Senior Specified Enhancement Percentage.
"Subcontractor": Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to Mortgage Loans under the direction or authority of the
Servicer or a Subservicer.
"Subordinated Certificates": The Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class B-1, Class B-2, Class
B-3, Class P, Class CE-1, Class CE-2, Class R and Class R-X Certificates.
"Subsequent Overcollateralization Amount": As of any Distribution Date,
after the application of principal payments and Applied Realized Loss Amounts,
an amount equal to the excess, if any of (a) the Pool Balance over (b) the sum
of (i) the Certificate Principal Balance of each Class of the Class A, Class M
and Class B Certificates and (ii) the remaining Initial Overcollateralization
Amount.
"Subsequent Recovery": Any amount received on a Mortgage Loan subsequent to
such Mortgage Loan being determined to be a Liquidated Mortgage Loan.
"Subservicer": Any Person that services Mortgage Loans on behalf of the
Servicer or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or
51
Subcontractors) of a substantial portion of the material servicing functions
required to be performed by the Servicer under this Agreement, with respect to
some or all of the Mortgage Loans, that are identified in Item 1122(d) of
Regulation AB.
"Substitution Adjustment Amount": As defined in Section 2.03(d) hereof.
"Supplemental Interest Trust": The separate trust, established pursuant to
Section 4.02(i) of this Agreement and held by the Trustee for the benefit of the
holders of the Certificates as a segregated subtrust of the Trust Fund, in which
the Swap Agreement, the Cap Agreement, the Swap Account and the Cap Account will
be held, out of which any Swap Termination Payments or Net Swap Payments owed to
the Swap Counterparty will be paid, certain distributions to Certificateholders
will be made, and into which any Swap Termination Payments or Net Swap Payments
received from the Swap Counterparty and any payments received on the Cap
Contract will be deposited as set forth in Section 4.02 hereof.
"Swap Account": The separate Eligible Account created and maintained by the
Trustee pursuant to Section 4.02(i)(i) in the name of the Trustee for the
benefit of the Trust Fund and designated "U.S. Bank, as trustee, in trust for
registered holders of 2006-CB8 Trust, C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2006-CB8." Funds in the Swap Account shall be held in trust
for the Trust Fund for the uses and purposes set forth in this Agreement.
"Swap Agreement": The confirmation to the master agreement, dated as of
October 30, 2006, between the Swap Counterparty and the trustee of the
Supplemental Interest Trust for the benefit of the Issuing Entity or any other
cap agreement or swap agreement (including any related schedules) held by the
Supplemental Interest Trust pursuant to Section 4.02(i) hereof.
"Swap Counterparty": The Xxxxxxx Xxxxx Capital Services, Inc. or any
successor counterparty who meets the requirements set forth in the Swap
Agreement.
"Swap LIBOR": With respect to any Distribution Date (and the related
Interest Accrual Period) the product of (i) the Floating Rate Option (as defined
in the Swap Agreement for the related Swap Payment Date), (ii) two and (iii) the
quotient of (a) the actual number of days in the Interest Accrual Period for the
REMIC 1 Regular Interests divided by (b) 30.
"Swap Payment Date": For so long as the Swap Agreement is in effect or
amounts remain unpaid thereunder, the second Business Day preceding each
Distribution Date.
"SWAP REMIC": As defined in the Preliminary Statement.
"SWAP REMIC Interests": Each interest in the SWAP REMIC as described in the
Preliminary Statement.
"SWAP REMIC Regular Interests": Each SWAP REMIC Interest other than the
Class R-SW Interest.
"Swap Termination Payment": Any payment payable by the Supplemental
Interest Trust or the Swap Counterparty upon termination of the Swap Agreement
as a result of termination of the Swap Agreement.
"Targeted Overcollateralization Amount": As of any Distribution Date, (x)
prior to the Stepdown Date, 3.15% of the Pool Balance on the Cut-off Date and
(y) on and after the Stepdown Date, (i) if a
52
Trigger Event has not occurred, the lesser of (a) 3.15% of the Pool Balance on
the Cut-off Date and (b) the greater of (A) 6.30% of the Pool Balance as of the
last day of the related Collection Period and (B) 0.50% of the Pool Balance on
the Cut-off Date and (ii) if a Trigger Event has occurred, the Targeted
Overcollateralization Amount for the immediately preceding Distribution Date.
Notwithstanding the foregoing, on and after any Distribution Date following the
reduction of the aggregate Certificate Principal Balance of the Class A, Class M
and Class B Certificates to zero, the Targeted Overcollateralization Amount
shall be zero.
"Tax Matters Person": The tax matters person appointed pursuant to Section
9.01(e) hereof.
"Tax Returns": The federal income tax returns on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
the REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be
filed on behalf of the Trust for each of the REMICs created pursuant to this
Agreement under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
"Telerate Page 3750": The display page currently so designated on the
Moneyline Telerate Service (or such other page as may replace the Telerate Page
3750 page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Termination Price": As defined in Section 10.01(a) hereof.
"Trigger Event": With respect to any Distribution Date, if (i) the
six-month rolling average of 60+ Day Delinquent Loans equals or exceeds 27.85%
of the Senior Enhancement Percentage or (ii) the aggregate amount of Realized
Losses incurred since the Cut-off Date through the last day of the related
Collection Period divided by the Pool Balance as of the Cut-off Date exceeds the
applicable percentages set forth below with respect to such Distribution Date:
DISTRIBUTION DATE OCCURRING IN PERCENTAGE
---------------------------------- ----------
November 2008 through October 2009 1.55%
November 2009 through October 2010 3.65%
November 2010 through October 2011 5.70%
November 2011 through October 2012 7.40%
November 2012 through October 2013 8.25%
November 2013 and thereafter 8.30%
"Trust": 2006-CB8 Trust, the trust created hereunder.
"Trust Fund": The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, with respect
to a portion of which REMIC elections are to be made, such entire Trust Fund
consisting of: (i) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all collections thereon and proceeds thereof, (ii) any REO Property, together
with all collections thereon and proceeds thereof, (iii) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby), (v) the Supplemental Interest Trust, which
in turns holds the Swap Agreement, the Cap Agreement, the Swap Account and the
Cap Account, and (vi) the Collection Account,
53
the Distribution Account and any REO account and such assets that are deposited
therein from time to time and any investments thereof, together with any and all
income, proceeds and payments with respect thereto.
"Trustee": U.S. Bank National Association, a banking association organized
and existing under the laws of United States of America, or any successor
Trustee appointed as herein provided.
"Trustee's Certification" shall have the meaning ascribed to such term in
Section 3.29(a) of this Agreement.
"Trustee Fee": With respect to any Distribution Date, the product of (x)
one-twelfth of the Trustee Fee Rate and (y) the aggregate of the Principal
Balances of all Mortgage Loans as of the opening of business on the first day of
the related Collection Period.
"Trustee Fee Rate": With respect to any Distribution Date, 0.0050% per
annum.
"Underwriter": Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, as
underwriter with respect to the Class A and Class M Certificates.
"United States Person" or "U.S. Person": (i) A citizen or resident of the
United States, (ii) a corporation, partnership or other entity treated as a
corporation or partnership for United States 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) or (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 a U.S. Person.
"Unpaid Realized Loss Amount": For any Class X-0, Xxxxx X-0, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class B-1, Class B-2 and
Class B-3 Certificates and as to any Distribution Date, the excess of (1) the
cumulative amount of related Applied Realized Loss Amounts with respect to such
Class for all prior Distribution Dates over (2) the sum of (x) the cumulative
amount of related Realized Loss Amortization Amounts with respect to such Class
for all prior Distribution Dates, (y) all increases in the Certificate Principal
Balance of such Class pursuant to the last sentence of the definition of
"Certificate Principal Balance", and (z) the cumulative amount of distributions
with respect to such Class for all prior Distribution Dates pursuant to clause
(viii) pursuant to Section 4.02(i).
"Value": With respect to any Mortgaged Property, the lower of the value
thereof as determined by an independent appraisal made at the time of the
origination of the related Mortgage Loan or the sale price, if the appraisal is
not available; except that, with respect to any Mortgage Loan that is a purchase
money mortgage loan, the lesser of (i) the value thereof as determined by an
independent appraisal made at the time of the origination of such Mortgage Loan,
if any, and (ii) the sales price of the related Mortgaged Property.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. The Voting Rights allocated
among Holders of the Class A, Class M and Class B Certificates shall be 98%, and
shall be allocated among each such Class according to the fraction, expressed as
a percentage, the numerator of which is the aggregate Certificate Principal
Balance of all the
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Certificates of such Class then outstanding and the denominator of which is the
aggregate Certificate Principal Balance of all the Class A, Class M and Class B
Certificates then outstanding. The Voting Rights allocated to each such Class of
Certificates shall be allocated among all holders of each such Class in
proportion to the outstanding Certificate Principal Balance of such
Certificates; provided, however, that any Certificate registered in the name of
the Servicer, the Depositor or the Trustee or any of their respective affiliates
shall not be included in the calculation of Voting Rights; provided that only
such Certificates as are known by a Responsible Officer of the Trustee to be so
registered will be so excluded. On each Distribution Date, the percentage of all
the Voting Rights allocated among the Holders of the Class P Certificates and
the Class CE-1 Certificates shall be 2%. The Residual Certificates and the Class
CE-2 Certificates shall have no Voting Rights.
"Written Order to Authenticate": A written order by which the Depositor
directs the Trustee to execute, authenticate and deliver the Certificates.
Section 1.02 Accounting.
Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added or
any distributions are taken into account such definition or calculation and any
related definitions or calculations shall be determined without duplication of
such functions.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey to the Trustee, on behalf
of the Trust, without recourse, for the benefit of the Certificateholders, all
the right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to (i) each Mortgage Loan
identified on the Mortgage Loan Schedule, including the related Cut-off Date
Principal Balance, all interest accruing thereon after the Cut-off Date and all
collections in respect of interest and principal due after the Cut-off Date;
(ii) property which secured each such Mortgage Loan and which has been acquired
by foreclosure or deed in lieu of foreclosure; (iii) its interest in any
insurance policies in respect of the Mortgage Loans; (iv) all proceeds of any of
the foregoing; (v) the rights of the Depositor under the Mortgage Loan Purchase
Agreement, and (vi) all other assets included or to be included in the Trust
Fund. Such assignment includes all interest and principal due to the Depositor
or the Servicer after the Cut-off Date with respect to the Mortgage Loans.
The Depositor, the Seller, the Servicer and the Trustee hereto agree and
understand that it is not intended that any Mortgage Loan be included in the
Trust Fund that is, without limitation, a "High-Cost Home Loan" as defined by
the Home Ownership and Equity Protection Act of 1994 or any other applicable
anti-predatory lending laws, including but not limited to (i) a "High-Cost Home
Loan" as defined in the New Jersey Home Ownership Act effective November 27,
2003; (ii) a "High-Cost Home Loan" as defined in the New Mexico Home Loan
Protection Act effective January 1, 2004; (iii) a "High-Cost Home Loan" as
defined in the Massachusetts Predatory Home Loan Practices Act effective
November 7, 2004 (iv) a "High-Cost Home Loan" as defined by the Indiana High
Cost Home Loan Law effective January 1, 2005; or (v) a "High-Cost Home Loan" as
defined by the Illinois High-Risk Home Loan Act effective January 1, 2004.
In connection with such transfer and assignment, the Seller, on behalf of
the Depositor, does hereby deliver to, and deposit with the Trustee, or its
designated agent (the "Custodian"), the following documents or instruments with
respect to each Mortgage Loan (a "Mortgage File") so transferred and assigned:
(i) the original Mortgage Note including any riders thereto,
endorsed either (A) in blank or (B) in the following form: "Pay to the order of
U.S. Bank National Association, as Trustee for the C-BASS Mortgage Loan
Asset-Backed Certificates, Series 2006-CB8, without recourse," or with respect
to any lost Mortgage Note, an original Lost Note Affidavit, together with a copy
of the related Mortgage Note;
(ii) the original Mortgage including any riders thereto, with
evidence of recording thereon, and the original recorded power of attorney, if
the Mortgage was executed pursuant to a power of attorney, with evidence of
recording thereon or, if such Mortgage or power of attorney has been submitted
for recording but has not been returned from the applicable public recording
office, has been lost or is not otherwise available, a copy of such Mortgage or
power of attorney, as the case may be, certified to be a true and complete copy
of the original submitted for recording;
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(iii) an original Assignment of Mortgage, in form and substance
acceptable for recording. The Mortgage shall be assigned either (A) in blank or
(B) to "U.S. Bank National Association, as Trustee for the C-BASS Mortgage Loan
Asset-Backed Certificates, Series 2006-CB8, without recourse";
(iv) an original or a certified copy of any intervening
assignment of Mortgage showing a complete chain of assignments;
(v) the original or a certified copy of lender's title insurance
policy; and
(vi) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any.
The Trustee agrees to execute and deliver (or cause the Custodian to
execute and deliver) to the Depositor on or prior to the Closing Date an
acknowledgment of receipt of the original Mortgage Note (with any exceptions
noted), substantially in the form attached as Exhibit F-3 hereto.
If any of the documents referred to in Section 2.01(ii), (iii) or (iv)
above has as of the Closing Date been submitted for recording but either (x) has
not been returned from the applicable public recording office or (y) has been
lost or such public recording office has retained the original of such document,
the obligations of the Seller to deliver such documents shall be deemed to be
satisfied upon (1) delivery to the Trustee or the Custodian no later than the
Closing Date, of a copy of each such document certified by the Seller in the
case of (x) above or the applicable public recording office in the case of (y)
above to be a true and complete copy of the original that was submitted for
recording and (2) if such copy is certified by the Seller, delivery to the
Trustee or the Custodian, promptly upon receipt thereof of either the original
or a copy of such document certified by the applicable public recording office
to be a true and complete copy of the original. The Seller shall deliver or
cause to be delivered to the Trustee or the Custodian promptly upon receipt
thereof any other documents constituting a part of a Mortgage File received with
respect to any Mortgage Loan, including, but not limited to, any original
documents evidencing an assumption or modification of any Mortgage Loan.
Upon discovery or receipt of notice of any materially defective document
in, or that a document is missing from, a Mortgage File, the Seller shall have
120 days to cure such defect or 150 days following the Closing Date, in the case
of missing Mortgages or Assignments or deliver such missing document to the
Trustee or the Custodian. If the Seller does not cure such defect or deliver
such missing document within such time period, and such failure to deliver or
cure, as applicable, would have a material and adverse effect on
Certificateholders, the Seller shall either repurchase or substitute for such
Mortgage Loan in accordance with Section 2.03.
The Servicer shall cause the Assignments of Mortgage which were delivered
in blank to be completed and shall cause all Assignments referred to in Section
2.01(iii) hereof and, to the extent necessary, in Section 2.01(iv) hereof to be
recorded at the Servicer's expense and of no cost to the Trust Fund; provided,
however, the Servicer need not cause to be recorded any Assignment which relates
to a Mortgage Loan in any jurisdiction under the laws of which, as evidenced by
an Opinion of Counsel delivered by the Servicer to the Trustee and the Rating
Agencies, the recordation of such assignment is not necessary to protect the
Trustee's interest, on behalf of the Trust, in the related Mortgage Loan. The
Servicer shall be required to deliver such assignments for recording within 30
days of the Closing Date. The Servicer shall furnish the Trustee, or its
designated agent, with a copy of each assignment of Mortgage submitted for
recording. In the event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Servicer shall promptly have a substitute
Assignment prepared or have
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such defect cured, as the case may be, and thereafter cause each such Assignment
to be duly recorded. In the event that any Mortgage Note is endorsed in blank as
of the Closing Date, promptly following the Closing Date the Servicer shall
cause to be completed such endorsements "Pay to the order of U.S. Bank National
Association, as Trustee for the C-BASS Mortgage Loan Asset-Backed Certificates,
Series 2006-CB8, without recourse."
In the event that any Assignments of Mortgage is not recorded or is
improperly recorded (as a result of actions taken or not taken by a person other
than the Servicer), neither the Servicer nor the Trustee shall have any
liability for its failure to receive notices related to such Assignment of
Mortgage.
The Depositor herewith delivers to the Trustee executed copies of the
Mortgage Loan Purchase Agreement.
Section 2.02 Acceptance by Trustee.
The Trustee acknowledges the Custodian's receipt of, subject to the
provisions of Section 2.01 and subject to the review described below and any
exceptions noted on the exception report described in the next paragraph below,
the documents referred to in Section 2.01 above and all other assets included in
the definition of "Trust Fund" and declares that the Custodian holds and will
hold such documents and the other documents delivered to it constituting a
Mortgage File, and that the Custodian holds or will hold all such assets and
such other assets included in the definition of "Trust Fund" in trust for the
exclusive use and benefit of all present and future Certificateholders.
The Custodian shall review each Mortgage File within 60 days after the
Closing Date (or, with respect to any document delivered after the Startup Day,
within 60 days of receipt and with respect to any Qualified Substitute Mortgage,
within 60 days after the assignment thereof) and the Custodian shall certify in
substantially the form attached hereto as Exhibit F-1 that, as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in the exception report
annexed thereto as not being covered by such certification), (i) all documents
required to be delivered to it pursuant to Section 2.01 of this Agreement are in
its possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged or torn and relate to such Mortgage Loan and (iii) based on
its examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (1), (2), (3), (5), (13) and
(26) (in the case of (26), only as to whether there is a prepayment penalty) of
the Mortgage Loan Schedule accurately reflects information set forth in the
Mortgage File. It is herein acknowledged that, in conducting such review, the
Custodian is under no duty or obligation to inspect, review or examine any such
documents, instruments, certificates or other papers to determine that they are
genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face.
Prior to the first anniversary date of this Agreement the Custodian shall
deliver to the Depositor and the Servicer a final certification in the form
annexed hereto as Exhibit F-2 evidencing the completeness of the Mortgage Files,
with any applicable exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making or preparing,
as the case may be, the certifications referred to above, the Custodian finds
any document or documents constituting a part of a Mortgage File to be missing
or defective in any material respect, at the conclusion of its review the
Custodian shall so notify the Seller, the Depositor and the Servicer. In
addition, upon the discovery by the Seller, Depositor, the Trustee or the
Servicer (or upon receipt by the Trustee of written notification of such breach)
of a breach of any of the representations and warranties made by the Seller in
the related
58
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects such Mortgage Loan or the interests of the related
Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties.
The Depositor and the Trustee intend that the assignment and transfer
herein contemplated constitute a sale of the Mortgage Loans and the Related
Documents, conveying good title thereto free and clear of any liens and
encumbrances, from the Depositor to the Trustee and that such property not be
part of the Depositor's estate or property of the Depositor in the event of any
insolvency by the Depositor. In the event that such conveyance is deemed to be,
or to be made as security for, a loan, the parties intend that the Depositor
shall be deemed to have granted and does hereby grant to the Trustee, on behalf
of the Trust, a first priority perfected security interest in all of the
Depositor's right, title and interest in and to the Mortgage Loans and the
Related Documents, and that this Agreement shall constitute a security agreement
under applicable law.
The Trustee is hereby directed to execute, deliver and perform its
obligations under the Swap Agreement and the Cap Agreement on the Closing Date
and thereafter on behalf of the Supplemental Interest Trust for the benefit of
the Holders of the Class A and Class M Certificates. The Seller, the Servicer,
the Depositor and the Holders of the Class A and Class M Certificates by
acceptance of their Certificates acknowledge and agree that the Trustee shall
execute, deliver and perform its obligations under the Swap Agreement and the
Cap Agreement and shall do so solely in its capacity as Trustee of the
Supplemental Interest Trust and not in its individual capacity. The Trustee
shall not, individually or personally, have any liability to perform any
covenant either express or implied contained in the Swap Agreement or the Cap
Agreement and under no circumstance shall the Trustee be personally liable for
the payment of any amounts payable by or on behalf of the Supplemental Interest
Trust under the Swap Agreement or the Cap Agreement or expenses by or on behalf
of the Supplemental Interest Trust or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by or on
behalf of the Supplemental Interest Trust under the Swap Agreement or the Cap
Agreement.
The Trustee is hereby directed to represent and warrant on behalf of the
Supplemental Interest Trust to the Swap Counterparty under the Swap Agreement
that the beneficial owner for United States federal income tax purposes of
payments made under each of the Swap Agreements is either:
(A) a "U.S. person" (as that term is used in section
1.1441-4(a)(3)(ii) of United States Treasury Regulations (the
"Regulations")) for United States federal income tax purposes, or
(B) a "non-U.S. branch of a foreign person" as that term is used in
section 1.1441-4(a)(3)(ii) of the Regulations for United States
federal income tax purposes, and a "foreign person" as that term is
used in section 1.6041-4(a)(4) of the Regulations for United States
federal income tax purposes.
Section 2.03 Repurchase or Substitution of Mortgage Loans by the Seller.
(a) Upon discovery or receipt of written notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement or in Section 2.04 in respect of any Mortgage
Loan which materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders, the Trustee (or the Custodian, as
applicable) shall promptly notify the Seller, the Servicer and the Trustee of
such defect, missing document or breach and request that the Seller deliver such
missing document or cure such defect or breach within 120 days or 150 days
following the Closing Date, in the case of missing Mortgages or Assignments from
the date the Seller was notified of such missing document, defect or breach, and
if the Seller does not deliver such missing document or cure such defect or
breach in all material respects during such period, and such missing document,
defect or breach will have a material and adverse effect on the
Certificateholders, the Trustee shall enforce the Seller's obligation under the
Mortgage Loan Purchase Agreement and inform the Seller of its obligation to
repurchase such Mortgage Loan from the Trust Fund at the Purchase Price on or
prior
59
to the Determination Date following the expiration of such 120 day period
(subject to Section 2.03(e)); provided that, in connection with any such breach
that is susceptible to cure but that could not reasonably have been cured within
such 120 day or 150 day period, if the Seller shall have commenced to cure such
breach within such 120 day or 150 day period, the Seller shall be permitted to
proceed thereafter diligently and expeditiously to cure the same within 120
days. The Purchase Price for the repurchased Mortgage Loan shall be deposited in
the Collection Account, and the Trustee, upon receipt of written certification
from the Servicer of such deposit, shall release to the Seller the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, representation or warranty, as the
Seller shall furnish to it and as shall be necessary to vest in the Seller any
Mortgage Loan released pursuant hereto and the Trustee shall have no further
responsibility with regard to such Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above, the Seller may cause such Mortgage Loan to
be removed from the Trust Fund (in which case it shall become a Defective
Mortgage Loan) and substitute one or more Eligible Substitute Mortgage Loans in
the manner and subject to the limitations set forth in Section 2.03(d). In
addition to the foregoing, in the case of a breach of the Seller's
representation set forth in Section 3.01(6) of the Mortgage Loan Purchase
Agreement, the Seller shall reimburse the Trust for all costs or damages
incurred by the Trust as a result of the violation of such law (such amount, the
"Reimbursement Amount"). The Reimbursement Amount shall be delivered to the
Servicer for deposit into the Collection Account within 10 days from the date
the Seller was notified by the Trustee of the amount of such costs and damages.
It is understood and agreed that the obligation of the Seller to pay the
Reimbursement Amount and to either cure or repurchase (or substitute for) any
Mortgage Loan as to which a document is missing, a material defect in a
constituent document exists or as to which such a breach has occurred and is
continuing shall constitute the sole remedy against the Seller respecting such
omission, defect or breach available to the Trustee and the Trustee on behalf of
the Certificateholders.
(b) [Reserved].
(c) Within 90 days of the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of any representation, warranty
or covenant of the Servicer set forth in Section 2.05 which materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the Servicer shall cure such breach in all material respects.
(d) Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to Section 2.03(a) must be effected prior
to the last Business Day that is within two years after the Closing Date. As to
any Defective Mortgage Loan for which the Seller substitutes an Eligible
Substitute Mortgage Loan or Loans, such substitution shall be effected by the
Seller delivering to the Trustee for such Eligible Substitute Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such
other documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officer's Certificate providing that
each such Eligible Substitute Mortgage Loan satisfies the definition thereof and
specifying the Substitution Adjustment Amount (as described below), if any, in
connection with such substitution. The Trustee shall acknowledge receipt for
such Eligible Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter, shall review (or cause the Custodian to review) such documents as
specified in Section 2.02 and deliver (or cause the Custodian to deliver) to the
Servicer, with respect to such Eligible Substitute Mortgage Loan or Loans, a
certification substantially in the form attached hereto as Exhibit F-1, with any
applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee shall deliver (or cause the Custodian to deliver) to
the Servicer a certification substantially in the form of Exhibit F-2 hereto
with respect to such Eligible Substitute Mortgage Loan or Loans, with any
applicable exceptions noted thereon. Monthly Payments due with respect to
Eligible Substitute Mortgage Loans in the month of substitution are not part of
the Trust Fund and will be retained by the Seller. For the month of
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substitution, distributions to Certificateholders will reflect the collections
and recoveries in respect of such Defective Mortgage Loan in the Collection
Period preceding the month of substitution and the Depositor or the Seller, as
the case may be, shall thereafter be entitled to retain all amounts subsequently
received in respect of such Defective Mortgage Loan. The Seller shall give or
cause to be given written notice to the Certificateholders that such
substitution has taken place, shall amend the Mortgage Loan Schedule to reflect
the removal of such Defective Mortgage Loan from the terms of this Agreement and
the substitution of the Eligible Substitute Mortgage Loan or Loans and shall
deliver a copy of such amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, such Eligible Substitute Mortgage Loan or Loans shall constitute
part of the Mortgage Pool and shall be subject in all respects to the terms of
this Agreement and, in the case of a substitution effected by the Seller, the
Mortgage Loan Purchase Agreement, including, in the case of a substitution
effected by the Seller all applicable representations and warranties thereof
included in the Mortgage Loan Purchase Agreement and all applicable
representations and warranties thereof set forth in Section 2.04, in each case
as of the date of substitution.
For any month in which the Seller substitutes one or more Eligible
Substitute Mortgage Loans for one or more Defective Mortgage Loans, the Servicer
will determine the amount (the "Substitution Adjustment Amount"), if any, by
which the aggregate Purchase Price of all such Defective Mortgage Loans exceeds
the aggregate, as to each such Eligible Substitute Mortgage Loan, of the
principal balance thereof as of the date of substitution, together with one
month's interest on such principal balance at the applicable Net Mortgage
Interest Rate. On the date of such substitution, the Seller will deliver or
cause to be delivered to the Servicer for deposit in the Collection Account an
amount equal to the Substitution Adjustment Amount, if any, and the Trustee,
upon receipt by it or the Custodian of the related Eligible Substitute Mortgage
Loan or Loans and certification by the Servicer of such deposit, shall release
to the Seller the related Mortgage File or Files and shall execute and deliver
such instruments of transfer or assignment, in each case without recourse,
representation or warranty, as the Seller shall deliver to it and as shall be
necessary to vest therein any Defective Mortgage Loan released pursuant hereto.
In addition, the Seller shall obtain at its own expense and deliver to the
Trustee an Opinion of Counsel to the effect that such substitution will not
cause (a) any federal tax to be imposed on the Trust Fund, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(l) of the Code or on "contributions after the startup date" under
Section 860G(d)(l) of the Code, or (b) any REMIC formed under this Agreement to
fail to qualify as a REMIC at any time that any Certificate is outstanding. If
such Opinion of Counsel cannot be delivered, then such substitution may only be
effected at such time as the required Opinion of Counsel can be given.
(e) Upon discovery by the Seller, 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 within two
Business Days give written notice thereof to the other parties. In connection
therewith, the Seller shall repurchase or, subject to the limitations set forth
in Section 2.03(d), substitute one or more Eligible Substitute Mortgage Loans
for the affected Mortgage Loan within 90 days of the earlier of discovery or
receipt of such notice with respect to such affected Mortgage Loan. In addition,
upon discovery that a Mortgage Loan is defective in a manner that would cause it
to be a "defective obligation" within the meaning of Treasury regulations
relating to REMICs, the Seller shall cure the defect or make the required
purchase or substitution no later than 90 days after the discovery of the
defect. Any such repurchase or substitution shall be made in the same manner as
set forth in Section 2.03(a), if made by the Seller. The Trustee shall reconvey
to the Seller the Mortgage Loan to be released pursuant hereto in the same
manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty.
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Notwithstanding anything to the contrary contained herein, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Mortgage Files pursuant to
Sections 2.01, 2.02 and 2.03 and preparation and delivery of the certifications
in the form of Exhibit F-1 and Exhibit F-2 shall be performed by the Custodian
pursuant to the terms and conditions of the Custodial Agreement. The fees and
expenses of the Custodian shall be paid by the Servicer.
Section 2.04 Representations and Warranties of the Seller with Respect to
the Mortgage Loans.
The Seller hereby represents and warrants to the Trustee for the benefit of
the Certificateholders that as of the Closing Date or as of such other date
specifically provided herein:
(a) The representations and warranties made by the Seller pursuant to
Section 3.01 of the Mortgage Loan Purchase Agreement are hereby being made to
the Trustee and are true and correct as of the Closing Date.
(b) Any written agreement between the Mortgagor in respect of a
Mortgage Loan and the Servicer modifying such Mortgagor's obligation to make
payments under the Mortgage Loan (such modified Mortgage Loan, a "Modified
Mortgage Loan") involved some assessment of the Mortgagor's ability to repay the
Modified Mortgage Loan.
With respect to the representations and warranties set forth in this
Section 2.04 that are made to the best of the Seller's knowledge or as to which
the Seller has no knowledge, if it is discovered by the Depositor, the Seller,
the Servicer or the Trustee that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the
value of the related Mortgage Loan or the interest therein of the
Certificateholders then, notwithstanding the Seller's lack of knowledge with
respect to the substance of such representation and warranty being inaccurate at
the time the representation or warranty was made, such inaccuracy shall be
deemed a breach of the applicable representation or warranty.
Upon discovery by the Depositor, the Seller, the Servicer or the Trustee of
a breach of any of the representations and warranties contained in this Section
that materially and adversely affects the value of any Mortgage Loan or the
interest therein of the Certificateholders, the party discovering the breach
shall give prompt written notice to the others and in no event later than two
Business Days from the date of such discovery. Within ninety days of its
discovery or its receipt of notice of any such missing or materially defective
documentation or any such breach of a representation or warranty, the Seller
shall promptly deliver such missing document or cure such defect or breach in
all material respects, or in the event such defect or breach cannot be cured,
the Seller shall repurchase the affected Mortgage Loan or cause the removal of
such Mortgage Loan from the Trust Fund and substitute for it one or more
Eligible Substitute Mortgage Loans, in either case, in accordance with Section
2.03.
It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the Mortgage Files to the
Trustee and shall inure to the benefit of the Certificateholders notwithstanding
any restrictive or qualified endorsement or assignment. It is understood and
agreed that the obligations of the Seller set forth in Section 2.03(a) and (c)
to cure, substitute for or repurchase a Mortgage Loan pursuant to the Mortgage
Loan Purchase Agreement and to reimburse the Trust the Reimbursement Amount,
constitute the sole remedies available to the Certificateholders or to the
Trustee on their behalf respecting a breach of the representations and
warranties contained in this Section 2.04.
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Section 2.05 Representations, Warranties and Covenants of the Servicer.
The Servicer hereby represents, warrants and covenants to the Trustee, for
the benefit of each of the Trustee and the Certificateholders and to the
Depositor that as of the Closing Date or as of such date specifically provided
herein:
(i) The Servicer is duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its formation and has all
licenses necessary to carry on its business as now being conducted, except for
such licenses, certificates and permits the absence of which, individually or in
the aggregate, would not have a material adverse effect on the ability of the
Servicer to conduct its business as it is presently conducted, and is licensed,
qualified and in good standing in the states where the Mortgaged Property is
located if the laws of such state require licensing or qualification in order to
conduct business of the type conducted by the Servicer or to ensure the
enforceability or validity of each Mortgage Loan; the Servicer has the power and
authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Servicer and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Servicer, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally; and all requisite corporate action
has been taken by the Servicer to make this Agreement valid and binding upon the
Servicer in accordance with its terms;
(ii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Servicer and will not
result in the breach of any term or provision of the certificate of formation or
the partnership agreement of the Servicer or result in the breach of any term or
provision of, or conflict with or constitute a default under or result in the
acceleration of any obligation under, any agreement, indenture or loan or credit
agreement or other instrument to which the Servicer or its property is subject,
or result in the violation of any law, rule, regulation, order, judgment or
decree to which the Servicer or its property is subject;
(iii) The Servicer is an approved servicer of conventional
mortgage loans for Xxxxxx Xxx and has the facilities, procedures and experienced
personnel necessary for the sound servicing of mortgage loans of the same type
as the Mortgage Loans. The Servicer is, and shall remain for as long as it is
servicing the Mortgage Loans hereunder, in good standing to service mortgage
loans for HUD, Xxxxxx Mae or Xxxxxxx Mac, and no event has occurred, including
but not limited to a change in insurance coverage, which would make the Servicer
unable to comply with HUD, Xxxxxx Mae or Xxxxxxx Mac eligibility requirements or
which would require notification to any of HUD, Xxxxxx Mae or Xxxxxxx Mac;
(iv) This Agreement, and all documents and instruments
contemplated hereby which are executed and delivered by the Servicer, constitute
and will constitute valid, legal and binding obligations of the Servicer,
enforceable in accordance with their respective terms, except as the enforcement
thereof may be limited by applicable bankruptcy laws and general principles of
equity;
(v) The Servicer does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained in
this Agreement;
(vi) There is no action, suit, proceeding or investigation
pending or, to its knowledge, threatened against the Servicer that, either
individually or in the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or assets of the
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Servicer, or in any material impairment of the right or ability of the Servicer
to carry on its business substantially as now conducted, or in any material
liability on the part of the Servicer, or that would draw into question the
validity or enforceability of this Agreement or of any action taken or to be
taken in connection with the obligations of the Servicer contemplated herein, or
that would be likely to impair materially the ability of the Servicer to perform
under the terms of this Agreement;
(vii) No consent, approval 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 by this Agreement, except for such
consents, approvals, authorizations and orders, if any, that have been obtained;
(viii) Neither this Agreement nor any information, certificate of
an officer, statement furnished in writing or report delivered to the Trustee by
the Servicer in connection with the transactions contemplated hereby contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; and
(ix) The Servicer has fully furnished, and shall continue to
fully furnish for so long as it is servicing the Mortgage Loans hereunder, in
accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information on the Mortgagor credit files to Equifax,
Experian and Trans Union Credit Information Company on a monthly basis.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor and the Certificateholders. Upon discovery by any of the Depositor,
the Servicer, the Seller or the Trustee of a breach of any of the foregoing
representations, warranties and covenants which materially and adversely affects
the value of any Mortgage Loan or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the other parties hereto.
Section 2.06 Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders as follows:
(i) This agreement constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by general principles of equity
(whether considered in a proceeding at law or in equity);
(ii) Immediately prior to the sale and assignment by the
Depositor to the Trustee on behalf of the Trust of each Mortgage Loan, the
Depositor had good and marketable title to each Mortgage Loan (insofar as such
title was conveyed to it by the Seller) subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge or other
encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all
right, title interest in the Mortgage Loans to the Trustee on behalf of the
Trust;
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(iv) The Depositor has not transferred the Mortgage Loans to the
Trustee on behalf of the Trust with any intent to hinder, delay or defraud any
of its creditors;
(v) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with full corporate power and authority to own its assets and conduct
its business as presently being conducted;
(vi) The Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Depositor is a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the financial condition,
earnings, affairs or business of the Depositor or which might materially and
adversely affect the properties or assets, taken as a whole, of the Depositor;
(vii) The execution, delivery and performance of this Agreement
by the Depositor, and the consummation of the transactions contemplated thereby,
do not and will not result in a material breach or violation of any of the terms
or provisions of, or, to the knowledge of the Depositor, constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Depositor is a party or by which the Depositor is
bound or to which any of the property or assets of the Depositor is subject, nor
will such actions result in any violation of the provisions of the certificate
of incorporation or by-laws of the Depositor or, to the best of the Depositor's
knowledge without independent investigation, any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Depositor or any of its properties or assets (except for such conflicts,
breaches, violations and defaults as would not have a material adverse effect on
the ability of the Depositor to perform its obligations under this Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body of the United States or any other jurisdiction is required for the issuance
of the Certificates, or the consummation by the Depositor of the other
transactions contemplated by this Agreement, except such consents, approvals,
authorizations, registrations or qualifications as (a) may be required under
State securities or Blue Sky laws, (b) have been previously obtained or (c) the
failure of which to obtain would not have a material adverse effect on the
performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement; and
(ix) There are no actions, proceedings or investigations pending
before or, to the Depositor's knowledge, threatened by any court, administrative
agency or other tribunal to which the Depositor is a party or of which any of
its properties is the subject: (a) which if determined adversely to the
Depositor would have a material adverse effect on the business, results of
operations or financial condition of the Depositor; (b) asserting the invalidity
of this Agreement or the Certificates; (c) seeking to prevent the issuance of
the Certificates or the consummation by the Depositor of any of the transactions
contemplated by this Agreement, as the case may be; (d) which might materially
and adversely affect the performance by the Depositor of its obligations under,
or the validity or enforceability of, this Agreement.
Section 2.07 Issuance of Certificates and the Uncertificated Regular
Interests.
The Trustee acknowledges the assignment to it of the Mortgage Loans and the
delivery to it (or the Custodian, as bailee and Custodian of the Trustee) of the
Mortgage Files, subject to the provisions of Sections 2.01 and 2.02, and the
Trustee acknowledges the assignment to it of all other assets included in the
Trust Fund, receipt of which is hereby acknowledged. Concurrently with such
assignment and
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delivery and in exchange therefor, the Trustee, pursuant to the
Written Order to Authenticate executed by an officer of the Depositor, has
executed, and the Certificate Registrar has authenticated and delivered to or
upon the order of the Depositor, the Certificates (other than the Class CE-1 and
Residual Certificates) in minimum dollar denominations or $25,000 and integral
dollar multiples of $1 in excess. The Class CE-1 and Class R Certificates are
issuable only in minimum Percentage Interests of 10%. The Class R-X Certificates
are issuable only in minimum Percentage Interests of 50%. The Trustee
acknowledges the issuance of the uncertificated SWAP REMIC Regular Interests,
the uncertificated REMIC 1 Regular Interests, the uncertificated REMIC 2 Regular
Interests, the uncertificated REMIC B-1 Regular Interests, the uncertificated
REMIC B-2 Regular Interests, the uncertificated REMIC B-3 Regular Interests, the
uncertificated REMIC CE-1 Regular Interests and the uncertificated REMIC IO
Regular Interests and declares that it holds the SWAP REMIC Regular Interests as
assets of REMIC 1, the REMIC 1 Regular Interests as assets of REMIC 2, the REMIC
2 B-1 Interest as the asset of REMIC B-1, the REMIC 2 B-2 Interest as the asset
of REMIC B-2, the REMIC 2 B-3 Interest as the asset of REMIC B-3, the REMIC 2
CE-1 Interest as the asset of REMIC CE-1, the REMIC 2 IO Interest as the asset
of REMIC IO and the REMIC 2 CE-2 Interest as the asset of REMIC CE-2. The
interests evidenced by the Certificates constitute the entire beneficial
ownership interest in the Trust Fund.
Section 2.08 Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders that as of the Closing Date or as of such date
specifically provided herein:
(i) The Seller is duly organized, validly existing and in good
standing as a limited liability company under the laws of the State of Delaware
and has the power and authority to own its assets and to transact the business
in which it is currently engaged. The Seller is duly qualified to do business
and is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires such
qualification and in which the failure to so qualify would have a material
adverse effect on (a) its business, properties, assets or condition (financial
or other), (b) the performance of its obligations under this Agreement, (c) the
value or marketability of the Mortgage Loans, or (d) its ability to foreclose on
the related Mortgaged Properties.
(ii) The Seller has the power and authority to make, execute,
deliver and perform this Agreement and to consummate all of the transactions
contemplated hereunder and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement. When executed and
delivered, this Agreement will constitute the Seller's legal, valid and binding
obligations enforceable in accordance with its terms, except as enforcement of
such terms may be limited by (1) bankruptcy, insolvency, reorganization,
receivership, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies, (2) general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law) or (3) public policy considerations underlying
the securities laws, to the extent that such policy considerations limit the
enforceability of the provisions of this Agreement which purport to provide
indemnification from securities laws liabilities.
(iii) The Seller holds all necessary licenses, certificates and
permits from all governmental authorities necessary for conducting its business
as it is presently conducted, except for such licenses, certificates and permits
the absence of which, individually or in the aggregate, would not have a
material adverse effect on the ability of the Seller to conduct its business as
it is presently conducted. It is not required to obtain the consent of any other
party or any consent, license, approval or authorization from, or registration
or declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except
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for such consents, licenses, approvals or authorizations, or registrations or
declarations as shall have been obtained or filed, as the case may be, prior to
the Closing Date.
(iv) The execution, delivery and performance of this Agreement by
the Seller will not conflict with or result in a breach of, or constitute a
default under, any provision of any existing law or regulation or any order or
decree of any court applicable to the Seller or any of its properties or any
provision of its Limited Liability Company Agreement, or constitute a material
breach of, or result in the creation or imposition of any lien, charge or
encumbrance upon any of its properties pursuant to any mortgage, indenture,
contract or other agreement to which it is a party or by which it may be bound.
(v) No certificate of an officer, written statement or report
delivered pursuant to the terms hereof by the Seller contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(vi) The transactions contemplated by this Agreement are in the
ordinary course of the Seller's business.
(vii) The Seller is not insolvent, nor will the Seller be made
insolvent by the transfer of the Mortgage Loans to the Depositor, nor is the
Seller aware of any pending insolvency.
(viii) The Seller is not in violation of, and the execution and
delivery of this Agreement by it and its performance and compliance with the
terms of this Agreement will not constitute a violation with respect to any
order or decree of any court, or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction, which violation would
materially and adversely affect the Seller's condition (financial or otherwise)
or operations or any of the Seller's properties, or materially and adversely
affect the performance of any of its duties hereunder.
(ix) There are no actions or proceedings against, or
investigations of, the Seller pending or, to its knowledge, threatened, before
any court, administrative agency or other tribunal (i) that, if determined
adversely, would prohibit the Seller from entering into this Agreement, (ii)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement or (iii) that, if determined adversely, would prohibit or
materially and adversely affect the Seller's performance of any of its
respective obligations under, or the validity or enforceability of, this
Agreement.
(x) The Seller did not transfer the Mortgage Loans to the
Depositor with any intent to hinder, delay or defraud any of its creditors.
(xi) The Seller acquired title to the Mortgage Loans in good
faith, without notice of any adverse claims.
(xii) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Seller to the Depositor are not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
Section 2.09 Covenants of the Seller.
The Seller hereby covenants that except for the transfer hereunder, the
Seller will not sell, pledge, assign or transfer to any other Person, or grant,
create, incur, assume or suffer to exist any lien on any Mortgage Loan, or any
interest therein; the Seller will notify the Trustee, as assignee of the
Depositor, of the existence of any lien on any Mortgage Loan immediately upon
discovery thereof, and the Seller will
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defend the right, title and interest of the Trust, as assignee of the Depositor,
in, to and under the Mortgage Loans, against all claims of third parties
claiming through or under the Seller; provided, however, that nothing in this
Section 2.09 shall prevent or be deemed to prohibit the Seller from suffering to
exist upon any of the Mortgage Loans any liens for municipal or other local
taxes and other governmental charges if such taxes or governmental charges shall
not at the time be due and payable or if the Seller shall currently be
contesting the validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with respect thereto.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Servicer to Act as Servicer.
The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with this Agreement and the normal
and usual standards of practice of prudent mortgage servicers, and shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which the Servicer
may deem necessary or desirable and consistent with the terms of this Agreement
and consistent with the standard of care which the Servicer uses and/or would
use in servicing mortgage loans for its own account (the "Servicing Standards").
Consistent with the terms of this Agreement, the Servicer may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if in the Servicer's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Certificateholders; provided, however, that the Servicer shall not make future
advances and (unless the Mortgagor is in default with respect to the Mortgage
Loan or such default is, in the judgment of the Servicer, reasonably
foreseeable) the Servicer shall not permit any modification with respect to any
Mortgage Loan that would (i) change the Mortgage Interest Rate, defer or forgive
the payment thereof of any principal or interest payments, reduce the
outstanding principal amount (except for actual payments of principal) or extend
the final maturity date with respect to such Mortgage Loan, (ii) affect
adversely the status of any REMIC constituting part of the Trust Fund as a REMIC
or (iii) cause any REMIC to be subject to a tax on "prohibited transactions" or
"contributions" pursuant to the REMIC Provisions. Notwithstanding the foregoing,
the Servicer shall not permit any modification with respect to any Mortgage Loan
that would both (x) effect an exchange or reissuance of such Mortgage Loan under
Section 1.860G-2(b) of the Treasury Regulations and (y) cause any REMIC
constituting part of the Trust Fund to fail to qualify as a REMIC under the Code
or the imposition of any tax on "prohibited transactions" or "contributions"
after the Startup Day under the REMIC Provisions. Without limiting the
generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered to execute and deliver on behalf of itself, and the
Trustee, all instruments of satisfaction or cancellation, or of partial or full
release, discharge and all other comparable instruments, with respect to the
Mortgage Loans and with respect to the Mortgaged Property. The Servicer shall
make all required Servicing Advances and shall service and administer the
Mortgage Loans in accordance with Applicable Regulations, and shall provide to
the Mortgagors any reports required to be provided to them thereby. If
reasonably required by the Servicer, the Trustee shall furnish the Servicer a
power of attorney (substantially in the form annexed hereto as Exhibit O) and
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
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In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures including collection procedures and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions and the Certificateholders'
reliance on the Servicer.
The Servicer shall give prompt notice to the Trustee of any action, of
which the Servicer has actual knowledge, which action purports to (i) assert a
claim against the Trust Fund or (ii) assert jurisdiction over the Trust Fund.
Notwithstanding anything in this Agreement to the contrary, in the event of
a Principal Prepayment in full, the Servicer may not waive any prepayment
penalty or portion thereof required by the terms of the related Mortgage Note
unless (i) the related Mortgage Loan is in default or foreseeable default and
such waiver (a) is standard and customary in servicing mortgage loans similar to
the Mortgage Loans and (b) would, in the reasonable judgment of the Servicer,
maximize recovery of total proceeds taking into account the value of such
prepayment penalty and the related Mortgage Loan, (ii) (A) the enforceability
thereof is limited (1) by bankruptcy, insolvency, moratorium, receivership, or
other similar law relating to creditors' rights generally or (2) due to
acceleration in connection with a foreclosure or other involuntary payment, or
(B) the enforceability is otherwise limited or prohibited by applicable law or
(iii) if the Servicer has not been provided with information sufficient to
enable it to collect the prepayment penalty. In the event of a Principal
Prepayment in full with respect to any Mortgage Loan, the Servicer shall deliver
to the Trustee an Officer's Certificate, substantially in the form of Exhibit Q,
no later than the third Business Day following the immediately succeeding
Determination Date. For the avoidance of doubt, the Servicer may waive a
prepayment penalty in connection with a short sale or short payoff on a
defaulted Mortgage Loan. If the Servicer has waived all or a portion of a
prepayment penalty relating to a Principal Prepayment, other than as provided
above, the Servicer shall deliver to the Trustee as soon as possible after the
date of payoff, but in no event later than five business days from such date,
for deposit into the Distribution Account the amount of such prepayment penalty
(or such portion thereof as had been waived) for distribution in accordance with
the terms of this Agreement.
Based solely on information provided to it by the Servicer, the Trustee
shall prepare and deliver to the Depositor and the owners of the Class P
Certificates, on a monthly basis, a statement setting forth the amounts received
with respect to prepayment penalties.
During the period when reports are required to be filed for the Trust under
the Exchange Act, the Servicer shall not permit a Subservicer to perform any
servicing responsibilities hereunder with respect to the Mortgage Loans unless
that Subservicer first agrees in writing with the Servicer to deliver an
Assessment of Compliance and an Accountant's Attestation in such manner and at
such times that permits the Servicer to comply with Section 3.20 of this
Agreement.
Section 3.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Servicer will diligently collect all
payments due under each Mortgage Loan when the same shall become due and payable
and shall, to the extent such procedures shall be consistent with this Agreement
and the terms and provisions of any related Primary Insurance Policy and
Applicable Regulations, follow such collection procedures as it follows with
respect to mortgage loans comparable to the Mortgage Loans and held for its own
account. Further, the Servicer will take special care in ascertaining and
estimating annual ground rents, taxes, assessments, water rates, fire and hazard
insurance premiums, mortgage insurance premiums, and all other charges that, as
provided in the Mortgage, will
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become due and payable to that end that the installments payable by the
Mortgagors will be sufficient to pay such charges as and when they become due
and payable.
Section 3.03 Realization Upon Defaulted Mortgage Loans.
In the event that any payment due under any Mortgage Loan is not paid when
the same becomes due and payable, or in the event the Mortgagor fails to perform
any other covenant or obligation under the Mortgage Loan and such failure
continues beyond any applicable grace period, the Servicer shall take such
action as it shall deem to be in the best interest of the Certificateholders.
With respect to any defaulted Mortgage Loan, the Servicer shall have the right
to review the status of the related forbearance plan and, subject to the second
paragraph of Section 3.01, may modify such forbearance plan; including,
extending the Mortgage Loan repayment date for a period of one year, which
period will not go beyond the latest Final Maturity Date.
In connection with a foreclosure or other conversion, the Servicer shall
exercise such rights and powers vested in it hereunder and use the same degree
of care and skill in its exercise as prudent mortgage servicers would exercise
or use under the circumstances in the conduct of their own affairs and
consistent with Applicable Regulations and the servicing standards set forth in
the Xxxxxx Xxx Guide, including, without limitation, advancing funds for the
payment of taxes and insurance premiums with respect to first lien Mortgage
Loans.
Notwithstanding the foregoing provisions of this Section 3.03, with respect
to any Mortgage Loan as to which the Servicer has received actual notice of, or
has actual knowledge of, the presence of any toxic or hazardous substance on the
related Mortgaged Property, the Servicer shall not either (i) obtain title to
such Mortgaged Property as a result of or in lieu of foreclosure or otherwise,
or (ii) otherwise acquire possession of, or take any other action with respect
to, such Mortgaged Property if, as a result of any such action, the Trust Fund
would be considered to hold title to, to be a mortgagee-in-possession of, or to
be an owner or operator of such Mortgaged Property within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time, or any comparable law, unless the Servicer has also
previously determined, based on its reasonable judgment and a prudent report
prepared by a Person who regularly conducts environmental audits using customary
industry standards, that:
A. such Mortgaged Property is in compliance with applicable environmental
laws or, if not, that it would be in the best economic interest of the
Certificateholders to take such actions as are necessary to bring the Mortgaged
Property into compliance therewith; and
B. there are no circumstances present at such Mortgaged Property relating
to the use, management or disposal of any hazardous substances, hazardous
materials, hazardous wastes, or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or remediation could
be required under any federal, state or local law or regulation, or that if any
such materials are present for which such action could be required, that it
would be in the best economic interest of the Certificateholders to take such
actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Section
3.03 shall be advanced by the Servicer, subject to the Servicer's right to be
reimbursed therefor from the Collection Account as provided in Section 3.05(ii).
If the Servicer determines, as described above, that it is in the best
economic interest of the Certificateholders to take such actions as are
necessary to bring any such Mortgaged Property into
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compliance with applicable environmental laws, or to take such action with
respect to the containment, clean-up or remediation of hazardous substances,
hazardous materials, hazardous wastes, or petroleum-based materials affecting
any such Mortgaged Property, then the Servicer shall take such action as it
deems to be in the best economic interest of the Certificateholders. The cost of
any such compliance, containment, cleanup or remediation shall be advanced by
the Servicer, subject to the Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.05(ii).
Section 3.04 Collection Account and Distribution Account.
(a) The Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Collection
Accounts. Each Collection Account shall be an Eligible Account.
The Servicer shall deposit in the Collection Account on a daily basis
within two Business Days of determining the proper application after receipt of
such funds, and retain therein, the following payments and collections received
or made by it 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;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Interest Rate less the Servicing Fee Rate;
(iii) all proceeds from a Cash Liquidation;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 3.10, other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged Property or
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures, the loan documents or applicable law;
(v) all Condemnation Proceeds affecting any Mortgaged Property
which are not released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, the loan documents or applicable law; and
(vi) any amounts required to be deposited by the Servicer in
connection with any REO Property pursuant to Section 3.13.
Any interest paid on funds deposited in the Collection Account, subject to
Section 3.25, shall accrue to the benefit of the Servicer and the Servicer shall
be entitled to retain and withdraw such interest from the Collection Account
pursuant to Section 3.05(v). The foregoing requirements for deposit from the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of late
payment charges, prepayment charges that are not prepayment penalties, and
assumption fees need not be deposited by the Servicer in the Collection Account.
(b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Certificateholders. On behalf of
the Trust Fund, the Servicer shall deliver to the Trustee in immediately
available funds for deposit in the Distribution Account by the close of business
New York time on the Servicer Remittance Date, that portion of the Available
Funds (calculated without regard to the references
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in the definition thereof to amounts that may be deposited to the Distribution
Account from a different source as provided herein) then on deposit in the
Collection Account. Amounts in the Distribution Account shall be deemed to be
held on behalf of the related REMICs in accordance with the REMIC distributions
set forth in Section 9.01. Funds on deposit in the Distribution Account will
remain uninvested.
(c) Funds in the Collection Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.25. The
Servicer shall give notice to the Trustee certifying the location of the
Collection Account maintained by it when established and prior to any change
thereof. The Trustee shall give notice to the Servicer and the Depositor of the
location of the Distribution Account when established and prior to any change
thereof.
(d) In the event the Servicer shall deliver to the Trustee for deposit
in the Distribution Account any amount not required to be deposited therein, it
may at any time in writing request that the Trustee withdraw such amount from
the Distribution Account and remit to the Servicer any such amount, any
provision herein to the contrary notwithstanding. In addition, the Servicer
shall deliver to the Trustee from time to time for deposit, and the Trustee
shall so deposit, in the Distribution Account in respect of the SWAP REMIC
(provided, however, that notwithstanding the foregoing, any amounts
distributable to the Class P Certificates shall not, for federal income tax
purposes, be treated as part of any REMIC):
(i) any Advances, as required pursuant to Section 4.07;
(ii) any Stayed Funds, as soon as permitted by the federal
bankruptcy court having jurisdiction in such matters;
(iii) any prepayment penalties or amounts in connection with the
waiver of such prepayment penalties, in each case required to be deposited
pursuant to Section 3.01;
(iv) any amounts required to be deposited in the Distribution
Account pursuant to Sections 2.03, 3.04, 3.15, 3.16, 3.23 or 4.07; and
(v) any amounts required to be deposited by the Servicer pursuant
to Section 3.11 in connection with the deductible clause in any blanket hazard
insurance policy, such deposit being made from the Servicer's own funds, without
reimbursement therefor.
(e) Promptly upon receipt of any Stayed Funds, whether from the
Servicer, a trustee in bankruptcy, or federal bankruptcy court or other source,
the Trustee shall notify the Servicer of such receipt and deposit such funds in
the Distribution Account, subject to withdrawal thereof as permitted hereunder.
Section 3.05 Permitted Withdrawals From the Collection Account.
The Servicer may, from time to time, withdraw from the Collection Account
for the following purposes:
(i) to remit to the Trustee for deposit in the Distribution
Account (a) the amounts required to be so remitted pursuant to Section 3.04(b),
(b) the amounts permitted to be so remitted pursuant to the first sentence of
Section 3.04(d) or clause (ii) of the first sentence of the second
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paragraph of Section 4.07(b), (c) any amounts required to be so remitted
pursuant to Section 6.03 and (d) any amounts required to be so remitted pursuant
to Section 8.05;
(ii) to reimburse itself for (a) Advances and Servicing Advances
to the extent of amounts received on the related Mortgage Loan which represent
payments of (x) principal and/or interest respecting which any such Advance was
made or (y) Condemnation Proceeds, Insurance Proceeds or Liquidation Proceeds
respecting which any such Servicing Advance was made; or (b) any unreimbursed
Advances to the extent of funds held in the Collection Account for future
distributions that were not included in Available Funds for the preceding
Distribution Date (provided, however, any funds so applied will be replaced by
the Servicer by deposit in the Collection Account no later than one Business Day
prior to the Distribution Date on which such funds are required to be
distributed) and to reimburse itself for Advances and Servicing Advances made in
connection with the modification of a Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances,
any unpaid Servicing Fees and for unreimbursed Advances to the extent that such
amounts are deemed to be Nonrecoverable Advances and to reimburse itself for
such amounts to the extent that such amounts are nonrecoverable from the
disposition of the related REO Property or have been written-off pursuant to
Section 3.13 hereof;
(iv) to reimburse itself for any amounts paid pursuant to Section
3.03 (and not otherwise previously reimbursed);
(v) to pay to itself as servicing compensation (a) any interest
earned on funds in the Collection Account (all such interest to be withdrawn
monthly not later than each Servicer Remittance Date) and (b) the Servicing Fee
from that portion of any payment or recovery as to interest to a particular
Mortgage Loan to the extent not retained pursuant to Section 3.04(d);
(vi) to pay or reimburse itself for any amounts payable or paid
pursuant to Section 6.03 (and not otherwise previously reimbursed) and to
reimburse itself as set forth in Section 9.01(c); and
(vii) to clear and terminate the Collection Account upon the
termination of this Agreement.
The foregoing requirements for withdrawal from the Collection Account shall
be exclusive. In the event the Servicer shall deposit in the Collection Account
any amount not required to be deposited therein, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.
Section 3.06 Establishment of Escrow Account; Deposits in Escrow Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit or demand
accounts. A copy of such letter agreement shall be furnished to the Trustee upon
request. The Escrow Account shall be an Eligible Account.
The Servicer shall deposit in the Escrow Account on a daily basis within
two Business Days of receipt, and retain therein, (i) all Escrow Payments
collected on account of the Mortgage Loans, for the
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purpose of effecting timely payment of any such items as required under the
terms of this Agreement, and (ii) all Insurance Proceeds which are to be applied
to the restoration or repair of any Mortgaged Property. The Servicer shall make
withdrawals therefrom only to effect such payments as are required under this
Agreement, and for such other purposes as shall be set forth in, or in
accordance with, Section 3.07. The Servicer shall be entitled to retain any
interest paid on funds deposited in the Escrow Account by the depository
institution other than interest on escrowed funds required by law to be paid to
the Mortgagor and, to the extent required by the related Mortgage Loan or
Applicable Regulations, the Servicer shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account is non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 3.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Servicer (i) to
effect timely payments of ground rents, taxes, assessments, water rates, fire,
flood and hazard insurance premiums, Primary Insurance Policy premiums, if
applicable, and comparable items, (ii) to reimburse the Servicer for any
Servicing Advance made by the Servicer with respect to a related Mortgage Loan
but only from amounts received on the related Mortgage Loan which represent late
payments or Late Collections of Escrow Payments thereunder, (iii) to refund to
the Mortgagor any funds as may be determined to be overages, (iv) for transfer
to the Collection Account in accordance with the terms of this Agreement, (v)
for application to restoration or repair of the Mortgaged Property, (vi) to pay
to the Servicer, or to the Mortgagor to the extent required by the related
Mortgage Loan or Applicable Regulations, any interest paid on the funds
deposited in the Escrow Account, (vii) to clear and terminate the Escrow Account
on the termination of this Agreement, or (viii) to transfer to the Collection
Account any insurance proceeds. As part of its servicing duties, the Servicer
shall pay to the Mortgagor interest on funds in the Escrow Account, to the
extent required by the related Mortgage Loan or Applicable Regulations, and to
the extent that interest earned on funds in the Escrow Account is insufficient,
shall pay such interest from its own funds, without any reimbursement therefor.
In the event the Servicer shall deposit in the Escrow Account any amount
not required to be deposited therein, it may at any time withdraw such amount
from the Escrow Account, any provision herein to the contrary notwithstanding.
Section 3.08 Payment of Taxes, Insurance and Other Charges; Collections
Thereunder.
With respect to each first lien Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates and other charges which are or may become a lien upon the Mortgaged
Property and the status of Primary Insurance Policy premiums and fire, flood and
hazard insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in the Escrow Account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage or Applicable Regulations. To the extent
that a Mortgage does not provide for Escrow Payments, the Servicer shall (i)
determine whether any such payments are made by the Mortgagor in a manner and at
a time that is necessary to avoid the loss of the Mortgaged Property due to a
tax sale or the foreclosure as a result of a tax lien and (ii) ensure that all
insurance required to be maintained on the Mortgaged Property pursuant to this
Agreement is maintained. If any such payment has not been made and the Servicer
receives notice of a tax lien with respect to the Mortgage Loan being imposed,
the Servicer will, to the extent required to avoid loss of the Mortgaged
Property, advance or cause to be advanced funds necessary to discharge such lien
on the Mortgaged Property. The Servicer assumes full
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responsibility for the payment of all such bills and shall effect payments of
all such bills irrespective of the Mortgagor's faithful performance in the
payment of same or the making of the Escrow Payments and shall make Servicing
Advances from its own funds to effect such payments.
The Servicer, on behalf of the Trustee, as mortgagee, will maintain in full
force and effect (to the extent a Mortgage Loan has a Primary Insurance Policy)
a Primary Insurance Policy issued by a Qualified Insurer with respect to each
Mortgage Loan for which such coverage is required. Such coverage will be
maintained until the Combined Loan-to-Value Ratio of the related Mortgage Loan
is reduced to 80% or less. The Servicer will not cancel or refuse to renew any
Primary Insurance Policy in effect on the Closing Date that is required to be
kept in force under this Agreement unless a replacement Primary Insurance Policy
for such cancelled or non-renewed policy is obtained from and maintained with a
Qualified Insurer. The Servicer shall not take any action which would result in
non-coverage under any applicable Primary Insurance Policy of any loss which,
but for the actions of the Servicer, would have been covered thereunder. In
connection with any assumption or substitution agreement entered into or to be
entered into pursuant to Section 3.14, the Servicer shall promptly notify the
insurer under the related Primary Insurance Policy, if any, of such assumption
or substitution of liability in accordance with the terms of such policy and
shall take all actions which may be required by such insurer as a condition to
the continuation of coverage under the Primary Insurance Policy. If such Primary
Insurance Policy is terminated as a result of such assumption or substitution of
liability, the Servicer shall obtain a replacement Primary Insurance Policy as
provided above.
In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself and the Trustee, claims to the insurer
under any Primary Insurance Policy in a timely fashion in accordance with the
terms of such policies and, in this regard, to take such action as shall be
necessary to permit recovery under any Primary Insurance Policy respecting a
defaulted Mortgage Loan. Pursuant to Section 3.04, any amounts collected by the
Servicer under any Primary Insurance Policy shall be deposited in the Collection
Account, subject to withdrawal pursuant to Section 3.05.
Section 3.09 Transfer of Accounts.
The Servicer may transfer the Collection Account or the Escrow Account to a
different depository institution from time to time. Upon such transfer, the
Servicer shall deliver to the Trustee and the Depositor, a certification or
letter agreement, as the case may be, as required pursuant to Sections 3.04 and
3.06.
Section 3.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each first lien Mortgage Loan
fire and hazard insurance with extended coverage as is customary in the area
where the Mortgaged Property is located in an amount which is at least equal to
the lesser of (i) the amount necessary to fully compensate for any damage or
loss to the improvements which are a part of such property on a replacement cost
basis and (ii) the Principal Balance of the Mortgage Loan, in each case in an
amount not less than such amount as is necessary to prevent the Mortgagor and/or
the Mortgagee from becoming a co-insurer. If the Mortgaged Property is in an
area identified in the Federal Register by the Flood Emergency Management Agency
as having special flood hazards and flood insurance has been made available, the
Servicer will cause to be maintained a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (i) the Principal Balance of the Mortgage
Loan, (ii) the maximum insurable value of the improvements securing such
Mortgage Loan or (iii) the maximum amount of insurance which is available under
the Flood Disaster Protection Act of 1973, as amended. The Servicer
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shall also maintain on the REO Property for the benefit of the
Certificateholders, (x) fire and hazard insurance with extended coverage in an
amount which is at least equal to the replacement cost of the improvements which
are a part of such property, (y) public liability insurance and, (z) to the
extent required and available under the Flood Disaster Protection Act of 1973,
as amended, flood insurance in an amount as provided above. Any amounts
collected by the Servicer under any such policies other than amounts to be
deposited in the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or REO Property, or released to the Mortgagor in accordance
with the Servicer's normal servicing procedures, shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.05. It is
understood and agreed that no earthquake or other additional insurance is
required to be maintained by the Servicer or the Mortgagor or maintained on
property acquired in respect of the Mortgage Loan, other than pursuant to such
Applicable Regulations as shall at any time be in force and as shall require
such additional insurance. All such policies shall be endorsed with standard
mortgagee clauses with loss payable to the Servicer and shall provide for at
least thirty days prior written notice of any cancellation, reduction in the
amount of or material change in coverage to the Servicer. The Servicer shall not
interfere with the Mortgagor's freedom of choice in selecting either his
insurance carrier or agent, provided, however, that the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies currently reflect a general policy rating of B:VI or better in Best's
Key Rating Guide and are licensed to do business in the state wherein the
property subject to the policy is located.
Section 3.11 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a blanket policy
issued by an insurer that has a general policy rating of B:VI or better in
Best's Key Rating Guide insuring against hazard losses on all of the Mortgage
Loans, then, to the extent such policy provides coverage in an amount equal to
the amount required pursuant to Section 3.10 and otherwise complies with all
other requirements of Section 3.10, it shall conclusively be deemed to have
satisfied its obligations as set forth in Section 3.10, it being understood and
agreed that such policy may contain a deductible clause, in which case the
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with Section 3.10,
and there shall have been a loss which would have been covered by such policy,
deliver to the Trustee for deposit in the Distribution Account the amount not
otherwise payable under the blanket policy because of such deductible clause,
which amount shall not be reimbursable to the Servicer from the Trust Fund. In
connection with its activities as servicer of the Mortgage Loans, the Servicer
agrees to prepare and present, on behalf of the Trustee, claims under any such
blanket policy in a timely fashion in accordance with the terms of such policy.
Upon request of the Trustee, the Servicer shall cause to be delivered to the
Trustee a certified true copy of such policy and a statement from the insurer
thereunder that such policy shall in no event be terminated or materially
modified without thirty days prior written notice to the Trustee.
Section 3.12 Fidelity Bond, Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity bond
(the "Fidelity Bond") and an errors and omissions insurance policy, with broad
coverage with financially responsible companies on all officers, employees or
other persons acting in any capacity with regard to the Mortgage Loans to handle
funds, money, documents and papers relating to the Mortgage Loans. The Fidelity
Bond and errors and omissions insurance shall be in the form of the Mortgage
Banker's Blanket Bond and shall protect and insure the Servicer against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons. Such Fidelity Bond shall also protect and insure
the Servicer against losses in connection with the failure to maintain any
insurance policies required pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan without having obtained payment in
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full of the indebtedness secured thereby. No provision of this Section 3.12
requiring the Fidelity Bond and errors and omissions insurance shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such bond and insurance policy shall
be at least equal to the corresponding amounts required by Xxxxxx Xxx in the
Xxxxxx Mae MBS Selling and Servicing Guide or by Xxxxxxx Mac in the Xxxxxxx Mac
Servicer's Guide. Upon the request of any party hereto, each year the Servicer
shall cause to be delivered to such party proof of coverage of the Fidelity Bond
and errors and omissions insurance policy and a statement from the surety and
the insurer that the surety and the insurer shall endeavor to notify the Trustee
within 30 days prior to such Fidelity Bond's errors and omissions insurance
policy's termination or material modification.
Section 3.13 Title, Management and Disposition of REO Property and Certain
Delinquent Mortgage Loans.
(a) In the event that title to a Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken (pursuant to a limited power of attorney to be provided by the
Trustee to the Servicer) in the name of the Trustee or a nominee thereof, on
behalf of the Certificateholders, or in the event the Trustee or a nominee
thereof is not authorized or permitted to hold title to real property in the
state where the REO Property is located, or would be adversely affected under
the "doing business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an Opinion of Counsel obtained by the Servicer from an
attorney duly licensed to practice law in the state where the REO Property is
located. Any Person or Persons holding such title other than the Trustee shall
acknowledge in writing that such title is being held as nominee for the benefit
of the Trustee.
(b) In the event that the Trust Fund acquires any REO Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such REO Property before the end of
the third calendar year beginning after the year of its acquisition by the Trust
Fund for purposes of Section 860G(a)(8) of the Code or if the Trust Fund has
received (at the expense of the Trust Fund) from the Internal Revenue Service an
extension of the period during which it may hold such REO Property without such
REO Property failing to be treated as "foreclosure property" (within the meaning
of Section 860G(a)(8) of the Code), before the end of such extension, unless the
Servicer obtains an Opinion of Counsel, addressed to the Servicer and the
Trustee, to the effect that the holding by the Trust Fund of such REO Property
subsequent to such period will not: (i) result in the imposition of any tax on
"prohibited transactions" as defined in Section 860F of the Code; or (ii) cause
any REMIC constituting part of the Trust Fund to fail to qualify as a REMIC at
any time that any Certificates are outstanding, in which case the Trust Fund may
continue to hold such REO Property (subject to any conditions contained in such
Opinion of Counsel). The Servicer shall be entitled to be reimbursed from the
Collection Account for any costs incurred in obtaining such Opinion of Counsel,
as provided in Section 3.05.
Subject to compliance with applicable laws and regulations as shall at any
time be in force, and notwithstanding any other provisions of this Agreement, no
REO Property acquired by the Trust Fund shall be rented (or allowed to continue
to be rented) or otherwise used by or on behalf of the Trust Fund in such a
manner or pursuant to any terms that would: (i) cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code; or (ii) subject any REMIC constituting part of the Trust Fund to the
imposition of any federal income taxes on the income earned from such REO
Property, including any taxes imposed by reason of Sections 860F or 860G(c) of
the Code, unless the Servicer has agreed to indemnify and hold harmless the
Trust Fund with respect to the imposition of any such taxes.
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The Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders and the Trust Fund solely for the purpose of its
prompt disposition and sale in a manner which does not cause such REO Property
to fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code or result in the receipt by the related REMIC of any
"income from non-permitted assets" within the meaning of Section 860F(a)(2)(B)
of the Code, or any "net income from foreclosure property" which is subject to
taxation under the REMIC Provisions. The Servicer shall cause each REO Property
to be inspected promptly upon the acquisition of title thereto and shall cause
each REO Property to be inspected at least annually thereafter. The Servicer
shall make or cause to be made a written report of each such inspection. Such
reports shall be retained in the Mortgage Servicing File and copies thereof
shall be forwarded by the Servicer to the Trustee upon request. The Servicer
shall attempt to sell the same (and may temporarily rent the same) on such terms
and conditions as the Servicer deems to be in the best interest of the
Certificateholders and the Trust Fund.
With respect to each REO Property, the Servicer shall account separately
for each REO Property with respect to all funds collected and received in
connection with the operation of such REO Property.
The Servicer shall deposit or cause to be deposited, on a daily basis,
within two Business Days of receipt, in the Collection Account, all revenues
received with respect to each REO Property and shall withdraw therefrom funds
necessary for the proper operation, management and maintenance of the related
REO Property, including the cost of maintaining any hazard insurance pursuant to
Section 3.10 hereof and the fees of any managing agent acting on behalf of the
Servicer.
The Servicer shall furnish to the Trustee, on each Servicer Remittance
Date, an operating statement for each REO Property covering the operation of
each REO Property for the previous month. Such operating statement shall be
accompanied by such other information as the Trustee shall reasonably request.
The Servicer shall use its best efforts to dispose of the REO Property as
promptly as is practically consistent with protecting the Certificateholders'
interests.
Each REO Disposition shall be carried out by the Servicer at such price and
upon such terms and conditions as the Servicer deems to be in the best interest
of the Certificateholders. If as of the date title to any REO Property was
acquired by the Servicer there were outstanding unreimbursed Servicing Advances
with respect to the REO Property or the related Mortgage Loan, the Servicer,
upon an REO Disposition of such REO Property, shall be entitled to reimbursement
for any related unreimbursed Servicing Advances from proceeds received in
connection with such REO Disposition. The proceeds from the REO Disposition, net
of any payment to the Servicer as provided above, shall be deposited in the
Collection Account for distribution on the succeeding Servicer Remittance Date
in accordance with Section 4.01.
Any REO Disposition shall be for cash only (unless changes in the REMIC
Provisions made subsequent to the Startup Day allow a sale for other
consideration and an Opinion of Counsel is obtained by the Servicer to the
effect that such sale shall not cause any REMIC constituting part of the Trust
Fund to fail to qualify as a REMIC).
(c) The Servicer may write-off any Second Lien Mortgage Loan that has
been Delinquent for a period of 180 days or more if the Servicer determines that
any amount that could be recovered on such Mortgage Loan would be less than the
cost required to achieve such recovery.
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Section 3.14 Due-on-Sale Clauses; Assumption and Substitution Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, 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. An Opinion of Counsel at
the expense of the Servicer (which expense shall constitute a Servicing Advance)
delivered to the Trustee and the Depositor to the foregoing effect shall
conclusively establish the reasonableness of such belief. 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 Mortgaged 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 (or the Custodian, as
the case may be) 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 (or the Custodian, as the case may be) 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 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.
Section 3.15 Notification of Adjustments.
On each Adjustment Date, the Servicer shall make Mortgage Interest Rate
adjustments for each Mortgage Loan in compliance with the requirements of the
related Mortgage and Mortgage Note and Applicable Regulations. The Servicer
shall execute and deliver the notices required by each Mortgage and Mortgage
Note and Applicable Regulations regarding Mortgage Interest Rate adjustments.
The Servicer also shall provide timely notification to the Trustee of all
applicable data and information regarding such Mortgage Interest Rate
adjustments and the Servicer's methods of implementing such Mortgage Interest
Rate adjustments. Upon the discovery by the Servicer or the Trustee that the
Servicer has failed to adjust or has incorrectly adjusted a Mortgage Interest
Rate or a Monthly Payment pursuant to the terms of the related Mortgage Note and
Mortgage, the Servicer shall deliver to the Trustee for deposit
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in the Distribution Account from its own funds the amount of any interest loss
caused thereby without reimbursement therefor; provided, however, the Servicer
shall be held harmless with respect to any Mortgage Interest Rate adjustments
made by any servicer prior to the Servicer.
Section 3.16 Optional Purchases of Mortgage Loans by Servicer.
The Servicer (or an affiliate of the Servicer) may, at its option, purchase
a Mortgage Loan or REO Property which becomes 120 or more days Delinquent or for
which the Servicer has accepted a deed in lieu of foreclosure, during the period
commencing on the first day of the calendar quarter succeeding the calendar
quarter in which the Initial Delinquency Date occurred with respect to such
Mortgage Loan and ending on the last Business Day of such calendar quarter. If
the Servicer (or an affiliate of the Servicer) does not exercise its purchase
right with respect to a Mortgage Loan during the period specified in the
preceding sentence, such Mortgage Loan shall thereafter again become eligible
for purchase pursuant to the preceding sentence only after the Mortgage Loan
ceases to be 120 days or more Delinquent and thereafter becomes 120 days
Delinquent again. The "Initial Delinquency Date" of a Mortgage Loan shall mean
the date on which the Mortgage Loan first became 120 days Delinquent. Prior to
repurchase pursuant to this Section 3.16, the Servicer shall be required to
continue to make monthly advances pursuant to Section 4.07. The Servicer shall
not use any procedure in selecting Mortgage Loans to be repurchased which is
materially adverse to the interests of the Certificateholders. The Servicer
shall purchase such (i) delinquent Mortgage Loan at a price equal to the
Principal Balance of the Mortgage Loan plus accrued interest thereon at the
Mortgage Interest Rate from the date to which interest has last been paid to the
Trust Fund to the date of purchase plus any unreimbursed Servicing Advances and
Advances or (ii) REO Property at its fair market value as determined in good
faith by the Servicer. Any such repurchase of a Mortgage Loan or REO Property
pursuant to this Section 3.16 shall be accomplished by delivery to the Trustee
for deposit in the Distribution Account of the amount of the purchase price. The
Trustee shall immediately effectuate the conveyance of such delinquent Mortgage
Loan or REO Property to the Servicer to the extent necessary, including the
prompt delivery of all necessary documentation provided by it to the Servicer.
Section 3.17 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Mortgage Loan (including any
liquidation of such Mortgage Loan through foreclosure or otherwise, 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 shall deliver to the
Trustee (or the Custodian as the case may be) two executed copies of a completed
"Request for Release" in the form of Exhibit E. Upon receipt of such Request for
Release of Documents, the Trustee (or the Custodian as the case may be) shall
promptly release the related Mortgage File, in trust to (i) the Servicer, or
(ii) such other party identified in the related Request for Release. Upon any
such payment in full, or the receipt of such notification that such funds have
been placed in escrow, the Servicer shall direct the Trustee in writing to
execute an instrument of satisfaction (or assignment of Mortgage without
recourse, representation or warranty) regarding the Mortgaged Property relating
to such Mortgage, which instrument of satisfaction or assignment, as the case
may be, shall be delivered to the Person or Persons entitled thereto against
receipt therefor of payment in full, it being understood and agreed that no
expense incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Collection Account.
In lieu of executing any such satisfaction or assignment, as the case may be,
the Servicer may prepare and submit to the Trustee a satisfaction (or assignment
without recourse, representation or warranty if requested by the Person or
Persons entitled thereto) in form for execution by the Trustee with all
requisite information completed by the Servicer; in such event, the Trustee
shall execute and acknowledge such satisfaction or assignment, as the case may
be, and deliver the same with the related Mortgage File, as aforesaid.
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(b) From time to time and as appropriate in the servicing of any
Mortgage Loan, including, without limitation, foreclosure or other comparable
conversion of a Mortgage Loan or collection under any insurance policy relating
to a Mortgage Loan, the Trustee shall (except in the case of the payment or
liquidation pursuant to which the related Mortgage File is released to an escrow
agent or an employee, agent or attorney of the Trustee), upon written request of
the Servicer and delivery to the Trustee (or the Custodian, as the case may be)
of two executed copies of a "Request for Release" in the form of Exhibit E
signed by a Servicing Officer, release the related Mortgage File to the Servicer
and shall execute such documents as shall be necessary to the prosecution of any
such proceedings, including, without limitation, an assignment without recourse,
representation or warranty of the related Mortgage to the Servicer. Such receipt
shall obligate the Servicer to return the Mortgage File to the Trustee (or the
Custodian, as the case may be) when the need therefor by the Servicer no longer
exists unless the Mortgage Loan shall be liquidated, in which case, upon receipt
of a Request for Release evidencing such liquidation, the receipt shall be
released by the Trustee (or the Custodian, as the case may be) to the Servicer.
(c) Subject to Section 3.01, the Servicer shall have the right to
accept applications of Mortgagors for consent to (i) partial releases of
Mortgages, (ii) alterations, (iii) removal, demolition or division of properties
subject to Mortgages and (iv) second mortgage subordination agreements. No
application for approval shall be considered by the Servicer unless: (w) it has
received an Opinion of Counsel, addressed to the Trustee (which opinion shall
not be an expense of the Trustee or the Trust Fund) that such sale, disposition,
substitution, acquisition or contribution will not affect adversely the status
of any REMIC constituting part of the Trust Fund as a REMIC or cause any REMIC
constituting part of the Trust Fund to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions; (x) the
provisions of the related Mortgage Note and Mortgage have been complied with;
(y) the Combined Loan-to-Value Ratio and debt-to-income ratio after any release
does not exceed the maximum Combined Loan-to-Value Ratio and debt-to-income
ratio established in accordance with the underwriting standards of the Mortgage
Loans; and (z) the lien priority of the related Mortgage is not affected. Upon
receipt by the Trustee of a Servicing Officer's certificate setting forth the
action proposed to be taken in respect of a particular Mortgage Loan and
certifying that the criteria set forth in the immediately preceding sentence
have been satisfied, the Trustee shall execute and deliver to the Servicer the
consent or partial release so requested by the Servicer. A proposed form of
consent or partial release, as the case may be, shall accompany any Servicing
Officer's certificate delivered by the Servicer pursuant to this paragraph.
Section 3.18 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Mortgage
Loan (including REO Properties). The Servicer shall be entitled to retain
additional servicing compensation in the form of release fees, bad check
charges, assumption fees, modification or extension fees, late payment charges,
customary real-estate referral fees, Prepayment Interest Excess or any other
service-related fees, Insurance Proceeds and Liquidation Proceeds not required
to be deposited in the Collection Account or the Distribution Account and
similar items, to the extent collected from Mortgagors. For so long as Xxxxxx is
the servicer of the Mortgage Loans, Xxxxxx will receive the Xxxxxx Servicing Fee
and the Holders of the Class CE-2 Certificates will receive the Excess Servicing
Fee.
Section 3.19 Annual Statement as to Compliance.
(a) The Servicer, at its own expense, will deliver to the Trustee and
the Depositor, not later than March 15 of each year, commencing in 2007, a
Servicing Officer's certificate, in the form
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attached hereto as Exhibit P-4, stating, as to each signer thereof, that (i) a
review of the activities of the Servicer during such preceding calendar year (or
such shorter period in the case of the first such report) and of performance of
such Servicer under this Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement for
such year, or, if there has been a failure to fulfill any such obligation in any
material respect throughout such year, specifying each failure known to such
officer and the nature and status thereof. During the period when reports under
the Exchange Act are required to be filed, with respect to any Subservicer that
meets the criteria of Item 1108(a)(2)(i) through (iii) of Regulation AB, the
Servicer shall cause each Subservicer to deliver the Officer's Certificate set
forth in this Section 3.19(a) as and when required with respect to the Servicer.
For purposes of clause (ii) above, the Servicer or Subservicer will be entitled
to rely upon a certification received by any Subcontractor.
(b) Delivery of such reports, information and documents to the Trustee
is for informational purposes only and its receipt of such shall not constitute
constructive notice of any information contained therein or determinable, from
information contained therein, including the Servicer's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officers' Certificates).
Section 3.20 Reports on Assessment of Compliance and Attestation.
(a) Not later than the earlier of (a) March 15 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
required to be filed pursuant to Section 3.29 on behalf of the Trust, 15
calendar days before each date on which that annual report on Form 10-K is
required to be filed, pursuant to Section 3.29 (or if such day is not a Business
Day, the immediately preceding Business Day), the Servicer, at its own expense,
shall deliver to the Depositor, the Trustee and each Rating Agency an officer's
certification and assessment of its compliance with the Servicing Criteria
during the preceding calendar year as required by Rules 13a-18 and 15d-18 of the
Exchange Act and Item 1122 of Regulation AB (the "Assessment of Compliance"),
which assessment shall be substantially in the form of Exhibit P-1 hereto. The
parties acknowledge and agree that the items indicated as being subject to
assessment by each such party on Exhibit P-2 hereto are the items to be assessed
by such party as of the Closing Date and that any changes to such allocation of
assessment responsibilities will be made by mutual agreement of the parties. Any
such changes will not require an amendment of this Agreement.
(b) Not later than the earlier of (a) March 15 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
required to be filed pursuant to Section 3.29 on behalf of the Trust, 15
calendar days before each date on which that annual report on Form 10-K is
required to be filed pursuant to Section 3.29 (or if such day is not a Business
Day, the immediately preceding Business Day), the Servicer, at its own expense,
shall cause a nationally or regionally recognized firm of independent registered
public accountants (who may also render other services to the Servicer, the
Seller or any affiliate thereof), which is a member of the American Institute of
Certified Public Accountants to furnish a statement to the Depositor and the
Trustee, that attests to and reports on the assessment of compliance provided by
the Servicer pursuant to Section 3.20(a) (the "Accountant's Attestation"). Such
Accountant's Attestation shall be in accordance with Rules 1-02(a)(3) and
2-02(g) of Regulation S-X under the Securities Act and the Exchange Act.
(c) The Servicer shall cause any Subservicer and each Subcontractor to
deliver, if applicable, with respect to any calendar year during which the
Depositor's annual report on Form 10-K is
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required to be filed in accordance with the Exchange Act and the rules and
regulations of the Securities and Exchange Commission, 15 calendar days before
the date on which the Depositor'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
Securities and Exchange Commission (or, in each case, if such day is not a
Business Day, the immediately preceding Business Day) to the Depositor and the
Trustee an Assessment of Compliance, which assessment shall be substantially in
the form of Exhibit P-1 hereto.
(d) With respect to any calendar year during which the Depositor'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 Securities and Exchange
Commission, 15 calendar days before the date on which the Depositor'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 Securities and Exchange Commission (or, in
each case, if such day is not a Business Day, the immediately preceding Business
Day), the Servicer shall cause each Subservicer and each Subcontractor to
deliver to the Depositor and the Trustee an Accountant's Attestation by a
registered public accounting firm that attests to, and reports on, the
Assessment of Compliance pursuant to Section 3.20 (c) above.
(e) With respect to any calendar year during which the Depositor'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 Securities and Exchange
Commission, not later than 15 calendar days before the date on which the
Depositor'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 Securities and
Exchange Commission (or, in each case, if such day is not a Business Day, the
immediately preceding Business Day), the Depositor shall cause the Custodian to
deliver to the Depositor and the Trustee an Assessment of Compliance with regard
to the Servicing Criteria applicable to the Custodian during the preceding
calendar year, which assessment shall be substantially in the form of Exhibit
P-1 hereto.
(f) With respect to any calendar year during which the Depositor'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 Securities and Exchange
Commission, not later than 15 calendar days before the date on which the
Depositor'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 Securities and
Exchange Commission (or, in each case, if such day is not a Business Day, the
immediately preceding Business Day), the Depositor shall cause the Custodian to
deliver to the Depositor and the Trustee an Accountant's Attestation by a
registered public accounting firm that attests to, and reports on, the
Assessment of Compliance pursuant to Section 3.20(e) above.
(g) With respect to any calendar year during which the Depositor'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 Securities and Exchange
Commission, not later than 15 calendar days before the date on which the
Depositor'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 Securities and
Exchange Commission (or, in each case, if such day is not a Business Day, the
immediately preceding Business Day), the Depositor shall cause the Trustee to
deliver to the Depositor an Assessment of Compliance with regard to the
Servicing Criteria applicable to the Trustee during the preceding calendar year,
which assessment shall be substantially in the form of Exhibit P-1 hereto.
(h) With respect to any calendar year during which the Depositor'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 Securities and Exchange
Commission, not later than 15 calendar days before the date on which the
Depositor's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and
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the rules and regulations of the Securities and Exchange Commission (or, in each
case, if such day is not a Business Day, the immediately preceding Business
Day), the Depositor shall cause the Trustee to deliver to the Depositor an
Accountant's Attestation by a registered public accounting firm that attests to,
and reports on, the Assessment of Compliance pursuant to Section 3.20(g) above.
(i) The Servicer agrees to indemnify and hold harmless each of the
Depositor, the Trustee and each Person, if any, who "controls" the Depositor or
the Trustee within the meaning of the Securities Act and their respective
officers, directors and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses that such Person actually sustains
out of third party claims based on (i) the failure of the Servicer or any
related Subservicer or Subcontractor to deliver or cause to be delivered when
required any Assessment of Compliance or Accountant's Attestation required of it
pursuant to this Section 3.20, as applicable, or (ii) any material misstatement
contained in any Assessment of Compliance provided on its behalf pursuant to
this Section 3.20, as applicable.
(j) The Trustee agrees to indemnify and hold harmless each of the
Depositor, the Servicer and each Person, if any, who "controls" the Depositor or
the Servicer within the meaning of the Securities Act and their respective
officers, directors and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses that such Person may sustain
arising out of third party claims based on (i) the failure of the Trustee to
deliver or cause to be delivered when required any Assessment of Compliance
required of it pursuant to Section 3.20(g), or (ii) any material misstatement
contained in any Assessment of Compliance provided on its behalf pursuant to
this Section 3.20. Failure by the Trustee to deliver an Accountant's Attestation
when required under Section 3.20 will be grounds for immediate removal of the
Trustee under Section 8.07; in the event of such failure, the Trustee shall pay
certain costs and expenses of the Depositor caused by such failure as separately
agreed to by the Depositor and the Trustee.
(k) Copies of such Assessments of Compliance and Accountant's
Attestations shall be provided by the Trustee to any Certificateholder, upon
request, provided such statement is delivered to the Trustee. The initial
Assessments of Compliance and Accountant's Attestations required pursuant to
this Section 3.20 shall be delivered to the Trustee and the Depositor, as
applicable, by each party no later than March 15, 2007.
Section 3.21 Access to Certain Documentation and Information Regarding the
Mortgage Loans.
The Servicer shall provide to the Trustee, Certificateholders that are
federally insured savings and loan associations, the Office of Thrift
Supervision, the FDIC and the supervisory agents and examiners of each of the
foregoing (which, in the case of supervisory agents and examiners, may be
required by applicable state and federal regulations) access to the
documentation regarding the Mortgage Loans, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Servicer designated by it.
Section 3.22 Reserved.
Section 3.23 Obligations of the Servicer in Respect of Compensating
Interest.
Not later than the close of business on each Servicer Remittance Date, the
Servicer shall deliver to the Trustee for deposit in the Distribution Account an
amount ("Compensating Interest") equal to the lesser of (A) the aggregate of the
Prepayment Interest Shortfalls on the Mortgage Loans for the related
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Distribution Date resulting from Principal Prepayments in full on the Mortgage
Loans during the related Prepayment Period and (B) 50% of the aggregate
Servicing Fee for the related Collection Period. The Servicer shall apply
Compensating Interest to offset any Prepayment Interest Shortfalls on the
Mortgage Loans. The Servicer shall not have the right to reimbursement for any
amounts remitted to the Trustee in respect of Compensating Interest. Such
amounts so remitted shall be included in the Available Funds and distributed
therewith on the next Distribution Date. The Servicer shall not be obligated to
pay Compensating Interest with respect to Prepayment Interest Shortfalls or
Relief Act Interest Shortfalls.
Section 3.24 Obligations of the Servicer in Respect of Mortgage Interest
Rates and Monthly Payments.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Interest Rates, Monthly Payments or Principal Balances that were made
by the Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Servicer, upon discovery or receipt of
notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor and
any successor servicer in respect of any such liability. Such indemnities shall
survive the termination or discharge of this Agreement.
Section 3.25 Investment of Funds in the Collection Account and the
Distribution Account.
(a) The Servicer may direct any depository institution maintaining the
Collection Account to invest the funds in the Collection Account in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trustee is the
obligor thereon, and (ii) no later than the date on which such funds are
required to be withdrawn from such account pursuant to this Agreement, if the
Trustee is the obligor thereon. In the absence of such direction, funds in the
Collection Account shall remain uninvested. All such Permitted Investments shall
be held to maturity, unless payable on demand. Any investment of funds in the
Collection Account shall be made in the name of the Trustee or the Servicer, as
applicable (in its capacity as such) or in the name of a nominee of the Trustee.
The Trustee shall be entitled to sole possession (except with respect to
investment direction of funds held in the Collection Account) over each such
investment and the income thereon, and any certificate or other instrument
evidencing any such investment shall be delivered directly to the Trustee or its
agent, together with any document of transfer necessary to transfer title to
such investment to the Trustee or its nominee. In the event amounts on deposit
in the Collection Account are at any time invested in a Permitted Investment
payable on demand, the Trustee shall at the direction of the Servicer:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an amount
equal to the lesser of (1) all amounts then payable thereunder
and (2) the amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer of the Trustee that such
Permitted Investment would not constitute a Permitted Investment
in respect of funds thereafter on deposit in the Collection
Account.
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(b) All income and gain realized from the investment of funds in the
Collection Account shall be for the benefit of the Servicer. The Servicer shall
deposit in the Collection Account the amount of any loss incurred in respect of
any such Permitted Investment made with funds in such account immediately upon
realization of such loss. Funds on deposit in the Distribution Account will
remain uninvested.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(a)(v),
upon the request of the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates, shall take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.
The Trustee shall not in any way be held liable by reason of any
insufficiency in any Account held by the Trustee resulting from any investment
loss on any Permitted Investment included therein (except to the extent that the
Trustee is the obligor and has defaulted thereon).
Section 3.26 Liability of Servicer; Indemnification.
(a) Subject to clause (b) below and Section 6.03, the Servicer (or its
successor hereunder (except the Trustee if it is required to succeed the
Servicer hereunder)) indemnifies and holds the Trustee, the Seller, the
Depositor and each Certificateholder harmless against any and all claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Depositor and any Certificateholder may sustain in any way related to the
failure of the Servicer to perform its duties and service the Mortgage Loans in
compliance with the Servicing Standards. The Servicer shall immediately notify
the Trustee, the Depositor and each Certificateholder if a claim is made that
may result in such claims, losses, penalties, fines, forfeitures, legal fees or
related costs, judgments, or any other costs, fees and expenses, and the
Servicer shall assume (with the consent of the Trustee) the defense of any such
claim and pay all expenses in connection therewith, including reasonable counsel
fees, and promptly pay, discharge and satisfy any judgment or decree which may
be entered against the Servicer, Trustee, the Depositor and/or Certificateholder
in respect of such claim. The provisions of this Section 3.26 shall survive the
termination of this Agreement, the termination or resignation of the Servicer or
the Trustee and the payment of the outstanding Certificates.
(b) None of the Depositor, the Seller, the Servicer, or any of the
directors, officers, employees or agents of the Depositor, the Seller or the
Servicer shall be under any liability to the Trust Fund 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
Seller or the Servicer or any such Person against any breach of warranties or
representations made herein, or against any specific liability imposed on the
Servicer for a breach of the Servicing Standard, or against any liability which
would otherwise be imposed by reason of its respective willful misfeasance, bad
faith, fraud or negligence in the performance of its duties or by reasons of
negligent disregard of its respective obligations or duties hereunder.
The Depositor, the Servicer, the Seller and any director, officer, employee
or agent of the Depositor, the Seller or the Servicer, may rely in good faith on
any document of any kind which, prima facie, is properly executed and submitted
by any appropriate Person with respect to any matters arising hereunder. The
Depositor, the Servicer, the Seller, and any director, officer, employee or
agent of the
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Depositor, the Seller or the Servicer shall be indemnified and held harmless by
the Trust Fund against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense incurred in connection with any legal action
incurred by reason of its respective misfeasance, bad faith, fraud or
negligence, a breach of a representation or warranty hereunder or (in the case
of the Servicer) a breach of the Servicing Standard in the performance of its
respective duties or by reason of negligent disregard of its respective
obligations or duties hereunder. Neither the Depositor, the Seller nor the
Servicer shall be under any obligation to appear in, prosecute or defend any
legal action unless such action is related to its respective duties under this
Agreement and in its opinion does not expose it to any expense or liability;
provided, however, that the Depositor, the Seller or the Servicer may in its
discretion undertake any action related to its obligations hereunder which it
may deem necessary or desirable with respect to this Agreement and the rights
and duties of the parties hereto and the interests of the Certificateholders
hereunder.
Section 3.27 Reports of Foreclosure and Abandonment of Mortgaged
Properties.
On or before the last day of February of each year beginning in 2007, the
Servicer shall file the reports of foreclosure and abandonment of any Mortgaged
Property required by Section 6050J of the Code with the Internal Revenue Service
and provide an Officer's Certificate certifying its compliance with this Section
3.27 to the Trustee. The reports from the Servicer shall be in form and
substance sufficient to meet the reporting requirements imposed by such Section
6050J.
Section 3.28 Protection of Assets.
(a) Except for transactions and activities entered into in connection
with the securitization that is the subject of this Agreement, the Trust is not
authorized and has no power to:
(1) borrow money or issue debt;
(2) merge with another entity, reorganize, liquidate or
sell assets; or
(3) engage in any business or activities.
(b) Each party to this Agreement agrees that it will not file an
involuntary bankruptcy petition against the Trustee or the Trust Fund or
initiate any other form of insolvency proceeding until after the Certificates
have been paid.
Section 3.29 Periodic Filings.
(a) The Trustee will prepare and file Current Reports on Form 8-K in
respect of the Trust at the direction and expense of the Depositor, provided,
that, as set forth on Exhibit R, the Depositor, the Seller or the Servicer shall
have timely notified the Trustee of an item reportable on a Form 8-K and shall
have delivered to the Trustee no later than three Business Days prior to the
filing deadline for such Form 8-K, all information, data, and exhibits required
to be provided or filed with such Form 8-K in electronic or other such other
format reasonably acceptable to the Trustee. To the extent that a Responsible
Officer of the Trustee has actual knowledge of an event relating to Items 3.03,
6.02, 6.03 or 6.04 of Form 8-K, the Trustee shall notify the Depositor of such
event. The Trustee shall not be responsible for determining what information is
required to be filed on a Form 8-K in connection with the transactions
contemplated by this Agreement or what events shall cause a Form 8-K to be
required to be filed and shall not be liable for any late filing of a Form 8-K
in the event that it does not receive all information, data, signatures and
exhibits required to be provided or filed on or prior to the second
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Business Day prior to the applicable filing deadline. Within 15 days after each
Distribution Date, the Trustee shall, on behalf of the Trust and in accordance
with industry standards, file with the Securities and Exchange Commission via
the Electronic Data Gathering and Retrieval System ("XXXXX"), a Form 10-D (or
other comparable form containing the same or comparable information or other
information mutually agreed upon) with, as set forth on Exhibit S, (1) a copy of
the report to the Certificateholders for such Distribution Date as an exhibit
thereto and (2) such other information provided to the Trustee as identified on
Exhibit S; provided that such information is provided to the Trustee no later
than the first Business Day immediately following the related Distribution Date.
Prior to Xxxxx 00, 0000 (xxx, if applicable, prior to March 30 of each
subsequent year), the Trustee shall, on behalf of the Trust and in accordance
with industry standards, prepare and file with the Securities and Exchange
Commission via XXXXX a Form 10-K with respect to the Trust Fund. As set forth on
Exhibit T, such Form 10-K shall include as exhibits, each annual statement of
compliance required to be delivered pursuant to Section 3.19 and each
Accountant's Attestation and Assessment of Compliance required to be furnished
pursuant to Section 3.20, in each case to the extent they have been timely
delivered to the Trustee (or the Depositor, in the case of the Trustee's
Assessment of Compliance) and such other information as is required by
Regulation AB. The Servicer will cause its senior officer in charge of
securitization to execute the certification, in the form attached hereto as
Exhibit P-3 (the "Form 10-K Certification") required pursuant to Rule 13a -14
under the Securities Exchange Act of 1934, as amended, and the Trustee shall
file the same with the Securities and Exchange Commission prior to Xxxxx 00,
0000 (xxx, if applicable, prior to March 30 of each year). In connection
therewith, the Trustee shall sign a certification (in the form attached hereto
as Exhibit P-5) for the benefit of the Depositor and the Servicer and their
officers, directors and affiliates regarding certain aspects of the Form 10-K
Certification (the "Trustee's Certification"). To the extent any information or
exhibits required to be included in the Form 10-K are not timely received by the
Trustee prior to March 30, the Trustee shall, on behalf of the Trust, file one
or more amended Form 10-Ks to include such missing information or exhibits
promptly after receipt thereof by the Trustee. Promptly following the first date
legally permissible under applicable regulations and interpretations of the
Securities and Exchange Commission, the Trustee shall, on behalf of the Trust
and in accordance with industry standards, file with the Securities and Exchange
Commission via XXXXX a Form 15 Suspension Notification with respect to the Trust
Fund, if applicable. 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 Trustee reasonably deems appropriate to prepare and file all necessary
reports with the Securities and Exchange Commission. Upon the preparation of
each Form 10-D filing by the Trustee, such Form 10-D filing shall be submitted
to the Servicer. Upon receipt of written notice to the Trustee via electronic
mail to xxxxxxx.xxxxxxxx@xxxxxx.xxx, with a copy to
xxxxxx.xxxxxxxxxxxxxx@xxxxxx.xxx, and from the Servicer that the Form 10-D is
ready for filing, the Trustee shall attach to any Form 10-D the signature page
of the Servicer (such signature page to have been delivered by the Servicer to
the Trustee on the Closing Date) and submit such Form 10-D for filing with the
Securities and Exchange Commission. The Trustee shall provide a copy of each
Form 10-D and Form 8-K to each of the Servicer and the Depositor. The Trustee
shall have no responsibility to file any items with the Securities and Exchange
Commission other than those specified in this section and the Servicer shall
execute any and all Form 8-Ks, 10-Ds and 10-Ks required hereunder. All materials
provided to the Trustee relating to the Form 8-Ks, 10-Ds and 10-Ks required
hereunder shall be provided in electronic format compatible with the XXXXX
system, which may be in Microsoft Word. To the extent that (i) no notice is
provided to the Trustee of events or information reportable in any Form 8-K,
(ii) no notice is provided of events or information reportable in any Form 10-D
by the first Business Day after the related Distribution Date or (iii) no notice
is provided of events or information reportable in any Form 10-K by March 15 of
each year, in each case the Trustee shall without further notice conclude that
there is no event or information to be reported. Notwithstanding anything set
forth herein, the Servicer will not be responsible for the filing of any Form
8-K or Form 10-D filed on behalf of the Trust (including but not limited to the
timing of any filing or
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completeness of such filings) and will not be responsible for determining
whether the content of any Form 8-K or Form 10-D filed on behalf of the Trust is
accurate or correct (unless such information is contained in the Remittance
Report or otherwise specific to the Servicer, in which case the Servicer will be
responsible for making such a determination).
(b) The Trustee shall, subject to Sections 8.01 and 8.02, indemnify
and hold harmless the Depositor, the Servicer and any director, officer,
employee or agent of the Depositor and the Servicer and hold 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 (other than punitive damages) that any of them may
sustain in any way related to (x) a breach of its obligation or the failure of
the Trustee to perform any of its obligations pursuant to Section 3.29(a), (y)
or Trustee's negligence, bad faith or willful misconduct in connection therewith
or any inaccuracy in the Trustee's Certification and (z) any inaccurate
information provided by the Trustee (to the extent such inaccuracy is not due to
inaccurate information provided to the Trustee by the Servicer or any other
party) that is contained in any Form 10-D filed with the SEC, other than any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs, fees and expenses arising out
of the Servicer's or any other party's breach of its obligations under this
Agreement or any other related agreement. If the indemnification provided for
herein is unavailable or insufficient to hold harmless any indemnified party,
then the Trustee shall contribute to the amount paid or payable by the
indemnified party as a result of the losses, claims, damages or liabilities of
such indemnified party in such proportion as is appropriate to reflect the
relative fault of the indemnified party on the one hand and the Trustee on the
other.
(c) The Servicer shall indemnify and hold harmless the Trustee and its
officers, directors and Affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of the Servicer's
failure to sign and deliver either the certification or the Form 10-K within the
time frame provided in Section 3.29(a), other than any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of the Trustee's
breach of its obligations under this Agreement. If the indemnification provided
for herein is unavailable or insufficient to hold harmless the Trustee and its
officers, directors and Affiliates, then the Servicer shall contribute to the
amount paid or payable by the Trustee, its officers, directors or Affiliates as
a result of the losses, claims, damages or liabilities of the Trustee, its
officers, directors or Affiliates in such proportion as is appropriate to
reflect the relative fault of the Trustee and its officers, directors and
Affiliates on the one hand and the Servicer on the other.
(d) If the Securities and Exchange 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 3.29, to be
conducted differently than as described, the Depositor, the Servicer, and the
Trustee will reasonably cooperate to amend the provisions of this Section 3.29
in order to comply with such amended reporting requirements and such amendment
of this Section 3.29. Any such amendment shall be made in accordance with the
first paragraph of Section 11.01 without the consent of the Certificateholders
and without the requirement to deliver notice in writing to the Depositor, the
Servicer and the Trustee from the Rating Agencies that such action will not
result in the reduction or withdrawal of the rating of any outstanding Class of
Certificates with respect to which it is a Rating Agency. Such amendment may
result in the reduction of the reports filed by the Trustee on behalf of the
Trust under the Exchange Act. Notwithstanding the foregoing, none of the
Depositor, the Servicer and the Trustee shall be obligated to enter into any
amendment pursuant to this Section 3.29 that adversely affects its obligations
and immunities under this Agreement.
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(e) In filing any Monthly Form 8-K or Form 10-K, the Trustee shall not
undertake any analysis of, and shall have no responsibility for, any financial
information, accountant's report, certification or other matter contained
therein, except for computations performed by the Trustee and reflected in the
statement set forth in Section 4.06(a) hereof.
(f) The Depositor, the Servicer and the Trustee agree to use their
good faith efforts to cooperate in complying with the requirements of this
Section 3.29.
(g) Upon any filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor and the Servicer a copy of any
such executed report, statement or information.
(h) The obligations set forth in paragraphs (a) and (b) of this
Section shall only apply with respect to periods for which reports are required
to be filed with respect to the Trust under the Exchange Act. Prior to January
30 of the first year in which the Trustee is able to do so under applicable law,
the Trustee shall file a Form 15 Suspension Notification with respect to the
Trust. At any time after the filing of a Form 15 Suspension Notification, if the
number of Certificateholders of record exceeds the number set forth in Section
15(d) of the Exchange Act or the regulations promulgated pursuant thereto which
would cause the Trust to again become subject to the reporting requirements of
the Exchange Act, the Trustee, solely at the Depositor's prior written direction
and expense, shall recommence preparing and filing reports on Form 10-K and 10-D
as required pursuant to this Section 3.29 and the parties hereto shall again
have the obligations set forth in this Section.
(i) For so long as reports are required to be filed with the
Securities and Exchange Commission under the Exchange Act with respect to the
Trust, each of the Depositor, the Trustee, the Servicer and the Seller shall
notify the Depositor and the Trustee in writing of any litigation or proceeding
that would be material to Certificateholders pending against such notifying
person (or, in the case of the Servicer, against the Servicer or any Subservicer
engaged by it), or, with respect to the Depositor, the Trustee and the Seller,
any affiliations or relationships that develop following the Closing Date
between such notifying person (or, in the case of the Servicer, between the
Servicer or any Subservicer engaged by it) and any other party hereto or an
Originator, that may have to be reported on a Form 8-K, Form 10-K or Form 10-D
with respect to the Trust.
(j) For so long as reports are required to be filed with the
Securities and Exchange Commission under the Exchange Act with respect to the
Trust, the Depositor shall notify the Servicer and the Trustee in writing within
10 days following any Distribution Date as to whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Notwithstanding the foregoing,
unless otherwise indicated in writing by the Depositor within such 10 day-period
of time, the Depositor shall be deemed to have notified the Servicer and the
Trustee in the affirmative as to clauses (1) and (2) above. The Depositor shall
indemnify and hold harmless each of the Servicer and the Trustee, and officers,
directors and Affiliates of each, from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of the Depositor's
failure to provide the accurate information required pursuant to this Section
3.29(j), other than any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses arising out of the Servicer's or the Trustee's breach of its
respective obligations under this Agreement. If the indemnification provided for
herein is unavailable or insufficient to hold harmless the Servicer or the
Trustee and its respective officers, directors and Affiliates, then the
Depositor shall contribute to the amount paid or payable by the Servicer,
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or the Trustee, as the case may be, its respective officers, directors or
Affiliates as a result of the losses, claims, damages or liabilities of the
Servicer, or the Trustee, as the case may be, its respective officers, directors
or Affiliates in such proportion as is appropriate to reflect the relative fault
of the Servicer, or the Trustee and its respective officers, directors and
Affiliates on the one hand and the Depositor on the other.
Section 3.30 Advance Facility.
(a) The Servicer is hereby authorized to enter into a financing or
other facility (any such arrangement, an "Advance Facility"), the documentation
for which complies with Section 3.30(e) below, under which (1) the Servicer
assigns or pledges its rights under this Agreement to be reimbursed for any or
all Advances and/or Servicing Advances to (i) a Person, which may be a
special-purpose bankruptcy-remote entity (an "SPV"), (ii) a Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (i) or (ii), may directly or through other
assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all the Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party shall be required before the
Servicer may enter into an Advance Facility nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to and as required
by this Agreement and (ii) shall not be relieved of such obligations by virtue
of such Advance Facility and (B) neither the Advance Financing Person nor any
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any Mortgagor for the purpose of collecting any
payment that may be due with respect to any related Mortgage Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan documents.
(b) If the Servicer enters into an Advance Facility, the Servicer and
the related Advance Financing Person shall deliver to the Trustee at the address
set forth in Section 11.05 hereof a written notice (an "Advance Facility
Notice"), stating (a) the identity of the Advance Financing Person and (b) the
identity of the Person (the "Servicer's Assignee") that will, subject to Section
3.30(c) hereof, have the right to make withdrawals from the Collection Account
pursuant to Section 3.05 hereof to reimburse previously unreimbursed Advances
and/or Servicing Advances ("Advance Reimbursement Amounts"). Advance
Reimbursement Amounts (i) shall consist solely of amounts in respect of Advances
and/or Servicing Advances for which the Servicer would be permitted to reimburse
itself in accordance with Section 3.05 hereof, assuming the Servicer had made
the related Advance(s) and/or Servicing Advance(s) and (ii) shall not consist of
amounts payable to a successor Servicer in accordance with Section 3.05 hereof
to the extent permitted under Section 3.30(e) below.
(c) Notwithstanding the existence of an Advance Facility, the
Servicer, on behalf of the Advance Financing Person, and the Servicer's
Assignee, shall be entitled to receive reimbursements of Advances and/or
Servicing Advances in accordance with Section 3.05 hereof, which entitlement may
be terminated by the Advance Financing Person pursuant to a written notice to
the Trustee in the manner set forth in Section 11.05 hereof. Upon receipt of
such written notice, the Servicer shall no longer be entitled to receive
reimbursement for any Advance Reimbursement Amounts and the Servicer's Assignee
shall immediately have the right to receive from the Collection Account all
Advance Reimbursement Amounts.
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Notwithstanding the foregoing, and for the avoidance of doubt, (i) the Servicer
and/or the Servicer's Assignee shall only be entitled to reimbursement of
Advance Reimbursement Amounts hereunder from withdrawals from the Collection
Account pursuant to Section 3.05 of this Agreement and shall not otherwise be
entitled to make withdrawals of, or receive, Advance Reimbursement Amounts that
shall be deposited in the Distribution Account pursuant to Section 3.04(b)
hereof, and (ii) none of the Trustee or the Certificateholders shall have any
right to, or otherwise be entitled to, receive any Advance Reimbursement Amounts
to which the Servicer or Servicer's Assignee, as applicable, shall be entitled
pursuant to Section 3.05 hereof. Without limiting the foregoing, none of the
Trustee or the Certificateholders shall have any right to set off against
Advance Reimbursement Amounts hereunder. An Advance Facility may be terminated
by the joint written direction of the Servicer and the related Advance Financing
Person. Written notice of such termination shall be delivered to the Trustee in
the manner set forth in Section 11.05 hereof. The Trustee shall have no duty or
liability with respect to the calculation of any Advance Reimbursement Amount
and shall be entitled to rely without independent investigation on the Advance
Facility Notice and on such Servicer's report of the amount of Advance
Reimbursement Amounts and Servicing Advance Reimbursement Amounts that were
included in the remittance from such Servicer to the Trustee pursuant to Section
4.07. Such 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 Advance Financing Person. The successor
Servicer shall be entitled to rely on any such information provided by the
predecessor Servicer, and the successor Servicer shall not be liable for any
errors in such information.
(d) [Reserved.]
(e) As between a predecessor Servicer and its Advance Financing
Person, on the one hand, and a successor Servicer and its Advance Financing
Person, if any, on the other hand, Advance Reimbursement Amounts on a
loan-by-loan basis with respect to each Mortgage Loan as to which a Advance
and/or Servicing Advance shall have been made and be outstanding shall be
allocated on a "first-in, first out" basis. In the event the Servicer's Assignee
shall have received some or all of an Advance Reimbursement Amount related to
Advances and/or Servicing Advances that were made by a Person other than such
predecessor Servicer or its related Advance Financing Person in error, then such
Servicer's Assignee shall be required to remit any portion of such Advance
Reimbursement Amount to each Person entitled to such portion of such Advance
Reimbursement Amount. Without limiting the generality of the foregoing, the
Servicer shall remain entitled to be reimbursed by the Advance Financing Person
for all Advances and/or Servicing Advances funded by the Servicer to the extent
the related Advance Reimbursement Amounts have not been assigned or pledged to
such Advance Financing Person or Servicer's Assignee.
(f) For purposes of any certification of a Servicing Officer of the
Servicer made pursuant to Section 4.07(d), any Nonrecoverable Advance referred
to therein may have been made by such Servicer or any predecessor Servicer. In
making its determination that any Advance or Servicing Advance theretofore made
has become a Nonrecoverable Advance, the Servicer shall apply the same criteria
in making such determination regardless of whether such Advance or Servicing
Advance shall have been made by the Servicer or any predecessor Servicer.
(g) The Trustee shall not, as a result of the existence of any Advance
Facility, have any additional responsibility to track or monitor Advance
Reimbursement Amounts or any Advance Facility, and, except as expressly provided
in Section 3.30(c) above, is not and shall not be obligated to make any payment
with respect to any Advance Reimbursement Amount. The Servicer hereby
indemnifies the Trustee, the Trust Fund and any successor Servicer, as
applicable, from and against any claims, losses, liabilities or damages
resulting from any claim by the related Advancing Person, except to
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the extent that such claim, loss, liability or damage resulted from or arose out
of negligence, recklessness or willful misconduct on the part of the Trustee or
the successor Servicer, or failure by the successor Servicer or the Trustee to
remit funds as required by this Agreement or the commission of an act or
omission to act by the successor Servicer or the Trustee, and the passage of any
applicable cure or grace period, such that a Servicer Event of Termination under
this Agreement occurs or such entity is subject to termination for cause under
this Agreement.
(h) Any amendment to this Section 3.30 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 3.30, including
amendments to add provisions relating to a successor Servicer, may be entered
into by the Trustee, the Depositor and the Servicer without the consent of any
Certificateholder, provided such amendment complies with Section 11.01 hereof.
All reasonable costs and expenses (including attorneys' fees) of each party
hereto of any such amendment shall be borne solely by the Servicer. The parties
hereto hereby acknowledge and agree that: (a) the Advances and/or Servicing
Advances financed by and/or pledged to an Advance Financing Person under any
Advance Facility are obligations owed to the Servicer payable only from the cash
flows and proceeds received under this Agreement for reimbursement of Advances
and/or Servicing Advances only to the extent provided herein, and the Trustee
and the Trust are not, as a result of the existence of any Advance Facility,
obligated or liable to repay any Advances and/or Servicing Advances financed by
the Advance Financing Person; (b) the Servicer will be responsible for remitting
to the Advance Financing Person the applicable amounts collected by it as
reimbursement for Advances and/or Servicing Advances funded by the Advance
Financing Person, subject to the provisions of this Agreement; and (c) the
Trustee shall not have any responsibility to track or monitor the administration
of the financing arrangement between the Servicer and any Advance Financing
Person.
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Interest Distributions.
On each Distribution Date, the Trustee shall withdraw from the Distribution
Account any prepayment charges collected on the Mortgage Loans and (A) any
amounts paid by the Seller or the Servicer in respect of prepayment charges
pursuant to this Agreement or (B) any amounts received in respect of any
indemnification paid as a result of a prepayment charge being unenforceable in
breach of the representations and warranties set forth in the Sale Agreement
received during the related Prepayment Period; and distribute such amounts to
the Class P Certificates. On each Distribution Date, for so long as Xxxxxx is
the Servicer of the Mortgage Loans, the Trustee shall distribute to the Holders
of the Class CE-2 Certificates, with respect to each Mortgage Loan and for each
such calendar month, the Excess Servicing Fee. Following such distribution, the
Trustee shall withdraw from the Distribution Account the remaining Interest
Remittance Amount and apply it in the following order of priority (based upon
the Mortgage Loan information provided to it in the Remittance Report, upon
which the Trustee may conclusively rely), the calculations required to be made
by the Trustee, to the extent available:
(i) to the Trustee, the Trustee Fee for such Distribution Date;
(ii) to the Supplemental Interest Trust, any Net Swap Payments
owed to the Swap Counterparty;
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(iii) to the Supplemental Interest Trust, any Swap Termination
Payment owed by the Trust to the Swap Counterparty (other than any Defaulted
Swap Termination Payment);
(iv) concurrently, (1) from the Group I Interest Remittance
Amount, to the Class A-1 Certificates, the applicable Accrued Certificate
Interest for such Distribution Date, and (2) from the Group II Interest
Remittance Amount, to the Class A-2A, Class A-2B, Class A-2C and Class A-2D
Certificates, pro rata, the applicable Accrued Certificate Interest for such
Distribution Date; provided, that if any Interest Remittance Amount for any Loan
Group is insufficient to make the related distributions set forth in this
paragraph, any Interest Remittance Amount relating to the other Loan Group
remaining after payment of the related Accrued Certificate Interest will be
available to cover that shortfall;
(v) concurrently (1) from the Group I Interest Remittance Amount,
to the Class A-1 Certificates, all applicable Interest Carry Forward Amounts for
such Distribution Date, and (2) from the Group II Interest Remittance Amount, to
the Class A-2A, Class A-2B, Class A-2C and Class A-2D Certificates, pro rata,
all applicable Interest Carry Forward Amounts for such Distribution Date;
provided, that if any Interest Remittance Amount for any Loan Group is
insufficient to make the related distributions set forth in this paragraph, any
Interest Remittance Amount relating to the other Loan Group remaining after
payment of the related Interest Carry Forward Amount will be available to cover
that shortfall;
(vi) to the Class M-1 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(vii) to the Class M-2 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(viii) to the Class M-3 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(ix) to the Class M-4 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(x) to the Class M-5 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(xi) to the Class M-6 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(xii) to the Class M-7 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(xiii) to the Class M-8 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(xiv) to the Class B-1 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(xv) to the Class B-2 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
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(xvi) to the Class B-3 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date; and
(xvii) the amount, if any, of the Interest Remittance Amount
remaining after application with respect to the priorities set forth above will
be applied as described under Section 4.02(b) hereof.
The Trustee Fee shall be paid from the Group I Interest Remittance Amount
and the Group II Interest Remittance Amount pro rata based on the principal
balance of the Mortgage Loans in each Loan Group.
Section 4.02 Distributions of Principal and Monthly Excess Cashflow
Amounts.
(a) On each Distribution Date, the Trustee shall make the following
distributions in the following order of priority (based upon the Mortgage Loan
information provided to it in the Remittance Report), and the calculations
required to be made by the Trustee, to the extent of the Principal Distribution
Amount:
(i) to the Supplemental Interest Trust, any Net Swap Payments
owed to the Swap Counterparty, to the extent not paid pursuant to Section
4.01(ii);
(ii) to the Supplemental Interest Trust, any Swap Termination
Payment owed by the Trust to the Swap Counterparty (other than any Defaulted
Swap Termination Payment), to the extent not paid pursuant to Section 4.01(iii);
(iii) before the Stepdown Date or on each Distribution Date with
respect to which a Trigger Event is in effect, sequentially, as follows:
(A) the Group I Principal Distribution Amount will be
distributed (1) to the Class A-1 Certificates until the Certificate Principal
Balance thereof has been reduced to zero and (2) after distributions pursuant to
Section 4.02(a)(iii)(B) below, sequentially to the Class A-2A, Class A-2B, Class
A-2C and Class A-2D Certificates, in that order, until their respective
Certificate Principal Balances have been reduced to zero;
(B) the Group II Principal Distribution Amount will be
distributed (1) sequentially to the Class A-2A, Class A-2B, Class A-2C and Class
A-2D Certificates, in that order, until their respective Certificate Principal
Balances have been reduced to zero and (2) after distributions pursuant to
Section 4.02(a)(iii)(A) above, to the Class A-1 Certificates until the
Certificate Principal Balance thereof has been reduced to zero; and
(C) any Group I Principal Distribution Amount and Group II
Principal Distribution Amount remaining after distributions pursuant to Sections
4.02(a)(iii)(A) and 4.02(a)(iii)(B) above will be distributed as follows:
(1) to the Class M-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(2) to the Class M-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
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(3) to the Class M-3 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(4) to the Class M-4 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(5) to the Class M-5 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(6) to the Class M-6 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(7) to the Class M-7 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(8) to the Class M-8 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(9) to the Class B-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(10) to the Class B-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(11) to the Class B-3 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(iv) any amount of the Principal Distribution Amount remaining
after making all of the distributions in clauses (i) through (iii) shall be
applied as set forth in Section 4.02(b).
(v) on or after the Stepdown Date and as long as a Trigger Event
is not in effect sequentially, as follows:
(A) the Group I Principal Distribution Amount will be
distributed (1) to the Class A-1 Certificates until the Certificate Principal
Balance thereof has been reduced to zero and (2) after distributions pursuant to
Section 4.02(a)(v)(B) below, sequentially to the Class A-2A, Class A-2B, Class
A-2C and Class A-2D Certificates, in that order, until their respective
Certificate Principal Balances have been reduced to zero;
(B) the Group II Principal Distribution Amount will be
distributed (1) sequentially to the Class A-2A, Class A-2B, Class A-2C and Class
A-2D Certificates, in that order, until the respective Certificate Principal
Balances have been reduced to zero and (2) and distributions pursuant to Section
4.02(a)(v)(A) above, to the Class A-1 Certificates until the Certificate
Principal Balance thereof has been reduced to zero;
(C) any Group I Principal Distribution Amount and Group II
Principal Distribution Amount remaining after distributions pursuant to Sections
4.02(a)(v)(A) and 4.02(a)(v)(B) above will be distributed as follows:
(1) sequentially as follows: (1) to the Class M-1
Certificates, the Class M-1/M-2/M-3 Principal Distribution Amount,
until its Certificate
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Principal Balance has been reduced to zero, (2) to the Class M-2
Certificates, the remaining Class M-1/M-2/M-3 Principal Distribution
Amount, until its Certificate Principal Balance has been reduced to
zero and (3) to the Class M-3 Certificates, the remaining Class
M-1/M-2/M-3 Principal Distribution Amount, until its Certificate
Principal Balance has been reduced to zero;
(2) to the Class M-4 Certificates, the Class M-4 Principal
Distribution Amount, until the Certificate Principal Balance thereof
has been reduced to zero;
(3) to the Class M-5 Certificates, the Class M-5 Principal
Distribution Amount, until the Certificate Principal Balance thereof
has been reduced to zero;
(4) to the Class M-6 Certificates, the Class M-6 Principal
Distribution Amount, until the Certificate Principal Balance thereof
has been reduced to zero;
(5) to the Class M-7 Certificates, the Class M-7 Principal
Distribution Amount, until the Certificate Principal Balance thereof
has been reduced to zero;
(6) to the Class M-8 Certificates, the Class M-8 Principal
Distribution Amount, until the Certificate Principal Balance thereof
has been reduced to zero;
(7) to the Class B-1 Certificates, the Class B-1 Principal
Distribution Amount, until the Certificate Principal Balance thereof
has been reduced to zero;
(8) to the Class B-2 Certificates, the Class B-2 Principal
Distribution Amount, until the Certificate Principal Balance thereof
has been reduced to zero;
(9) to the Class B-3 Certificates, the Class B-3 Principal
Distribution Amount, until the Certificate Principal Balance thereof
has been reduced to zero; and
(D) any amount of the Principal Distribution Amount
remaining after making all of the distributions in Section 4.02(a)(v)(A) through
Section 4.02(a)(v)(C) above shall be applied as set forth in Section 4.02(b).
(b) On each Distribution Date, any Monthly Excess Cashflow Amount
shall be distributed, to the extent available, in the following order of
priority (the "Monthly Excess Cashflow Allocation") on such Distribution Date:
(i) to pay any remaining unpaid Accrued Certificate Interest for
such Distribution Date, pro rata, among the Class A Certificates;
(ii) to pay any remaining Interest Carry Forward Amounts for the
classes of Class A Certificates, if any, pro rata, among the Class A
Certificates;
(iii) to pay the Extra Principal Distribution Amount for such
Distribution Date in accordance with Section 4.02(a);
(iv) to pay any remaining unpaid Accrued Certificate Interest for
such Distribution Date for the Class M-1 Certificates;
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(v) to pay the remaining Class M-1 Interest Carry Forward Amount,
if any;
(vi) to pay the Class M-1 Realized Loss Amortization Amount for
such Distribution Date;
(vii) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class M-2 Certificates;
(viii) to pay the remaining Class M-2 Interest Carry Forward
Amount, if any;
(ix) to pay the Class M-2 Realized Loss Amortization Amount for
such Distribution Date;
(x) to pay any remaining unpaid Accrued Certificate Interest for
such Distribution Date for the Class M-3 Certificates;
(xi) to pay the remaining Class M-3 Interest Carry Forward
Amount, if any;
(xii) to pay the Class M-3 Realized Loss Amortization Amount for
such Distribution Date;
(xiii) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class M-4 Certificates;
(xiv) to pay the Interest Carry Forward Amount for the Class M-4
Certificates, if any;
(xv) to pay the Class M-4 Realized Loss Amortization Amount for
such Distribution Date;
(xvi) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class M-5 Certificates;
(xvii) to pay the Interest Carry Forward Amount for the Class M-5
Certificates, if any;
(xviii) to pay the Class M-5 Realized Loss Amortization Amount
for such Distribution Date;
(xix) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class M-6 Certificates;
(xx) to pay the Interest Carry Forward Amount for the Class M-6
Certificates, if any;
(xxi) to pay the Class M-6 Realized Loss Amortization Amount for
such Distribution Date;
(xxii) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class M-7 Certificates;
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(xxiii) to pay the Interest Carry Forward Amount for the Class
M-7 Certificates, if any;
(xxiv) to pay the Class M-7 Realized Loss Amortization Amount for
such Distribution Date;
(xxv) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class M-8 Certificates;
(xxvi) to pay the Interest Carry Forward Amount for the Class M-8
Certificates, if any;
(xxvii) to pay the Class M-8 Realized Loss Amortization Amount
for such Distribution Date;
(xxviii) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class B-1 Certificates;
(xxix) to pay the remaining Class B-1 Interest Carry Forward
Amount, if any;
(xxx) to pay the Class B-1 Realized Loss Amortization Amount for
such Distribution Date;
(xxxi) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class B-2 Certificates;
(xxxii) to pay the remaining Class B-2 Interest Carry Forward
Amount, if any;
(xxxiii) to pay the Class B-2 Realized Loss Amortization Amount
for such Distribution Date;
(xxxiv) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class B-3 Certificates;
(xxxv) to pay the remaining Class B-3 Interest Carry Forward
Amount, if any;
(xxxvi) to pay the Class B-3 Realized Loss Amortization Amount
for such Distribution Date;
(xxxvii) to the Class A Certificates, pro rata, the aggregate
amount of any Net WAC Carryover Amount due to such Certificates;
(xxxviii) sequentially, to the Class X-0, Xxxxx X-0, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class B-1, Class B-2 and
Class B-3 Certificates, in that order, any Net WAC Carryover Amount due to such
Certificates;
(xxxix) to the Supplemental Interest Trust, to fund any Defaulted
Swap Termination Payment; and
(xl) to the Class CE-1 Certificates, the Class CE-1 Distributable
Amount for such Distribution Date.
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On each Distribution Date, there shall be distributed to the Holders of the
Class R Certificates any remaining amount in the Distribution Account on such
date after the application pursuant to Sections 4.01, 4.02(a) and
4.02(b)(i)-(xl).
(c) [Reserved].
(d) Any amounts distributed to the Certificates in respect of Excess
Interest (other than from proceeds of the Swap Agreement or the Cap Agreement)
shall first be deemed distributed by REMIC 2 as a distribution in respect of the
REMIC 2 CE-1 Interest, to REMIC CE-1 and distributed thereby as a distribution
to the REMIC CE-1 CE-1 Interest, and then distributed to such Certificates as
payments on notional principal contracts. The Trustee shall account for the
rights to receive Excess Interest as rights in a limited recourse notional
principal contract written by the Holders of the Class CE-1 Certificates. For
federal information reporting purposes, such rights shall be assigned a value of
zero.
(e) Any amounts distributed to the Class B-1 Certificates pursuant to
Section 4.01 or this Section 4.02, other than payments in respect of Excess
Interest, shall be deemed distributed by REMIC 2 to REMIC B-1 in respect of the
REMIC 2 B-1 Interest, and distributed thereby as a distribution in respect of
the REMIC B-1 B-1 Interest. Any amounts distributed to the Class B-2
Certificates pursuant to Section 4.01 or this Section 4.02, other than payments
in respect of Excess Interest, shall be deemed distributed by REMIC 2 to REMIC
B-2 in respect of the REMIC 2 B-2 Interest, and distributed thereby as a
distribution in respect of the REMIC B-2 B-2 Interest. Any amounts distributed
to the Class B-3 Certificates pursuant to Section 4.01 or this Section 4.02,
other than payments in respect of Excess Interest, shall be deemed distributed
by REMIC 2 to REMIC B-3 in respect of the REMIC 2 B-3 Interest, and distributed
thereby as a distribution in respect of the REMIC B-3 B-3 Interest. Any amounts
distributed to the Class CE-1 Certificates pursuant to Section 4.01 or this
Section 4.02, other than payments in respect of Class Payment Shortfalls and
other than from proceeds of the Swap Agreement or Cap Agreement, shall be deemed
distributed by REMIC 2 to REMIC CE-1 in respect of the REMIC 2 CE-1 Interest,
and distributed thereby as a distribution in respect of the REMIC CE-1 CE-1
Interest. Any amounts distributed to the Class CE-2 Certificates pursuant to
Section 4.01 or this Section 4.02 shall be deemed distributed by REMIC 2 to
REMIC CE-2 in respect of the REMIC 2 CE-2 Interest, and distributed thereby as a
distribution in respect of the Class CE-2 Certificates.
(f) [Reserved].
(g) [Reserved].
(h) The Trustee is hereby directed by the Depositor to execute the
Swap Agreement and the Cap Agreement on behalf of the Supplemental Interest
Trust in the form presented to it by the Depositor and shall have no
responsibility for the contents of the Swap Agreement or the Cap Agreement,
including, without limitation, the representations and warranties contained
therein. Any funds payable by the Trustee under the Swap Agreement or the Cap
Agreement at closing shall be paid by the Depositor. Notwithstanding anything to
the contrary contained herein or contained in the Swap Agreement or the Cap
Agreement, except as set forth in paragraph 2 of the Swap Agreement or in Part 1
of the Cap Agreement, the Trust shall not be required to make any payments to
the counterparty under the Swap Agreement or the Cap Agreement.
(i) On the Closing Date, the Trustee shall establish and maintain
in its name, the following two separate accounts for the benefit of the Issuing
Entity and the Certificateholders: (1) the "Cap Account", which is the account
into which all Cap Payments will be deposited and from which all payments to the
Cap Counterparty will be made; and (2) the "Swap Account", which is the account
into which all Net Swap Payments and Swap Termination Payments received from the
Swap Counterparty will be deposited and from which all Net Swap Payments, Swap
Termination Payments and Defaulted Swap Termination Payments will be made.
(ii) On or prior to the Distribution Date in October 2010,
amounts, if any, received by the Trustee for the benefit of the Trust Fund in
respect of the Cap Agreement shall be deposited by the Trustee into the Cap
Account and will be used to make payments on the related Class A and Class M
Certificates to the extent provided in the immediately
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preceding paragraph. With respect to any Distribution Date on or prior to the
Distribution Date in October 2010, the amount, if any, payable by the Cap
Counterparty under the Cap Agreement will equal the product of (i) the excess,
if any, of (x) one-month LIBOR (as determined pursuant to the Cap Agreement) as
of that Distribution Date, over (y) the strike rate with respect to such
Distribution Date as shown in the schedule to the Cap Agreement and (ii) an
amount equal to the lesser of (a) the notional amount set forth in the Cap
Agreement for such Distribution Date and (b) the excess, if any, of (A) the
aggregate Certificate Principal Balance of the Class A and Class M Certificates
(prior to taking into account any distributions on such Distribution Date) over
(B) the then current notional amount set forth under "Notional Amount" in the
schedule attached to the Swap Agreement, and (iii) a fraction, the numerator of
which is equal to the actual number of days in the related calculation period
(as defined in the Cap Agreement) and the denominator of which is 360.
(iii) Amounts on deposit in the Swap Account or the Cap Account
will remain uninvested pending distribution to Certificateholders.
(iv) The Cap Agreement will terminate following the Distribution
Date in October 2010.
(i) A separate trust is hereby established (the "Supplemental
Interest Trust"), the corpus of which shall be held by the Trustee for the
benefit of the holders of the Class A and Class M Certificates as a segregated
subtrust of the Trust Fund. The Supplemental Interest Trust shall be a party to
the Swap Agreement and the Cap Agreement and shall contain the Swap Account and
the Cap Account, which shall each be an Eligible Account, and funds deposited
therein shall be held separate and apart from, and shall not be commingled with,
any other moneys, including, without limitation, other moneys of the Trustee
held pursuant to this Agreement. In no event shall any funds deposited in either
the Swap Account or the Cap Account be credited to or made available to any
other account of the Trust Fund. The records of the Trustee shall at all times
reflect that the Supplemental Interest Trust is a subtrust of the Trust Fund,
the assets of which are segregated from other assets of the Trust Fund.
The Trustee shall enforce all of the rights of the Supplemental Interest
Trust and exercise any remedies under the Swap Agreement. In the event the Swap
Agreement is terminated as a result of the designation by either party thereto
of an Early Termination Date (as defined in the Swap Agreement), the Depositor
shall find a replacement counterparty to enter into a replacement swap agreement
utilizing the amounts of the net Swap Termination Payments received.
For each Distribution Date, through and including the Distribution Date in
October 2010, the Trustee shall, based on the Significance Estimate (which shall
be provided to the Trustee by the Depositor within five Business Days prior to
the Distribution Date), calculate the Significance Percentage of the Swap
Agreement. If on any such Distribution Date, the Significance Percentage is
equal to or greater than 9%, the Trustee shall promptly notify the Depositor and
the Depositor, on behalf of the Trustee, shall obtain the financial information
required to be delivered by the Swap Counterparty pursuant to the terms of the
Swap Agreement. If, on any succeeding Distribution Date through and including
the Distribution Date in October 2010, the Significance Percentage is equal to
or greater than 10%, the Trustee shall promptly notify the Depositor and the
Depositor shall, within five Business Days of such Distribution Date, deliver to
the Trustee the financial information provided to it by the Swap Counterparty
for inclusion in the Form 10-D relating to such Distribution Date.
Any Swap Termination Payment received by the Trustee shall be deposited in
the Swap Account and shall be used to make any upfront payment required under a
replacement swap agreement and any
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upfront payment received from the counterparty to a replacement swap agreement
shall be used to pay any Swap Termination Payment owed to the Swap Counterparty.
Notwithstanding anything contained herein, in the event that a replacement
swap agreement cannot be obtained within 30 days after receipt by the Trustee of
the Swap Termination Payment paid by the terminated Swap Counterparty, the
Trustee shall deposit such Swap Termination Payment into a separate, segregated
non-interest bearing subtrust established by the Trustee and the Trustee shall,
on each Distribution Date following receipt of such Swap Termination Payment,
withdraw from such subtrust, an amount equal to the Net Swap Payment, if any,
that would have been paid to the Supplemental Interest Trust by the original
Swap Counterparty (computed in accordance with the original Swap Agreement) and
distribute such amount in accordance with this Section 4.02(i). Any such
subtrust shall not be an asset of any REMIC. Any amounts remaining in such
subtrust shall be distributed to the holders of the Class CE-1 Certificates on
the Distribution Date following the earlier of (i) the termination of the Trust
Fund pursuant to Section 10.01 and (ii) the Distribution Date in October 2010.
On any Distribution Date, any Swap Termination Payments or Net Swap
Payments owed to the Swap Counterparty will be paid out of, or any Net Swap
Payments or Swap Termination Payments received from the Swap Counterparty will
be deposited into, the Swap Account. The Supplemental Interest Trust will not be
an asset of any REMIC. Funds in the Swap Account or the Cap Account within the
Supplemental Interest Trust shall be distributed in the following order of
priority by the Trustee:
(i) to the Swap Counterparty, from the Swap Account only, all Net
Swap Payments, if any, owed to the Swap Counterparty for such Distribution Date;
(ii) to the Swap Counterparty, from the Swap Account only, any
Swap Termination Payment, other than a Defaulted Swap Termination Payment, if
any, owed to the Swap Counterparty;
(iii) to each class of the Class A Certificates, on a pro rata
basis, any Accrued Certificate Interest with respect to such class to the extent
unpaid pursuant to Section 4.01 and Section 4.02(b);
(iv) to each class of the Class A Certificates, on a pro rata
basis, any Interest Carry Forward Amount with respect to such class to the
extent unpaid pursuant to Section 4.01 and Section 4.02(b);
(v) sequentially, to the Class M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the Class
M-5 Certificates, the Class M-6 Certificates, the Class M-7 Certificates and the
Class M-8 Certificates, in that order, any Accrued Certificate Interest for such
class to the extent unpaid pursuant to Section 4.01 and Section 4.02(b);
(vi) sequentially, to the Class M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the Class
M-5 Certificates, the Class M-6 Certificates, the Class M-7 Certificates and the
Class M-8 Certificates, in that order, any Interest Carry Forward with respect
to such class to the extent unpaid pursuant to Section 4.01 and Section 4.02(b);
(vii) to the Class A, Class M and Class B Certificates, to pay
principal as described and in the same manner and order of priority as set forth
in Section 4.02(a) in order to maintain the Targeted Overcollateralization
Amount, and after giving effect to distributions from Principal Distribution
Amount for each such Class;
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(viii) sequentially, to each Class of the Class M-1, Class M-2,
Class M-3, Class M-4, Class M-5, Class M-6, Class M-7 and Class M-8
Certificates, in that order, any remaining Unpaid Realized Loss Amount for such
Distribution Date;
(ix) to the Class A, on a pro rata basis, any Net WAC Carryover
Amount to the extent not paid pursuant to Section 4.02(b);
(x) sequentially, to the Class M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the Class
M-5 Certificates, the Class M-6 Certificates, the Class M-7 Certificates and the
Class M-8 Certificates, any Net WAC Carryover Amount to the extent not paid
pursuant to Section 4.02(b);
(xi) to the Swap Counterparty, from the Swap Account only, any
Defaulted Swap Termination Payment owed to the Swap Counterparty to the extent
not already paid; and
(xii) to the Class CE-1 Certificates any remaining amount.
Notwithstanding the foregoing, however, the sum of all cumulative amounts
distributed pursuant to clauses (vii) and (viii) above shall not exceed the
cumulative Realized Losses incurred. Upon termination of the Trust Fund, any
amounts remaining in the Swap Account or the Cap Account within the Supplemental
Interest Trust shall be distributed pursuant to the priorities set forth in this
Section 4.02(i).
With respect to the failure of the Swap Counterparty to perform any of its
obligations under the Swap Agreement, the breach by the Swap Counterparty of any
of its representations and warranties made pursuant to the Swap Agreement, or
the termination of the Swap Agreement, the Trustee shall send any notices and
make any demands required hereunder.
Section 4.03 Allocation of Losses.
Realized Losses shall be allocated first against any Initial
Overcollateralization Amount remaining and second to the Subsequent
Overcollateralization Amount, until the Overcollateralization Amount has been
reduced to zero. If, after giving effect to the distribution of the Principal
Distribution Amount on any Distribution Date the aggregate Certificate Principal
Balance of the Class A, Class M and Class B Certificates exceeds the Pool
Balance as of the end of the related Collection Period, such excess will be
allocated against the Class B-3, Class B-2, Class B-1, Class M-8, Class M-7,
Class M-6, Class M-5, Class M-4, Class M-3, Class M-2 and Class M-1
Certificates, in that order, until the respective Certificate Principal Balances
thereof are reduced to zero.
Special Hazard Losses will be allocated as described above, provided that
if the cumulative amount of such losses, as of any date of determination,
exceeds the greatest of (i) 1.0% of the Pool Balance as of the Cut-off Date,
(ii) two times the amount of the principal balance of the largest Mortgage Loan
as of the date of determination and (iii) an amount equal to the aggregate
principal balances of the Mortgage Loans in the largest zip-code concentration
in the State of California as of the date of determination, such losses will be
allocated among the Class X-0, Xxxxx X-0, Class M-3, Class M-4, Class M-5, Class
M-6, Class M-7, Class M-8, Class B-1, Class B-2 and Class B-3 Certificates, pro
rata, based on their respective Certificate Principal Balances. For the
avoidance of doubt, any losses allocated as Special Hazard Losses shall not be
reimbursed pursuant to Section 4.02(b) as Realized Loss Amortization Amounts.
Section 4.04 Method of Distribution.
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The Trustee shall make distributions in respect of a Distribution Date to
each Certificateholder of record on the related Record Date (other than as
provided in Section 10.01 respecting the final distribution), in the case of
Certificateholders of the Certificates, by wire transfer in immediately
available funds to the account of the Person entitled thereto if such Person
shall have so notified the Trustee in writing at least five Business Days prior
to the Record Date immediately prior to such Distribution Date and is the
registered owner of such Certificates the aggregate initial Certificate
Principal Balance or Notional Amount of which is in excess of $5,000,000, or by
check mailed by first class mail to the address of the Person entitled thereto,
as such name and address shall appear on the Certificate Register, provided that
the Trustee may deduct a reasonable wire transfer fee from any payment made by
wire transfer. Distributions among Certificateholders shall be made in
proportion to the Percentage Interests evidenced by the Certificates held by
such Certificateholders.
Section 4.05 Distributions on Book-Entry Certificates.
Each distribution with respect to a Book-Entry Certificate shall be paid to
the Depository, which shall credit the amount of such distribution to the
accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Certificates. None of the Trustee, the Depositor, the Servicer or the Seller
shall have any responsibility therefor except as otherwise provided by
applicable law.
Section 4.06 Statements.
(a) On each Distribution Date, based, as applicable, on the Mortgage
Loan information contained in the Remittance Report, the Trustee shall prepare
and post on its website at xxx.xxxxxx.xxx/xxx, a statement as to the
distributions made on such Distribution Date:
(i) the amount of the distribution made on such Distribution Date
to the Holders of each Class of Certificates allocable to principal, separately
identified;
(ii) the applicable Record Date, accrual date and Determination
Date;
(iii) the amount of the distribution made on such Distribution
Date to the Holders of each Class of Certificates allocable to interest or Class
CE-1 Distributable Amount, separately identified;
(iv) the Overcollateralization Amount, the Overcollateralization
Release Amount, the Overcollateralization Deficiency and the Targeted
Overcollateralization Amount as of such Distribution Date and the Monthly Excess
Interest Amount and Monthly Excess Cashflow Amount for such Distribution Date;
(v) the aggregate amount of servicing compensation received by
the Servicer during the related Collection Period;
(vi) the aggregate amount of Advances for the related Collection
Period;
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(vii) the Pool Balance at the close of business at the end of the
related Collection Period;
(viii) the number, weighted average remaining term to maturity
and weighted average Mortgage Interest Rate of the Mortgage Loans as of the
related Due Date;
(ix) the number and aggregate unpaid principal balance of
Mortgage Loans (a) 31 to 60 days Delinquent, (b) 61 to 90 days Delinquent, (c)
91 or more days Delinquent, (d) as to which foreclosure proceedings have been
commenced and (e) in bankruptcy as of the close of business on the last day of
the calendar month preceding such Distribution Date;
(x) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the loan number of such Mortgage Loan, the
unpaid principal balance and the Principal Balance of such Mortgage Loan as of
the date it became an REO Property;
(xi) the book value of any REO Property as of the close of
business on the last Business Day of the calendar month preceding the
Distribution Date, and, cumulatively, the total number and cumulative principal
balance of all REO Properties as of the close of business of the last day of the
preceding Collection Period;
(xii) the aggregate amount of Principal Prepayments made during
the related Prepayment Period;
(xiii) the aggregate amount of prepayment penalties collected
(including amounts deposited in connection with the full or partial waiver of
such prepayment penalties pursuant to Section 3.01) during the related
Collection Period and the amounts thereof allocable to the Class P Certificates;
(xiv) the aggregate amount of Realized Losses incurred during the
related Collection Period and the cumulative amount of Realized Losses;
(xv) any material modifications, extensions or waivers to the
terms, fees, penalties or payments of the related Mortgage Loans;
(xvi) the Certificate Principal Balance, or Notional Amount, as
applicable, of each Class of Certificates, after giving effect to the
distributions, and allocations of Realized Losses or Applied Realized Loss
Amounts, as applicable, made on such Distribution Date, separately identifying
any reduction thereof due to allocations of Realized Losses or Applied Realized
Loss Amounts;
(xvii) the Accrued Certificate Interest in respect of each Class
of the Class A, Class M and Class B Certificates for such Distribution Date,
separately identifying the portions thereof attributable to Net WAC Carryover
Amounts, and the respective portions thereof, if any, remaining unpaid following
the distributions made in respect of such Certificates on such Distribution
Date;
(xviii) the aggregate amount of any Prepayment Interest
Shortfalls for such Distribution Date, to the extent not covered by payments by
the Servicer pursuant to Section 3.23;
(xix) the amount of any Net Swap Payments or Swap Termination
Payments paid or received by the Supplemental Interest Trust pursuant to the
Swap Agreement and the amount of any Defaulted Swap Termination Payments paid by
the Supplemental Interest Trust;
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(xx) the amount, if any, received pursuant to the Cap Agreement
and the amount thereof, if any, to be paid to each Class of Certificates;
(xxi) the amount of the Trustee Fee paid;
(xxii) the Net WAC Carryover Amounts distributed on such
Distribution Date;
(xxiii) any Overcollateralization Deficiency after giving effect
to the distribution of principal on such Distribution Date;
(xxiv) whether a Trigger Event has occurred and is continuing,
and the cumulative Realized Losses, as a percentage of the original Pool
Balance;
(xxv) the Available Funds;
(xxvi) the rate at which interest accrues for each Class of
Certificates for such Distribution Date;
(xxvii) the Liquidation Report for such Distribution Date;
(xxviii) the aggregate Principal Balance of Mortgage Loans
purchased by the Servicer or Seller during the related Collection Period and
indicating the Section of this Agreement requiring or allowing the purchase of
each such Mortgage Loan;
(xxix) the aggregate Principal Balance of the Mortgage Loans
repurchased by the Servicer (or an affiliate) during the related Collection
Period in connection with Section 3.16;
(xxx) the amount distributed to the Class CE-1, Class CE-2, Class
P, Class R and Class R-X Certificates;
(xxxi) the related Distribution Date; and
(xxxii) the amount of cash received with respect to the related
accrual period.
Parties that are unable to use xxx.xxxxxx.xxx/xxx are entitled to have a
paper copy mailed to them via first class mail by calling the Trustee at (800)
934-6802 and indicating such. The Trustee shall have the right to change the way
such statements 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 may fully rely upon and shall have no liability with respect to
information with respect to the Mortgage Loans provided by the Servicer.
In the case of information furnished pursuant to subclauses (i), (iii) and
(iv) above, the amounts shall be expressed in a separate section of the report
as a dollar amount for each Class for each $1,000 original dollar amount as of
the Cut-off Date.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Certificateholder of a Regular Certificate, if requested in
writing by such Person, such information as is reasonably necessary to provide
to such Person a statement containing the information set forth in subclauses
(i), (iii), (xvii) and
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(xxii) above, 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 prepared and furnished by the Trustee to
Certificateholders pursuant to any requirements of the Code as are in force from
time to time.
(c) On each Distribution Date, the Trustee shall make available to the
Residual Certificateholders a copy of the reports made available to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be prepared and furnished to Residual
Certificateholders by the Trustee pursuant to any requirements of the Code as
from time to time in force.
Section 4.07 Remittance Reports; Advances.
(a) On the second Business Day following each Determination Date but
in no event less than four Business Days prior to the related Distribution Date,
the Servicer shall deliver to the Trustee by telecopy (or by such other means as
the Servicer and the Trustee may agree from time to time) a Remittance Report
with respect to the related Distribution Date. On the same date, the Servicer
shall forward to the Trustee by overnight mail a computer readable magnetic tape
or diskette or in such other medium as may be agreed between the Servicer and
the Trustee containing the information set forth in such Remittance Report with
respect to the related Distribution Date. Not later than the close of business
New York time on the Servicer Remittance Date, the Servicer shall deliver or
cause to be delivered to the Trustee in addition to the information provided on
the Remittance Report, such other information reasonably available to it with
respect to the Mortgage Loans as the Trustee may reasonably request or order in
order for the Trustee to perform the calculations necessary to make the
distributions contemplated by Section 4.01, 4.02 and 4.03 and to prepare the
statements to Certificateholders contemplated by Section 4.06. The Trustee shall
not be responsible to recompute, recalculate or verify any information provided
to it by the Servicer.
(b) The amount of Advances to be made by the Servicer for any
Distribution Date shall equal, subject to Section 4.07(d), the sum of (i) the
aggregate amount of Monthly Payments (net of the related Servicing Fee), due
during the related Collection Period in respect of the Mortgage Loans, which
Monthly Payments were delinquent on a contractual basis as of the close of
business on the related Determination Date and (ii) with respect to each REO
Property, which REO Property was acquired during or prior to the related
Prepayment Period and as to which such REO Property an REO Disposition did not
occur during the related Prepayment Period, an amount equal to the excess, if
any, of the interest portion of Monthly Payments (net of the related Servicing
Fee) that would have been due on the related Due Date in respect of the related
Mortgage Loans, over the net income from such REO Property deposited in the
Collection Account pursuant to Section 3.13 for distribution on such
Distribution Date. For purposes of the preceding sentence, the Monthly Payment
on each Balloon Mortgage Loan with a delinquent Balloon Payment is equal to the
assumed monthly payment that would have been due on the related Due Date based
on the original principal amortization schedule for such Balloon Mortgage Loan.
The Servicer shall not be required to make any Advances with respect to the
principal portion of the Monthly Payments that would have been due on the
related Due Date with respect to Second Lien Mortgage Loans and shall not make
any Advances with respect to the principal portion of the Monthly Payments that
would have been due on the related Due Date with respect to REO Properties. The
Servicer will not advance shortfalls in interest collections due to bankruptcy
proceedings or the application of the Relief Act.
On or before the close of business New York time on the Servicer Remittance
Date, the Servicer shall remit in immediately available funds to the Trustee for
deposit in the Distribution Account an
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amount equal to the aggregate amount of Advances, if any, to be made in respect
of the Mortgage Loans and REO Properties for the related Distribution Date
either (i) from its own funds or (ii) from the Collection Account, to the extent
of funds held therein for future distribution (in which case it will cause to be
made an appropriate entry in the records of the Collection Account that amounts
held for future distribution have been, as permitted by this Section 4.07, used
by the Servicer in discharge of any such Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of Advances to be made
by the Servicer with respect to the Mortgage Loans and REO Properties. 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 amounts held
for future distribution and so used shall be appropriately reflected in the
Servicer's records and replaced by the Servicer by deposit in the Collection
Account on or before any future Servicer Remittance Date to the extent that the
Available Funds for the related Distribution Date (determined without regard to
Advances to be made on the Servicer Remittance Date) shall be less than the
total amount that would be distributed to the Classes of Certificateholders
pursuant to Section 4.01 and 4.02 on such Distribution Date if such amounts held
for future distributions had not been so used to make Advances. The Servicer may
reimburse itself from any amounts in the Collection Account for any prior
Advances or Servicing Advances that have not been reimbursed at the time the
Mortgage Loan is modified. The Trustee will provide notice to the Servicer by
telecopy by the close of business on any Servicer Remittance Date in the event
that the amount remitted by the Servicer to the Trustee on such date is less
than the Advances required to be made by the Servicer for the related
Distribution Date, as set forth in the related Remittance Report.
(c) The obligation of the Servicer to make such Advances is mandatory,
notwithstanding any other provision of this Agreement but subject to (d) below,
and, with respect to any Mortgage Loan or REO Property, shall continue until the
earlier of such time as the Trust acquires title to the related Mortgaged
Property or such Mortgage Loan is paid in full by the Mortgagor or disposed of
by the Trust, or until the recovery of all Liquidation Proceeds thereon.
(d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
Advance would, if made, constitute a Nonrecoverable Advance. The determination
by the Servicer that it has made a Nonrecoverable Advance or that any proposed
Advance, if made, would constitute a Nonrecoverable Advance, shall be evidenced
by an Officers' Certificate of the Servicer delivered to the Depositor and the
Trustee.
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates.
Each of the Class A, Class M, Class B, Class P, Class CE-1, Class
CE-2,Class R and Class R-X Certificates shall be substantially in the forms
annexed hereto as exhibits, and shall, on original issue, be executed by the
Trustee and authenticated and delivered by the Certificate Registrar to or upon
the receipt of a Written Order to Authenticate from the Depositor concurrently
with the sale and assignment to the Trustee of the Trust Fund. Each Class of the
Class A, Class M and Class B Certificates shall be initially evidenced by one or
more Certificates representing a Percentage Interest with a minimum dollar (or
notional amount) denomination of $25,000 and integral multiples of $1 in excess
thereof. The Class P, Class CE-1, Class CE-2 and Class R Certificates are
issuable only in minimum Percentage Interests of 10%. The Class R-X Certificates
are issuable only in minimum Percentage Interests of 50%.
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The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature on behalf of the Trustee by a Responsible 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 Trust, 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
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Certificate Registrar substantially in the form
provided for herein, and such 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. Subject to Section 5.02(c), the Class A, Class M and
Class B Certificates shall be Book-Entry Certificates. The Class P, Class CE-1,
Class CE-2,Class R and Class R-X Certificates shall not be Book-Entry
Certificates but shall be issued in fully registered certificate form.
The Class X-0, X-0 and Class B-3 Certificates sold in offshore transactions
in reliance on Regulation S shall be issued initially in the form of one or more
permanent global certificates in definitive, fully registered form without
interest coupons with the applicable legends set forth in Exhibits X-0-0, X-0-0
and B-3-2 hereto added to the forms of such Certificates (each, a "Book-Entry
Regulation S Global Security"), which shall be deposited on behalf of the
Holders of such Certificates represented thereby with the Certificate Registrar,
as custodian for DTC and registered in the name of a nominee of DTC, duly
executed and authenticated by the Certificate Registrar as hereinafter provided.
The aggregate principal amounts of the Book-Entry Regulation S Global Securities
may from time to time be increased or decreased by adjustments made on the
records of the Certificate Registrar or DTC or its nominee, as the case may be,
as hereinafter provided.
Section 5.02 Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall cause to be kept at the Corporate
Trust Office of the Trustee a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, the Certificate Registrar shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall initially serve as
Certificate Registrar for the purpose of registering Certificates and transfers
and exchanges of Certificates as herein provided. The Trustee as Certificate
Registrar shall be subject to the same standards of care, limitations on
liability and rights to indemnity as the Trustee, and the provisions of Sections
8.01, 8.02, 8.03, 8.04, 8.05, 8.14 and 8.15 shall apply to the Certificate
Registrar to the same extent as they apply to the Trustee. Any Certificate
Registrar appointed in accordance with this Section 5.02(a) may at any time
resign by giving at least 30 days' advance written notice of resignation to the
Trustee, the Servicer and the Depositor, such resignation to become effective
upon appointment of a successor Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of a Residual Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute and the Certificate Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates in authorized denominations and the same aggregate Percentage
Interests, upon surrender of the Certificates to be exchanged at any such office
or agency. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute on behalf of the Trust and the Certificate Registrar shall
authenticate and deliver the Certificates which the Certificateholder making the
exchange is entitled to receive. Every
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Certificate presented or surrendered for registration of transfer or exchange
shall (if so required by the Trustee or the Certificate Registrar) be duly
endorsed by, or be accompanied by a written instrument of transfer satisfactory
to the Trustee and the Certificate Registrar duly executed by, the Holder
thereof or his attorney duly authorized in writing.
(b) Upon original issuance, the Book-Entry Certificates shall be
issued in the form of one or more typewritten certificates, to be delivered to
the Depository, the initial Depository, by, or on behalf of, the Depositor; or
to, and deposited with the Certificate Custodian, on behalf of the Depository,
if directed to do so pursuant to instructions from the Depository. Except as
provided in paragraph (c) below, the Book-Entry Certificates shall at all times
remain registered in the name of the Depository or its nominee and at all times:
(i) registration of such Certificates may not be transferred by the Trustee
except to another Depository; (ii) the Depository shall maintain book-entry
records with respect to the Certificate Owners and with respect to ownership and
transfers of such Certificates; (iii) ownership and transfers of registration of
such Certificates on the books of the Depository shall be governed by applicable
rules established by the Depository; (iv) the Depository may collect its usual
and customary fees, charges and expenses from its Depository Participants; (v)
the Trustee shall for all purposes deal with the Depository as representative of
the Certificate Owners of the Certificates for purposes of exercising the rights
of Holders under this Agreement, and requests and directions for and votes of
such representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; (vi) the Trustee may rely and shall be
fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and Persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners; and (vii) the direct participants of the Depository shall have no rights
under this Agreement under or with respect to any of the Certificates held on
their behalf by the Depository, and the Depository may be treated by the Trustee
and their agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement, the terms of this
Agreement shall control.
(c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Depositor is unable to locate a
qualified successor, (ii) the Depositor, at its sole option elects to terminate
the book-entry system through the Depository or (iii) after the occurrence of a
Servicer Event of Termination, the Certificate Owners of each Class of
Book-Entry Certificates representing Percentage Interests of such Classes
aggregating not less than 51% advises the Trustee and Depository through the
Financial Intermediaries and the Depository Participants in writing that the
continuation of a book-entry system through the Depository to the exclusion of
definitive, fully registered certificates (the "Definitive Certificates") to
Certificate Owners is no longer in the best interests of the Certificate Owners.
Upon surrender to the Certificate Registrar of the Book-Entry Certificates by
the Depository, accompanied by registration instructions from the Depository for
registration, the Trustee shall, at the Depositor's expense, in the case of (ii)
above, or the Seller's expense, in the case of (i) and (iii) above, execute on
behalf of the Trust and the Certificate Registrar shall authenticate the
Definitive Certificates. Neither the Depositor nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
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shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates, the Trustee, the Certificate Registrar, the Servicer,
any Paying Agent and the Depositor shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
(d) No transfer, sale, pledge or other disposition of any Private
Certificate shall be made unless such disposition is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws or is made in accordance with
the 1933 Act and laws. In the event of any such transfer, other than the initial
transfer of the Private Certificates by the Depositor, (i) unless such transfer
is made in reliance upon Rule 144A (as evidenced by the investment letter
delivered to the Certificate Registrar, in substantially the form attached
hereto as Exhibit J) under the 1933 Act, the Certificate Registrar and the
Depositor may require a written Opinion of Counsel (which may be in-house
counsel) acceptable to and in form and substance reasonably satisfactory to the
Certificate Registrar and the Depositor that such transfer may be made pursuant
to an exemption, describing the applicable exemption and the basis therefor,
from the 1933 Act or is being made pursuant to the 1933 Act, which Opinion of
Counsel shall not be an expense of the Certificate Registrar, the Trustee or the
Depositor or (ii) the Certificate Registrar shall require the transferor to
execute a transferor certificate (in substantially the form attached hereto as
Exhibit L) and the transferee to execute an investment letter (in substantially
the form attached hereto as Exhibit J) acceptable to and in form and substance
reasonably satisfactory to the Depositor and the Certificate Registrar
certifying to the Depositor and the Certificate Registrar the facts surrounding
such transfer, which investment letter shall not be an expense of the
Certificate Registrar or the Depositor. The Holder of a Private Certificate
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Certificate Registrar and the Depositor 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 Trustee, the Depositor, the Certificate
Registrar 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
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.
The beneficial ownership (as determined for federal income tax purposes) of
a Class P or Class CE-1 Certificate shall not be transferred to a non-United
States Person unless the Certificate Registrar has received, in the manner
required by applicable Treasury regulations (and with all required attachments,
including, where the non-United States Person is providing a Form X-0XXX, Xxxxx
X-0XXX, X-0XXX or W-9 from all persons treated as beneficially owning an
interest in the Class CE-1 or Class P Certificate through such non-U.S. Person
either directly, through an intermediary or through another entity that is
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treated as a partnership for U.S. federal income tax purposes), a properly
completed Internal Revenue Service Form W-8IMY, Form W-8BEN, Form W-8EXP or Form
W-8ECI from such non-United States Person. No Class CE-1 Certificate may be
pledged or used as collateral for any obligation if it would cause any portion
of the Trust Fund to be treated as a taxable mortgage pool under Section 7701(i)
of the Code.
No transfer of a Certificate that is neither an ERISA-Restricted
Certificate nor a Residual Certificate shall be registered unless the Trustee
and the Certificate Registrar shall have received a representation substantially
in the form of Exhibit I hereto that either (i) the transferee is not, and is
not acting for, on behalf of or with any assets of, an employee benefit plan or
other arrangement subject to Title I of ERISA or plan subject to Section 4975 of
the Code, or (ii) until the termination of the Swap Agreement, the acquisition
and holding of such Certificate are eligible for exemptive relief under any of
Section 408(b)(17) of ERISA or Section 4975(d)(20) of the Code, Prohibited
Transaction Class Exemption ("PTCE") 00-00, XXXX 00-0, XXXX 91-38, PTCE 95-60 or
PTCE 96-23, each as it may be amended from time to time.
No transfer of an ERISA-Restricted Certificate or a Residual Certificate
shall be registered unless the Trustee and the Certificate Registrar shall have
received (I) a representation from the transferee of such Certificate,
acceptable to and in form and substance satisfactory to the Trustee and the
Certificate Registrar (such requirement is satisfied only by the Certificate
Registrar's receipt of a representation letter from the transferee substantially
in the form of Exhibit I or Exhibit K hereto, as applicable), to the effect that
such transferee is not an employee benefit plan or arrangement subject to Title
I of ERISA, a plan subject to Section 4975 of the Code or a plan subject to any
state, local, federal, non-U.S. or other law substantively similar to the
foregoing provisions of ERISA or the Code ("Similar Law") (collectively, a
"Plan"), and is not directly or indirectly acquiring the 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 letter from the transferee
substantially in the form of Exhibit I hereto, that the 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 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 (B) solely in the case of a Definitive Certificate,
an Opinion of Counsel satisfactory to the Trustee and the Certificate Registrar,
and upon which the Trustee and the Certificate Registrar shall be entitled to
rely, to the effect that the acquisition and holding of such Certificate by the
transferee will not 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 Certificate Registrar, the Depositor, the Servicer or the
Trustee to any obligation in addition to those undertaken by such entities in
this Agreement, which opinion of counsel shall not be an expense of the
Certificate Registrar, the Depositor, the Servicer or the Trustee.
The representations set forth in the preceding two paragraphs (other than
clause (II)(B) in the immediately preceding paragraph) shall be deemed to have
been made to the Certificate Registrar and the Trustee by the Certificate
Owner's acceptance of the beneficial interest in any such class of Certificates,
unless the Trustee and the Certificate Registrar shall have received from the
transferee an alternative representation acceptable in form and substance to the
Trustee and the Certificate Registrar.
Notwithstanding any other provision herein to the contrary, any purported
transfer of a Certificate to or on behalf of a Plan without the delivery to the
Trustee and the Certificate Registrar of a representation or an Opinion of
Counsel satisfactory to the Trustee and the Certificate Registrar as described
above shall be void and of no effect. None of the Certificate Registrar, the
Depositor, the Servicer or the Trustee shall be under any
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liability to any Person for any registration or transfer of any Certificate that
is in fact not permitted by this Section 5.02(d) nor shall the Paying Agent 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
Certificate Registrar in accordance with the foregoing requirements. The
Certificate Registrar, Depositor, Servicer, Paying Agent and/or Trustee shall be
entitled, but not obligated, to recover from any holder of any Certificate that
was in fact a Plan and that held such Certificate in violation of this Section
5.02(d) all payments made on such Certificate at and after the time it commenced
such holding. Any such payments so recovered shall be paid and delivered to the
last preceding holder of such Certificate that is not a Plan.
Each Person who has or who acquires any Ownership Interest in a Residual
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Residual Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly notify
the Certificate Registrar of any change or impending change in its status as a
Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Residual
Certificate unless such Ownership Interest is a pro rata undivided interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Residual Certificate, the Certificate Registrar shall as a
condition to registration of the transfer, require delivery to it, in form and
substance satisfactory to it, of each of the following:
(A) an affidavit in the form of Exhibit K hereto from the
proposed transferee to the effect that, among other things, such transferee is a
Permitted Transferee and that it is not acquiring its Ownership Interest in the
Residual Certificate that is the subject of the proposed transfer as a nominee,
trustee or agent for any Person who is not a Permitted Transferee; and
(B) a covenant of the proposed transferee to the effect that
the proposed transferee agrees to be bound by and to abide by the transfer
restrictions applicable to the Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of this
Section shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall, in violation of the
provisions of this Section, become a Holder of a Residual Certificate, then the
prior Holder of such Residual Certificate that is a Permitted Transferee shall,
upon discovery that the registration of transfer of such Residual Certificate
was not in fact permitted by this Section, be restored to all rights as Holder
thereof retroactive to the date of registration of transfer of such Residual
Certificate. The Certificate Registrar shall be under no liability to any Person
for any registration of transfer of a Residual Certificate that is in fact not
permitted by this Section or for making any distributions due on such Residual
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 Certificate
Registrar received the documents specified in clause (iii). The Trustee shall be
entitled to recover from any Holder of a Residual Certificate that was in fact
not a Permitted Transferee at the time such distributions were made all
distributions made on such
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Residual Certificate. Any such distributions so recovered by the Trustee shall
be distributed and delivered by the Trustee to the prior Holder of such Residual
Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the restrictions in
this Section, then the Certificate Registrar shall have the right but not the
obligation, without notice to the Holder of such Residual Certificate or any
other Person having an Ownership Interest therein, to notify the Depositor to
arrange for the sale of such Residual Certificate. The proceeds of such sale,
net of commissions (which may include commissions payable to the Depositor or
its affiliates in connection with such sale), expenses and taxes due, if any,
will be remitted by the Trustee to the previous Holder of such Residual
Certificate that is a Permitted Transferee, except that in the event that the
Trustee determines that the Holder of such Residual Certificate may be liable
for any amount due under this Section or any other provisions of this Agreement,
the Trustee may withhold a corresponding amount from such remittance as security
for such claim. The terms and conditions of any sale under this clause (v) shall
be determined in the sole discretion of the Trustee and it shall not be liable
to any Person having an Ownership Interest in a Residual Certificate as a result
of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the restrictions in
this Section, then the Trustee will provide to the Internal Revenue Service, and
to the persons specified in Sections 860E(e)(3) and (6) of the Code, information
needed to compute the tax imposed under Section 860E(e)(5) of the Code on
transfers of residual interests to disqualified organizations. The Trustee shall
be entitled to reasonable compensation for providing such information from the
person to whom it is provided.
The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Certificate Registrar, in form and substance satisfactory to the Certificate
Registrar, (i) written notification from each Rating Agency that the removal of
the restrictions on Transfer set forth in this Section will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion of
Counsel to the effect that such removal will not cause any REMIC hereunder to
fail to qualify as a REMIC.
(e) No service charge shall be made for any registration of transfer
or exchange of Certificates of any Class, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange shall
be cancelled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (ii) there is delivered to
the Trustee, the Depositor and the Certificate Registrar 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 or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute on behalf of the Trust, and the Certificate Registrar shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental
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charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee and the Certificate Registrar) in
connection therewith. Any duplicate Certificate issued pursuant to this Section,
shall constitute complete and indefeasible evidence of ownership in the Trust,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 5.04 Persons Deemed Owners.
The Servicer, the Depositor, the Trustee, the Certificate Registrar, any
Paying Agent and any agent of the Servicer, the Depositor, the Certificate
Registrar, any Paying Agent or the Trustee may treat the Person, including a
Depository, in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 4.01
and 4.02 and for all other purposes whatsoever, and none of the Servicer, the
Trust, the Trustee, any Paying Agent nor any agent of any of them shall be
affected by notice to the contrary.
Section 5.05 Appointment of Paying Agent.
The Paying Agent shall make distributions to Certificateholders from the
Distribution Account pursuant to Section 4.01 and 4.02 and shall report the
amounts of such distributions to the Trustee. The duties of the Paying Agent may
include the obligation (i) to withdraw funds from the Collection Account
pursuant to Section 3.05 and for the purpose of making the distributions
referred to above and (ii) to distribute statements and provide information to
Certificateholders as required hereunder. The Paying Agent hereunder shall at
all times be an entity duly incorporated and validly existing under the laws of
the United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. The Paying Agent shall initially be the Trustee.
The Trustee may appoint a successor to act as Paying Agent, which appointment
shall be reasonably satisfactory to the Depositor and the Rating Agencies. The
Trustee as Paying Agent shall be subject to the same standards of care,
limitations on liability and rights to indemnity as the Trustee, and the
provisions of Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.14 and 8.15 shall apply
to the Paying Agent to the same extent as they apply to the Trustee. Any Paying
Agent appointed in accordance with this Section 5.05 may at any time resign by
giving at least 30 days' advance written notice of resignation to the Trustee,
the Servicer and the Depositor, such resignation to become effective upon
appointment of a successor Paying Agent.
ARTICLE VI
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the Servicer and the Depositor.
The Seller and the Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and undertaken by the
Seller or Servicer, as the case may be, herein. The Depositor shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Depositor.
Section 6.02 Merger or Consolidation of, or Assumption of the Obligations
of, the Seller, the Servicer or the Depositor.
Any entity into which the Seller, the Servicer or the Depositor may be
merged or consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Seller, the Servicer or the Depositor shall be a
party, or any corporation succeeding to the business of the Seller, the Servicer
or the
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Depositor, shall be the successor of the Seller, the Servicer or the Depositor,
as the case may be, hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor Servicer shall
satisfy all the requirements of Section 7.02 with respect to the qualifications
of a successor Servicer.
Section 6.03 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Trust or the
Certificateholders for any action taken or for refraining from the taking of any
action by the Servicer in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the
Servicer or any such Person against any liability which would otherwise be
imposed by reason of its willful misfeasance, bad faith or gross negligence in
the performance of duties of the Servicer or by reason of its reckless disregard
of its obligations and duties of the Servicer hereunder; provided, further, that
this provision shall not be construed to entitle the Servicer to indemnity in
the event that amounts advanced by the Servicer to retire any senior lien exceed
Liquidation Proceeds (in excess of related liquidation expenses) realized with
respect to the related Mortgage Loan. The Servicer and any director or officer
or employee or agent of 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 Servicer and any director or officer or
employee or agent of the Servicer shall be indemnified by the Trust and held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement or the Certificates, other than any
loss, liability or expense incurred by reason of its willful misfeasance, bad
faith or negligence in the performance of duties hereunder or by reason of its
reckless disregard of obligations and duties hereunder. The Servicer may
undertake any such action which 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 Certificateholders hereunder. In such event, the reasonable
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities of the Trust and the Servicer shall be
entitled to pay such expenses from the proceeds of the Trust or to be reimbursed
therefor pursuant to Section 3.05 upon presentation to the Trustee of
documentation of such expenses, costs and liabilities. The Servicer's right to
indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of the Servicer pursuant to Section 6.04 or 7.01 with
respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination (or arising from events that occurred prior to such
resignation or termination). This paragraph shall apply to the Servicer solely
in its capacity as Servicer hereunder and in no other capacities.
Section 6.04 Servicer Not to Resign.
Subject to the provisions of Section 7.01 and Section 6.02, the Servicer
shall not resign from the obligations and duties hereby imposed on it except (i)
upon determination that the performance of its obligations or duties hereunder
are no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it or its
subsidiaries or Affiliates, the other activities of the Servicer so causing such
a conflict being of a type and nature carried on by the Servicer or its
subsidiaries or Affiliates at the date of this Agreement or (ii) upon
satisfaction of the following conditions: (a) either (x) the Servicer has
proposed a successor servicer to the Trustee in writing and such proposed
successor servicer is reasonably acceptable to the Trustee or (y) the Servicing
Rights Pledgee has delivered to the Trustee a letter signed by the Servicer
whereunder the Servicer resigns as Servicer under this Agreement pursuant to the
second paragraph of this Section 6.04 or the second paragraph of Section
7.02(a); and (b) each Rating Agency shall have delivered a letter to the Trustee
prior to the appointment of the successor servicer stating that the proposed
appointment of such successor servicer as Servicer hereunder will not result in
the reduction or withdrawal of the then current
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rating of the Regular Certificates; or the ratings that are in effect; provided,
however, that no such resignation by the Servicer shall become effective until
such successor servicer or, in the case of (i) above, the Trustee shall have
assumed the Servicer's responsibilities and obligations hereunder or the Trustee
shall have designated a successor servicer in accordance with the second
paragraph of this Section 6.04 or with Section 7.02. Any such resignation shall
not relieve the Servicer of responsibility for any of the obligations specified
in Sections 7.01 and 7.02 as obligations that survive the resignation or
termination of the Servicer. Any such determination permitting the resignation
of the Servicer pursuant to clause (i) above shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee. Any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee.
The Trustee and the Depositor hereby specifically (i) consent to the pledge
and assignment by the Servicer of all the Servicer's right, title and interest
in, to and under this Agreement to the Servicing Rights Pledgee, for the benefit
of certain lenders, and (ii) provided that no Servicer Event of Termination
exists, agree that upon delivery to the Trustee by the Servicing Rights Pledgee
of a letter signed by the Servicer whereunder the Servicer shall resign as
Servicer under this Agreement, the Trustee shall appoint the Servicing Rights
Pledgee or its designee as successor Servicer, provided that at the time of such
appointment, the Servicing Rights Pledgee or such designee meets the
requirements of a successor Servicer pursuant to Section 7.02(a) and agrees to
be subject to the terms of this Agreement. If, pursuant to any provision hereof,
the duties of the Servicer are transferred to a successor, the entire amount of
the Servicing Fee and other compensation payable to the Servicer pursuant hereto
shall thereafter be payable to such successor.
Section 6.05 Delegation of Duties.
In the ordinary course of business, the Servicer at any time may delegate
any of its duties hereunder to any Person, including any of its Affiliates, who
agrees to conduct such duties in accordance with standards comparable to those
set forth in Section 3.01. Such delegation shall not relieve the Servicer of its
liabilities and responsibilities with respect to such duties and shall not
constitute a resignation within the meaning of Section 6.04. At any time that
reporting under the Exchange Act is required, the Servicer shall provide the
Trustee and the Rating Agencies with 30 days prior written notice prior to the
delegation of any of its duties to any Person other than any of the Servicer's
Affiliates or their respective successors and assigns.
ARTICLE VII
DEFAULT
Section 7.01 Servicer Events of Termination.
(a) If any one of the following events (each, a "Servicer Event of
Termination") shall occur and be continuing:
(i) (A) The failure by the Servicer to make any required Advance;
or (B) any other failure by the Servicer to deposit in the Collection Account or
Distribution Account any deposit required to be made under the terms of this
Agreement which continues unremedied for a period of one Business Day after the
date upon which written notice of such failure shall have been given to the
Servicer by the Trustee or by any Holder of a Regular Certificate evidencing at
least 25% of the Voting Rights; or
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(ii) The failure by the Servicer to make any required Servicing
Advance which failure continues unremedied for a period of 30 days, or the
failure by the Servicer duly to observe or perform, in any material respect, any
other covenants, obligations or agreements of the Servicer as set forth in this
Agreement, which failure continues unremedied for a period of 30 days, after the
date (A) on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee or by any Holder
of a Regular Certificate evidencing at least 25% of the Voting Rights or (B)
actual knowledge of such failure by a Servicing Officer of the Servicer; or
(iii) The entry against the Servicer of a decree or order by a
court or agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 days; or
(iv) The Servicer shall voluntarily go into liquidation, consent
to the appointment of a conservator or receiver or liquidator or similar person
in any insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Servicer or of or relating to all
or substantially all of its property; or a decree or order of a court or agency
or supervisory authority having jurisdiction in the premises for the appointment
of a conservator, receiver, liquidator or similar person in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Servicer and such decree or order shall have remained
in force undischarged, unbonded or unstayed for a period of 60 days; or the
Servicer shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations; or
(v) The aggregate amount of cumulative Realized Losses incurred
since the Cut-off Date through the last day of the related Collection Period
divided by the Pool Balance as of the Cut-off Date exceeds the applicable
percentages set forth below with respect to such Distribution Date:
DISTRIBUTION DATE OCCURRING IN PERCENTAGE
---------------------------------- ----------
November 2009 through October 2010 5.45%
November 2010 through October 2011 7.15%
November 2011 through October 2012 8.90%
November 2012 and thereafter 9.95%
(b) Then, and in each and every such case, so long as a Servicer Event
of Termination shall not have been remedied within the applicable grace period,
(x) with respect solely to clause (i)(A) above, if such Advance is not made by
2:00 P.M., New York time, on the Business Day immediately following the Servicer
Remittance Date, the Trustee may terminate all of the rights and obligations of
the Servicer under this Agreement and the Trustee, or a successor servicer
appointed in accordance with Section 7.02, shall immediately make such Advance
and assume, pursuant to Section 7.02, the duties of a successor Servicer and (y)
in the case of (i)(B), (ii), (iii), (iv) and (v) above, the Trustee shall, at
the direction of the Holders of each Class of Regular Certificates evidencing
Percentage Interests aggregating not less than 51%, by notice then given in
writing to the Servicer (and to the Trustee if given by Holders of
Certificates), terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be
given to each Rating Agency, the Depositor and the Seller. On or after the
receipt by the Servicer (and by the Trustee if such notice is given by the
Holders) of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates or the Mortgage Loans
or otherwise, shall pass to and
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be vested in the Trustee pursuant to and under this Section; and, without
limitation, 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 of each Mortgage
Loan and Related Documents or otherwise. The Servicer agrees to cooperate with
the Trustee (or the applicable successor Servicer) in effecting the termination
of the responsibilities and rights of the Servicer hereunder, including, without
limitation, the delivery to the Trustee of all documents and records requested
by it to enable it to assume the Servicer's functions under this Agreement
within ten Business Days subsequent to such notice, the transfer within one
Business Day subsequent to such notice to the Trustee (or the applicable
successor Servicer) for the administration by it of all cash amounts that shall
at the time be held by the Servicer and to be deposited by it in the Collection
Account, the Distribution Account, any REO account or any Escrow Account or that
have been deposited by the Servicer in such accounts or thereafter received by
the Servicer with respect to the Mortgage Loans or any REO Property received by
the Servicer. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the servicing to the successor Servicer
and amending this Agreement to reflect such succession as Servicer pursuant to
this Section shall be paid by the predecessor Servicer (or if the predecessor
Servicer is the Trustee, the initial Servicer) upon presentation of reasonable
documentation of such costs and expenses.
Section 7.02 Trustee to Act; Appointment of Successor.
(a) Within 90 days of the time the Servicer (and the Trustee, if
notice is sent by the Holders) receives a notice of termination pursuant to
Section 7.01 or 6.04, the Trustee (or such other successor Servicer as is
approved in accordance with this Agreement) shall be the successor in all
respects 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 arising on and after its succession;
except that the Trustee shall not be (i) liable for losses of the predecessor
Servicer pursuant to Section 3.04 or any acts or omissions of the predecessor
Servicer hereunder, (ii) obligated to effectuate repurchases or substitutions of
Mortgage Loans hereunder, (iii) responsible for expenses of the predecessor
Servicer pursuant to Section 2.03, (iv) obligated to make Advances if it is
prohibited from doing so by applicable law, (v) deemed to have made any
representations and warranties of the Servicer hereunder, or (vi) obligated to
perform any obligation of the Servicer under Sections 3.19, 3.20 or 3.29 of this
Agreement with respect to any period of time during which the Trustee was not
the Servicer. As compensation therefor, the Trustee (or such other successor
Servicer) shall be entitled to such compensation as the Servicer would have been
entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, (i) if the Trustee is unwilling to act as successor
Servicer or (ii) if the Trustee is legally unable so to act, the Trustee shall
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank or other mortgage loan or
home equity loan servicer having a net worth of not less than $50,000,000 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; provided,
that the appointment of any such successor Servicer will not result in the
qualification, reduction or withdrawal of the ratings assigned to the
Certificates or the ratings that are in effect by the Rating Agencies as
evidenced by a letter to such effect from the Rating Agencies. Pending
appointment of a successor to the Servicer hereunder, unless the Trustee is
prohibited by law from so acting, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
successor shall be entitled to receive compensation out of payments on Mortgage
Loans in an amount equal to the compensation which the Servicer would otherwise
have received pursuant to Section 3.18 (or such other compensation as the
Trustee and such successor shall agree, not to exceed the Servicing Fee). The
successor servicer shall be entitled to withdraw from the Collection Account all
costs and expenses associated with the transfer of the
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servicing to the successor servicer. The appointment of a successor servicer
shall not affect any liability of the predecessor Servicer which may have arisen
under this Agreement prior to its termination as Servicer to pay any deductible
under an insurance policy pursuant to Section 3.12 or to indemnify the parties
indicated in Section 3.26 pursuant to the terms thereof, nor shall any successor
Servicer be liable for any acts or omissions of the predecessor Servicer or for
any breach by such Servicer of any of its representations or warranties
contained herein or in any related document or agreement. The Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
In the event of a Servicer Event of Termination, notwithstanding anything
to the contrary above, the Trustee and the Depositor hereby agree that upon
delivery to the Trustee by the Servicing Rights Pledgee of a letter signed by
the Servicer within ten Business Days of when notification of such event shall
have been provided to the Trustee, whereunder the Servicer shall resign as
Servicer under this Agreement, the Servicing Rights Pledgee or its designee
shall be appointed as successor Servicer (provided that at the time of such
appointment the Servicing Rights Pledgee or such designee meets the requirements
of a successor Servicer set forth above) and the Servicing Rights Pledgee agrees
to be subject to the terms of this Agreement.
(b) Any successor, including the Trustee, to the Servicer as servicer
shall during the term of its service as servicer continue to service and
administer the Mortgage Loans for the benefit of Certificateholders, and
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
Fidelity Bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.12.
Section 7.03 Waiver of Defaults.
The Holders of Certificates entitled to at least 66 2/3% of the Voting
Rights allocated to the Class of Certificates affected by a Servicer Event of
Termination may, on behalf of all Certificateholders, waive any events
permitting removal of the Servicer as servicer pursuant to this Article VII,
provided, however, that such Holders may not waive a default in making a
required distribution on a Certificate without the consent of the Holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist and any Servicer Event of Termination arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereto
except to the extent expressly so waived. Notice of any such waiver shall be
given by the Trustee to the Rating Agencies.
Section 7.04 Notification to Certificateholders.
(a) On any termination or appointment of a successor the Servicer
pursuant to this Article VII or Section 6.04, the Trustee shall give prompt
written notice thereof to the Certificateholders at their respective addresses
appearing in the Certificate Register and each Rating Agency.
(b) No later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute a
Servicer Event of Termination for five Business Days after a Responsible Officer
of the Trustee becomes aware of the occurrence of such an event, the Trustee
shall transmit by mail to all Certificateholders notice of such occurrence
unless such default or Servicer Event of Termination shall have been waived or
cured. Such notice shall be given to the Rating Agencies promptly after any such
occurrence.
Section 7.05 Survivability of Servicer Liabilities.
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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.
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of Termination of
which a Responsible Officer of the Trustee shall have actual knowledge and after
the curing of all Servicer Events of Termination which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If a Servicer Event of Termination has occurred (which
has not been cured) of which a Responsible Officer has actual knowledge, 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.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which 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 to the extent
specified herein; provided, however, that that the Trustee shall not be
responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by the
Servicer, the Seller or the Depositor hereunder. If any such instrument is found
not to conform in any material respect to the requirements of this Agreement,
the Trustee shall notify the Certificateholders of such instrument in the event
that the Trustee, after so requesting, does not receive a satisfactorily
corrected instrument.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct; provided, however, that:
(i) prior to the occurrence of a Servicer Event of Termination,
and after the curing of all such Servicer Events of Termination which 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
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, in the absence of bad faith on the
part of the Trustee, 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 on their face
to the requirements of this Agreement to the extent specified herein;
(ii) the Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee unless it shall be
proved that the Trustee was negligent in ascertaining or investigating the facts
related thereto;
(iii) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Majority Certificateholders relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising or omitting to exercise any trust or power conferred upon the
Trustee under this Agreement; and
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(iv) the Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the Servicer referred
to in clauses (i) and (ii) of Section 7.01(a) or any Servicer Event of
Termination unless a Responsible Officer of the Trustee at the applicable
Corporate Trust Office obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Servicer or the Majority
Certificateholders. In the absence of such receipt of such notice, the Trustee
may conclusively assume that there is no Servicer Event of Termination.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement; provided, however, the Trustee shall not seek
reimbursement or repayment of any of its expenses from the Trust Fund except in
connection with expenses that would constitute "unanticipated expenses" under
Treasury Regulation 1.860G-1(b)(3)(ii).
The Trustee shall not have any duty (A) to see to any recording, filing, or
depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security interest, or
to see to the maintenance of any such recording or filing or depositing or to
any rerecording, refiling or redepositing of any thereof, (B) to see to 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 Trust Fund other than
from funds available in the Distribution Account.
The Trustee shall have no duty hereunder with respect to any complaint,
claim, demand, notice or other document it may receive or which may be alleged
to have been delivered to or served upon it by the parties as a consequence of
the assignment of any Mortgage Loan hereunder; provided, however, that the
Trustee shall promptly remit to the Servicer upon receipt any such complaint,
claim, demand, notice or other document (i) which is delivered to the Trustee at
its Corporate Trust Office; (ii) of which a Responsible Officer has actual
knowledge and (iii) which contains information sufficient to permit the Trustee
to make a determination that the real property to which such document relates to
is a Mortgaged Property.
Section 8.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon, and shall be protected
in acting or refraining from acting upon, any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document reasonably 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 and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or Opinion of Counsel;
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(iii) the Trustee shall not be under any obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of the Certificateholders pursuant to the provisions
of this Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; the right of the Trustee
to perform any discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Trustee shall not be answerable for other than its
negligence or willful misconduct in the performance of any such act;
(iv) 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;
(v) prior to the occurrence of a Servicer Event of Termination
and after the curing of all Servicer Events of Termination which 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 documents, unless requested in writing to do so by the Majority
Certificateholder; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the Trustee not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to such proceeding. The reasonable expense
of every such examination shall be paid by the Servicer or, if paid by the
Trustee shall be reimbursed by the Servicer upon demand. Nothing in this clause
(v) shall derogate from the obligation of the Servicer to observe any applicable
law prohibiting disclosure of information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have any
liability or make any representation as to any acts or omissions hereunder of
the Servicer until such time as the Trustee may be required to act as Servicer
pursuant to Section 7.02;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian and the Trustee shall not be responsible for
any misconduct or negligence on the part of any such agent, attorney or
custodian appointed by it with due care; and
(viii) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act.
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee does not assume any responsibility for
the correctness of the same. The Trustee makes no representations as to the
validity or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or Related Document. The Trustee shall not be accountable for the
use or application by the Servicer, or for the use or application of any funds
paid to the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall not at
any time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and
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priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust or its ability to
generate the payments to be distributed to Certificateholders under this
Agreement, including, without limitation: the existence, condition and ownership
of any Mortgaged Property; the existence and enforceability of any hazard
insurance thereon (other than if the Trustee shall assume the duties of the
Servicer pursuant to Section 7.02); the validity of the assignment of any
Mortgage Loan to the Trustee or of any intervening assignment; the completeness
of any Mortgage Loan; the performance or enforcement of any Mortgage Loan (other
than if the Trustee shall assume the duties of the Servicer pursuant to Section
7.02); the compliance by the Depositor, the Seller or the Servicer with any
warranty or representation made under this Agreement or in any related document
or the accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other discovery of any non-compliance therewith or any
breach thereof; any investment of monies by or at the direction of the Servicer
or any loss resulting therefrom; the acts or omissions of any of the Servicer
(other than if the Trustee shall assume the duties of the Servicer pursuant to
Section 7.02), or any Mortgagor; any action of the Servicer (other than if the
Trustee shall assume the duties of the Servicer pursuant to Section 7.02), taken
in the name of the Trustee; the failure of the Servicer to act or perform any
duties required of it as agent of the Trustee hereunder; or any action by the
Trustee taken at the instruction of the Servicer (other than if the Trustee
shall assume the duties of the Servicer pursuant to Section 7.02); provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement. The Trustee shall not have any
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder.
Section 8.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights as it would have if it were not
Trustee and may transact any banking and trust business with the Seller, the
Servicer, the Depositor or their Affiliates.
Section 8.05 Seller to Pay Trustee Fees and Expenses.
The Trustee shall withdraw from the Distribution Account on each
Distribution Date and pay to itself the Trustee Fee pursuant to Section 4.01(i)
and, to the extent the Interest Remittance Amount is at any time insufficient
for such purpose, the Seller shall pay such fees as reasonable 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, and the
Seller will pay or reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from such party's negligence or bad faith or which is
the responsibility of Certificateholders, the Trustee hereunder. Notwithstanding
any other provision of this Agreement, including Section 2.03(a) and Section
2.04, to the contrary, the Seller covenants and agrees to indemnify the Trustee
and its officers, directors, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, damages, claims or expenses
incurred in connection with (a) any legal action relating to this Agreement, the
Custodial Agreement, the Certificates or incurred in connection with the
administration of the Trust, other than with respect to a party, any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence of such party in the performance of its duties hereunder or by reason
of such party's reckless disregard of obligations and duties hereunder and (b)
the second paragraph of Section 2.01. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Trustee be liable for special, indirect
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or consequential loss or damage of any kind whatsoever (including but not
limited to lost profits), even if the Trustee has been advised of the likelihood
of such loss or damage and regardless of the form of action. The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified, to the
extent not paid by the Seller pursuant to this Section, by the Trust Fund and
held harmless against any loss, liability or expense (not including expenses,
disbursements and advances incurred or made by the Trustee, in the ordinary
course of the Trustee's performance in accordance with the provisions of this
Agreement) incurred by the Trustee or such party arising out of or in connection
with the acceptance or administration of its duties under this Agreement, other
than in connection with the indemnification provided pursuant to clause (a)
above, any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance by the Trustee of its duties under
this Agreement or by reason of the reckless disregard of the Trustee's
obligations and duties under this Agreement. This section shall survive
termination of this Agreement or the resignation or removal of any Trustee
hereunder.
Section 8.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a Department of Housing and
Urban Development and Federal Housing Administration approved mortgagee, an
entity duly organized and validly existing under the laws of the United States
of America or any state thereof, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and a minimum long-term debt rating of BBB by Fitch and S&P, a long
term debt rating of at least A1 or better by Xxxxx'x, and a minimum short term
debt rating of at least A1 by S&P, and subject to supervision or examination by
federal or state authority. If such entity 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 8.06,
the combined capital and surplus of such entity shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. The principal office of the Trustee (other than the initial
Trustee) shall be in a state with respect to which an Opinion of Counsel has
been delivered to such Trustee at the time such Trustee is appointed Trustee to
the effect that the Trust will not be a taxable entity under the laws of such
state. In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 8.06, the Trustee shall resign immediately
in the manner and with the effect specified in Section 8.07.
Section 8.07 Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Depositor, the Servicer and each
Rating Agency. Upon receiving such notice of resignation, the Depositor shall
promptly appoint a successor Trustee, by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and having accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 and shall fail to resign after written request
therefor by the Depositor, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a 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. If the Depositor or the Servicer removes the Trustee under the
authority of the immediately preceding sentence, the Depositor shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor Trustee.
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The Majority Certificateholders may at any time remove the Trustee by
written instrument or instruments delivered to the Servicer, the Depositor and
the Trustee; the Depositor shall thereupon use its best efforts to appoint a
successor Trustee in accordance with this Section.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 8.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 8.08.
Section 8.08 Successor Trustee.
Any successor Trustee appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor, the Rating Agencies, the Servicer and
to its predecessor Trustee 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 like effect as if originally
named as Trustee. The Depositor, the Servicer and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Trustee all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this Section
8.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 8.06 and the appointment of such
successor Trustee shall not result in a downgrading of the Regular Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 8.08, the successor Trustee shall mail notice of the appointment of a
successor Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency.
Section 8.09 Merger or Consolidation of Trustee.
Any entity into which the Trustee may be merged or converted or with which
it may be consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any entity succeeding to
the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such entity shall be eligible under the provisions of Section 8.06 and
8.08, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust or any Mortgaged Property may at the time be located, the
Depositor 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, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Servicer and the Trustee may consider necessary or
desirable. Any such co-trustee or separate trustee shall be subject to the
written approval of the Servicer. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request
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so to do, or in the case a Servicer Event of Termination 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 8.06, and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08. The Servicer shall be responsible for the
fees of any co-trustee or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee 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 Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate trustee
or co-trustee, but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Servicer and the Trustee, acting jointly may at any
time accept the resignation of or remove any separate trustee or co-trustee
except that following the occurrence of a Servicer Event of Termination, the
Trustee acting alone may accept the resignation 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
Depositor, the Rating Agencies and the Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 8.11 Limitation of Liability.
The Certificates are executed by the Trustee, not in its individual
capacity but solely as Trustee of the Trust, in the exercise of the powers and
authority conferred and vested in it by this Agreement. Each of the undertakings
and agreements made on the part of the Trustee in the Certificates is made and
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intended not as a personal undertaking or agreement by the Trustee but is made
and intended for the purpose of binding only the Trust.
Section 8.12 Trustee May Enforce Claims Without Possession of Certificates.
(a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee for the benefit of all
Holders of such Certificates, subject to the provisions of this Agreement. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursement and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Certificateholders in respect of
which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Depositor, the Servicer
and each Certificateholder upon reasonable notice during normal business hours,
access to all records maintained by the Trustee in respect of its duties
hereunder and access to officers of the Trustee responsible for performing such
duties. The Trustee shall cooperate fully with the Seller, the Servicer, the
Depositor and such Certificateholder and shall make available to the Seller, the
Servicer, the Depositor and such Certificateholder for review and copying at the
expense of the party requesting such copies, such books, documents or records as
may be requested with respect to the Trustee's duties hereunder. The Seller, the
Depositor, the Servicer and the Certificateholders shall not have any
responsibility or liability for any action or failure to act by the Trustee and
are not obligated to supervise the performance of the Trustee under this
Agreement or otherwise.
Section 8.13 Suits for Enforcement.
In case a Servicer Event of Termination or other default by the Servicer or
the Seller hereunder shall occur and be continuing, the Trustee 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.
Section 8.14 Waiver of Bond Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby waives,
any requirement of any jurisdiction in which the Trust, or any part thereof, may
be located that the Trustee post a bond or other surety with any court, agency
or body whatsoever.
Section 8.15 Waiver of Inventory, Accounting and Appraisal Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby waives,
any requirement of any jurisdiction in which the Trust, or any part thereof, may
be located that the Trustee file any inventory, accounting or appraisal of the
Trust with any court, agency or body at any time or in any manner whatsoever.
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ARTICLE IX
REMIC AND GRANTOR TRUST ADMINISTRATION
Section 9.01 REMIC Administration.
(a) The Trustee shall make or cause to be made REMIC elections for
each of REMIC 1, REMIC 2, REMIC B-1, REMIC B-2, REMIC B-3, the SWAP REMIC, REMIC
IO, REMIC CE-1 and REMIC CE-2 as set forth in the Preliminary Statement on Forms
1066 or other appropriate federal tax or information return for the taxable year
ending on the last day of the calendar year in which the Certificates are
issued. The regular interests and residual interest in each REMIC shall be as
designated in the Preliminary Statement.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 860G(a)(9) of the Code.
(c) The Servicer shall pay any and all tax related expenses (not
including taxes) of each REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial proceedings
with respect to such REMIC that involve the Internal Revenue Service or state
tax authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Servicer in fulfilling its duties hereunder. The Servicer
shall be entitled to reimbursement of expenses to the extent provided in clause
(i) above from the Collection Account, but only to the extent that such expenses
are "unanticipated expenses" under Treasury Regulations Section
1.860G-1(b)(3)(ii).
(d) The Trustee shall prepare or cause to be prepared, sign and file
or cause to be filed, each REMIC's federal and state tax and information returns
as such REMIC's direct representative. The expenses of preparing and filing such
returns shall be borne by the Trustee.
(e) The Holder of the Residual Certificates with respect to each REMIC
holding the largest Percentage Interest shall be the "tax matters person" as
defined in the REMIC Provisions (the "Tax Matters Person") with respect to the
applicable REMIC or REMICs, and the Trustee is irrevocably designated as and
shall act as attorney-in-fact and agent for such Tax Matters Person for each
REMIC. The Trustee, as agent for the Tax Matters Person, shall perform, on
behalf of each REMIC, all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions, or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, if required by the Code, the REMIC
Provisions, or other such guidance, the Trustee, as agent for the Tax Matters
Person, shall provide (i) to the Treasury or other governmental authority such
information as is necessary for the application of any tax relating to the
transfer of a Residual Certificate to any disqualified person or organization
and (ii) to the Certificateholders such information or reports as are required
by the Code or REMIC Provisions.
(f) The Trustee, the Servicer and the Holders of Certificates shall
take any action or cause any REMIC to take any action necessary to create or
maintain the status of such REMIC as a REMIC under the REMIC Provisions and
shall assist each other as necessary to create or maintain such status. Neither
the Trustee, the Servicer, nor the Holder of any Residual Certificate shall take
any action or cause any REMIC to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of such
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REMIC as a REMIC or (ii) result in the imposition of a tax upon such REMIC
(including but not limited to the tax on prohibited transactions as defined in
Code Section 860F(a)(2) and the tax on prohibited contributions set forth on
Section 860G(d) of the Code) (either such event, an "Adverse REMIC Event")
unless such action or failure to take such action is expressly permitted under
the terms of this Agreement or the Trustee and the Servicer have received an
Opinion of Counsel (at the expense of the party seeking to take such action) to
the effect that the contemplated action will not endanger such status or result
in the imposition of such a tax. In addition, prior to taking any action with
respect to any REMIC or the assets therein, or causing such REMIC to take any
action, which is not expressly permitted under the terms of this Agreement, any
Holder of a Residual Certificate will consult with the Trustee and the Servicer,
or their respective designees, in writing, with respect to whether such action
could cause an Adverse REMIC Event to occur with respect to such REMIC, and no
such Person shall take any such action or cause such REMIC to take any such
action as to which the Trustee or the Servicer has advised it in writing that an
Adverse REMIC Event could occur.
(g) Each Holder of a Residual Certificate shall pay when due its pro
rata share of any and all taxes imposed on any REMIC by federal or state
governmental authorities. To the extent that such REMIC taxes are not paid by
Residual Certificateholders, the Trustee shall pay any remaining REMIC taxes out
of current or future amounts otherwise distributable to the Holder of the
Residual Certificate in each REMIC or, if no such amounts are available, out of
other amounts held in the Collection Account, and shall reduce amounts otherwise
payable to Holders of the REMIC Regular Interests or the Certificates, as the
case may be.
(h) The Trustee, shall, for federal income tax purposes, maintain or
cause to be maintained books and records with respect to each REMIC on a
calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement with respect to Eligible
Substitute Mortgage Loans.
(j) Neither the Trustee nor the Servicer shall enter into any
arrangement by which any REMIC will receive a fee or other compensation for
services.
(k) On or before April 15 of each calendar year beginning in 2007, the
Servicer shall deliver to the Trustee and each Rating Agency an Officer's
Certificate stating the Servicer's compliance with the provisions of this
Section 9.01.
(l) (i) 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 CE-1 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 REMIC 2 held by
the holders of the Class A and Class M Certificates, the regular interest in
REMIC B-1 held by the holders of the Class B-1 Certificates, the regular
interest in REMIC B-2 held by the holders of the Class B-2 Certificates and the
regular interest in REMIC B-3 held by the holders of the Class B-3 Certificates.
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 Swap Agreement or Cap Agreement,
will be treated as distributed by REMIC CE-1 to the Class CE-1
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Certificates pro rata and then paid to the relevant Class of Certificates
pursuant to the related interest rate cap agreement.
(ii) It is intended that the beneficial owners of the
Certificates (other than the Class P, Class CE-1, Class CE-2 and Residual
Certificates) shall be treated as having entered into a notional principal
contract with respect to the beneficial owners of the Class CE-1 Certificates.
Pursuant to each such notional principal contract, all beneficial owners of each
Class of Certificates (other than the Class P, Class CE-1, Class CE-2 and
Residual Certificates) shall be treated as having agreed to pay, on each
Distribution Date, to the beneficial owners of the Class CE-1 Certificates an
aggregate amount equal to the excess, if any, of (i) the amount payable on such
Distribution Date on the Corresponding REMIC 2 Regular Interest of such Class of
Certificates over (ii) the amount payable on such Class of Certificates on such
Distribution Date (such excess, a "Class Payment Shortfall"). A Class Payment
Shortfall shall be allocated to each Class of Certificates to the extent that
interest accrued on such Class for the related Interest Accrual Period at the
Pass-Through Rate for a Class, computed by substituting "REMIC 2 Net WAC Cap"
for the Net WAC Cap set forth in the definition thereof, exceeds the amount of
interest accrued on such Certificate at the Pass-Through Rate (without such
substitution) for the related Interest Accrual Period, and a Class Payment
Shortfall payable from principal collections shall be allocated to the most
subordinate Class of Certificates with an outstanding principal balance to the
extent of such balance.
(m) The parties intend that the portion of the Trust Fund consisting
of the uncertificated REMIC CE-1 CE-1 Interest, the uncertificated REMIC IO IO
Interest, the rights to receive payments deemed made by the Class A, Class M and
Class B Certificates in respect of notional principal contracts described in
Section 9.01(l)(ii), the Supplemental Interest Trust which holds the Swap
Agreement and Cap Agreement and the obligation of the holders of the Class CE-1
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 CE-1 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 CE-1 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 CE-1 Certificates as may be applicable under the Code.
(n) 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 4.01 hereof shall be treated as a "grantor trust" under the
Code, for the benefit of the holders of the Class P Certificates, and the
provisions hereof shall be interpreted consistently with this intention. In
furtherance of such intention, the Trustee shall (i) furnish or cause to be
furnished to the holders of the Class P Certificates information regarding their
allocable share of the income with respect to such grantor trust and (ii) file
or cause to be filed with the Internal Revenue Service Form 1041 (together with
any necessary attachments) and such other forms as may be applicable.
(o) The parties intend that amounts paid to the Swap Counterparty
under the Swap Agreement shall be deemed for federal income tax purposes to be
paid by the Class CE-1 Certificates first, out of funds deemed received in
respect of the REMIC IO IO Interest, second, out of funds deemed received in
respect of the REMIC CE-1 CE-1 Interest and third, out of funds deemed received
in respect of notional principal contracts described in Section 9.01(l)(ii), and
the provisions hereof shall be interpreted consistently with this intention. On
each Distribution Date, to the extent that amounts paid to the Swap Counterparty
are deemed paid out of funds received in respect of the REMIC IO IO Interest or
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the REMIC CE-1 CE-1 Interest, such amounts will be treated as distributed by
REMIC IO or REMIC CE-1, respectively, to the Class CE-1 Certificates pro rata
and then paid to the Swap Counterparty pursuant to the Swap Agreement.
The Supplemental Interest Trust shall be an "outside reserve fund" for
federal income tax purposes and not an asset of any REMIC. Furthermore, the
Holders of the Class CE-1 Certificates shall be the beneficial owners of the
Supplemental Interest Trust for all federal income tax purposes, and shall be
taxable on all income earned thereon.
(p) REMIC CE-2. All amounts deemed distributed in respect of the REMIC
2 CE-2 Interest shall be treated as received by REMIC CE-2 and then distributed
by REMIC CE-2 in respect of the Class CE-2 Certificates.
(q) REMIC IO. All amounts deemed distributed in respect of the REMIC 2
IO Interest shall be treated as received by REMIC IO and then distributed by
REMIC IO in respect of the REMIC IO IO Interest.
(r) REMIC CE-1. All amounts deemed distributed in respect of the REMIC
2 CE-1 Interest shall be treated as received by REMIC CE-1 and then distributed
by REMIC CE-1 in respect of the REMIC CE-1 CE-1 Interest. All allocations of
Realized Losses to the REMIC 2 CE-1 Interest shall result in similar allocations
to the REMIC CE-1 CE-1 Interest.
(s) REMIC B-3. All amounts deemed distributed in respect of the REMIC
2 B-3 Interest shall be treated as received by REMIC B-3 then distributed by
REMIC B-3 in respect of the REMIC B-3 B-3 Interest. All allocations of Applied
Realized Loss Amounts and Realized Loss Amortization Amounts to the REMIC 2 B-3
Interest shall result in similar allocations to the REMIC B-3 B-3 Interest. If
on any Distribution Date the Certificate Principal Balance of the Class B-3
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 amount of the REMIC B-3 B-3 Interest on such Distribution Date.
(t) REMIC B-2. All amounts deemed distributed in respect of the REMIC
2 B-2 Interest shall be treated as received by REMIC B-2 then distributed by
REMIC B-2 in respect of the REMIC B-2 B-2 Interest. All allocations of Applied
Realized Loss Amounts and Realized Loss Amortization Amounts to the REMIC 2 B-2
Interest shall result in similar allocations to the REMIC B-2 B-2 Interest. If
on any Distribution Date the Certificate Principal Balance of the Class B-2
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 amount of the REMIC B-2 B-2 Interest on such Distribution Date.
(u) REMIC B-1. All amounts deemed distributed in respect of the REMIC
2 B-1 Interest shall be treated as received by REMIC B-1 then distributed by
REMIC B-1 in respect of the REMIC B-1 B-1 Interest. All allocations of Applied
Realized Loss Amounts and Realized Loss Amortization Amounts to the REMIC 2 B-1
Interest shall result in similar allocations to the REMIC B-1 B-1 Interest. If
on any Distribution Date the Certificate Principal Balance of the Class B-1
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 amount of the REMIC B-1 B-1 Interest on such Distribution Date.
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(v) REMIC 2. On each Distribution Date, REMIC 2 shall be deemed to
have received the amounts deemed distributed in respect of the REMIC 1 Regular
Interests. Principal, interest, shortfalls and Realized Losses shall be deemed
paid to and allocated among the REMIC 2 Regular Interests in the same manner as
such items (other than payments to the Cap Carryover Certificates in respect of
Excess Interest and disregarding the deemed obligation to make payments in
respect of Class Payment Shortfalls) are paid or allocated in respect of the
related Certificates (the REMIC 2 A-1 Interest being related to the Class A-1
Certificates, the REMIC 2 A-2A Interest being related to the Class A-2A
Certificates, the REMIC 2 A-2B Interest being related to the Class A-2B
Certificates, the REMIC 2 A-2C Interest being related to the Class A-2C
Certificates, the REMIC 2 A-2D Interest being related to the Class A-2D
Certificates, the REMIC 2 M-1 Interest being related to the Class M-1
Certificates, the REMIC 2 M-2 Interest being related to the Class M-2
Certificates, the REMIC 2 M-3 Interest being related to the Class M-3
Certificates, the REMIC 2 M-4 Interest being related to the Class M-4
Certificates, the REMIC 2 M-5 Interest being related to the Class M-5
Certificates, the REMIC 2 M-6 Interest being related to the Class M-6
Certificates, the REMIC 2 M-7 Interest being related to the Class M-7
Certificates, the REMIC 2 M-8 Interest being related to the Class M-8
Certificates, the REMIC 2 B-1 Interest being related to the Class B-1
Certificates, the REMIC 2 B-2 Interest being related to the Class B-2
Certificates and the REMIC 2 B-3 Interest being related to the Class B-3
Certificates). Amounts shall be deemed paid and allocated to the REMIC 2 CE-2
Interest equal to amounts paid and allocated to the Class LT1-CE2 Interest.
Amounts shall be deemed paid and allocated to the REMIC 2 IO Interest equal to
amounts paid and allocated to the Class LT1-IO Interest. On each Distribution
Date, principal shall be paid to, Realized Losses shall be allocated to and
accrued but unpaid interest shall be added to the principal amount of the REMIC
2 CE-1 Interest so that such principal amount shall equal the excess of (i) the
Pool Balance as of the close of the related Collection Period over (ii) the
aggregate Certificate Principal Balance of each Class of Certificates on such
Distribution Date after all principal payments have been made and Realized
Losses have been allocated to such Certificates (other than the Class CE-1
Certificates). The portion of Available Funds remaining in REMIC 2 on a
Distribution Date after all distributions have been made to the REMIC 2 Regular
Interests shall be distributed to the Class R Certificates in respect of the
Class R-2 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 REMIC 2 Regular Interests,
with each Corresponding REMIC 2 Regular Interest having an increase in its
principal amount equal to the increase in the Certificate Principal Balance of
the Corresponding Cap Carryover Certificates.
(w) REMIC 1. On each Distribution Date, REMIC 1 shall be deemed to
have received the amounts deemed distributed in respect of the SWAP REMIC
Regular Interests. Amounts with respect to interest shall accrue on the REMIC 1
Regular Interests at the rates specified in the Preliminary Statement. Payments
and Realized Losses shall be allocated among the REMIC 1 Regular Interests so
that (i) each of the Marker Interests shall have a principal balance equal to
50% of the principal balance of the related REMIC 2 Regular Interest (with, for
purposes of this Section 9.01(w), the REMIC 2 A-1 Interest being related to the
Class LT1-A1 Interest, the REMIC 2 A-2A Interest being related to the Class
LT1-A2A Interest, the REMIC 2 A-2B Interest being related to the Class LT1-A2B
Interest, the REMIC 2 A-2C Interest being related to the Class LT1-A2C Interest,
the REMIC 2 A-2D Interest being related to the Class LT1-A2D Interest, the REMIC
2 M-1 Interest being related to the Class LT1-M1 Interest, the REMIC 2 M-2
Interest being related to the Class LT1-M2 Interest, the REMIC 2 M-3 Interest
being related to the Class LT1-M3 Interest, the REMIC 2 M-4 Interest being
related to the Class LT1-M4 Interest, the REMIC 2 M-5 Interest being related to
the Class LT1-M5 Interest, the REMIC 2 M-6 Interest being related to the Class
LT1-M6 Interest, the REMIC 2 M-7 Interest being related to the Class LT1-M7
Interest, the REMIC 2 M-8 Interest being related to the Class LT1-M8 Interest,
the REMIC 2 B-1 Interest being related to the Class LT1-B1 Interest, the REMIC 2
B-2 Interest being related to the Class
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LT1-B2 Interest and the REMIC 2 B-3 Interest being related to the Class LT1-B3
Interest) and (ii) the Class LT1-X1 Interest has a principal balance equal to
the excess of (x) the remaining principal balance of the Mortgage Loans over (y)
the aggregate principal balance of the Marker Interests (if necessary to reflect
an increase in overcollateralization, accrued and unpaid interest on the Class
LT1-X1 interest may be added to its principal amount to achieve this result).
Notwithstanding the preceding sentence, however, Realized Losses not allocated
to any Class of Certificates will not be allocated to any REMIC 1 Regular
Interests. All computations with respect to the REMIC 1 Regular Interests shall
be taken out to ten decimal places. Any portion of Available Funds remaining in
REMIC 1 on a Distribution Date after distributions to the REMIC 1 Regular
Interests shall be distributed to the Class R Certificates in respect of the
Class R-1 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 REMIC 1 Regular Interests,
with such increase allocated (before the making of distributions and the
allocation of losses on the REMIC 1 Regular Interests on such Distribution Date)
among the REMIC 1 Regular Interests so that, to the greatest extent possible,
(i) each of the Marker Interests has a principal balance equal to 50% of the
principal balance of the related REMIC 2 Regular Interest and (ii) the Class
LT1-X1 Interest has a principal balance equal to the excess of (x) the remaining
principal balance of the Mortgage Loans over (y) the aggregate principal balance
of the Marker Interests.
(x) The SWAP REMIC. The Class SW-CE2 Interest shall be entitled to
distributions from the SWAP REMIC in the same amounts as all distributions on
the Class CE-2 Certificates. 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 4.01 hereof) received by the SWAP
REMIC with respect to the Mortgage Loans shall be paid to the SWAP REMIC Regular
Interests until the principal balance of all such interests have been reduced to
zero and any losses allocated to such interests have been reimbursed. Any
available funds remaining in the SWAP REMIC on a Distribution Date after
distributions to the SWAP REMIC Regular Interests shall be distributed to the
Class R Certificates on account of the Class R-SW Interest. On each Distribution
Date, the Trustee shall distribute the aggregate Interest Remittance Amount (net
of expenses and payments to the Class P Certificates) with respect to each of
the SWAP REMIC Regular Interests (other than the Class SW-CE2 Interest) based on
the interest rates for each such SWAP REMIC Regular Interest. On each
Distribution Date, the Trustee shall distribute the aggregate Principal
Remittance Amount first to the Class SW-Z Interest until its principal balance
is reduced to zero and then sequentially to each of the other SWAP REMIC Regular
Interests (other than the Class SW-CE2 Interest) in ascending order of their
numerical class designation, in equal amounts to each such class in such
numerical designation, until the principal balance of each such class is reduced
to zero. All losses shall be allocated among the SWAP REMIC Regular Interests in
the same manner that principal distributions are allocated. Subsequent
Recoveries and loss reimbursements shall be allocated in the reverse fashion
from the manner in which losses are allocated.
(y) Notwithstanding anything to the contrary contained herein, the
above distributions in this Section 9.01 (other than on the Certificates) are
deemed distributions, and distributions of funds from the Distribution Account
shall be made only in accordance with Sections 4.01 and 4.02 hereof.
Section 9.02 Prohibited Transactions and Activities.
Neither the Seller, the Depositor, the Servicer nor the Trustee shall sell,
dispose of, or substitute for any of the Mortgage Loans, except in a disposition
pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of any REMIC pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
repurchase of Mortgage
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Loans pursuant to Article II of this Agreement, nor acquire any assets for any
REMIC constituting part of the Trust Fund, nor sell or dispose of any
investments in the Distribution Account for gain, nor accept any contributions
to any REMIC constituting part of the Trust Fund after the Closing Date, unless
it has received an Opinion of Counsel (at the expense of the party causing such
sale, disposition, or substitution) that such disposition, acquisition,
substitution, or acceptance will not (a) affect adversely the status of such
REMIC as a REMIC or of the interests therein other than the Residual
Certificates as the regular interests therein, (b) affect the distribution of
interest or principal on the Certificates, (c) result in the encumbrance of the
assets transferred or assigned to the Trust Fund (except pursuant to the
provisions of this Agreement) or (d) cause such REMIC to be subject to a tax on
prohibited transactions or prohibited contributions pursuant to the REMIC
Provisions.
Section 9.03 Indemnification with Respect to Certain Taxes and Loss of
REMIC Status.
In the event that any REMIC formed hereunder 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 Holder of the
related Residual Certificate against any and all losses, claims, damages,
liabilities or expenses ("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 such
Residual Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of such Residual 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 Residual 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 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).
Section 9.04 REO Property.
(a) Subject to compliance with applicable laws and regulations as
shall at any time be in force, and notwithstanding any other provision of this
Agreement, the Servicer, acting on behalf of the Trust hereunder, shall not
rent, lease, or otherwise earn income on behalf of any REMIC constituting part
of the Trust Fund with respect to any REO Property which might cause such REO
Property to fail to qualify as "foreclosure" property within the meaning of
section 860G(a)(8) of the Code or result in the receipt by any REMIC
constituting part of the Trust Fund of any "income from non-permitted assets"
within the meaning of section 860F(a)(2) of the Code or any "net income from
foreclosure property" which is subject to tax under the REMIC Provisions unless
the Servicer has advised the Trustee in writing to the effect that, under the
REMIC Provisions, such action would not adversely affect the status of any REMIC
constituting part of the Trust Fund as a REMIC and any income generated for such
REMIC by the REO Property would not result in the imposition of a tax upon such
REMIC.
(b) The Servicer shall make reasonable efforts to sell any REO
Property for its fair market value. In any event, however, the Servicer shall
dispose of any REO Property before the close of the third calendar year
beginning after the year of its acquisition by the Trust Fund unless the
Servicer has received a grant of extension from the Internal Revenue Service to
the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, any REMIC constituting part of the
Trust Fund may hold REO Property for a longer period without adversely affecting
its REMIC
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status or causing the imposition of a Federal or state tax upon any REMIC. If
the Servicer has received such an extension, then the Servicer shall continue to
attempt to sell the REO Property for its fair market value as determined in good
faith by the Servicer for such longer period as such extension permits (the
"Extended Period"). If the Servicer has not received such an extension and the
Servicer is unable to sell the REO Property within 33 months after its
acquisition by the Trust Fund or if the Servicer has received such an extension,
and the Servicer is unable to sell the REO Property within the period ending
three months before the close of the Extended Period, the Servicer shall, before
the end of the applicable period, (i) purchase such REO Property at a price
equal to the REO Property's fair market value as determined in good faith by the
Servicer or (ii) auction the REO Property to the highest bidder (which may be
the Servicer) in an auction reasonably designed to produce a fair price prior to
the expiration of the applicable period.
ARTICLE X
TERMINATION
Section 10.01 Termination.
(a) The respective obligations and responsibilities of the Seller, the
Servicer, the Depositor, the Trustee and the Certificate Registrar created
hereby (other than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date and the obligation of the
Servicer to send certain notices as hereinafter set forth) shall terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balance of each Class of Certificates has been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust Fund, and (iii) the optional purchase by the Servicer of the
Mortgage Loans as described below. Notwithstanding the foregoing, in no event
shall the trust created hereby continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of Xxxxxx X. Xxxxxxx, the late
ambassador of the United States to the Court of St. Xxxxx, living on the date
hereof.
The Servicer (or an Affiliate) may, at its option, terminate the Mortgage
Loans in the Trust Fund and retire the Certificates on the next succeeding
Distribution Date upon which the current Pool Balance is 10% or less of the Pool
Balance of the Mortgage Loans as of the Cut-off Date (x) by purchasing all of
the outstanding (i) Mortgage Loans in the Trust Fund at a price equal to the sum
of the outstanding Principal Balance of the Mortgage Loans and except to the
extent previously advanced by the Servicer, accrued and unpaid interest thereon
at the weighted average of the Mortgage Interest Rates through the end of the
Collection Period preceding the final Distribution Date plus unreimbursed
Servicing Advances, Advances and any unpaid Servicing Fees allocable to such
Mortgage Loans plus any costs or damages incurred by the Trust Fund in
connection with any violation by such Mortgage Loan of any predatory or abusive
lending laws and (ii) REO Properties in the Trust Fund at a price equal to their
fair market value as determined in good faith by the Servicer, and (y) in
addition to the foregoing, by paying sufficient funds to pay any Swap
Termination Payment in connection with the termination of the Trust Fund
pursuant to this Section 10.01 (the "Termination Price"). Notwithstanding the
foregoing, the Servicer (or an Affiliate) may not exercise its optional purchase
right unless any Reimbursement Amount owed to the Trust pursuant to Section 2.03
hereof has been paid.
Notwithstanding anything herein to the contrary, only an amount equal to
the Termination Price, reduced by the portion thereof consisting of any funds to
pay any Swap Termination Payment in connection with the termination of the Trust
Fund pursuant to this Section 10.01 (such portion, the "Swap Optional
Termination Payment"), shall be made available for distribution to the
Certificates. The Swap Optional Termination Payment shall be withdrawn by the
Trustee from the Distribution Account and
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remitted to the Supplemental Interest Trust for payment to the Swap
Counterparty. The Swap Optional Termination Payment shall not be part of any
REMIC and shall not be paid into any account which is part of any REMIC. In
connection with any such purchase pursuant to the preceding paragraph, the
Servicer shall deliver to the Trustee for deposit in the Distribution Account
all amounts then on deposit in the Collection Account (less amounts permitted to
be withdrawn by the Servicer pursuant to Section 3.07), which deposit shall be
deemed to have occurred immediately following such purchase.
Any such purchase shall be accomplished by delivery to the Trustee for
deposit into the Distribution Account as part of Available Funds on the
Determination Date before such Distribution Date of the Termination Price.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee upon the Trustee receiving notice of such date from the Servicer, by
letter to the Certificateholders mailed not earlier than the 15th day of the
month preceding the month of such final distribution and not later than the 15th
day of the month of such final distribution specifying (1) the Distribution Date
upon which final distribution of the Certificates will be made upon presentation
and surrender of such Certificates at the office or agency of the Trustee
therein designated, (2) the amount of any such final distribution and (3) 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 or agency of the Trustee therein specified. Not less
than five (5) Business Days prior to such Determination Date relating to such
Distribution Date, the Trustee shall notify the Seller of the amount of any
unpaid Reimbursement Amount owed to the Trust.
(c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Holders of the Certificates on the
Distribution Date for such final distribution, in proportion to the Percentage
Interests of their respective Class and to the extent that funds are available
for such purpose, an amount equal to the amount required to be distributed to
such Holders in accordance with the provisions of Section 10.02.
(d) In the event that all Certificateholders shall not surrender their
Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders, and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Trustee (in any other
case) 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 nine months after the second notice all the
Certificates shall not have been surrendered for cancellation, the Class R
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto and the Trustee upon transfer of such funds shall be
discharged of any responsibility for such funds, and such Certificateholders
shall look to the Class R Certificateholders for payment.
Section 10.02 Additional Termination Requirements.
(a) In the event that the Servicer exercises its purchase option as
provided in Section 10.01, the Trust shall be terminated in accordance with the
following additional requirements, unless the Trustee shall have been furnished
with an Opinion of Counsel to the effect that the failure of the Trust to comply
with the requirements of this Section will not (i) result in the imposition of
taxes on "prohibited
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transactions" of the Trust as defined in Section 860F of the Code or (ii) cause
any REMIC constituting part of the Trust Fund to fail to qualify as a REMIC at
any time that any Certificates are outstanding:
(i) The Trustee shall designate a date within 90 days prior to
the final Distribution Date as the date of adoption of plans of complete
liquidation delivered to it by the Servicer of each of the remaining REMICs
included in the Trust Fund and shall specify such date in the final federal
income tax return of each REMIC;
(ii) After the date of adoption of such plans of complete
liquidation and at or prior to the final Distribution Date, the Trustee shall
sell all of the assets of the Trust to the Servicer 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 in the following order of priority (A) (i) to the Holders of each of
the Class A Certificates, pro rata and (ii) to the Class X-0, Xxxxx X-0, Class
M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class B-1, Class B-2
and Class B-3 Certificates, the related Certificate Principal Balance, as
applicable, plus one month's interest thereon at the applicable Pass-Through
Rate, (B) (i) any Net WAC Carryover Amounts not previously distributed and (ii)
to the Class CE-1 Certificates, the amount of any remaining Monthly Excess
Cashflow Amounts not previously distributed thereon, (C) to the remaining REMIC
Regular Interests the amounts allocable thereto pursuant to Section 9.01 and (D)
to the Class R Certificateholders, all cash on hand in respect of the related
REMIC or REMICs after such payment (other than cash retained to meet claims) and
the Trust shall terminate at such time.
(b) By their acceptance of Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) designate such
date of adoption of plans of complete liquidation and (ii) to take such other
action in connection therewith as may be reasonably required to carry out such
plans of complete liquidation all in accordance with the terms hereof.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment.
This Agreement may be amended from time to time by the Seller, the
Depositor, the Servicer and the Trustee; and without the consent of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions herein which may be defective or inconsistent with any other
provisions herein, (iii) to make any other provisions with respect to matters or
questions arising under this Agreement, which shall not be inconsistent with the
provisions of this Agreement, or (iv) to comply with any requirements imposed by
the Code; provided, however, that any such action listed in clause (i) through
(iv) above shall not adversely affect in any respect the interests of any
Certificateholder, as evidenced by (i) notice in writing to the Depositor, the
Servicer and the Trustee from the Rating Agencies that such action will not
result in the reduction or withdrawal of the rating of any outstanding Class of
Certificates with respect to which it is a Rating Agency, or (ii) an Opinion of
Counsel delivered to the Servicer and the Trustee. In addition, this Agreement
may be amended from time to time by the Seller, the Depositor, the Servicer and
the Trustee without the consent of any of the Certificateholders to comply with
the provisions of Regulation AB.
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In addition, this Agreement may be amended from time to time by the Seller,
the Depositor, the Servicer and the Trustee, with the consent of the Majority
Certificateholders 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 or waiver shall (x) reduce in any manner the
amount of, or delay the timing of, payments on the Certificates which are
required to be made on any Certificate without the consent of the Holder of such
Certificate, (y) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in
clause (x) above, without the consent of the Holders of Certificates of such
Class evidencing at least a 66 2/3% Percentage Interest in such Class, or (z)
reduce the percentage of Voting Rights required by clause (y) above without the
consent of the Holders of all Certificates of such Class then outstanding. Upon
approval of an amendment, a copy of such amendment shall be sent to the Rating
Agencies.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel (at the expense
of the Person seeking such amendment) stating that the execution of such
amendment is authorized or permitted by this Agreement. The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under this Agreement.
The Trustee shall not enter into any amendment to this Agreement that would
have a materially adverse effect on the Swap Counterparty without first
obtaining the consent of the Swap Counterparty.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, delivered by (and at the expense of)
the Person seeking such Amendment, to the effect that such amendment is
permitted hereunder and will not result in the imposition of a tax on any REMIC
constituting part of the Trust Fund pursuant to the REMIC Provisions or cause
any REMIC constituting part of the Trust to fail to qualify as a REMIC at any
time that any Certificates are outstanding and that the amendment is being made
in accordance with the terms hereof.
Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is the Seller or the Servicer (but in no event at the expense of the
Trustee), otherwise at the expense of the Trust, a copy of such amendment and
the Opinion of Counsel referred to in the immediately preceding paragraph to the
Servicer and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this
Section 11.01 to approve the particular form of any proposed amendment; instead
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Notwithstanding anything to the contrary in this Section 11.01, the
Trustee, the Seller 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 Securities and Exchange Commission.
Notwithstanding the foregoing, none of the Seller, the Servicer and the Trustee
shall be obligated to enter into any amendment pursuant to this paragraph that
adversely affects its obligations and immunities under this Agreement.
Section 11.02 Recordation of Agreement; Counterparts.
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To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the expense of the Trust, but only upon direction of
Certificateholders, accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall together constitute but one and the
same instrument.
Section 11.03 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not (i) operate to
terminate this Agreement or the Trust, (ii) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Except as expressly provided for herein, no Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to 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 person 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 of any provision 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 default and of the
continuance thereof, as herein provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 15 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 is understood
and intended, and 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 of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 11.03 each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.04 Governing Law; Jurisdiction.
This Agreement shall be construed in accordance with the laws of the State
of New York, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws. With respect to any claim
arising out of this Agreement, each party irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located
140
in the Borough of Manhattan in The City of New York, and each party irrevocably
waives any objection which it may have at any time to the laying of venue of any
suit, action or proceeding arising out of or relating hereto brought in any such
courts, irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in any inconvenient forum and further
irrevocably waives the right to object, with respect to such claim, suit, action
or proceeding brought in any such court, that such court does not have
jurisdiction over such party, provided that service of process has been made by
any lawful means.
Section 11.05 Notices.
All directions, demands and notices hereunder shall be in writing and shall
be deemed to have been duly given if personally delivered at or mailed by first
class mail, postage prepaid, or by express delivery service, to (a) in the case
of the Seller, Credit-Based Asset Servicing and Securitization LLC, 000 Xxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Director - Mortgage
Finance (telecopy number (000) 000-0000), or such other address or telecopy
number as may hereafter be furnished to the Depositor and the Trustee in writing
by the Seller, (b) in the case of the Trustee, U.S. Bank National Association,
00 Xxxxxxxxxx Xxxxxx, Mail Code EP-MN-WS3D, Xx. Xxxx, Xxxxxxxxx 00000-0000,
Attention: Structured Finance, C-BASS 2006-CB8, or such other address as may
hereafter be furnished to the Depositor, the Seller and the Servicer in writing
by the Trustee, (c) in the case of the Depositor, Xxxxxxx Xxxxx Mortgage
Investors, Inc., 000 Xxxxx Xxxxxx, 4 World Financial Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Asset-Backed Finance, or such other address as
may be furnished to the Seller, the Servicer and the Trustee in writing by the
Depositor, and (d) in the case of the Servicer, Xxxxxx Loan Servicing LP, 0000
Xxxx Xxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention: Xxxxxx XxXxxxx, or such
other address as may be furnished to the Seller, the Depositor and the Trustee
in writing by the Servicer. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Notice of any
Servicer Event of Termination shall be given by telecopy and by certified mail.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have duly been given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder shall also be mailed to the appropriate party in the manner
set forth above.
Section 11.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.07 Article and Section References.
All article and section references used in this Agreement, unless otherwise
provided, are to articles and sections in this Agreement.
Section 11.08 Notice to the Rating Agencies.
Each of the Trustee and the Servicer shall be obligated to use its best
reasonable efforts promptly to provide notice to the Rating Agencies with
respect to each of the following of which a Responsible Officer of the Trustee
or the Servicer, as the case may be, has actual knowledge:
141
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Servicer Event of Termination that has
not been cured or waived;
(iii) the resignation or termination of the Servicer or the
Trustee;
(iv) the final payment to Holders of the Certificates of any
Class;
(v) any change in the location of any Account; and
(vi) if the Trustee is acting as successor Servicer pursuant to
Section 7.02 hereof, any event that would result in the inability of the Trustee
to make Advances.
(vii) In addition, the Servicer shall promptly furnish to each
Rating Agency copies of the following:
(A) each annual statement as to compliance described in
Section 3.19 hereof;
(B) each annual independent public accountants' servicing
report described in Section 3.20 hereof; and
(C) each notice delivered pursuant to Section 7.01(a) hereof
which relates to the fact that the Servicer has not made an Advance.
Any such notice pursuant to this Section 11.08 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to Xxxxx'x
Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Managing Director, Residential Mortgage-Backed Securities; and Standard &
Poor's, a division of The XxXxxx-Xxxx Companies, Inc., 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Mortgage Surveillance Group.
Section 11.09 Further Assurances.
Notwithstanding any other provision of this Agreement, neither the holders
of the Regular Certificates nor the Trustee shall have any obligation to consent
to any amendment or modification of this Agreement unless they have been
provided reasonable security or indemnity against their out-of-pocket expenses
(including reasonable attorneys' fees) to be incurred in connection therewith.
Section 11.10 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Certificateholders and the parties
hereto and their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement; provided, however, that the Swap
Counterparty shall be a third-party beneficiary with respect to the fourth
paragraph of Section 11.01.
Section 11.11 Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and
142
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by agent duly appointed in writing; and
such action shall become effective when such instrument or instruments are
delivered to the Trustee, the Seller and the Servicer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "act" of the Certificateholders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section 11.11.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee or the
Trust in reliance thereon, whether or not notation of such action is made upon
such Certificate.
Section 11.12 Compliance with Regulation AB.
Each of the parties hereto acknowledges and agrees that the purpose of
Sections 3.19, 3.20 and 3.29 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, 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 (c) the parties
shall comply with reasonable requests made by the Depositor for delivery of that
or different information as the Depositor may determine in good faith is
necessary to comply with the provisions of Regulation AB, provided that such
information is available to such party without unreasonable effort or expense
and within such timeframe as may be reasonably requested.
[SIGNATURE PAGES IMMEDIATELY FOLLOW]
143
IN WITNESS WHEREOF, the Seller, the Depositor, the Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized, all as of the day and year first above written.
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.,
as Depositor
By:
------------------------------------
Name:
Title:
CREDIT-BASED ASSET SERVICING AND
SECURITIZATION LLC, as Seller
By:
------------------------------------
Name:
Title:
XXXXXX LOAN SERVICING LP, as Servicer
By:
------------------------------------
Name: Xxxxxx XxXxxxx
Title: Senior Vice President
U.S. BANK NATIONAL ASSOCIATION, not in
its individual capacity but solely as
Trustee for the Xxxxxxx Xxxxx Mortgage
Investors Trust, Series 2006-CB8
By:
------------------------------------
Name:
Title:
EXHIBIT A-1
FORM OF THE CLASS A-1 CERTIFICATE
[Intentionally Omitted]
X-0-0
XXXXXXX X-0
FORM OF CLASS A-2A CERTIFICATES
[Intentionally Omitted]
X-0-0
XXXXXXX X-0
FORM OF CLASS A-2B CERTIFICATES
[Intentionally Omitted]
X-0-0
XXXXXXX X-0
FORM OF CLASS A-2C CERTIFICATES
[Intentionally Omitted]
X-0-0
XXXXXXX X-0
FORM OF CLASS A-2D CERTIFICATES
[Intentionally Omitted]
X-0-0
XXXXXXX X-0-0
FORM OF CLASS B-1 CERTIFICATES (144A)
[Intentionally Omitted]
X-0-0-0
XXXXXXX X-0-0
FORM OF CLASS B-1 CERTIFICATES (REGULATION S)
[Intentionally Omitted]
X-0-0-0
XXXXXXX X-0-0
FORM OF CLASS B-2 CERTIFICATES (144A)
[Intentionally Omitted]
X-0-0-0
XXXXXXX X-0-0
FORM OF CLASS B-2 CERTIFICATES (REGULATION S)
[Intentionally Omitted]
X-0-0-0
XXXXXXX X-0-0
FORM OF CLASS B-3 CERTIFICATES (144A)
[Intentionally Omitted]
X-0-0-0
XXXXXXX X-0-0
FORM OF CLASS B-3 CERTIFICATES (REGULATION S)
[Intentionally Omitted]
B-3-2-1
EXHIBIT C-1-1
FORM OF CLASS R CERTIFICATE
[Intentionally Omitted]
C-1-1-1
EXHIBIT C-1-2
FORM OF CLASS R-X CERTIFICATE
[Intentionally Omitted]
C-1-2-1
EXHIBIT C-2
FORM OF CLASS M-1 CERTIFICATES
[Intentionally Omitted]
C-2-1
EXHIBIT C-3
FORM OF CLASS M-2 CERTIFICATES
[Intentionally Omitted]
C-3-1
EXHIBIT C-4
FORM OF CLASS M-3 CERTIFICATES
[Intentionally Omitted]
C-4-1
EXHIBIT C-5
FORM OF CLASS M-4 CERTIFICATES
[Intentionally Omitted]
C-5-1
EXHIBIT C-6
FORM OF CLASS M-5 CERTIFICATES
[Intentionally Omitted]
C-6-1
EXHIBIT C-7
FORM OF CLASS M-6 CERTIFICATES
[Intentionally Omitted]
C-7-1
EXHIBIT C-8
FORM OF CLASS M-7 CERTIFICATES
[Intentionally Omitted]
C-8-1
EXHIBIT C-9
FORM OF CLASS M-8 CERTIFICATES
[Intentionally Omitted]
C-9-1
EXHIBIT C-10
FORM OF CLASS P CERTIFICATES
[Intentionally Omitted]
C-10-1
EXHIBIT C-11-1
FORM OF CLASS CE-1 CERTIFICATES
[Intentionally Omitted]
C-11-1-1
EXHIBIT C-11-2
FORM OF CLASS CE-2 CERTIFICATES
[Intentionally Omitted]
C-11-2-1
EXHIBIT D-1
MORTGAGE LOAN SCHEDULE
[Intentionally Omitted]
D-1-1
EXHIBIT D-2
GROUP I MORTGAGE LOAN SCHEDULE
[Intentionally Omitted]
D-2-1
EXHIBIT D-3
GROUP II MORTGAGE LOAN SCHEDULE
[Intentionally Omitted]
D-3-1
EXHIBIT E
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
To: U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Structured Finance/C-BASS 0000-XX0
[xxx/xx its designee]
Re: Pooling and Servicing Agreement dated as of October 1, 2006, among Xxxxxxx
Xxxxx Mortgage Investors, Inc., as depositor, Credit-Based Asset Servicing
and Securitization LLC, as sponsor, U.S. Bank National Association, as
trustee, and Xxxxxx Loan Servicing LP, as servicer, relating to C-BASS
Mortgage Loan Asset-Backed Certificates, Series 2006-CB8
In connection with the administration of the Mortgage Loans held by you, as
Trustee, pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt of the Mortgage File for the
Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
_______ 1. Mortgage Paid in Full
_______ 2. Foreclosure
_______ 3. Substitution
_______ 4. Other Liquidation (Repurchases, etc.)
_______ 5. Nonliquidation
Address to which the Trustee should deliver the Mortgage File:
By:
------------------------------------
(authorized signer)
Address:
-------------------------------
Date:
----------------------------------
If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.
E-1
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:
U.S. Bank National Association, as Trustee
By:
--------------------------------- ----------------------------------------
Signature Date
Documents returned to Trustee:
By:
--------------------------------- ----------------------------------------
Signature Date
E-2
EXHIBIT F-1
FORM OF CUSTODIAN'S INITIAL CERTIFICATION
[Date]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
4 World Financial Center, 10th Floor
New York, New York 10080
Xxxxxx Loan Servicing LP
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Structured Finance/C-BASS 0000-XX0
[xxx/xx its designee]
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of October 1, 2006, among Xxxxxxx Xxxxx Mortgage
Investors, Inc., as depositor, Credit-Based Asset Servicing and
Securitization LLC, as sponsor, Xxxxxx Loan Servicing LP, as servicer,
and U.S. Bank National Association, as trustee, with respect to C-BASS
Mortgage Loan Asset-Backed Certificates, Series 2006-CB8
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing Agreement, the
undersigned, as Custodian, hereby certifies that it received the documents
listed in Section 2.01 of the Pooling and Servicing Agreement for each Mortgage
File pertaining to each Mortgage Loan listed on Exhibit D-1 and Exhibit D-2, to
the Pooling and Servicing Agreement, subject to any exceptions noted on Schedule
I hereto.
Capitalized words and phrases used herein and not otherwise defined herein
shall have the respective meanings assigned to them in the Pooling and Servicing
Agreement. This Certificate is subject in all respects to the terms of Section
2.02 of the Pooling and Servicing Agreement and the Pooling and Servicing
Agreement sections cross-referenced therein.
THE BANK OF NEW YORK,
as Custodian
By:
------------------------------------
Name:
Title:
F-1-1
EXHIBIT F-2
FORM OF CUSTODIAN'S FINAL CERTIFICATION
[Date]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
4 World Financial Center, 10th Floor
New York, New York 10080
Xxxxxx Loan Servicing LP
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Structured Finance/C-BASS 0000-XX0
[xxx/xx its designee]
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of October 1, 2006, among Xxxxxxx Xxxxx Mortgage
Investors, Inc., as depositor, Credit-Based Asset Servicing and
Securitization LLC, as sponsor, Xxxxxx Loan Servicing LP, as servicer,
and U.S. Bank National Association, as Trustee, with respect to C-BASS
Mortgage Loan Asset-Backed Certificates, Series 2006-CB8
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing Agreement, the
undersigned, as Custodian, hereby certifies that as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
listed on Schedule I hereto) it has received the applicable documents listed in
Section 2.01 of the Pooling and Servicing Agreement.
The undersigned hereby certifies that as to each Mortgage Loan identified
on the Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents listed above and has determined that each
such document appears to be complete and, based on an examination of such
documents, the information set forth in the Mortgage Loan Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement. This
Certificate is qualified in all respects by the terms of said Pooling and
Servicing Agreement.
THE BANK OF NEW YORK,
as Custodian
By:
----------------------------------
Name:
Title:
F-2-1
EXHIBIT F-3
FORM OF RECEIPT OF MORTGAGE NOTE
[Date]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-CB8
Ladies and Gentlemen:
Pursuant to Section 2.01 of the Pooling and Servicing Agreement, dated as
of October 1, 2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor,
Credit-Based Asset Servicing and Securitization LLC, as sponsor, Xxxxxx Loan
Servicing LP, as servicer, and U.S. Bank National Association, as trustee, we
hereby acknowledge the receipt of the original Mortgage Note (a copy of which is
attached hereto as Exhibit 1) with any exceptions thereto listed on Exhibit 2.
THE BANK OF NEW YORK,
as Custodian
By:
------------------------------------
Name:
Title:
F-3-1
EXHIBIT G
MORTGAGE LOAN PURCHASE AGREEMENT
[Intentionally Omitted]
G-1
EXHIBIT H
FORM OF LOST NOTE AFFIDAVIT
Personally appeared before me the undersigned authority to administer
oaths, ______________________ who first being duly sworn deposes and says:
Deponent is ______________________ of ______________________________, successor
by merger to _________________________________________ ("Seller") and who has
personal knowledge of the facts set out in this affidavit.
On ___________________, _________________________ did execute and deliver a
promissory note in the principal amount of $__________.
That said note has been misplaced or lost through causes unknown and is
presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and interest on said note is still
presently outstanding, due, and unpaid, and Seller is still owner and holder in
due course of said lost note.
Seller executes this Affidavit for the purpose of inducing U.S. Bank
National Association, as trustee on behalf of C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2006-CB8 to accept the transfer of the above described loan
from Seller.
Seller agrees to indemnify and hold harmless U.S. Bank National Association
and Xxxxxxx Xxxxx Mortgage Investors, Inc. for any losses, liabilities, costs
and expenses incurred by such parties resulting from the above described
promissory note having been lost or misplaced.
By:
------------------------------------
STATE OF )
) SS:
COUNTY OF )
On this ____ day of _______ 20__, before me, a Notary Public, in and for
said County and State, appeared ________________________, who acknowledged the
extension of the foregoing and who, having been duly sworn, states that any
representations therein contained are true.
Witness my hand and Notarial Seal this ____ day of _______ 20__.
My commission expires _____________________________.
H-1
EXHIBIT I
FORM OF ERISA REPRESENTATION
Date
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Structured Finance/C-BASS 0000-XX0
[xxx/xx its designee]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-CB8
Ladies and Gentlemen:
1. [The undersigned is the ______________________ of (the "Transferee") a
[corporation duly organized] and existing under the laws of __________, on
behalf of which he makes this affidavit.] [The undersigned, ___________________,
is the transferee (the "Transferee").]
2. The Transferee hereby acknowledges that under the terms of the Pooling
and Servicing Agreement (the "Agreement") among Xxxxxxx Xxxxx Mortgage
Investors, Inc., as depositor (the "Depositor"), Credit-Based Asset Servicing
and Securitization LLC, as sponsor, Xxxxxx Loan Servicing LP, as servicer, and
U.S. Bank National Association, as trustee (the "Trustee"), no transfer of the
ERISA-Restricted Certificates (other than the Class R and Class R-X
Certificates) shall be permitted to be made to any person unless the Depositor
and the Certificate Registrar (as defined in the Agreement) have received a
certificate from such transferee in the form hereof.
3. The Transferee (i) is not an employee benefit plan or arrangement
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), a plan subject to Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code") or a plan subject to any state, local, federal,
non-U.S. or other law substantively similar to the foregoing provisions of ERISA
or the Code ("Similar Law") (collectively, a "Plan"), and is not directly or
indirectly acquiring the Certificate for, on behalf of or with any assets of any
such Plan, (ii) 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 (iii) solely in the case of a Definitive Certificate, will
deliver herewith an Opinion of Counsel satisfactory to the Trustee and the
Certificate Registrar, and upon which the Trustee and the Certificate Registrar
shall be entitled to rely, to the effect that the acquisition and holding of
such Certificate by the transferee will not 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 Certificate Registrar, the Depositor,
the Servicer or the Trustee 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 Certificate Registrar, the Depositor, the
Servicer or the Trustee.
I-1
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Agreement.
IN WITNESS WHEREOF, the Transferee has executed this certificate.
[Transferee]
By:
-----------------------------------
Name:
Title:
I-2
EXHIBIT J
FORMS OF INVESTMENT LETTERS
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
4 World Financial Center, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Structured Finance/C-BASS 0000-XX0
[xxx/xx its designee]
Re: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-CB8
Ladies and Gentlemen:
In connection with our acquisition of the C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2006-CB8 (the "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 are an "accredited investor,"
as defined in Regulation D under the Act, and 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 Certificates and all matters relating thereto or any additional
information deemed necessary to our decision to purchase the Certificates, (d)
we are acquiring the Certificates for investment for our own account and not
with a view to any distribution of such Certificates (but without prejudice to
our right at all times to sell or otherwise dispose of the Certificates in
accordance with clause (g) below), (e) we agree that the Certificates must be
held indefinitely by us and we acknowledge that we are able to bear the economic
risk of investment in the Certificates, (f) 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, or
taken any other action which would result in a violation of Section 5 of the
Act, (g) we will not sell, transfer or otherwise dispose of any Certificates
unless (1) such sale, transfer or other disposition is made pursuant to an
effective registration statement under the Act or is exempt from such
registration requirements, and if requested, we will at our expense provide an
opinion of counsel satisfactory to the addressees of this Certificate that such
sale, transfer or other disposition may be made pursuant to an exemption from
the Act, (2) the purchaser or transferee of such Certificate has executed and
delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling and Servicing Agreement and (h)
we acknowledge that the Certificates will bear a legend setting forth the
applicable restrictions on transfer.
Very truly yours,
[NAME OF TRANSFEREE]
By:
-----------------------------------
Authorized Officer
J-1
FORM OF INVESTMENT LETTER [RULE 144A]
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
4 World Financial Center, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Structured Finance/C-BASS 0000-XX0
[xxx/xx its designee]
Re: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-CB8
Ladies and Gentlemen:
In connection with our acquisition of the C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2006-CB8 (the "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 had the opportunity to
ask questions of and receive answers from the Depositor concerning the purchase
of the Certificates and all matters relating thereto or any additional
information deemed necessary to our decision to purchase the Certificates, (c)
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, (d) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed either of the forms of certification to that effect
attached hereto as Annex 1 or Annex 2. We are aware that the sale to us is being
made in reliance on Rule 144A. We are acquiring the 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 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.
Very truly yours,
[NAME OF TRANSFEREE]
By:
-----------------------------------
Authorized Officer
J-2
ANNEX 1 TO EXHIBIT J
QUALIFIED INSTITUTIONAL 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 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 $_____(1) 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 the 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 any such institutions 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.
___ Insurance Company. The Buyer is an insurance company whose primary
and predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a similar
official or agency of a State, territory or the District of Columbia.
----------
(1) Buyer must own and/or invest on a discretionary basis at least $______ in
securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $______ in securities.
J-3
___ 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 within the
meaning of Title I of the Employee Retirement Income Security Act of
1974.
___ Investment Advisor. The Buyer is an investment advisor registered
under the Investment Advisors Act of 1940.
___ 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.
___ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisors
Act of 1940.
3. The term "securities" as used herein does not include (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 is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
Print Name of Buyer
By:
-----------------------------------
Name:
J-4
Title:
Date:__________________________________
J-5
ANNEX 2 TO EXHIBIT J
QUALIFIED INSTITUTIONAL 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 SEC 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.
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed
J-6
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.
Print Name of Buyer or Adviser
By:
-----------------------------------
Name:
Title:
IF AN ADVISER:
Print Name of Buyer
Date: _________________________________
J-7
EXHIBIT K
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT
C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2006-CB8
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is [an officer of] ______________, the proposed
Transferee of an Ownership Interest in a [Class R and/or Class R-X Certificates]
(the "Residual Certificate") issued pursuant to the Pooling and Servicing
Agreement, (the "Agreement"), relating to the above-referenced Certificates,
among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Credit-Based Asset
Servicing and Securitization LLC, as sponsor, Xxxxxx Loan Servicing LP, as
servicer, and U.S. Bank National Association, as trustee (the "Trustee").
Capitalized terms used, but not defined herein shall have the meanings ascribed
to such terms in the Agreement. The Transferee has authorized the undersigned to
make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the date of
the transfer, a Permitted Transferee. The Transferee is acquiring the Residual
Certificate either (i) for its own account or (ii) as nominee, trustee or agent
for another Person who is a Permitted Transferee and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax will
be imposed on Transfers of the Residual Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
Transferee is the record Holder of an interest in such entity. The Transferee
understands that, other than in the case of an "electing large partnership"
under Section 775 of the Code, such tax will not be imposed for any period with
respect to which the record Holder furnishes to the pass-through entity an
affidavit that such record Holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 5.02 of the
Agreement and understands the legal consequences of the acquisition of the
Residual Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 5.02 of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee
K-1
understands and agrees that any breach of any of the representations included
herein shall render the transfer to the Transferee contemplated hereby null and
void.
6. The Transferee agrees to require a transfer affidavit in the form of
this Affidavit from any Person to whom the Transferee attempts to transfer the
Residual Certificate, and in connection with any transfer by a Person for whom
the Transferee is acting as nominee, trustee or agent, and the Transferee will
not transfer the Residual Certificate or cause the Residual Certificate to be
transferred to any Person that the Transferee knows is not a Permitted
Transferee.
7. The Transferee historically has paid its debts as they have become due.
8. The Transferee does not have the intention to impede the assessment or
collection of any tax legally required to be paid with respect to the Residual
Certificate.
9. The taxpayer identification number of the Transferee's nominee is
___________.
10. The Transferee is a U.S. Person as defined in Code Section 7701(a)(30).
11. The Transferee is aware that the Residual Certificate may be a
"noneconomic residual interest" within the meaning of Treasury Regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
12. The Transferee will not cause income from the Residual 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 any other
person.
13. If the Transferee is purchasing the Residual Certificate in a transfer
intended to meet the safe harbor provisions of Treasury Regulations Sections
1.860E-1(c), the Transferee has executed and attached Attachment A hereto.
14. The Transferee is not an employee benefit plan or arrangement subject
to Title I of ERISA, a plan subject to Section 4975 of the Code or a plan
subject to any state, local or other federal law substantively similar to the
foregoing provisions of ERISA or the Code (collectively, a "Plan"), and is not
directly or indirectly acquiring this Certificate for, on behalf of or with any
assets of any such Plan.
* * *
K-2
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer this _____ day of ________________, ____.
Print Name of Transferee
By:
-----------------------------------
Name:
Title:
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
Transferee, and acknowledged that he executed the same as his free act and deed
and the free act and deed of the Transferee.
Subscribed and sworn before me this _____ day of _______________________,
____
NOTARY PUBLIC
My Commission expires the ____ day of
______________, ____
K-3
ATTACHMENT A
to
AFFIDAVIT PURSUANT TO SECTION 860E(E)(4) OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, AND FOR NON-ERISA INVESTORS
Check the appropriate box:
[_] The consideration paid to the Transferee to acquire the Residual
Certificate equals or exceeds the excess of (a) the present value of the
anticipated tax liabilities over (b) the present value of the anticipated
savings associated with holding such Residual Certificate, in each case
calculated in accordance with U.S. Treasury Regulations Sections
1.860E-1(c)(7) and (8), computing present values using a discount rate
equal to the short-term Federal rate prescribed by Section 1274(d) of the
Code and the compounding period used by the Transferee.
OR
[_] The transfer of the Residual Certificate complies with U.S. Treasury
Regulations Sections 1.860E-1(c)(5) and (6) and, accordingly:
(i) the Transferee is an "eligible corporation," as defined in U.S.
Treasury Regulations Section 1.860E-1(c)(6)(i), as to which income
from Residual Certificate will only be taxed in the United States;
(ii) at the time of the transfer, and at the close of the Transferee's two
fiscal years preceding the year of the transfer, the Transferee had
gross assets for financial reporting purposes (excluding any
obligation of a person related to the Transferee within the meaning of
U.S. Treasury Regulations Section 1.860E-1(c)(6)(ii)) in excess of
$100 million and net assets in excess of $10 million;
(iii) the Transferee will transfer the Residual Certificate only to another
"eligible corporation," as defined in U.S. Treasury Regulations
Section 1.860E-1(c)(6)(i), in a transaction that satisfies the
requirements of Sections 1.860E-1(c)(4)(i), (ii) and (iii) and Section
1.860E-1(c)(5) of the U.S. Treasury Regulations;
(iv) the Transferee has determined the consideration paid to it to acquire
the Residual Certificate based on reasonable market assumptions
(including, but not limited to, borrowing and investment rates,
prepayment and loss assumptions, expense and reinvestment assumptions,
tax rates and other factors specific to the Transferee) that it has
determined in good faith; and
(v) in the event of any transfer of the Residual Certificate by the
Transferee, the Transferee will require its transferee to complete a
representation in the form of this Attachment A as a condition of such
transferee's purchase of the Residual Certificate.
K-4
EXHIBIT L
FORM OF TRANSFEROR CERTIFICATE
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
4 World Financial Center, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Structured Finance/C-BASS 0000-XX0
[xxx/xx its designee]
Re: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-CB8
Ladies and Gentlemen:
In connection with our disposition of the C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2006-CB8 (the "Certificates"), 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, (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 which would result in, a violation of Section 5 of the Act, (c) to
the extent we are disposing of a Class [R]R-X] Certificate, we have no knowledge
the Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of a Class [R][R-X] Certificate is to impede the assessment or
collection of tax.
Very truly yours,
[_______________________]
By:
------------------------------------
L-1
EXHIBIT M
MONTHLY INFORMATION DELIVERED BY SERVICER
1. With respect to the Mortgage Pool and each Loan Group, the number and
Principal Balances of all Mortgage Loans which were the subject of
Principal Prepayments during the related Prepayment Period.
2. With respect to the Mortgage Pool and each Loan Group, the amount of all
partial Principal Prepayments received by the Servicer during the related
Prepayment Period.
3. With respect to the Mortgage Pool and each Loan Group, the aggregate amount
of principal portion of all Monthly Payments received during the related
Collection Period.
4. With respect to the Mortgage Pool and each Loan Group, the amount of
interest received on the Mortgage Loans during the related Collection
Period.
5. With respect to the Mortgage Pool and each Loan Group, the aggregate amount
of the Advances made and recovered with respect to such Distribution Date.
6. With respect to the Mortgage Pool and each Loan Group, the delinquency and
foreclosure information and the amount of Mortgage Loan Losses as of the
close of business of the last day of the preceding Collection Period.
7. With respect to the Mortgage Pool and each Loan Group, the weighted average
maturity, the weighted average Mortgage Interest Rate and the weighted
average Net Mortgage Interest Rate as of the last day of the preceding
Collection Period preceding of the related Interest Accrual Period.
8. The Servicing Fees paid and Servicing Fees accrued during the related
Collection Period.
9. The amount of all payments or reimbursements to the Servicer paid or to be
paid since the prior Distribution Date (or in the case of the first
Distribution Date, since the Closing Date).
10. The Pool Balance and aggregate Principal Balance for each Loan Group.
11. With respect to the Mortgage Pool and each Loan Group, the number of
Mortgage Loans outstanding at the beginning and at the end of the related
Collection Period.
12. The aggregate interest accrued on the Mortgage Loans at their respective
Mortgage Interest Rates for the related Collection Period.
13. The amount deposited in the Collection Account that may not be withdrawn
therefrom pursuant to an order of a United States Bankruptcy Court of
competent jurisdiction imposing a stay pursuant to Section 362 of the
Bankruptcy Code.
14. The aggregate Realized Losses since the Cut-off Date as of the end of the
related Collection Period.
M-1
EXHIBIT N-1
FORM OF SWAP AGREEMENT
DATE: OCTOBER 24, 2006
TO: U.S. BANK NATIONAL ASSOCIATION, not individually, but solely as
Supplemental Interest Trust Trustee on behalf of the Supplemental
Interest Trust with respect to the C-Bass Mortgage Loan Asset-Backed
Certificates, Series 2006-CB8 ("Party B")
ATTENTION: Structured
Finance, C-BASS 2006-CB8
FAX: (000) 000-0000
FROM: XXXXXXX XXXXX CAPITAL SERVICES, INC. ("Party A")
CONTACT: XXXX WON
EMAIL: xxxx@xxxxxxxx.xx.xxx
TEL: 000-000-0000
FAX: 000-000-0000
RE: Fixed Income Derivatives Confirmation and Agreement
ML REF: 06DL24190, 2982623
Dear Sir or Madam:
The purpose of this letter agreement ("Agreement") is to confirm the terms
and conditions of the current Transaction entered into on the Trade Date
specified below (the "Transaction") between Swap Provider ("Party A") and U.S.
Bank National Association, not individually, but solely as trustee (the
"Supplemental Interest Trust Trustee") on behalf of the supplemental interest
trust with respect to the C-Bass Mortgage Loan Asset-Backed Certificates, Series
2006-CB8 (the "Supplemental Interest Trust") ("Party B") created under the
Pooling and Servicing Agreement, dated as of October 1, 2006, among Credit-Based
Asset Servicing and Securitization LLC, as sponsor, Xxxxxxx Xxxxx Mortgage
Investors, Inc., as depositor, Xxxxxx Loan Servicing LP, as servicer and U.S.
Bank National Association, as trustee (the "Pooling and Servicing Agreement").
This Agreement, which evidences a complete and binding agreement between you and
us to enter into the Transaction on the terms set forth below, constitutes a
"Confirmation" as referred to in the "ISDA Form Master Agreement" (as defined
below), as well as a "Schedule" as referred to in the ISDA Form Master
Agreement.
1. This Agreement is subject to the 2000 ISDA Definitions (the "Definitions"),
as published by the International Swaps and Derivatives Association, Inc.
("ISDA"). Any reference to a "Swap Transaction" in the Definitions is
deemed to be a reference to a "Transaction" for purposes of this Agreement,
and any reference to a "Transaction" in this Agreement is deemed to be a
reference to a "Swap Transaction" for purposes of the Definitions. You and
we have agreed to enter into this Agreement in lieu of negotiating a
Schedule to the 1992 ISDA Master Agreement (Multicurrency--Cross Border)
form (the "ISDA Form Master Agreement") but, rather, an ISDA Form Master
Agreement shall be deemed to have been executed by you and us on the date
we entered into the Transaction, and this Agreement shall form part of,
supplement and be subject to such ISDA Form Master Agreement. For the
avoidance of doubt, the Transaction described herein shall be the sole
Transaction governed by such ISDA Form Master Agreement. Each term
capitalized but not defined herein or in the Definitions shall have the
meaning assigned thereto in the Pooling and Servicing Agreement. Each
reference to a "Section" (unless specifically referencing the Pooling
N-1-1
and Servicing Agreement) or to a "Section" "of this Agreement" will be
construed as a reference to a Section of the ISDA Form Master Agreement,
and each reference to a "Part" will be construed as a reference to the
provisions herein deemed incorporated in a Schedule to the ISDA Form Master
Agreement.
In the event of any inconsistency between any of the following documents, the
relevant document first listed below shall govern: (i) a Confirmation; (ii) the
Schedule and Paragraph 13 of an ISDA Credit Support Annex (as applicable); (iii)
the ISDA Definitions; and (iv) the ISDA Form Master Agreement and ISDA Credit
Support Annex (as applicable).
2. The terms of the particular Transaction to which the Confirmation relates
are as follows:
Type of Transaction: Interest Rate Swap
Notional Amount: With respect to any Calculation Period, the amount
set forth for such period in Schedule I attached
hereto.
Trade Date: October 17, 2006
Effective Date: October 30, 2006
Termination Date: October 25, 2010, subject to adjustment in accordance
with the Following Business Day Convention.;
provided, however, that for the purpose of
determining the final Fixed Rate Payer Period End
Date, Termination Date shall be subject to No
Adjustment.
Additional Payment: [INTENTIONALLY OMITTED] payable by Party B to Party A
on October 19, 2006
Fixed Amounts:
Fixed Rate Payer: Party B
Fixed Rate Payer
Period End Date: The 25th calendar day of each month during the Term
of this Transaction, commencing November 25, 2006 and
ending on the Termination Date subject to No
Adjustment.
Fixed Rate Payer
Payment Date: The 25th calendar day of each month during the Term
of this Transaction, commencing November 25, 2006 and
ending on the Termination Date, subject to adjustment
in accordance with the Following Business Day
Convention.
Fixed Rate: 5.200000% per annum
Fixed Rate Payer:
Day Count Fraction: 30/360
N-1-2
Floating Amounts:
Floating Rate Payer: Party A
Floating Rate Payer
Period Date: The 25th calendar day of each month during the Term
of this Transaction, commencing November 25, 2006 and
ending on the Termination Date, subject to adjustment
in accordance with the Following Business Day
Convention.
Floating Rate Payer
Payment Date: The 25th calendar day of each month during the Term
of this Transaction, commencing November 25, 2006 and
ending on the Termination Date, subject to adjustment
in accordance with the Following Business Day
Convention.
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: One Month, with the exception of the initial
Calculation Period where Linear Interpolation shall
apply using Designated Maturities of Two Weeks and
One Month.
Spread: Inapplicable
Floating Rate Payer
Day Count Fraction: Actual/360
Reset Dates: The first day of each Floating Rate Payer Calculation
Period
Rate Cut-Off Dates: Inapplicable
Averaging: Inapplicable
Compounding: Inapplicable
Business Days: New York
Business Day Convention: Following
Calculation Agent: Party A
N-1-3
3. Provisions Deemed Incorporated in a Schedule to the Master Agreement:
PART 1. TERMINATION PROVISIONS.
For the purposes of this Agreement:-
(a) "SPECIFIED ENTITY" is not applicable to Party A or Party B for any purpose.
(b) "SPECIFIED TRANSACTION" is not applicable to Party A or Party B for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to Party A or
Party B.
(c) EVENTS OF DEFAULT:
(i) The "BREACH OF AGREEMENT" provision of Section 5(a)(ii) will not apply
to Party A or Party B.
(ii) The "CREDIT SUPPORT DEFAULT" provisions of Section 5(a)(iii) will
apply to Party A (if Party A posts collateral or provides a guarantee
or other contingent agreement pursuant to Part 5(h) below), and will
not apply to Party B.
(iii) The "MISREPRESENTATION" provisions of Section 5(a)(iv) will not apply
to Party A or Party B.
(iv) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will not apply to
Party A or to Party B.
(v) The "BANKRUPTCY" provision of Section 5(a)(vii)(2) will not apply to
Party B.
(vi) The "MERGER WITHOUT ASSUMPTION" provisions of Section 5(a)(viii) will
not apply to Party B.
(d) TERMINATION EVENTS:
(i) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will not
apply to Party A or Party B.
(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not apply
to Party A or to Party B.
(f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this
Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "TERMINATION CURRENCY" means United States Dollars.
(h) ADDITIONAL TERMINATION EVENTS. Additional Termination Events will apply as
provided in Part 5(h).
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PART 2. TAX REPRESENTATIONS.
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this Agreement,
each of Party A and Party B makes the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant Jurisdiction
to make any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
Agreement) to be made by it to the other party under this Agreement. In
making this representation, it may rely on:
(i) the accuracy of any representations made by the other party pursuant
to Section 3(f) of this Agreement;
(ii) the satisfaction of the agreement contained in Section 4(a)(i) or
4(a)(iii) of this Agreement and the accuracy and effectiveness of any
document provided by the other party pursuant to Section 4(a)(i) or
4(a)(iii) of this Agreement; and
(iii) the satisfaction of the agreement of the other party contained in
Section 4(d) of this Agreement, provided that it shall not be a
breach of this representation where reliance is placed on clause (ii)
and the other party does not deliver a form or document under Section
4(a)(iii) by reason of material prejudice to its legal or commercial
position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f) of this Agreement:
(i) Party A makes the following representation(s):
It is a corporation organized under the laws of the State of Delaware.
(ii) Party B makes the following representation(s):
The beneficial owner of the payments made under the Agreement is
either (i) a "U.S. person" (as that term is used in section
1.1441-4(a)(3)(ii) of United States Treasury Regulations) for United
States federal income tax purposes or (ii) a "non-U.S. branch of a
foreign person" as that term is used in section 1.1441-4(a)(3)(ii) of
the United States Treasury Regulations (the "Regulations") for United
States federal income tax purposes, and it is a "foreign person" as
that term is used in section 1.6041-4(a)(4) of the Regulations for
United States federal income tax purposes.
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PART 3. AGREEMENT TO DELIVER DOCUMENTS.
(a) For the purpose of Section 4(a)(i), tax forms, documents, or certificates
to be delivered are:
PARTY
REQUIRED TO
DELIVER
DOCUMENT FORM/DOCUMENT/CERTIFICATE DATE BY WHICH TO BE DELIVERED
----------- ------------------------------- --------------------------------
Party A A correct, complete and duly (A) before the first Payment
executed U.S. Internal Revenue Date under this Agreement, (B)
Service Form W-9 (or successor promptly upon reasonable demand
thereto), together with by the other party and (C)
appropriate attachments, that promptly upon learning that any
eliminates U.S. federal such form previously provided
withholding and backup by the party has become obsolete
withholding tax on payments to or incorrect.
Party A under this Agreement.
Party B A correct, complete and duly (A) before the first Payment
executed U.S. Internal Revenue Date under this Agreement, (B)
Service Form W-9 (or successor promptly upon reasonable demand
thereto), together with by the other party and (C)
appropriate attachments, that promptly upon learning that any
eliminates U.S. federal such form previously provided
withholding and backup by the party has become obsolete
withholding tax on payments to or incorrect.
Party B under this Agreement.
(b) For the purpose of Section 4(a)(ii), other documents to be delivered are:
PARTY
REQUIRED TO
DELIVER DATE BY WHICH TO BE COVERED BY SECTION
DOCUMENT FORM/DOCUMENT/CERTIFICATE DELIVERED 3(d) REPRESENTATION
----------- ------------------------- ------------------------- ----------------------
Party A and Any documents required by Upon the execution and Yes
Party B the receiving party to delivery of this
evidence the authority of Agreement
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
Party A and A certificate of an Upon the execution and Yes
Party B authorized officer of the delivery of this
party, as to the Agreement
incumbency 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
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Party A Annual Report of Party A Promptly after request by Yes
containing consolidated Party B
financial statements
certified by independent
certified public
accountants and prepared
in accordance with
generally accepted
accounting principles in
the country in which such
party is organized
Party A Quarterly Financial Promptly after request by Yes
Statements of Party A Party B
Corporation containing
unaudited, consolidated
financial statements of
such party's fiscal
quarter prepared in
accordance with generally
accepted accounting
principles in the country
in which such party is
organized
PART 4. MISCELLANEOUS.
(a) ADDRESS FOR NOTICES: For the purposes of Section 12(a) of this Agreement:
Address for notices or communications to PARTY A:-
Address: XXXXXXX XXXXX WORLD HEADQUARTERS
4 WORLD FINANCIAL XXXXXX, 00XX XXXXX
XXX XXXX, XXX XXXX 00000
Attention: SWAP GROUP
Facsimile No.: 000-000-0000 Telephone No.: 000 000-0000
(For all purposes)
Additionally, a copy of all notices pursuant to Sections 5, 6, and 7 as
well as any changes to counterparty's address, telephone number or
facsimile number should be sent to:
GMI COUNSEL, XXXXXXX XXXXX WORLD HEADQUARTERS, 4 WORLD FINANCIAL
XXXXXX,
00XX XXXXX
XXX XXXX, XXX XXXX 00000
ATTENTION: SWAPS LEGAL
FACSIMILE NO.: 000 000-0000
Address for notices or communications to Party B:
U.S. Bank National Association, as Trustee
Attn: Structured Finance, C-BASS 2006-CB8
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Fax: (000) 000-0000
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Phone: (000) 000-0000
(For all purposes)
(b) PROCESS AGENT. For the purpose of Section 13(c):
Party A appoints as its
Process Agent: Not Applicable
Party B appoints as its
Process Agent: Not Applicable
(c) OFFICES. The provisions of Section 10(a) will apply to this Agreement;
neither Party A nor Party B has any Offices other than as set forth in the
Notices Section and Party A agrees that, for purposes of Section 6(b) of
this 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 this Agreement:
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A, provided, however,
that if an Event of Default shall have occurred with respect to Party A,
Party B shall have the right to appoint as Calculation Agent a third party,
reasonably acceptable to Party A, the cost for which shall be borne by
Party A.
(f) CREDIT SUPPORT DOCUMENT.
Party A: Guarantee of Xxxxxxx Xxxxx & Co., Inc. ("ML & Co.").
In the event that Party A posts collateral under a Credit Support
Annex or provides a guarantee or other contingent agreement
pursuant to Part 5(i) below, such Credit Support Annex or
guarantee or other contingent agreement.
Party B: None
(g) CREDIT SUPPORT PROVIDER.
Party A: ML & Co.
In the event that Party A provides a guarantee or other contingent
agreement pursuant to Part 5(i) below, such guarantor or other
provider of credit support.
Party B: None
(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 the conflict of law provisions thereof other than New
York General Obligations Law Sections 5-1401 and 5-1402.
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(i) NETTING OF PAYMENTS. The parties agree that subparagraph (ii) of Section
2(c) of the ISDA Form Master Agreement will apply to any Transaction.
(j) "AFFILIATE." Party B shall be deemed not to have any Affiliates for
purposes of this Agreement, including for purposes of Section 6(b)(ii).
PART 5. OTHER PROVISIONS.
(a) AMENDMENTS TO ISDA FORM MASTER AGREEMENT.
(i) 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.
Each party represents to the other party on each date when it enters into a
Transaction that:--
(1) Nonreliance. (i) 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 and (ii) it has consulted with
its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent it has
deemed necessary, and it has made its own investment,
hedging and trading decisions based upon its own judgment
and upon any advice from such advisors as it has deemed
necessary and not upon any view expressed by the other
party.
(2) Evaluation and Understanding. (i) It has the capacity to
evaluate (internally or through independent professional
advice) the Transaction and has made its own decision
subject to Section 6(n) of this Agreement to enter into the
Transaction and (ii) It understands the terms, conditions
and risks of the Transaction and is willing and able to
accept those terms and conditions and to assume those risks,
financially and otherwise.
(3) Purpose. 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.
(4) Status of Parties. The other party is not acting as an
agent, fiduciary or advisor for it in respect of the
Transaction.
(5) Eligible Contract Participant. 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, and an
"eligible contract participant" as defined in Section
1(a)(12) of the Commodity Exchange Act, as amended."
(ii) Section 5(a)(i) of the ISDA Form Master Agreement is hereby amended by
replacing the word "third" with the word "first" in the third line
thereof.
(b) 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.
Notwithstanding any provision of this Agreement
N-1-9
or any other existing or future agreement, each party irrevocably waives
any and all rights it may have to set off, net, recoup or otherwise
withhold or suspend or condition payment or performance of any obligation
between it and the other party hereunder against any obligation between it
and the other party under any other agreements.
(c) 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 trading, marketing, and operations personnel of
the parties and their Affiliates, waives any further notice of such
monitoring or recording, and agrees to notify such personnel of such
monitoring or recording.
(d) 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.
(e) NON-RECOURSE. Notwithstanding any provision herein or in the ISDA Form
Master Agreement to the contrary, the obligations of Party B hereunder are
limited recourse obligations of Party B, payable solely from the
Supplemental Interest Trust and the proceeds thereof, in accordance with
the priority of payments and other terms of the Pooling and Servicing
Agreement. In the event that the Supplemental Interest Trust and the
proceeds thereof, should be insufficient to satisfy all claims outstanding
and following the realization of the account held by the Supplemental
Interest Trust and the proceeds thereof, any claims against or obligations
of Party B under the ISDA Form Master Agreement or any other confirmation
thereunder still outstanding shall be extinguished and thereafter not
revive. The Supplemental Interest Trust Trustee shall not have liability
for any failure or delay in making a payment hereunder to Party A due to
any failure or delay in receiving amounts in the account held by the
Supplemental Interest Trust from the Trust created pursuant to the Pooling
and Servicing Agreement.
(f) TRANSFER, AMENDMENT AND ASSIGNMENT. No transfer, amendment or assignment of
this Agreement shall be permitted by either party unless Xxxxx'x, S&P, and
Fitch have been provided prior notice of the same and confirms in writing
(including by facsimile transmission) that it will not downgrade, withdraw
or otherwise modify its then-current ratings of any Certificates or Notes.
Subject to the preceding paragraph and notwithstanding the provisions of
Section 7, Party A may assign and delegate its rights and obligations under
(i) any one or more Transactions or (ii) this Agreement and all
Transactions hereunder (the "Transferred Obligations") to any subsidiary of
ML & Co. (the "Assignee") by notice specifying the effective date of such
transfer ("Effective Date") and including an executed acceptance and
assumption by the Assignee of the Transferred Obligations; provided that
(i) Party B is not, as a result of such transfer, required to pay to the
Assignee an amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii), or
6(e)) greater than the amount in respect of which Party B would have been
required to pay to Party A in the absence of such transfer; and (ii) the
Assignee is not, as a result of such transfer, required to withhold or
deduct on account of a Tax under Section 2(d)(i) (except in respect of
interest under Section 2(e), 6(d)(ii), or 6(e)) an amount in excess of that
which Party A would have been required to withhold or deduct in the absence
of such transfer, unless the Assignee would be required to make additional
payments pursuant to Section 2(d)(i)(4) corresponding to such excess.
On the Effective Date, (a) Party A shall be released from all obligations
and liabilities arising under the Transferred Obligations; and (b) if Party
A has not assigned and delegated its rights and obligations under this
Agreement and all Transactions hereunder, the Transferred Obligations shall
cease to be Transaction(s) under this Agreement and shall be deemed to be
Transaction(s) under the master agreement, if any, between Assignee and
Party B, provided that, if at such time Assignee and Party B have not
entered into a master agreement, Assignee and Party B shall be deemed to
have entered into an ISDA form of Master Agreement (Multicurrency-Cross
Border) with a Schedule substantially in the form hereof but amended to
N-1-10
reflect the name of the Assignee and the address for notices and any
amended representations under Part 2 hereof as may be specified in the
notice of transfer.
(g) GROSS UP. Section 2(d)(i)(4) shall not apply to Party B as X, and Section
2(d)(ii) shall not apply to Party B as Y, such that Party B shall not be
required to pay any additional amounts referred to therein.
(h) ADDITIONAL TERMINATION EVENTS. The following Additional Termination Events
will apply:
(i) If a Rating Agency Downgrade has occurred and Party A has not
complied with Part 5(i) below, then an Additional Termination Event
shall have occurred with respect to Party A and Party A shall be the
sole Affected Party with respect to such Additional Termination
Event.
(ii) If, upon the occurrence of a Swap Disclosure Event (as defined in
Part 5(j) below) Party A has not, within 10 calendar days after such
Swap Disclosure Event complied with any of the provisions set forth
in clause (iii) of Part 5(n) below, then an Additional Termination
Event shall have occurred with respect to Party A and Party A shall
be the sole Affected Party with respect to such Additional
Termination Event.
(iii) If, at any time, the Servicer purchases the Mortgage Loans pursuant
to Section 10.01 of the Pooling and Servicing Agreement, then an
Additional Termination Event shall have occurred and Party B shall be
the sole Affected Party with respect thereto; provided, however, that
notwithstanding Section 6(b)(iv) of the ISDA Form Master Agreement,
both Party A and Party B shall have the right to designate an Early
Termination Date in respect of this Additional Termination Event;
provided, further, that such Early Termination Date shall be on the
final Distribution Date.
(iv) If, without the prior written consent of Party A where such consent
is required under the Pooling and Servicing Agreement (such consent
not to be unreasonably withheld), an amendment is made to the Pooling
and Servicing Agreement which amendment could reasonably be expected
to have a material adverse effect on the interests of Party A under
this Agreement, an Additional Termination Event shall have occurred
with respect to Party B and Party B shall be the sole Affected Party
with respect to such Additional Termination Event.
(i) RATING AGENCY DOWNGRADE. In the event that (i) ML & Co's short-term
unsecured and unsubordinated debt rating is reduced below "A-1" by S&P, or,
in the event that ML & Co does not have a short-term rating from S&P, if ML
& Co's long-term unsecured and unsubordinated debt rating is reduced below
"A+" by S&P, (ii) ML & Co's long-term unsecured and unsubordinated debt
rating is reduced below "A1" by Xxxxx'x or its short-term unsecured and
unsubordinated debt rating is reduced below "P1" by Xxxxx'x, or, in the
event that ML & Co does not have a short-term rating from Xxxxx'x, if ML &
Co's long-term unsecured and unsubordinated debt rating is reduced below
"Aa3" by Xxxxx'x or (iii) ML & Co's long-term unsecured and unsubordinated
debt rating is withdrawn or reduced below "A" by Fitch or its short-term
unsecured and unsubordinated debt rating is withdrawn or reduced below "F1"
by Fitch (and together with S&P and Xxxxx'x, the "Swap Rating Agencies" and
such rating thresholds, "Approved Rating Thresholds" and any such reduction
below the Approved Rating Thresholds, a "Collateral Rating Downgrade
Event"), then within 30 days after such rating withdrawal or downgrade
(unless, within 30 days after such withdrawal or downgrade, each such Swap
Rating Agency, as applicable, has reconfirmed the rating of the C-Bass
Mortgage Loan Asset-Backed Certificates, Series 2006-CB8 (the
"Certificates") and
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any notes backed by the Certificates (the "Notes"), which was in effect
immediately prior to such withdrawal or downgrade), Party A shall, at its
own expense, subject to the Rating Agency Condition, either (i) seek
another entity to replace Party A as party to this Agreement that meets or
exceeds the Approved Rating Thresholds on terms substantially similar to
this Agreement, (ii) obtain a guaranty of, or a contingent agreement of
another person with the Approved Rating Thresholds, to honor, Party A's
obligations under this Agreement, or (iii) post collateral which will be
sufficient to restore the immediately prior ratings of the Certificates and
any Notes. In the event that ML & Co's long-term unsecured and
unsubordinated debt rating is withdrawn or reduced below "BBB-" by S&P (a
"Required Rating Downgrade Event"), then within 10 Business Days after such
rating withdrawal or downgrade, Party A shall, subject to the Rating Agency
Condition and at its own expense, either (i) secure another entity to
replace Party A as party to this Agreement that meets or exceeds the
Approved Rating Thresholds on terms substantially similar to this Agreement
or (ii) obtain a guaranty of, or a contingent agreement of another person
with the Approved Rating Thresholds, to honor, Party A's obligations under
this Agreement. For purposes of this provision, "Rating Agency Condition"
means, with respect to any particular proposed act or omission to act
hereunder that the party acting or failing to act must consult with each of
the Swap Rating Agencies then providing a rating of the Certificates and
any Notes and receive from each of the Swap Rating Agencies a prior written
confirmation that the proposed action or inaction would not cause a
downgrade or withdrawal of the then-current rating of any Certificates or
Notes. For purposes of this Agreement, the occurrence of either a
Collateral Rating Downgrade Event or a Required Rating Downgrade Event may
be referred to as a rating agency downgrade (a "Rating Agency Downgrade").
(j) COMPLIANCE WITH REGULATION AB.
(i) Party A agrees and acknowledges that Xxxxxxx Xxxxx Mortgage
Investors, Inc. (the "Depositor") may be required under Regulation
AB, as defined in the Pooling and Servicing Agreement, to disclose
certain financial information regarding Party A or its group of
affiliated entities, if applicable, depending on the aggregate
"significance percentage" of this Agreement and any other derivative
contracts between Party A or its group of affiliated entities, if
applicable, and Party B, 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 for so long as the Issuing
Entity is required to file periodic reports under the Exchange Act
with respect to the Certificates, Party B or the Depositor requests
from Party A the applicable financial information described in Item
1115(b) of Regulation AB (such request to be based on a reasonable
determination by the Depositor, based on "significance estimates"
made in substantially the same manner as that used in the Sponsor's
internal risk management process in respect of similar instruments
and furnished by the Sponsor to the Depositor, or if the Sponsor does
not furnish such significance estimates to the Depositor, based on a
determination of such significance estimates by the Depositor in a
manner that it deems reasonable) (the "Swap Financial Disclosure").
(iii) Upon the occurrence of a Swap Disclosure Event, Party A, at its own
expense, shall either (1)(a) either (i) provide to the Depositor the
current Swap Financial Disclosure in an XXXXX-compatible format (for
example, such information may be provided in Microsoft Word(R) or
Microsoft Excel(R) format but not in .pdf format) or (ii) provide
written consent to the Depositor to incorporation by reference of
such current Swap Financial Disclosure that are filed with the
Securities and Exchange Commission in the Exchange Act Reports of the
Depositor, (b) if applicable, cause its outside accounting firm to
provide its consent to
N-1-12
filing or incorporation by reference in the Exchange Act Reports of
the Depositor of such accounting firm's report relating to their
audits of such current Swap Financial Disclosure, and (c) provide to
the Depositor any updated Swap Financial Disclosure with respect to
Party A or any entity that consolidates Party A within five days of
the release of any such updated Swap Financial Disclosure; (2) secure
another entity to replace Party A as party to this Agreement on terms
substantially similar to this Agreement, which entity (or a guarantor
therefor) meets or exceeds the Approved Rating Thresholds and which
entity complies with the requirements of Item 1115 of Regulation AB
and clause (1) above, or (3) obtain a guaranty of Party A's
obligations under this Agreement from an affiliate of Party A that
complies with the financial information disclosure requirements of
Item 1115 of Regulation AB, and cause such affiliate to provide Swap
Financial Disclosure and any future Swap Financial Disclosure and
other information pursuant to clause (1), such that disclosure
provided in respect of such affiliate will satisfy any disclosure
requirements applicable to the Swap Provider.
(iv) Party A agrees that, in the event that Party A provides Swap Financial
Disclosure to the Depositor in accordance with clause (iii)(1) above
or causes its affiliate to provide Swap Financial Disclosure to the
Depositor in accordance with clause (iii)(3) above, it will indemnify
and hold harmless the Depositor, its respective directors or officers
and any person controlling the Depositor, 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.
(v) Depositor shall be an express third party beneficiary of this
Agreement as if a party hereto to the extent of Depositor's rights
explicitly specified herein.
(k) PROCEEDINGS. Party A shall not institute against, or cause any other person
to institute against, or join any other person in instituting against Party
B, the Supplemental Interest Trust, or the trust formed pursuant to the
Pooling and Servicing Agreement, in 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 (or, if longer, the applicable preference period) and one day
following payment in full of the Certificates and any Notes. This provision
will survive the termination of this Agreement.
(l) PAYMENT INSTRUCTIONS. Party A hereby agrees that, unless notified in
writing by the Supplemental Interest Trust Trustee of other payment
instructions, any and all amounts payable by Party A to Party B under this
Agreement shall be paid to the account specified in paragraph 4 below.
(m) SUPPLEMENTAL INTEREST TRUST TRUSTEE LIABILITY LIMITATIONS. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is
executed by U.S. Bank National Association ("U.S. Bank") not in its
individual capacity, but solely as Supplemental Interest Trust Trustee
under the Pooling and Servicing Agreement in the exercise of the powers and
authority conferred and invested in it thereunder; (b) U.S. Bank has been
directed pursuant to the Pooling and Servicing Agreement to enter into this
Agreement and to perform its obligations hereunder; (c) each of the
representations, undertakings and agreements herein made on behalf of the
Trust is made and intended not as personal representations of the Trustee
but is made and intended for the purpose of binding only the Trust; and (d)
under no circumstances shall U.S. BANK in its individual capacity be
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personally liable for any payments hereunder or for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken
under this Agreement.
(n) ADDITIONAL DEFINITIONS.
As used in this Agreement, the following terms shall have the meanings set
forth below, unless the context clearly requires otherwise:
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor.
"S&P" means Standard & Poor's Ratings Services, or any successor.
"Fitch" means Fitch Ratings Ltd., or any successor.
(o) 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; provided, however, that this severability provision shall not be
applicable if any provision of Section 2, 5, 6, or 13 (or any definition or
provision in Section 14 to the extent it relates to, or is used in or in
connection with any such Section) shall be so held to be invalid or
unenforceable.
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.
(p) PAYMENTS BY PARTY B UPON EARLY TERMINATION. Notwithstanding anything to the
contrary in the ISDA Form Master Agreement, if an amount is calculated as
being due in respect of any Early Termination Date under Section 6(e) from
Party B to Party A, then such payment shall be due on the next subsequent
Distribution Date (or if such Early Termination Date is the final
Distribution Date, on such final Distribution Date), and on any subsequent
Distribution Dates until paid in full.
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4. Account Details and Settlement Information:
Payments to Party A: DEUTSCHE BANK TRUST COMPANY AMERICAS, NEW YORK, NY
ABA 000000000
ACCT 00-000-000
Attn: FAO: XXXXXXX XXXXX CAPITAL SERVICES, INC. NEW YORK,
NY
Payments to Party B: U.S. Bank N.A.
ABA 000000000
DDA 173103322058
REF# C-Bass 2006-CB8
Attn: Xxxx Xxxxxxxx
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.
N-1-15
Please confirm that the foregoing correctly sets the terms of our agreement by
executing this Confirmation and returning it to us by facsimile transmission.
Yours sincerely,
XXXXXXX XXXXX CAPITAL SERVICES, INC.
By:
---------------------------------
Authorized Signatory
Accepted and confirmed as of the
Trade Date written above:
U.S. BANK NATIONAL ASSOCIATION, not
individually, but solely as
Supplemental Interest Trust Trustee
on behalf of the Supplemental
Interest Trust with respect to the
C-Bass Mortgage Loan Asset-Backed
Certificates, Series 2006-CB8
By:
---------------------------------
Authorized Signatory
Name:
Title:
N-1-16
Schedule I
For the Calculation Period
from and including:* To but excluding:* Notional Amount in USD
-------------------------- ------------------------- ----------------------
October 30, 2006 November 25, 2006 515,228,249.10
November 25, 2006 December 25, 2006 504,730,909.50
December 25, 2006 January 25, 2007 492,340,291.30
January 25, 2007 February 25, 2007 478,101,772.80
February 25, 2007 March 25, 2007 462,068,851.70
March 25, 2007 April 25, 2007 444,429,594.80
April 25, 2007 May 25, 2007 425,299,156.60
May 25, 2007 June 25, 2007 405,246,705.80
June 25, 2007 July 25, 2007 385,042,974.00
July 25, 2007 August 25, 2007 365,026,740.40
August 25, 2007 September 25, 2007 345,261,915.00
September 25, 2007 October 25, 20007 326,351,440.70
October 25, 20007 November 25, 2007 307,832,624.20
November 25, 2007 December 25, 2007 290,220,663.00
December 25, 2007 January 25, 2008 273,459,895.30
January 25, 2008 February 25, 2008 257,527,380.20
February 25, 2008 March 25, 2008 242,269,739.80
March 25, 2008 April 25, 2008 225,835,477.60
April 25, 2008 May 25, 2008 205,983,763.30
May 25, 2008 June 25, 2008 186,117,534.70
June 25, 2008 July 25, 2008 167,752,277.60
July 25, 2008 August 25, 2008 147,317,894.40
August 25, 2008 September 25, 2008 129,438,507.00
September 25, 2008 October 25, 2008 115,341,401.70
October 25, 2008 February 25, 2009 103,243,430.60
February 25, 2009 March 25, 2009 102,269,047.00
March 25, 2009 April 25, 2009 96,849,870.23
April 25, 2009 May 25, 2009 91,731,078.82
May 25, 2009 June 25, 2009 86,895,505.36
June 25, 2009 July 25, 2009 82,328,072.68
July 25, 2009 August 25, 2009 78,012,318.39
August 25, 2009 September 25, 2009 73,933,931.33
September 25, 2009 October 25, 20007 70,080,398.01
October 25, 20007 November 25, 2009 66,437,900.76
November 25, 2009 December 25, 2009 62,994,386.82
December 25, 2009 January 25, 2010 59,738,796.34
January 25, 2010 February 25, 2010 56,660,279.75
February 25, 2010 March 25, 2010 53,748,847.01
March 25, 2010 April 25, 2010 50,995,101.62
April 25, 2010 May 25, 2010 48,390,136.27
May 25, 2010 June 25, 2010 45,925,586.46
June 25, 2010 July 25, 2010 43,593,574.24
July 25, 2010 August 25, 2010 41,386,675.24
August 25, 2010 September 25, 2010 39,297,892.56
N-1-17
September 25, 2010 October 25, 2010 37,320,721.05
* All such dates subject to No Adjustment with respect to Fixed Rate Payer
Period End Dates and adjustment in accordance with the Following Business
Day Convention with respect to Floating Rate Payer Period End Dates.
N-1-18
EXHIBIT N-2
FORM OF CAP AGREEMENT
Barclays Capital
5 Xxx Xxxxx Xxxxxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Tel x00 (0)00 0000 0000
To: U.S. Bank National Association, not in its individual capacity but
solely as Trustee on behalf of the Supplemental Interest Trust
with respect to C-BASS Mortgage Loan Asset-Backed Certificates,
Series 2006-CB8 (the "Counterparty" or "Party B")
Attention: Structured Finance, C-BASS 2006-CB8
Fax: 000.000.0000
From: BARCLAYS BANK PLC (LONDON HEAD OFFICE) ("Barclays" or "Party A")
Date: October 30, 2006
Reference #: 1416434B
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the current Transaction entered into on the Trade Date specified
below (the "Transaction") between Swap Provider ("Party A") and U.S. Bank
National Association, not individually, but solely as trustee (the "Supplemental
Interest Trust Trustee") on behalf of the supplemental interest trust with
respect to the C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-CB8
(the "Supplemental Interest Trust") ("Party B") created under the Pooling and
Servicing Agreement, dated as of October 1, 2006, among Xxxxxxx Xxxxx Mortgage
Investors, Inc., as depositor, Credit-Based Asset Servicing and Securitization
LLC, as sponsor, Xxxxxx Loan Servicing LP, as servicer and U.S. Bank National
Association, as trustee (the "Pooling and Servicing Agreement"). This Agreement,
which evidences a complete and binding agreement between you and us to enter
into the Transaction on the terms set forth below, constitutes a "Confirmation"
as referred to in the "ISDA Form Master Agreement" (as defined below), as well
as a "Schedule" as referred to in the ISDA Form Master Agreement.
1. This Agreement is subject to the 2000 ISDA Definitions (the "Definitions"),
as published by the International Swaps and Derivatives Association, Inc.
("ISDA"). Any reference to a "Swap Transaction" in the Definitions is deemed to
be a reference to a "Transaction" for purposes of this Agreement, and any
reference to a "Transaction" in this Agreement is deemed to be a reference to a
"Swap Transaction" for purposes of the Definitions. You and we have agreed to
enter into this Agreement in lieu of negotiating a Schedule to the 1992 ISDA
Master Agreement (Multicurrency--Cross Border) form (the "ISDA Form Master
Agreement") but, rather, an ISDA Form Master Agreement shall be deemed to have
been executed by you and us on the date we entered into the Transaction, and
this Agreement shall form part of, supplement and be subject to such ISDA Form
Master Agreement. For the avoidance of doubt, the Transaction described herein
shall be the sole Transaction governed by such ISDA Form Master Agreement. Each
term capitalized but not defined herein or in the Definitions shall have the
meaning assigned thereto in the Pooling and Servicing Agreement. 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. Each reference to a "Section" (unless specifically referencing
the Pooling and Servicing Agreement) or to a "Section" "of this Agreement" will
be construed as a reference to a Section of the ISDA Form Master Agreement.
N-2-1
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Type of Transaction: Interest Rate Cap
Notional Amount: With respect to any Calculation Period, the lesser
of (i) the Notional Amount set forth for such
period on Schedule I attached hereto and (ii) the
excess, if any, of (a) the aggregate Certificate
Principal Balance of the Class A Certificates and
the Class M Certificates immediately preceding the
Distribution Date which occurs in the calendar
month of the Floating Rate Payer Payment Date for
such Calculation Period (determined for this
purpose without regard to any adjustment of the
Floating Rate Payer Payment Date or Distribution
Date relating to business days) over (b) the
Notional Amount set forth for such period on
Schedule II attached hereto.
Trade Date: October 30, 2006
Effective Date: October 30, 2006
Termination Date: October 25, 2010
FIXED AMOUNT:
Fixed Rate Payer: Party B
Fixed Rate Payer
Payment Date: October 30, 2006
Fixed Amount: USD636,000
FLOATING AMOUNTS:
Floating Rate Payer: Party A
Strike Rate: 5.32%
Floating Rate Payer
Period End Dates: The 25th calendar day of each month during the
Term of this Transaction, commencing November 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 Date shall be two Business Days
preceding each Floating Rate Payer Period End
Date.
Floating Rate Option: USD-LIBOR-BBA
N-2-2
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: Following
Calculation Agent: Party A
3. Provisions Deemed Incorporated in a Schedule to the Master Agreement:
Part 1. TERMINATION PROVISIONS. For purposes of the Master Agreement:
(a) "Specified Entity" is not applicable to Party A or Party B for any purpose.
(b) "Breach of Agreement" provision of Section 5(a)(ii) will not apply to Party
A or Party B.
(c) "Credit Support Default" provisions of Section 5(a)(iii) will apply to
Party A (if Party A posts collateral or provides a guarantee or other
contingent agreement pursuant to Part 5(h) below), and will not apply to
Party B.
(d) "Misrepresentation" provisions of Section 5(a)(iv) will not apply to Party
A or Party B.
(e) "Specified Transaction" is not applicable to Party A or Party B for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to Party A or
Party B.
(f) The "Cross Default" provisions of Section 5(a)(vi) will not apply to Party
A or to Party B.
(g) The "Bankruptcy" provision of Section 5(a)(vii)(2) will not apply to Party
B.
(h) The "Merger Without Assumption" provision of Section 5(a)(viii) will not
apply to Party B.
(i) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not
apply to Party A or Party B.
(j) The "Automatic Early Termination" provision of Section 6(a) will not apply
to Party A or to Party B.
(k) Payments on Early Termination. For the purpose of Section 6(e) of this
Agreement:
(i) Market Quotation will apply.
(ii) the Second Method will apply.
(l) "Termination Currency" means United States Dollars.
N-2-3
(m) Gross Up. The provisions of Section 2(d)(i)(4) and 2(d)(ii) of the printed
ISDA Form Master Agreement shall not apply to Party B and Party B shall not
be required to pay any additional amounts referred to therein.
(n) Limitation on Events of Default. Notwithstanding the terms of Sections 5
and 6 of the ISDA Form Master Agreement, if at any time and so long as the
Party B has satisfied in full all its payment obligations under Section
2(a)(i) of the ISDA Form Master Agreement and has at the time no future
payment obligations, whether absolute or contingent, under such Section,
then unless Party A is required pursuant to appropriate proceedings to
return to the Party B or otherwise returns to the Party B upon demand of
the Party B any portion of any such payment, (a) the occurrence of an event
described in Section 5(a) of the ISDA Form Master Agreement with respect to
the Party B shall not constitute an Event of Default or Potential Event of
Default with respect to the Party B as Defaulting Party and (b) Party A
shall be entitled to designate an Early Termination Date pursuant to
Section 6 of the ISDA Form Master Agreement only as a result of the
occurrence of a Termination Event set forth in either Section 5(b)(i) or
5(b)(ii) of the ISDA Form Master Agreement with respect to Party A as the
Affected Party, or Section 5(b)(iii) with respect to Party A as the
Burdened Party. For purposes of the Transaction to which this Agreement
relates, Party B'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.
Part 2. TAX REPRESENTATIONS.
(a) Payer Representations. For the purpose of Section 3(e) of this
Agreement, each of Party A and Party B makes the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant Jurisdiction
to make any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
Agreement) to be made by it to the other party under this Agreement. In
making this representation, it may rely on:
(i) the accuracy of any representations made by the other party
pursuant to Section 3(f) of this Agreement;
(ii) the satisfaction of the agreement contained in Section 4(a)(i) or
4(a)(iii) of this Agreement and the accuracy and effectiveness of any
document provided by the other party pursuant to Section 4(a)(i) or
4(a)(iii) of this Agreement; and
(iii) the satisfaction of the agreement of the other party contained
in Section 4(d) of this Agreement, provided that it shall not be a
breach of this representation where reliance is placed on clause (ii)
and the other party does not deliver a form or document under Section
4(a)(iii) by reason of material prejudice to its legal or commercial
position.
(b) Payee Representations. For the purpose of Section 3(f) of this
Agreement:
(i) Party A makes the following representation(s):
With respect to payments made to Party A which are not effectively
connected to the U.S.: It is a non-U.S. branch of a foreign person for
U.S. federal income tax purposes.
With respect to payments made to Party A which are effectively
connected to the U.S.: Each payment received or to be received by it
in connection with this Agreement will be effectively connected with
its conduct of a trade or business in the U.S.
N-2-4
(ii) Party B makes the following representation(s):
Party B represents that the beneficial owner of the payments made to
it under this Agreement is either (i) a "U.S. person" (as that term is
used in section 1.1441-4(a)(3)(ii) of United States Treasury
Regulations) for United States federal income tax purposes or (ii) a
"non-U.S. branch of a foreign person" as that term is used in section
1.1441-4(a)(3)(ii) of the United States Treasury Regulations (the
"Regulations") for United States federal income tax purposes, and it
is a "foreign person" as that term is used in section 1.6041-4(a)(4)
of the Regulations for United States federal income tax purposes.
Part 3. AGREEMENT TO DELIVER DOCUMENTS. For the purpose of Section 4(a):
(1) Tax forms, documents, or certificates to be delivered are:
PARTY REQUIRED TO DELIVER FORM/DOCUMENT/ DATE BY WHICH TO
DOCUMENT CERTIFICATE BE DELIVERED
------------------------- ----------------------------- ----------------------------------------------
Party A A correct, complete and duly (A) before the first Payment Date under this
executed U.S. Internal Agreement, (B) promptly upon reasonable demand
Revenue Service Form W-9 (or by the other party and (C) promptly upon
successor thereto), together learning that any such form previously
with appropriate attachments, provided by the party has become obsolete or
that eliminates U.S. federal incorrect.
withholding and backup
withholding tax on payments
to Party A under this
Agreement.
Party B A correct, complete and duly (A) before the first Payment Date under this
executed U.S. Internal Agreement, (B) promptly upon reasonable demand
Revenue Service Form W-9 (or by the other party and (C) promptly upon
successor thereto), together learning that any such form previously
with appropriate attachments, provided by the party has become obsolete or
that eliminates U.S. federal incorrect.
withholding and backup
withholding tax on payments
to Party B under this
Agreement.
(2) Other documents to be delivered are:
PARTY REQUIRED
TO DELIVER FORM/DOCUMENT/ DATE BY WHICH TO COVERED BY SECTION 3(d)
DOCUMENT CERTIFICATE BE DELIVERED REPRESENTATION
-------------- ------------------------- ------------------------------- -----------------------
Party A and Any documents required by Upon the execution and delivery Yes
Party B the receiving party to of this Agreement and such
evidence the authority of
N-2-5
PARTY REQUIRED
TO DELIVER FORM/DOCUMENT/ DATE BY WHICH TO COVERED BY SECTION 3(d)
DOCUMENT CERTIFICATE BE DELIVERED REPRESENTATION
-------------- ------------------------- ------------------------------- -----------------------
the delivering party or Confirmation
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
Party A and A certificate of an Upon the execution and delivery Yes
Party B authorized officer of the of this Agreement and such
party, as to the Confirmation
incumbency 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
Party A Annual Report of Party A Upon request Yes
Corporation containing
consolidated financial
statements certified by
independent certified
public accountants and
prepared in accordance
with generally accepted
accounting principles in
the country in which such
party is organized
Party A An opinion of counsel Upon the execution and delivery Yes
with respect to the due of this Agreement
authorization, execution
and enforceability of
this Agreement,
acceptable to Party B.
N-2-6
Part 4. MISCELLANEOUS.
(a) Address for Notices: For the purposes of Section 12(a) of this Agreement:
Address for notices or communications to Party A:
Address: 5 Xxx Xxxxx Xxxxxxxxx
Xxxxxx Xxxxx
X00 0XX
Facsimile: 00(00) 00000000
Phone: 00(00) 00000000
(For all purposes)
Address for notices or communications to Party B:
U.S. Bank National Association, as Trustee
Attn: Structured Finance, C-BASS 2006-CB8
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Fax (000) 000-0000
Phone (000) 000-0000
Fax: (000) 000-0000
(For all purposes)
(b) Process Agent. For the purpose of Section 13(c):
Party A appoints as its
Process Agent: Not Applicable
Party B appoints as its
Process Agent: Not Applicable
(c) Offices. The provisions of Section 10(a) will apply to this Agreement.
(d) Multibranch Party. For the purpose of Section 10(c) of this Agreement:
Party A is a Multibranch Party and may act through its London and New York
offices.
Party B is not a Multibranch Party.
(e) Credit Support Document.
Party A: None or, in that event that Party A posts collateral under a
Credit Support Annex or provides a guarantee or other contingent
agreement pursuant to Part 5(h) below, such Credit Support Annex
or guarantee or other contingent agreement.
N-2-7
Party B: None
(f) Credit Support Provider.
Party A: None or, in that event that Party A provides a guarantee or
other contingent agreement pursuant to Part 5(h) below, such
guarantor or other provider of credit support.
Party B: None
(g) 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 the conflict of law provisions thereof other than New York General
Obligations Law Sections 5-1401 and 5-1402.
(h) Netting of Payments. The parties agree that subparagraph (ii) of Section
2(c) of the ISDA Form Master Agreement will apply to any Transaction.
(i) "Affiliate". Party A and Party B shall be deemed not to have any Affiliates
for purposes of this Agreement, including for purposes of Section 6(b)(ii).
Part 5. OTHERS PROVISIONS.
(a) 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.
(b) 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.
(c) 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.
(d) 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.
Notwithstanding any provision of this Agreement or any other existing or future
agreement, each party irrevocably waives any and all rights it may have to set
off, net, recoup or otherwise withhold or suspend or condition payment or
performance of any obligation between it and the other party hereunder against
any obligation between it and the other party under any other agreements.
(e) Additional Definitional Provisions.
As used in this Agreement, the following terms shall have the meanings set
forth below, unless the
N-2-8
context clearly requires otherwise:
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor.
"S&P" means Standard & Poor's Ratings Services, or any successor.
"Fitch" means Fitch Ratings Ltd., or any successor.
(f) Supplemental Interest Trust Trustee Liability Limitations. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
by U.S. Bank National Association not in its individual capacity, but solely as
Supplemental Interest Trust Trustee under the Pooling and Servicing Agreement in
the exercise of the powers and authority conferred and invested in it
thereunder; (b) U.S. Bank National Association has been directed pursuant to the
Pooling and Servicing Agreement to enter into this Agreement and to perform its
obligations hereunder; (c) each of the representations, undertakings and
agreements herein made on behalf of the Trust is made and intended not as
personal representations of the Trustee but is made and intended for the purpose
of binding only the Trust; and (d) under no circumstances shall U.S. Bank
National Association in its individual capacity be personally liable for any
payments hereunder or for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken under this Agreement.
(g) Additional Termination Events. Additional Termination Events will apply:
(i) If a Rating Agency Downgrade has occurred and Party A has not complied
with Part 5(h) below, then an Additional Termination Event shall have
occurred with respect to Party A and Party A shall be the sole Affected
Party with respect to such Additional Termination Event.
(ii) An Additional Termination Event shall occur under the ISDA Form Master
Agreement upon unrescindable notice by the Servicer or the Master Servicer
that it will purchase all Mortgage Loans in accordance with Section 10.01
of the Pooling and Servicing Agreement. With respect to such Additional
Termination Event, Party B shall be the sole Affected Party and this
Transaction shall be the sole Affected Transaction; provided, however, that
notwithstanding Section 6(b)(iv) of the ISDA Form Master Agreement, only
Party B may designate an Early Termination Date in respect of this
Additional Termination Event; provided, further, that such Early
Termination Date shall not be prior to the final Distribution Date.
(iii) If, upon the occurrence of a Swap Disclosure Event (as defined in
Part 5(n) below) Party A has not, within 10 calendar days after such Swap
Disclosure Event complied with any of the provisions set forth in clause
(iii) of Part 5(n) below, then an Additional Termination Event shall have
occurred with respect to Party A and Party A shall be the sole Affected
Party with respect to such Additional Termination Event.
(h) Rating Agency Downgrade. In the event that (i) Party A's long-term unsecured
and unsubordinated debt rating is reduced below "A+" by S&P or Party A's
short-term unsecured and unsubordinated debt rating is reduced below "A-1" by
S&P, (ii) Party A's long-term unsecured and unsubordinated debt rating is
reduced below "A1" by Moody's or its short-term unsecured and unsubordinated
debt rating is reduced below "P1" by Moody's, or, in the event that Party A does
not have a short-term rating from Moody's, if Party A's long-term unsecured and
unsubordinated debt rating is reduced below "Aa3" by Moody's or (iii) Party A's
long-term unsecured and unsubordinated debt rating is withdrawn or reduced below
"A" by Fitch or its short-term unsecured and unsubordinated debt rating is
withdrawn or reduced below "F1" by Fitch (and together with S&P and Moody's, the
"Swap Rating Agencies" and such rating thresholds, "Approved Rating Thresholds"
and any such reduction below the Approved Rating Thresholds, a "Collateral
Rating Downgrade Event"),
N-2-9
then within 30 days after such rating withdrawal or downgrade (unless, within 30
days after such withdrawal or downgrade, each such Swap Rating Agency, as
applicable, has reconfirmed the rating of the C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2006-CB8 (the "Certificates") and any notes backed by the
Certificates (the "Notes"), which was in effect immediately prior to such
withdrawal or downgrade), Party A shall, at its own expense, subject to the
Rating Agency Condition, either (i) seek another entity to replace Party A as
party to this Agreement that meets or exceeds the Approved Rating Thresholds on
terms substantially similar to this Agreement, (ii) obtain a guaranty of, or a
contingent agreement of another person with the Approved Rating Thresholds, to
honor, Party A's obligations under this Agreement, or (iii) post collateral
which will be sufficient to restore the immediately prior ratings of the
Certificates and any Notes. In the event that Party A's long-term unsecured and
unsubordinated debt rating is withdrawn or reduced below "BBB-" by S&P (a
"Required Rating Downgrade Event"), then within 10 Business Days after such
rating withdrawal or downgrade, Party A shall, subject to the Rating Agency
Condition and at its own expense, either (i) secure another entity to replace
Party A as party to this Agreement that meets or exceeds the Approved Rating
Thresholds on terms substantially similar to this Agreement or (ii) obtain a
guaranty of, or a contingent agreement of another person with the Approved
Rating Thresholds, to honor, Party A's obligations under this Agreement. For
purposes of this provision, "Rating Agency Condition" means, with respect to any
particular proposed act or omission to act hereunder that the party acting or
failing to act must consult with each of the Swap Rating Agencies then providing
a rating of the Certificates and any Notes and receive from each of the Swap
Rating Agencies a prior written confirmation that the proposed action or
inaction would not cause a downgrade or withdrawal of the then-current rating of
any Certificates or Notes. For purposes of this Agreement, the occurrence of
either a Collateral Rating Downgrade Event or a Required Rating Downgrade Event
may be referred to as a rating agency downgrade (a "Rating Agency Downgrade").
(i) Payment Instructions. Party A hereby agrees that, unless notified in writing
by the Supplemental Interest Trust Trustee of other payment instructions, any
and all amounts payable by Party A to Party B under this Agreement shall be paid
to the account specified in paragraph 4 below.
(j) 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.
Each party represents to the other party on each date when it
enters into a Transaction that:--
(1) Non-Reliance. It is acting for its own account, and it has made
its own independent decisions to enter into the Transaction and as to whether
the Transaction is appropriate or proper based upon its own judgment and upon
advice from such advisers 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 the Transaction: it being understood that
information and explanations related to the terms and conditions of the
Transaction shall not be considered investment advice or a recommendation to
enter into the Transaction. No communication (written or oral) received from the
other party shall be deemed to be an assurance or guarantee as to the expected
results of the Transaction.
(2) Assessment and Understanding. It is capable of assessing the
merits of and understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms, conditions and
risks of the Transaction. It is also capable of assuming, and assumes, the risks
of the Transaction.
(3) Purpose. 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.
N-2-10
(4) Status of Parties. The other party is not acting as a fiduciary
for or an adviser to it in respect of the Transaction.
(5) Eligible Contract Participant. 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, and an "eligible contract participant" as
defined in Section 1(a)(12) of the Commodity Exchange Act, as amended."
(k) Non-Recourse. Notwithstanding any provision herein or in the ISDA Form
Master Agreement to the contrary, the obligations of Party B hereunder are
limited recourse obligations of Party B, payable solely from the Supplemental
Interest Trust and the proceeds thereof, in accordance with the terms of the
Pooling and Servicing Agreement. In the event that the Supplemental Interest
Trust and the proceeds thereof, should be insufficient to satisfy all claims
outstanding and following the realization of the account held by the
Supplemental Interest Trust and the proceeds thereof, any claims against or
obligations of Party B under the ISDA Form Master Agreement or any other
confirmation thereunder still outstanding shall be extinguished and thereafter
not revive. The Supplemental Interest Trust Trustee shall not have liability for
any failure or delay in making a payment hereunder to Party A due to any failure
or delay in receiving amounts in the account held by the Supplemental Interest
Trust from the Trust created pursuant to the Pooling and Servicing Agreement.
(l) Transfer, Amendment and Assignment. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless Xxxxx'x Investors Service, Inc. ("Moody's") and
Standard & Poors Ratings Service, a division of The XxXxxx-Xxxx Companies, Inc.
("S&P") have been provided prior notice of the same and confirms in writing
(including by facsimile transmission) that it will not downgrade, withdraw or
otherwise modify its then-current ratings of any Certificates or Notes.
(m) Proceedings. Party A shall not institute against, or cause any other person
to institute against, or join any other person in instituting against Party B,
the Supplemental Interest Trust, or the trust formed pursuant to the Pooling and
Servicing Agreement, in 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 (or, if longer, the
applicable preference period) and one day following payment in full of the
Certificates and any Notes. This provision will survive the termination of this
Agreement.
(n) Compliance with Regulation AB.
(i) Party A agrees and acknowledges that Xxxxxxx Xxxxx Mortgage Investors,
Inc. (the "Depositor") may be required under Regulation AB, as defined in the
Pooling and Servicing Agreement, to disclose certain financial information
regarding Party A or its group of affiliated entities, if applicable, depending
on the aggregate "significance percentage" of this Agreement and any other
derivative contracts between Party A or its group of affiliated entities, if
applicable, and Party B, 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 for so long as the Issuing Entity is
required to file periodic reports under the Exchange Act with respect to the
Certificates, Party B or the Depositor requests from Party A the applicable
financial information described in Item 1115(b) of Regulation AB (such request
to be based on a reasonable determination by the Depositor, based on
"significance estimates" made in substantially the same manner as that used in
the Sponsor's internal risk management process in respect of similar instruments
and furnished by the Sponsor to the Depositor, or if the Sponsor does not
furnish such significance estimates to the Depositor, based on a determination
of such significance estimates by the Depositor in a manner that it deems
reasonable) (the "Swap Financial Disclosure").
N-2-11
(iii) Upon the occurrence of a Swap Disclosure Event, Party A, at its own
expense, shall either (1)(a) either (i) provide to the Depositor the current
Swap Financial Disclosure in an XXXXX-compatible format (for example, such
information may be provided in Microsoft Word(R) or Microsoft Excel(R) format
but not in .pdf format) or (ii) provide written consent to the Depositor to
incorporation by reference of such current Swap Financial Disclosure that are
filed with the Securities and Exchange Commission in the Exchange Act Reports of
the Depositor, (b) if applicable, cause its outside accounting firm to provide
its consent to filing or incorporation by reference in the Exchange Act Reports
of the Depositor of such accounting firm's report relating to their audits of
such current Swap Financial Disclosure, and (c) provide to the Depositor any
updated Swap Financial Disclosure with respect to Party A or any entity that
consolidates Party A within five days of the release of any such updated Swap
Financial Disclosure; (2) secure another entity to replace Party A as party to
this Agreement on terms substantially similar to this Agreement, which entity
(or a guarantor therefor) meets or exceeds the Approved Rating Thresholds and
which entity complies with the requirements of Item 1115 of Regulation AB and
clause (1) above, or (3) obtain a guaranty of Party A's obligations under this
Agreement from an affiliate of Party A that complies with the financial
information disclosure requirements of Item 1115 of Regulation AB, and cause
such affiliate to provide Swap Financial Disclosure and any future Swap
Financial Disclosure and other information pursuant to clause (1), such that
disclosure provided in respect of such affiliate will satisfy any disclosure
requirements applicable to the Swap Provider.
(iv) Party A agrees that, in the event that Party A provides Swap Financial
Disclosure to the Depositor in accordance with clause (iii)(1) above or causes
its affiliate to provide Swap Financial Disclosure to the Depositor in
accordance with clause (iii)(3) above, it will indemnify and hold harmless the
Depositor, its respective directors or officers and any person controlling the
Depositor, 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.
(v) Third Party Beneficiary. Depositor shall be an express third party
beneficiary of this Agreement as if a party hereto to the extent of Depositor's
rights explicitly specified herein.
4. Account Details and
Settlement Information: PAYMENTS TO PARTY A:
Correspondent: BARCLAYS BANK PLC NEW YORK
FEED: 000000000
Beneficiary: BARCLAYS SWAPS
Beneficiary Account: 000-00000-0
PAYMENTS TO PARTY B:
US Bank N.A.
ABA 000000000
DDA 173103322058
REF# C-Bass 2006-CB8
Attn: Xxxx Xxxxxxxx
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.
N-2-12
The time of dealing will be confirmed by Barclays upon written request. Barclays
is regulated by the Financial Services Authority. Barclays is acting for its own
account in respect of this Transaction.
Please confirm that the foregoing correctly sets forth all the terms and
conditions of our agreement with respect to the Transaction by responding within
three (3) Business Days by promptly signing in the space provided below and both
(i) faxing the signed copy to Incoming Transaction Documentation, Barclays
Capital Global OTC Transaction Documentation & Management, Global Operations,
Fax x(00) 00-0000-0000/6857, Tel x(00) 00-0000-0000/6904/6965, and (ii) mailing
the signed copy to Barclays Bank PLC, 5 Xxx Xxxxx Xxxxxxxxx, Xxxxxx Xxxxx,
Xxxxxx X00 0XX, Attention of Incoming Transaction Documentation, Barclays
Capital Global OTC Transaction Documentation & Management, Global Operation.
Your failure to respond within such period shall not affect the validity or
enforceability of the Transaction against you. This facsimile shall be the only
documentation in respect of the Transaction and accordingly no hard copy
versions of this Confirmation for this Transaction shall be provided unless the
Counterparty requests.
For and on behalf of: For and on behalf of:
BARCLAYS BANK PLC U.S. BANK NATIONAL ASSOCIATION, NOT IN
ITS INDIVIDUAL CAPACITY BUT SOLELY AS
TRUSTEE ON BEHALF OF THE SUPPLEMENTAL
INTEREST TRUST WITH RESPECT TO C-BASS
MORTGAGE LOAN ASSET-BACKED CERTIFICATES,
SERIES 2006-CB8
------------------------------------- ----------------------------------------
Name: Name:
Title: Title:
Date: Date:
Barclays Bank PLC and its Affiliates, including Barclays Capital Inc., may share
with each other information, including non-public credit information, concerning
its clients and prospective clients. If you do not want such information to be
shared, you must write to the Director of Compliance, Barclays Bank PLC, 000
Xxxx Xxxxxx, Xxx Xxxx, XX 00000.
N-2-13
SCHEDULE I
(ALL SUCH DATES SUBJECT TO ADJUSTMENT IN ACCORDANCE WITH THE FOLLOWING BUSINESS
DAY CONVENTION WITH RESPECT TO FLOATING RATE PAYER PERIOD END DATES)
FROM AND INCLUDING TO BUT EXCLUDING NOTIONAL AMOUNT (USD)
------------------ ---------------- ---------------------
10/30/2006 11/25/2006 0
11/25/2006 12/25/2006 2,986,720
12/25/2006 01/25/2007 6,510,585
01/25/2007 02/25/2007 10,555,973
02/25/2007 03/25/2007 15,100,100
03/25/2007 04/25/2007 20,072,714
04/25/2007 05/25/2007 25,425,630
05/25/2007 06/25/2007 30,951,876
06/25/2007 07/25/2007 36,376,693
07/25/2007 08/25/2007 41,588,441
08/25/2007 09/25/2007 46,568,995
09/25/2007 10/25/2007 51,116,705
10/25/2007 11/25/2007 55,419,620
11/25/2007 12/25/2007 59,277,200
12/25/2007 01/25/2008 62,722,095
01/25/2008 02/25/2008 65,778,251
02/25/2008 03/25/2008 68,511,764
03/25/2008 04/25/2008 71,586,752
04/25/2008 05/25/2008 75,658,020
05/25/2008 06/25/2008 79,432,282
06/25/2008 07/25/2008 82,389,463
07/25/2008 08/25/2008 85,766,751
08/25/2008 09/25/2008 88,082,951
09/25/2008 10/25/2008 89,189,969
10/25/2008 11/25/2008 89,611,112
11/25/2008 12/25/2008 78,612,940
12/25/2008 01/25/2009 69,557,915
01/25/2009 02/25/2009 61,041,837
02/25/2009 03/25/2009 53,819,836
03/25/2009 04/25/2009 51,351,172
04/25/2009 05/25/2009 48,877,635
05/25/2009 06/25/2009 46,405,127
06/25/2009 07/25/2009 43,940,679
07/25/2009 08/25/2009 41,487,296
08/25/2009 09/25/2009 39,049,329
09/25/2009 10/25/2009 36,632,208
10/25/2009 11/25/2009 34,237,753
11/25/2009 12/25/2009 37,681,267
12/25/2009 01/25/2010 40,936,858
01/25/2010 02/25/2010 44,015,374
02/25/2010 03/25/2010 46,926,807
03/25/2010 04/25/2010 49,680,552
04/25/2010 05/25/2010 52,285,518
05/25/2010 06/25/2010 52,714,679
N-2-14
06/25/2010 07/25/2010 51,526,521
07/25/2010 08/25/2010 50,343,210
08/25/2010 09/25/2010 49,166,821
09/25/2010 10/25/2010 47,999,362
N-2-15
SCHEDULE II
(ALL SUCH DATES SUBJECT TO ADJUSTMENT IN ACCORDANCE WITH THE FOLLOWING BUSINESS
DAY CONVENTION WITH RESPECT TO FLOATING RATE PAYER PERIOD END DATES)
FROM AND INCLUDING TO BUT EXCLUDING NOTIONAL AMOUNT (USD)
------------------ ---------------- ---------------------
10/30/2006 11/25/2006 515,228,249
11/25/2006 12/25/2006 504,730,910
12/25/2006 01/25/2007 492,340,291
01/25/2007 02/25/2007 478,101,773
02/25/2007 03/25/2007 462,068,852
03/25/2007 04/25/2007 444,429,595
04/25/2007 05/25/2007 425,299,157
05/25/2007 06/25/2007 405,246,706
06/25/2007 07/25/2007 385,042,974
07/25/2007 08/25/2007 365,026,740
08/25/2007 09/25/2007 345,261,915
09/25/2007 10/25/2007 326,351,441
10/25/2007 11/25/2007 307,832,624
11/25/2007 12/25/2007 290,220,663
12/25/2007 01/25/2008 273,459,895
01/25/2008 02/25/2008 257,527,380
02/25/2008 03/25/2008 242,269,740
03/25/2008 04/25/2008 225,835,478
04/25/2008 05/25/2008 205,983,763
05/25/2008 06/25/2008 186,117,535
06/25/2008 07/25/2008 167,752,278
07/25/2008 08/25/2008 147,317,894
08/25/2008 09/25/2008 129,438,507
09/25/2008 10/25/2008 115,341,402
10/25/2008 11/25/2008 103,243,431
11/25/2008 12/25/2008 103,243,431
12/25/2008 01/25/2009 103,243,431
01/25/2009 02/25/2009 103,243,431
02/25/2009 03/25/2009 102,269,047
03/25/2009 04/25/2009 96,849,870
04/25/2009 05/25/2009 91,731,079
05/25/2009 06/25/2009 86,895,505
06/25/2009 07/25/2009 82,328,073
07/25/2009 08/25/2009 78,012,318
08/25/2009 09/25/2009 73,933,931
09/25/2009 10/25/2009 70,080,398
10/25/2009 11/25/2009 66,437,901
11/25/2009 12/25/2009 62,994,387
12/25/2009 01/25/2010 59,738,796
01/25/2010 02/25/2010 56,660,280
02/25/2010 03/25/2010 53,748,847
03/25/2010 04/25/2010 50,995,102
04/25/2010 05/25/2010 48,390,136
05/25/2010 06/25/2010 45,925,586
06/25/2010 07/25/2010 43,593,574
07/25/2010 08/25/2010 41,386,675
N-2-16
08/25/2010 09/25/2010 39,297,893
09/25/2010 10/25/2010 37,320,721
N-2-17
EXHIBIT O
FORM OF POWER OF ATTORNEY
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
Xxxxxx Loan Servicing LP
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: _________________________________
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that________________________, having its
principal place of business at_______________________, as Trustee (the
"Trustee") pursuant to that Pooling and Servicing Agreement among Xxxxxxx Xxxxx
Mortgage Investors, Inc. (the "Depositor"), Xxxxxx Loan Servicing LP (the
"Servicer"), Credit-Based Asset Servicing and Securitization LLC (the "Sponsor")
and the Trustee, dated as of October 1, 2006 (the "Pooling and Servicing
Agreement"), hereby constitutes and appoints the Servicer, by and through the
Servicer's officers, the Trustee's true and lawful Attorney-in-Fact, in the
Trustee's name, place and stead and for the Trustee's benefit, in connection
with all mortgage loans serviced by the Servicer pursuant to the Pooling and
Servicing Agreement for the purpose of performing all acts and executing all
documents in the name of the Trustee as may be customarily and reasonably
necessary and appropriate to effectuate the following enumerated transactions in
respect of any of the mortgages or deeds of trust (the "Mortgages" and the
"Deeds of Trust", respectively) and promissory notes secured thereby (the
"Mortgage Notes") for which the undersigned is acting as Trustee for various
certificateholders (whether the undersigned is named therein as mortgagee or
beneficiary or has become mortgagee by virtue of endorsement of the Mortgage
Note secured by any such Mortgage or Deed of Trust) and for which the Servicer
is acting as servicer, all subject to the terms of the Pooling and Servicing
Agreement.
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recordings is for the purpose of correcting the Mortgage
or Deed of Trust to conform same to the original intent of the parties
thereto or to correct title errors discovered after such title insurance
was issued and said modification or re-recording, in either instance, does
not adversely affect the lien of the Mortgage or Deed of Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to an easement
in favor of a public utility company of a government agency or unit with
powers of eminent domain; this section shall include, without limitation,
the execution of partial satisfactions/releases, partial reconveyances or
the execution or requests to trustees to accomplish same.
3. The conveyance of the properties to the mortgage insurer, or the closing of
the title to the property to be acquired as real estate owned, or
conveyance of title to real estate owned.
4. The completion of loan assumption agreements.
O-1
5. The full satisfaction/release of a Mortgage or Deed of Trust or full
conveyance upon payment and discharge of all sums secured thereby,
including, without limitation, cancellation of the related Mortgage Note.
6. The assignment of any Mortgage or Deed of Trust and the related Mortgage
Note, in connection with the repurchase of the mortgage loan secured and
evidenced thereby.
7. The full assignment of a Mortgage or Deed of Trust upon payment and
discharge of all sums secured thereby in conjunction with the refinancing
thereof, including, without limitation, the assignment of the related
Mortgage Note.
8. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of
a deed in lieu of foreclosure, or the completion of judicial or
non-judicial foreclosure or termination, cancellation or rescission of any
such foreclosure, including, without limitation, any and all of the
following acts:
a. the substitution of trustee(s) serving under a Deed of Trust, in
accordance with state law and the Deed of Trust;
b. the preparation and issuance of statements of breach or
non-performance;
c. the preparation and filing of notices of default and/or notices of
sale;
d. the cancellation/rescission of notices of default and/or notices of
sale;
e. the taking of a deed in lieu of foreclosure; and
f. the preparation and execution of such other documents and performance
of such other actions as may be necessary under the terms of the
Mortgage, Deed of Trust or state law to expeditiously complete said
transactions in paragraphs 8.a. through 8.e., above.
This Power of Attorney is effective for one (1) year from the date hereof or the
earlier of (i) revocation by the bank (ii) the Attorney shall no longer be
retained on behalf of the bank or an affiliate of the bank; or (iii) the
expiration of one year from the date of execution.
The authority granted to the attorney-in-fact by the Power of Attorney is not
transferable to any other party or entity.
The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect and has not
been revoked unless an instrument of revocation has been made in writing by the
undersigned.
O-2
IN WITNESS WHEREOF, ______________________ as Trustee pursuant to that Pooling
and Servicing Agreement among the Depositor, the Servicer, and the Trustee,
dated as of October 1, 2006, C-BASS Mortgage Loan Asset Backed Certificates,
Series 2006-CB8, has caused its corporate seal to be hereto affixed and these
presents to be signed and acknowledged in its name and behalf by
______________________ its duly elected and authorized Vice President this ___
day of________, 200__.
U.S. BANK NATIONAL ASSOCIATION
as Trustee for C-BASS Mortgage Loan
Asset Backed Certificates, Series
2006-CB8
By
-------------------------------------
STATE OF
COUNTY OF
On _______________, 200__, before me, the undersigned, a Notary Public in and
for said state, personally appeared ___________________, ___________ of
___________________ as Trustee for C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2006-CB8, personally known to me to be the person whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed that same in his/her authorized capacity, and that by his/her signature
on the instrument the entity upon behalf of which the person acted and executed
the instrument.
WITNESS my hand and official seal.
(SEAL)
________________________________________
Notary Public
My Commission Expires __________________
X-0
XXXXXXX X-0
FORM OF 1122(d) SERVICING CRITERIA LETTER
[DATE]
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Structured Finance Services-C-BASS 0000-XX0
Xxx Xxxx xx Xxx Xxxx
000 Xxxxxxx Xxxxxx, 0X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Re: Item 1122 of Regulation AB -- C-BASS 2006-CB8 Trust
Ladies and Gentlemen:
In connection with the above-referenced transaction, Xxxxxx Loan Servicing
LP (the "Servicer"), U.S. Bank National Association (the "Trustee") and The Bank
of New York (the "Custodian") hereby acknowledge and agree that the purpose of
this letter agreement (this "Letter Agreement") is to facilitate compliance by
the Servicer, the Trustee and the Custodian with identifying each party's
responsibility with respect to the servicing criteria identified in Item 1122(d)
of Regulation AB. Xxxxxxx Xxxxx Mortgage Investors, Inc. (the "Depositor") shall
not exercise its right to request delivery of information or other performance
under these provisions other than in good faith, or for purposes other than
compliance with the Securities Act, the Exchange Act and the rules and
regulations of the Commission thereunder.
The Servicer, the Trustee and the Custodian each agree that as of the
Closing Date, each such party will, solely with respect to completing
assessments as required with respect to Item 1122(d) of Regulation AB and not as
an obligation with respect to the administration of the transaction, comply with
the servicing criteria indicated on Exhibit A hereto applicable to it in order
to comply with the requirements of Item 1122(d) of Regulation AB.
The Servicer, the Trustee and the Custodian each hereby acknowledge that
interpretations of the requirements of Item 1122(d) of Regulation AB may change
over time and agree in good faith to comply with requests made by the Depositor
in good faith for delivery of information under these provisions on the basis of
evolving interpretations of Regulation AB. In the event that the parties are not
able to agree upon the servicing criteria applicable to it, the parties hereby
agree to negotiate in good faith to come to a determination of the servicing
criteria applicable to them under Item 1122(d) of Regulation AB using industry
practice, industry groups' recommended practices and SEC interpretative guidance
as determining factors. If the parties cannot come to a resolution after such
negotiations, the parties hereby agree to submit to binding arbitration by an
arbitrator agreed to by the parties or if an arbitrator can not be agreed upon
then an arbitrator selected by the Depositor.
Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement, dated as of October 1,
2006 among Credit-Based Asset Servicing and Securitization LLC, the Servicer,
the Trustee and the Depositor.
P-1-1
This Letter Agreement shall be construed in accordance with the laws of the
State of New York, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with the laws of the State of New
York except to the extent preempted by federal law.
For the purpose of facilitating the execution of this Letter Agreement, and
for other purposes, this Letter Agreement may be executed simultaneously in any
number of counterparts. Each counterpart shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.
[NO FURTHER TEXT ON THIS PAGE]
P-1-2
XXXXXX LOAN SERVICING LP
By:
------------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED:
U.S. BANK NATIONAL ASSOCIATION
By:
---------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
---------------------------------
Name:
Title:
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
By:
---------------------------------
Name:
Title:
X-0-0
XXXXXXX X-0
SERVICING CRITERIA TO BE ADDRESSED
IN ASSESSMENT OF COMPLIANCE
(RMBS UNLESS OTHERWISE NOTED)
DEFINITIONS
PRIMARY SERVICER - transaction party having borrower contact
CUSTODIAN - safe keeper of pool assets
TRUSTEE - fiduciary of the transaction
XXXXXX LOAN
REG AB SERVICING LP BANK OF NEW US BANK
REFERENCE SERVICING CRITERIA (SERVICER) YORK (CUSTODIAN) (TRUSTEE)
--------------- -------------------------------------------- ----------------- ----------------- -----------------
GENERAL SERVICING CONSIDERATIONS
1122(d)(1)(i) Policies and procedures are instituted to X X
monitor any performance or other triggers
and events of default in accordance with the
transaction agreements.
1122(d)(1)(ii) If any material servicing activities are If applicable for If applicable for If applicable for
outsourced to third parties, policies and a transaction a transaction a transaction
procedures are instituted to monitor the participant participant participant
third party's performance and compliance
with such servicing activities.
1122(d)(1)(iii) Any requirements in the transaction
agreements to maintain a back-up servicer
for the Pool Assets are maintained.
1122(d)(1)(iv) A fidelity bond and errors and omissions X
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 deposited into X X*
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 transfer on X X
behalf of an obligor or to an investor are
made only by authorized personnel.
1122(d)(2)(iii) Advances of funds or guarantees regarding X
collections, cash flows or distributions,
and any interest or other fees charged for
such advances, are made, reviewed and
approved as specified in the transaction
agreements.
1122(d)(2)(iv) The related accounts for the transaction, X* X
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.
P-2-1
XXXXXX LOAN
REG AB SERVICING LP BANK OF NEW US BANK
REFERENCE SERVICING CRITERIA (SERVICER) YORK (CUSTODIAN) (TRUSTEE)
---------------- -------------------------------------------- ----------------- ----------------- -----------------
1122(d)(2)(v) Each custodial account is maintained at a X X*
federally insured depository institution as
set forth in the transaction agreements.
For purposes of this criterion, "federally
insured depository institution" with respect
to a foreign financial institution means a
foreign financial institution that meets the
requirements of Rule 13k-1(b)(1) of the
Securities Exchange Act.
1122(d)(2)(vi) Unissued checks are safeguarded so as to If applicable If applicable
prevent unauthorized access.
1122(d)(2)(vii) Reconciliations are prepared on a monthly X X
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 those to be X X
filed with the Commission, are maintained in
accordance with the transaction agreements
and applicable Commission requirements.
Specifically, such reports (A) are prepared
in accordance with timeframes and other
terms set forth in the transaction
agreements; (B) provide information
calculated in accordance with the terms
specified in the transaction agreements; (C)
are filed with the Commission as required by
its rules and regulations; and (D) agree
with investors' or the trustee's records as
to the total unpaid principal balance and
number of Pool Assets serviced by the
Servicer.
1122(d)(3)(ii) Amounts due to investors are allocated and X X
remitted in accordance with timeframes,
distribution priority and other terms set
forth in the transaction agreements.
1122(d)(3)(iii) Disbursements made to an investor are posted X X
within two business days to the Servicer's
investor records, or such other number of
days specified in the transaction
agreements.
1122(d)(3)(iv) Amounts remitted to investors per the X X
investor reports agree with cancelled
checks, or other form of payment, or
P-2-2
XXXXXX LOAN
REG AB SERVICING LP BANK OF NEW US BANK
REFERENCE SERVICING CRITERIA (SERVICER) YORK (CUSTODIAN) (TRUSTEE)
---------------- -------------------------------------------- ----------------- ----------------- -----------------
custodial bank statements.
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on pool assets is X
maintained as required by the transaction
agreements or related pool asset documents.
1122(d)(4)(ii) Pool assets and related documents are X
safeguarded as required by the transaction
agreements
1122(d)(4)(iii) Any additions, removals or substitutions to X X
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 any X
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 the pool X
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 X
of an obligor's pool assets (e.g., loan
modifications or re-agings) are made,
reviewed and approved by authorized
personnel in accordance with the transaction
agreements and related pool asset
documents.
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., X
forbearance plans, modifications and deeds
in lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated,
conducted and concluded in accordance with
the timeframes or other requirements
established by the transaction agreements.
1122(d)(4)(viii) Records documenting collection efforts are X
maintained during the period a pool asset is
delinquent in accordance with the
transaction agreements. Such records are
maintained on at least a monthly basis, or
such other period specified in the
transaction agreements, and describe the
entity's activities in monitoring delinquent
pool assets including, for example, phone
calls, letters and payment rescheduling
plans in cases where delinquency is deemed
temporary (e.g., illness or unemployment).
1122(d)(4)(ix) Adjustments to interest rates or rates of X
return for pool assets with variable rates
P-2-3
XXXXXX LOAN
REG AB SERVICING LP BANK OF NEW US BANK
REFERENCE SERVICING CRITERIA (SERVICER) YORK (CUSTODIAN) (TRUSTEE)
---------------- -------------------------------------------- ----------------- ----------------- -----------------
are computed based on the related pool asset
documents.
1122(d)(4)(x) Regarding any funds held in trust for an X
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 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 X
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 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 X
with any payment to be made on behalf of an
obligor are paid from the Servicer's funds
and not charged to the obligor, unless the
late payment was due to the obligor's error
or omission.
1122(d)(4)(xiii) Disbursements made on behalf of an obligor X
are posted within two business days to the
obligor's records maintained by the
servicer, or such other number of days
specified in the transaction agreements.
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible X
accounts are recognized and recorded in
accordance with the transaction agreements.
1122(d)(4)(xv) Any external enhancement or other support, X
identified in Item 1114(a)(1) through (3) or
Item 1115 of Regulation AB, is maintained as
set forth in the transaction agreements.
* For d(2)(iv) Servicer needs to provide only if it is deemed that the
Collection Account is subject to this criteria.
* For d(2)(i) and (v) Trustee needs to provide only if it is deemed that any
account maintained by the Trustee is a custodial account for purposes of
the servicing criteria. Subject to further clarification from the SEC.
X-0-0
XXXXXXX X-0
XXXX XX XXXXXXXX-XXXXX CERTIFICATION (SERVICER)
C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2006-CB8
Re: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-CB8
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.
[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, custodian or trustee].]
Date:______________
----------------------------------------
[Signature]
[Title]
X-0-0
XXXXXXX X-0
FORM OF ITEM 1123 CERTIFICATION OF SERVICER
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Center, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Structured Finance/C-BASS 0000-XX0
[xxx/xx its designee]
Re: Pooling and Servicing Agreement (the "Agreement") dated as of October 1,
2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Xxxxxx
Loan Servicing LP, as servicer, Credit-Based Asset Servicing and
Securitization LLC, as sponsor, and U.S. Bank National Association, as
trustee, relating to C-BASS Mortgage Loan Asset-Backed Certificates, Series
2006-CB8.
I, [identify name of certifying individual], [title of certifying individual] of
Xxxxxx Loan Servicing LP (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:
XXXXXX LOAN SERVICING LP,
as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
X-0-0
XXXXXXX X-0
FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2006-CB8
Reference is made to the Pooling and Servicing Agreement, dated as of
October 1, 2006 (the "Pooling Agreement"), by and among U.S. Bank National
Association (the "Trustee"), Credit-Based Asset Servicing and Securitization
LLC, as sponsor, Xxxxxx Loan Servicing LP, as servicer (the "Servicer") and
Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor (the "Depositor"). The
Trustee hereby certifies to the Servicer and its officers, directors and
affiliates, and with the knowledge and intent that they will rely upon this
certification, that:
(i) The Trustee has reviewed the annual report on Form 10-K for the
fiscal year [_], and all reports on Form 8-K containing distribution
reports filed in respect of periods included in the year covered by
that annual report, relating to the above-referenced trust;
(ii) Subject to paragraph (iv), the Distribution Information in the
distribution reports contained in all Monthly Form 8-K's included in
the year covered by the annual report on Form 10-K for the calendar
year [___], taken as a whole, does not contain any untrue statement
of a material fact or omit to state a material fact required by the
Pooling Agreement to be included therein and necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading as of the last day of the period
covered by that annual report;
(iii) The Distribution Information required to be provided by the Trustee
under the Pooling Agreement is included in these reports.
(iv) In compiling the Distribution Information and making the foregoing
certifications, the Trustee has relied upon information furnished to
it by the Servicer under the Pooling Agreement. The Trustee shall
have no responsibility or liability for any inaccuracy in such
reports resulting from information so provided by the Servicer.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Pooling Agreement.
Date:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
P-5-1
EXHIBIT Q
FORM OF OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS
Officer's Certificate
C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-CB8
[DATE]
VIA FACSIMILE
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Structured Finance Services
C-BASS 2006-CB8
Re: Prepayments
Dear Sir or Madam:
__________________ hereby certifies that he/she is an officer of the Servicer,
holding the office set forth beneath his/her name and hereby further certifies
as follows:
With respect to the Mortgage Loans set forth in the attached schedule:
1. A Principal Prepayment in full was received during the
related Collection Period;
2. Any prepayment penalty due under the terms of the
Mortgage Note with respect to such Principal Prepayment in full was
received from the mortgagor and deposited in the Collection Account:
____ Yes ____ No
3. As to each Mortgage Loan so noted on the attached
schedule, all or part of the prepayment penalty required in connection
with the Principal Prepayment in full was waived based upon (Circle
one):
(i) the Servicer's determination that such waiver would maximize
recovery of Liquidation Proceeds for such Mortgage Loan, taking
into account the value of such prepayment penalty, or
(ii)(A) the enforceability thereof be limited (1) by bankruptcy
insolvency, moratorium, receivership, or other similar law
relating to creditors' rights generally or (2) due to
acceleration in connection with a foreclosure or other
involuntary payment, or (B) the enforceability is otherwise
limited or prohibited by applicable law;
4. We certify that all amounts due in connection with the
waiver of a prepayment penalty inconsistent with number 3 above which
are required to be deposited by the Servicer pursuant to Section 3.01
of the Pooling and Servicing Agreement, have been or will be so
deposited.
Q-1
Capitalized terms used herein shall have the meanings ascribed to such terms in
the Pooling and Servicing Agreement, dated October 1, 2006, among Xxxxxxx Xxxxx
Mortgage Investors, Inc., as depositor, Credit-Based Asset Servicing and
Securitization LLC, as sponsor, Xxxxxx Loan Servicing LP, as servicer and U.S.
Bank National Association, as trustee.
XXXXXX LOAN SERVICING LP
By:
------------------------------------
Name:
Title:
Q-2
EXHIBIT R
FORM 8-K DISCLOSURE
Item on Form 8-K Party Responsible
---------------------------------------------------------- -------------------
Item 1.01- Entry into a Material Definitive Agreement Depositor
Item 1.02- Termination of a Material Definitive Agreement Depositor
Item 1.03- Bankruptcy or Receivership Depositor
Item 2.04- Triggering Events that Accelerate or Increase Depositor
a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement
Item 3.03- Material Modification to Rights of Security Depositor
Holders
Item 5.03- Amendments of Articles of Incorporation or Depositor
Bylaws; Change of Fiscal Year
Item 6.01- ABS Informational and Computational Material Depositor
Item 6.02- Change of Servicer or Trustee Servicer, Depositor
Item 6.03- Change in Credit Enhancement or External Depositor
Support
Item 6.04- Failure to Make a Required Distribution Depositor
Item 6.05- Securities Act Updating Disclosure Depositor
Item 7.01- Reg FD Disclosure Depositor
Item 8.01 Depositor
Item 9.01 Depositor
To the extent no notice is provided to the Trustee of the events or information
as described above in this Exhibit R, the Trustee shall without further notice
conclude that there is no event or information to be reported.
R-1
EXHIBIT S
FORM 10-D DISCLOSURE
ITEM DESCRIPTION RESPONSIBLE PARTY
---- ----------------------------------------------------- -----------------
1 DISTRIBUTION AND POOL PERFORMANCE INFORMATION
Item 1121(a) - Distribution and Pool Performance
Information
(1) Any applicable record dates, accrual dates, 4.06 statement*
determination dates for calculating distributions and
actual distribution dates for the distribution
period.
(2) Cash flows received and the sources thereof for 4.06 statement
distributions, fees and expenses.
(3) Calculated amounts and distribution of the flow 4.06 statement
of funds for the period itemized by type and priority
of payment, including:
(i) Fees or expenses accrued and paid, with an 4.06 statement
identification of the general purpose of such fees
and the party receiving such fees or expenses.
(ii) Payments accrued or paid with respect to 4.06 statement
enhancement or other support identified in Item 1114
of Regulation AB (such as insurance premiums or other
enhancement maintenance fees), with an identification
of the general purpose of such payments and the party
receiving such payments.
(iii) Principal, interest and other 4.06 statement
distributions accrued and paid on the asset-backed
securities by type and by class or series and any
principal or interest shortfalls or carryovers.
(iv) The amount of excess cashflow or excess 4.06 statement
spread and the disposition of excess cashflow.
(4) Beginning and ending principal balances of the 4.06 statement
asset-backed securities.
(5)Interest rates applicable to the pool assets and 4.06 statement
the asset-backed securities, as applicable. Interest
rate information for pool assets in appropriate
distributional groups and incremental ranges.
(6) Beginning and ending balances of transaction 4.06 statement
accounts, such as reserve accounts, and material
account activity during the period.
(7) Any amounts drawn on any credit enhancement or 4.06 statement
other support identified in Item 1114 of Regulation
AB, as applicable, and the amount of coverage
remaining under any such enhancement, if known and
applicable.
(8) Number and amount of pool assets at the beginning 4.06 statement
and ending of each period, and updated pool
composition information, including weighted average Pool composition
coupon, weighted average life, weighted average information
remaining term, pool factors and prepayment amounts. fields may be
updated as
specified by
Depositor from
time to time.
(9) Delinquency and loss information for the period. 4.06 statement
In addition, describe any material changes to the Form 10-D report:
information specified in Item 1100(b)(5) of Servicer
Regulation AB regarding the pool assets.
(10) Information on the amount, terms and general 4.06 statement
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.
(11) Any material modifications, extensions or 4.06 statement
waivers to pool asset terms, fees, penalties or
payments during the distribution period or that have
S-1
cumulatively become material over time.
(12) Material breaches of pool asset representations Form 10-D report:
or warranties or transaction covenants Servicer
(13) Information on ratio, coverage or other tests 4.06 statement
used for determining any early amortization,
liquidation or other performance trigger and whether
the trigger was met.
(14) Information regarding any new issuance of Form 10-D report:
asset-backed securities backed by the same asset Depositor
pool, 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. Disclose any
material changes in the solicitation,
credit-granting, underwriting, origination,
acquisition or pool selection criteria or procedures,
as applicable, used to originate, acquire or select
the new pool assets.
Item 1121(b) - Pre-Funding or Revolving Period
Information
Updated pool information as required under Item N/A
1121(b).
2 LEGAL PROCEEDINGS
Item 1117 - Legal proceedings pending against the
following entities, or their respective property,
that is material to Certificateholders, including
proceedings known to be contemplated by governmental
authorities:
Sponsor Sponsor
Depositor Depositor
Trustee Trustee
Issuing Entity All Parties
Originator Originator
Custodian Custodian
3 SALES OF SECURITIES AND USE OF PROCEEDS
Information from Item 2(a) of Part II of Form 10-Q:
With respect to any sale of securities by the Depositor
Sponsor, Depositor or Issuing Entity that are backed
by the same asset pool or are otherwise issued by the
Issuing Entity, whether or not registered, provide
the sales and use of proceeds information in Item 701
of Regulation S-K. Pricing information may be omitted
if securities were not registered.
4 DEFAULT UPON SENIOR SECURITIES
Information from Item 3 of Part II Of Form 10-Q:
Report the occurrence of any Event of Default (after Trustee
expiration of any grace period and provision of any
required notice).
5 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Information from Item 4 of Part II of Form 10-Q Trustee
6 SIGNIFICANT OBLIGORS OF POOL ASSETS
S-2
Item 1112(b) - Significant Obligor Financial N/A
Information*
* This information need only be reported on the
Form 10-D for the distribution period in which
updated information is required pursuant to the
Item.
7 SIGNIFICANT ENHANCEMENT PROVIDER INFORMATION
Item 1114(b)(2) - Credit Enhancement Provider
Financial Information*
Determining applicable disclosure threshold. Depositor
Obtaining required financial information or effecting Depositor
incorporation by reference.
Item 1115(b) - Derivative Counterparty Financial
Information*
Determining current maximum probable exposure. Depositor
Determining current significance percentage. Depositor
Obtaining required financial information or effecting Depositor
incorporation by reference.
* This information need only be reported on the
Form 10-D for the distribution period in which
updated information is required pursuant to the
Items.
8 OTHER INFORMATION
Disclose any information required to be reported on The Responsible
Form 8-K during the period covered by the Form 10-D Party for the
but not reported. applicable
Form 8-K item.
9 EXHIBITS
Distribution Report Trustee
Exhibits required by Item 601 of Regulation S-K, such Depositor
as material agreements.
* "4.06 statement" refers to the Statements to be prepared by the Trustee as
described in Section 4.06 of the Pooling Agreement.
To the extent no notice is provided to the Trustee of the events or information
as described above in this Exhibit S, the Trustee shall without further notice
conclude that there is no event or information to be reported.
S-3
EXHIBIT T
FORM 10-K DISCLOSURE
Item on Form 10-K Party Responsible
-------------------------------------------------- --------------------------------------------------------------
Item 1B: Unresolved Staff Comments Depositor
Item 9B: Other Information Any party responsible for disclosure items on Form 8-K
Item 15: Exhibits, Financial Statement Schedules Depositor
Additional Item: All parties to the Pooling and Servicing Agreement (as to
themselves), any party with notice thereof with respect to the
Disclosure per Item 1117 of Reg AB issuing entity, any 1100(d)(1) party
Additional Item: All parties to the Pooling and Servicing Agreement (as to
Disclosure per Item 1119 of Reg AB themselves), the sponsor, significant obligor, enhancement or
support provider
Additional Item: N/A
Disclosure per Item 1112(b) of Reg AB
Additional Item: Depositor
Disclosure per Items 1114(b) and 1115(b) of Reg AB
Additional Item: Trustee, Servicer and Custodian
Disclosure per Item 1122 of Reg AB
Additional Item: Servicer
Disclosure per Item 1123 of Reg AB
To the extent no notice is provided to the Trustee of the events or information
as described above in this Exhibit T, the Trustee shall without further notice
conclude that there is no event or information to be reported.
T-1
